Today, citing “growing pains” of his Republican majority, Speaker Paul Ryan (R-WI), in consultation with President Donald Trump, determined not to proceed with a planned vote on the American Health Care Act (AHCA), which repealed and replaced important elements of the Affordable Care Act (ACA).  The Speaker indicated that the House Republican Caucus “came up short” in the number of votes needed for the bill.  House Republican Leadership had been moving AHCA through the Chamber at a rapid pace.  The bill was officially released on March 6, and had been changed several times to try to appease various conservative and moderate voting blocs within the Republican Caucus.  The Congressional Budget Office (CBO) originally estimated the bill would reduce federal deficits by $337 billion, and subsequently downgraded the deficit reduction to $150 billion based on additional substantive policy changes to the bill.  The CBO estimates the bill would have increased the country’s number of uninsured by about 24 million people.

In negotiating the provisions of AHCA, the House Republican Leadership had faced a constant seesaw, as efforts to appease one ideological bloc upset the other.  Ultimately, throughout the day in advance of the scheduled vote, an increasing number of moderate Republicans, including Appropriations Committee Chairman Rodney Frelinghuysen (R-NJ), announced they would vote against the bill.  As the moderates disappeared, not enough members of the conservative Freedom Caucus decided to support the bill.

As disarray in the House Republican Caucus occurred, there appeared to be a similar lack of consensus amongst their Republican colleagues on the Senate side.  While Senate Leadership had planned to move the bill directly to the Senate floor as fast as within a week of receipt from the House, there were a number of Senators from a range of political perspectives with serious concerns about the bill.  On one side of the Republican spectrum, Senators Rand Paul (KY), Mike Lee (UT) and Ted Cruz (TX) had planned to push the limits of what can be included in a reconciliation bill to make it more conservative. Senator Paul had advocated for repealing the ACA in full and dealing with the replacement later on. On the other side, more moderate or “purple state” Members like Senators Susan Collins (ME), Lisa Murkowski (AK), Rob Portman (OH), Cory Gardner (CO) and Dean Heller (NV) raised concerns about insurance affordability and the expedited rollback of Medicaid expansion in the House version of the bill. Other Senators who will likely play a prominent role in any further health reform developments include physician Senator Bill Cassidy (LA), and Senator Tom Cotton (AR), who advocated all along to slow the process down. Republicans can only lose two Senators and still pass any health reform bill, with the vote of Vice President Mike Pence breaking the tie.

As a next step, House and Senate Republican Leadership plan to take more time to develop consensus in any future approach to health reform.  How much time is unclear – but it seems unlikely the bill will be the legislative focus in the short term.  Instead, there will likely be a cooling-off period on health reform legislative activity, since the fundamental disagreements within the caucus are not easily fixed.  There will continue to be significant messaging against ACA from conservatives, and there is the potential that the idea of “repeal and delay” may gain more traction.  Nonetheless, in the short term, the Speaker indicated he would move on to other items on his conference’s agenda – including tax reform.  Keep in mind, however, that since health-related tax provisions are a major component of the tax code, it would not be surprising to see some health issues resurface in tax reform.

The Speaker indicated that he expects the ACA marketplace to get worse – specifically citing rising premium costs.  In his own remarks on the failure to pass AHCA, the President suggested the Democrats will own any rising premiums, and provided a rare moment of optimism for the day when he indicated that a bipartisan health care reform bill may be achievable in the future when that happens.   As the Legislative Branch takes time to develop consensus, more focus will be placed on the Executive Branch.

We expect HHS Secretary Tom Price and White House Budget Director Mick Mulvaney to take an increasingly important role in driving the health agenda.  It is unclear at this point whether the Trump Administration will let ACA drift in the wind, take administrative actions to try to improve the marketplace, or even actively work to derail it further.  A likely bellwether as to the Administration’s intent is how it approaches the pending litigation over cost-sharing reduction (CSR) subsidies.  The House had sued the Obama Administration over the program, which funnels federal dollars to insurers to help keep out-of-pocket costs manageable for lower-income individuals, saying the funding had to be appropriated.  But after the inauguration, the House and Trump Administration sought a stay of the case until May 22 to allow time to resolve the issue.  If the Administration agrees to fold, the subsidies would be cut off, leading to further market instability.  If the House folds, the CSR payments would continue into the indefinite future.

From a health care legislative perspective, 2017 will still be far from a quiet year.  The President has proposed significant changes in the funding levels of important discretionary health programs.  Those budget battles will now move more front and center on the legislative agenda.  Furthermore, there continue to be “must pass” pieces of health care legislation, including CHIP reauthorization, FDA User Fee legislation, and certain Medicare extenders legislation.