Senate Republicans have released several bills in recent weeks in support of their goal of repealing and replacing the Affordable Care Act (ACA). This morning, that effort appears to have failed.

On Tuesday, the Senate narrowly approved a motion to proceed, allowing the chamber to begin consideration of measures to achieve that goal. Republican Senators Susan Collins of Maine and Lisa Murkowski of Alaska voted with the Democrats against the motion, but Vice President Mike Pence broke the resulting 50-50 tie. That vote allowed debate to move forward on a range of healthcare legislative options.

The next step for proponents of the repeal effort was to agree on what, if anything, would replace the ACA. Three options were considered, and all were voted down:

  • Tuesday night, the Senate considered an overall "repeal and replace." However, the Senate Parliamentarian advised that several provisions of this bill did not comply with the "Byrd rule." The Democrats raised a point of order, asking that the noncompliant provisions be struck from the bill. The Republicans moved to overrule the point of order, a motion that needed 60 votes to pass. Instead, it failed, 43-57, with nine Republicans and all Democrats voting against it.
  • On Wednesday, the Senate considered a "partial repeal." This version would have struck much of the ACA, including the individual mandate, Medicaid expansion, and premium subsidies. It would have left in place those provisions that could not be included without violating the Byrd rule, such as the essential health benefits. But it did not set forth any proposal to replace the ACA. That version would have needed only 50 votes (plus, potentially, Vice President Mike Pence as tie-breaker), but it failed, 45-55.
  • Early this morning, the Senate considered a "skinny repeal" bill limited to repealing the individual mandate, employer mandate, and medical device tax. If passed, this bill could have been either approved by the House as is, or moved to a Conference Committee with the House in an attempt to reconcile the differences between the two chambers' bills. However, the "skinny repeal" bill ultimately failed, 49-51.

At this point, it appears as if Senate Majority Leader Mitch McConnell is moving on to other Senate business, such as nominations and defense authorization.

What are the next steps? At this point there does not appear to be a clear path forward for Congress. At this juncture, there appear to be two divergent policy options surfacing:

  • Before this week's votes, Senator McConnell said that if the GOP proposals did not pass, the Republicans would need to work with Democrats to shore up the ACA Health Exchanges.
  • President Donald Trump has expressed a desire to let the ACA "implode" before negotiating further.

Also, one issue policymakers may need to address in the near-term is cost-sharing reductions (CSRs). Under the ACA, insurance companies are required to reduce copays and deductibles for certain low income taxpayers—the insurance companies front the money and are reimbursed by the federal government. However, a federal district judge has ruled that the reimbursements are not legal unless Congress appropriates funds. The decision may be appealed, and HHS is permitted to make CSR payments pending appeal. If HHS stops making CSR payments and Congress fails to appropriate the funds, premiums will increase. Ironically, economists believe that the resulting increase in premium subsidies (which rise when premiums do) will cost the federal government more than the CSRs themselves.

Other possible topics that policymakers may seek to address is providing assistance to low income people in states that did not expand Medicaid and improving the administrative issues in the exchanges. Also, some of the taxes imposed by the ACA might be repealed as part of a tax reform effort later this year.

The Administration and Congress have already taken several steps to try to undermine the ACA:

  • The CSRs described above are the subject of active litigation by Congress. In addition, while the administration has paid the CSRs to date, it is not required to do so and has frequently suggested that the payments could stop at any time.
  • The Internal Revenue Service has relaxed enforcement of the individual mandate.
  • The Department of Health and Human Services has cut back on efforts to publicize the exchanges, and indeed its website now says, "the Affordable Care Act (ACA) has done damage to [the insurance] market and created great burdens for many Americans."
  • An Executive Order dated January 20, 2017 calls upon the heads of the relevant agencies to "exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications." This could include waiver of the tax penalties on individuals and businesses for failing to maintain coverage, or providing states with waivers to cut back on essential health benefits.