On May 4, the House of Representatives passed by a narrow vote of 217-213 the American Health Care Act (AHCA), which repealed and replaced significant portions of the Affordable Care Act (ACA). House Democrats unanimously opposed the legislation. Twenty Republicans also voted against the legislation.

It is highly unlikely that the Senate will pass the House-approved bill. At best, it becomes a starting point for discussions, and it may not even be that.

The Senate and Timing

Senate Republican leaders have already signaled that the process will not be rushed. The expiration of the FY2017 budget reconciliation instruction, which will occur once a new FY2018 resolution is enacted or at the end of the fiscal year (9/30/17), is the only deadline for getting the repeal bill to the president. Some members have suggested it might take two months of deliberations in the Senate. The truth is no one knows how long the Senate might take.

The Process in the Senate

Senate Republican leadership created a special working group to develop a proposal. The working group is comprised of leadership, relevant committee chairs and other members. From leadership are Sens. McConnell of Kentucky, Cornyn of Texas, Thune of South Dakota and Barrasso of Wyoming. Committee chairs participating on the working group include Sens. Alexander of Tennessee (Health, Education, Labor and Pensions Committee); Enzi of Wyoming (Budget Committee); and Hatch of Utah (Finance Committee). Other committee members are Sens. Cruz of Texas, Lee of Utah, Cotton of Arizona, Gardner of Colorado, Portman of Ohio and Toomey of Pennsylvania; this last group of senators represents a range of political views, including those who believe the House bill did not do enough in terms of repeal and those who oppose the House bill because of the dramatic Medicaid changes. In addition, there has been some discussion of the group dividing into three subgroups to handle Medicaid, tax credits and insurance market reforms.

Leadership indicated once the work group has developed a proposal, the legislation will be considered on the Senate floor, bypassing the committee process.

Budget Reconciliation Rules and How They Impact Consideration

As the Senate deliberates, Democrats will continue to oppose any repeal legislation, so Republicans will not be able to get 60 votes to pass a bill through regular order. This means it will be critical to be able to consider the legislation under the rules of budget reconciliation. Under those rules, only provisions that have a direct budgetary impact can be enacted through reconciliation.

While the Senate parliamentarian has not ruled on the House bill, many observers believe several areas of the bill must be removed or modified because the budget impact is merely incidental to a broader policy — or indirect. Provisions that may be ruled indirect are those changes directly impacting individual market insurance rules, state waivers, pre-existing conditions and essential health benefits. As a result, the House bill is not likely to survive Senate consideration in its current form, and Senators charged with developing the Senate bill will have to keep the reconciliation rules in mind as they negotiate among themselves.

This also means the Congressional Budget Office (CBO) analysis will be an important factor in determining which provisions of the House-passed bill may be subject to a point of order under the budget reconciliation process. The CBO analysis is expected the week of May 22.

Other Issues Subject to Change

Beyond changes that may be required under reconciliation, other amendments are likely to come about because of differing political views in the Senate and the need to develop some consensus within the Republican Caucus. Issues that may be changed include: (1) Medicaid (both block grant and per capita cap provisions, as well as impact on Medicaid expansion states, and disproportionate share hospital payments); (2) risk pool funding and stabilization funding; (3) additional assistance for rural hospital providers; (4) the size and structure of the current age-based tax credits; and (5) abortion provisions (Planned Parenthood funding restrictions and limitations on use of tax credits for abortion-related services).

Senate Vote Counting Republican leaders can afford to lose only two votes. For passage, Republicans would need at least 50 votes plus the vice president voting to break the tie. More than three conservatives in the Senate may think the House bill still spends too much and leaves in place too much of the ACA. At least three Republican senators oppose some of the House bill's abortion restrictions. More than three Republican senators represent states that expanded Medicaid and may want more Medicaid funding than provided in the House bill or may want to protect the Medicaid expansion population.

The composition of the work group has raised eyebrows. However, the composition of the work group may reflect leadership’s attempt to bring a core group of members with specific and differing views together to see what can be developed, while also knowing other members will make their own political calculations. For example, two Republican senators up for re-election in 2018 who are considered somewhat vulnerable — Sen. Jeff Flake of Arizona and Sen. Dean Heller of Nevada — will have to make their own political calculations. Both states expanded Medicaid under the ACA, providing coverage to thousands more people in both states.

Sen. Susan Collins of Maine and Sen. Bill Cassidy of Louisiana have their own proposal, and Sen. Collins has made it clear that not being on the working group is not going to stop her from being active on these issues.

Impact on Other Senate Must-Do Health Legislation

Work on the AHCA may cause delays on other health care priorities. For example, the day after House passage, the Senate Finance Committee postponed indefinitely its first scheduled hearing on the Children’s Health Insurance Program (CHIP), which must be reauthorized by Sept. 30. That negotiation may now become part of the larger debate over the AHCA, which may further complicate the situation.

What Happens After the Senate Passes Legislation?

Because the legislation that ultimately comes out of the Senate is likely to vary significantly from the House version, the differences between the two approaches will need to be worked out. Normally, the House and Senate appoint conferees from each body to meet and work through the differences and create a conference report for the House and Senate to consider. A conference report cannot be amended on the floor of either body.

Observers have noted the potential for several scenarios that would spell disaster for the repeal-and-replace effort. First, the conference committee might not be able to work out differences. In that case, Congress could not move forward. Second, the House might not be able to pass the conference report because anything that might pass in the Senate is not likely to gain enough of the House Freedom Caucus votes to pass in the House. Third, whatever is negotiated by the conference committee and passes the House might not pass the Senate because it does not have the votes to capture moderates in the Senate.

Conclusion

Even if the Senate finds a consensus that allows it to pass a repeal-and-replace proposal, the path forward is delicate and fraught with potential deal-killers for individual members. To be successful, the process will require compromise and a careful dance of negotiations.