The GOP’s new Obamacare repeal bill is a big defeat for conservatives

Those complaints were enough to win the most conservative Republicans a few perks. The revision makes changes to Medicaid, the federal program that provides health insurance to the poor, giving officials in red states modestly more authority to administer the program as they see fit. The new bill also includes more rapid relief from the taxes imposed by Obamacare.

But the real concessions went to moderate lawmakers. Between Medicaid and a system of tax breaks for working- and middle-class households purchasing private insurance, the bill includes some $150 billion in new federal spending to help make sure that Americans can buy insurance. It is a tangible expansion of federal power in the health-care sector, compared with the first draft, that indicates an appetite among moderate Republicans for a more robust social safety net.

One moderate congressman, Rep. Tom MacArthur (R-N.J.), told The Washington Post he was “satisfied enough” with the changes that he would support the bill.

Among conservative Republicans, the symbolic gains seem to have softened the opposition, but some members remain unpersuaded.

The House Freedom Caucus, a crucial conservative bloc, will allow its members to vote as they please on the legislation.

Still, the group’s leader — Rep. Mark Meadows (R-N.C.) ripped the proposed changes Monday night. “After investing hours and hours and hours of trying to find common ground between our moderate members and conservative members, and believing, because of the White House's engagement in the process, that we could find common ground; I've now reached a conclusion that our leadership is going to put forth a bill that does not address any of the concerns in a meaningful way and will dare us to vote against it,” he told Axios.

There are a lot of moving pieces remaining, however. The bill will go through a committee hearing in which Republicans will have the opportunity to vote on the proposed revisions changes.

And in the House vote on the full bill, tentatively slated for later this week, Ryan will find out if he can hold his party together. Here's a detailed look at how he's trying to do it.

Medicaid

In particular, conservative Republicans hoped for major changes to Medicaid, the federally funded program that provides insurance to poor Americans. Republicans have argued that the program, which has been expanded under Obamacare, has become costly and inefficient and that beneficiaries have become dependent on the system.

The original GOP bill would have preserved Obamacare's expansion of Medicaid, shifting beneficiaries off the program only after 2020. Conservative Republicans had hoped to move that date forward, but the revised bill mostly maintains the scheduled laid out in the first draft.

States that have not already expanded Medicaid will not receive additional federal funds to do so in the revised draft, but this version still grandfathers in those beneficiaries who are already in the expanded program.

Republicans revised their bill to include other changes to Medicaid as well, although it is unclear whether they will have much practical effect. The new bill would allow states to require beneficiaries to work in order to qualify for insurance, but because it would be difficult for hospitals to deny treatment to the sick and injured because they had not fulfilled the requirements in the law, conservative experts on health care have questioned whether this provision would really have teeth.

The amendment also adds a change long sought by Republicans, who have argued that instead of guaranteeing coverage for poor Americans who qualify for Medicaid, the federal government should simply turn over a fixed amount of money to the states each year and let them decide how to use it to care for the indigent.

In the revised bill, however, converting Medicaid payments into a “block grant” would only be an option that each state could elect. Other states could choose to receive funding on a per-capita basis, giving the federal government less control over spending.

Meanwhile, the revised bill would increase the rate at which the federal government reimburses states for covering elderly and disabled beneficiaries through Medicaid — a victory for moderate Republicans worried that the government is not doing enough to care for the most vulnerable.

Taxes

Another of the moderate faction's achievements is that the bill's revised version allocates $85 billion to be used to help Americans between the ages of 50 and 65 pay for private insurance.

The effects of repeal on this group were a particular concern for many lawmakers, because the bill as written would have allowed insurers to increase prices for those in older middle age without proportionally increasing the tax credits available to help them pay those costs. The nonpartisan Congressional Budget Office estimated that a typical 64-year-old making $26,500 a year would pay almost $13,000 more annually for insurance under the GOP plan.

The revised version does not specify how the additional money will be spent for this group, leaving the details to the Senate.

Compared with the first draft, the revised bill contains about $150 billion in additional spending on the safety net for older and infirm Americans in total, said MacArthur, the congressman.

The bill does contain one real concession to conservative lawmakers: tax relief.

In the revision, a number of new taxes imposed under Obamacare will be repealed immediately, instead of after a year as in the first draft. These taxes fall primarily on the health-care industry and wealthy households.

The three most important taxes in dollar terms are a fee on health insurance companies and two taxes on salaries and gains from investments earned by the rich. Each of those three taxes produces $10 billion to $15 billion a year in revenue, according to the CBO.

Finally, the bill would delay for yet another year a tax on particularly generous health-care plans sponsored by employers. Many union households have policies that would be subject to this tax, which was included in Obamacare originally but which Democrats have delayed. Under the Republican plan, it would not take effect until 2026.

An unanswered question

The combination of reduced taxes and new outlays means that the revised bill will be much worse for the federal budget than the first draft. The government will be collecting less revenue and spending more than under the first version.

That first draft would have reduced the federal deficit, creating net savings of $337 billion over a decade, CBO projected. The revised bill would presumably use much of that savings to further reduce taxes and make health care more affordable for the vulnerable.

Republicans, however, cannot pass a bill that would increase the federal deficit over the long term — such legislation would be subject to a Democratic filibuster in the Senate. It remains to be seen whether the math in the revised bill still adds up, but the CBO is expected to release revised estimates based on the new language in the coming days.

Republicans are expected to formally adopt the revised version of the bill in a hearing of the House Rules Committee on Wednesday and to bring the bill to the floor later this week.

Correction: An earlier version of this item incorrectly described the Republican plan to include block grants for the Medicaid program in a partial repeal of the Affordable Care Act, wrongly stating that the current system of Medicaid funding would remain an option for states. Under the GOP proposal, states would have the option of choosing a block grant or payments allocated on a per-capita basis. This version has been corrected.