“On The Brink” – It’s D-Day For TrumpCare: Here’s The Latest

To vote, or not to vote, that is the only question on the minds of Trump’s White House and House Republicans this morning, or as AP puts it, the fate of Trump’s domestic agenda is “on the brink”:

The GOP’s long-promised legislation to repeal and replace “Obamacare” stood on the brink just hours before Republican leaders planned to put it on the House floor for a showdown vote. Short of support, GOP leaders looked to President Donald Trump to close the deal with a crucial bloc of conservatives, in the first major legislative test of his young presidency.

If everything proceeds as planned, the Obamacare vote is currently scheduled for 7pm tonight.  That said, the further we press into today without confirmation that Republicans have narrowed the opposition votes from their own party down to 22 or less (as of last night the estimate was 25-30) the more unlikely the vote is to proceed. 

As we pointed out yesterday, the TrumpCare vote is the first high-stakes political battle of Trump’s Presidency and pits Trump against the more conservative elements of the Republican Party.  For Trump, failure to pass healthcare reform would be a major blow as it was a signature component of his campaign and could signal that he will face an uphill battle against the Freedom Caucus to implement other policy initiatives.  For conservatives, they must choose between supporting their party and a bill that has been dubbed “Obamacare-lite” at the risk of alienating powerful conservative funders, like the Koch Brothers and their various Super PACs, which got them elected in the first place. 

Trump has been billed by some lawmakers as “the closer” to seal the deal on the replacement healthcare plan in a vote but, as of this morning, less than 12 hours from the scheduled vote, passage still looks questionable, at best. 

As of last night, Trump signaled he was willing to meet some of the conservatives’ demands to knock out Obamacare’s insurance regulations — even though there’s no guarantee those changes would comply with the budget rules, and they could just get stripped out in the Senate.  Here are some of the changes currently being contemplated/drafted, per Axios:

• Top Republicans may be willing to strip out Obamacare’s “essential health benefit” requirements to win the votes of the Freedom Caucus.
• These are the 10 categories of benefits that have to be covered under the law: outpatient care, emergency services, hospitalization, maternity care, mental health, prescription drugs, rehab, laboratory services, preventive care, and pediatric services.
• Still up in the air is whether the GOP will also be willing to strip out Obamacare’s other insurance regulations — like requiring insurers to cover pre-existing conditions and preventing them from charging sick people more than others.
• The Freedom Caucus wants them out because they think those are the reasons individual health insurance became so expensive under Obamacare — but the law’s supporters say those health plans used to be skimpy and will go back to being skimpy if the benefits aren’t required.
• The change of plans happened after the White House offered to try to get those regulations stripped out in the Senate, if the conservatives would vote for the House bill as is. The conservatives rejected that offer because they don’t trust the Senate.
• The risk, as Democratic aides warned, is that the Senate could just strip out all the insurance changes.

Trump also announced he’ll be hosting the Freedom Caucus at the White House this morning at 11:30, presumably as a last ditch effort to swing votes after changes to the legislation were drafted overnight.  But, early reports suggest that House Republicans have postponed a planned meeting this morning, according to conference spokesman Nate Hodson.

As a reminder, here is a recap of some of the key components of the TrumpCare bill per Stone McCarthy Research:

The AHCA would eliminate the penalties for individuals who don’t obtain health insurance and large employers who don’t provide adequate coverage. The legislation would repeal subsidies for individuals receive for the purchase of health insurance and in their place create age-based tax credits.

The AHCA would allow insurers to charge higher premiums for older individuals, ease restrictions on what share of benefits insurance plans must cover and require insurers to apply a 30 percent surcharge on premiums for individuals who allow their coverage to lapse.

The legislation calls for cuts in Medicaid spending for those made eligible for the program by the ACA. Future growth in spending would also be curtailed through per capita limits on spending or through optional block grants made available to states. States could also impose work requirements on beneficiaries.

The AHCA would repeal many of the ACA’s taxes, including the surtax on high-income taxpayers’ net investment income, the increase in the Medicare payroll tax rate for high-income taxpayers and the annual fee on health insurance providers. The bill would delay the implementation of the tax on high-cost plans — the so-called Cadillac tax — until 2026.

If TrumpCare passes the House, the Senate can pass it with a simple majority, meaning Republicans can lose no more than two votes. That said, more than two Republican senators have publicly opposed the AHCA in its current form. The legislation could also be challenged by Democrats for violating reconciliation’s requirement that all provisions have a direct impact on the budget

As Goldman’s Alec Phillips points out, the financial markets will be looking to today’s vote, or lack their of, as an indication of Trump’s ability to execute other key components of his agenda like tax reform and border policies.

Financial markets are focused on the prospects for passage of the House Republican proposal to “repeal and replace” Obamacare because the vote is seen as a referendum on the ability of Congress to enact its broader policy agenda. While this view has some merit, we would note three important nuances.

First, the Senate is likely to pose at least as much of a challenge as the House, and reconciling the likely differences between the two chambers will be hard. This week’s vote is the start of a process that could last several more weeks, and may not be the hardest part of the process.

Second, passage of the health bill is not what is important for tax reform. Instead, the most important issue for financial markets is for Congress to be finished with this bill one way or another so that it can move forward with tax reform, which is likely to have a greater effect on corporate earnings and the real economy. While the prospects for the health bill are murky, we would be surprised if Congress has not begun debating tax reform by mid-year, even if it means putting the health bill aside to return to it later.

Third, while there are lessons for tax reform in the current health debate, there are also differences. The trouble that congressional Republicans face in achieving majority support for the health bill is a reminder of how difficult it might be to reach near-unanimous Republican support for major tax reforms, like border adjustment. However, there is likely to be much broader support for tax cuts than there is for the health legislation. Even if the health bill fails, we would continue to believe the odds of tax legislation passing by early 2018 are high.

Meanwhile, today is a fitting day for the TrumpCare vote as it marks the 7th anniversary of Obamacare becoming the law of the land.

On this day 7 years ago, Pres Obama signed Obamacare into law. Today, the House will vote to repeal it- or it won’t. Hard to say right now

— Jennifer Haberkorn (@jenhab) March 23, 2017