WASHINGTON - The Republican debate over how to overhaul the Affordable Care Act turned sharply Thursday to a divisive and ideological question: How much money should the Senate health-care bill spend on protecting vulnerable Americans, and how much on providing tax relief to the wealthy?
Senate Majority Leader Mitch McConnell (R., Ky.), in an effort to strike a balance between centrists and conservatives, is now making concessions to both factions of his caucus, according to lawmakers and aides.
But this effort was complicated by a new Congressional Budget Office estimate Thursday finding that the Republican plan to change how Medicaid payments are calculated starting in 2025 would lead to significantly deeper reductions in its second decade than at the end of the first decade.
By 2036, the new analysis says, the government would spend 35 percent less on Medicaid than under the current law, compared with a 26 percent decrease in the first decade.
McConnell is rewriting his proposal to provide more money for opioid treatment and assistance to low- and moderate-income Americans, in part by potentially preserving a 3.8 percent tax on investment income provided under the Affordable Care Act that the current draft of the Senate bill would repeal. At the same time, the new draft aims to placate the right by further easing the existing law's insurance mandates and providing higher tax deductions for the health-savings accounts that conservatives favor, Republicans said.
It remains unclear whether these changes, if adopted, would garner enough support for the bill to pass. But they may represent the most viable path forward if Republicans want to rewrite the 2010 health law known as Obamacare without any help from Democrats.
"We will, it appears to me, address the issue of ensuring that lower-income citizens are in a position to be able to buy plans that actually provide them appropriate health-care," Sen. Bob Corker (R., Tenn.) said. "And with that, my sense is that the 3.8 percent repeal [in the current draft] will go away."
The 3.8 percent tax applies only to individuals making over $200,000 a year, and married couples earning more than $250,000. Repealing it as of Dec. 31, 2016, as the bill does now, would cost the federal government $172 billion in revenue over the next 10 years, according to a recent CBO analysis.
The updated Medicaid estimate from the CBO, which shows how spending would shrink over the next 20 years, underscored the extent to which McConnell's plan would squeeze the longstanding public insurance program.
The current draft already cuts $772 billion over 10 years from Medicaid, which covers poor Americans as well as the elderly, children and pregnant women.
The updated analysis, requested by Sen. Ron Wyden (D., Ore.), and other Senate Democrats, calculated the impact of pegging the program's inflation rate to the Consumer Price Index for urban consumers, as opposed to the medical inflation rate.
With senators leaving town Thursday for a 10-day break over the July 4th holiday, Republicans are not likely to announce any new deal or unveil full legislation until after their return next month. That would give time for the CBO to analyze the new proposals and for senators to hear from constituents, setting up a few more days of haggling when they return July 10 and a vote possible the week after that.
Corker, who met with GOP leaders Wednesday, said he believes "the route being pursued" is to preserve the tax and use that money to provide subsidies for lower-income people.
He added that he voiced directly to President Trump his unease with the idea of slashing taxes for the wealthy while "increasing the burden" on lower-income Americans.
Minutes later, Senate Majority Whip John Cornyn (R., Texas) acknowledged that keeping the tax was being discussed, but he underscored that no final decision had been made.
In a sign of the sharp disagreements that continue to plague Senate Republicans, Sen. Pat Toomey (R., Pa.) disputed Corker's notion that the tax cut would be jettisoned, calling the proposal a "very bad idea."
"I'm not at all convinced that that's where it's going," Toomey said.
Sen. Tim Scott (R., S.C.) said that while he thought it was a bad idea to use the investment tax to help fund the ACA's existing programs, lawmakers may need to keep the tax. Scott said there is clear pressure from at least three senators to preserve it, and their votes are critical to passing the bill.
"Keeping it now is a whole new conversation," Scott said. "particularly when you have three senators already heading in that direction."
The dispute underscores the challenge Senate leaders face as they reexamine the tax portion of their Better Care Reconciliation Act. One bit of wiggle room in their negotiations is the CBO's analysis of the bill's impact on the federal deficit, which allows them to spend as much as $198 billion without violating Senate budget rules.
The draft bill that stalled this week would phase out the program's expansion under the ACA over three years and rein in spending on the overall program, especially starting in 2025. It would also repeal or delay $541 billion in taxes, primarily on wealthy Americans and insurers.
The measure eliminates every tax imposed under the ACA except the "Cadillac" tax on employers offering generous health plans. That tax is suspended until 2026 to comply with congressional budget rules.
The move to cut Medicaid, which covers nearly 70 million Americans, helps offset the bill's generous tax cuts. But it has generated significant opposition among more than a half-dozen centrists who fear the reductions will impede the nation's effort to address the opioid crisis and could leave many vulnerable Americans without any health coverage at all.
With Vice President Mike Pence prepared to cast the tiebreaking vote, Republicans need the support of all but two of their 52 senators.
Pence was in the Capitol Thursday as the health-care talks continued in small and large group settings. Asked if he was changing any minds, the vice president replied: "We're working hard."
McConnell hopes to send a revised version of the bill to the CBO as soon as Friday to get a vote on the bill before Congress's August recess.
Cornyn said Thursday that GOP leaders are working to add money to the bill to treat opioid addiction, but he was not prepared to announce exactly how much.
"That certainly is the goal," he said.
Sens. Rob Portman (R., Ohio) and Shelley Moore Capito (R., W.Va.) have been seeking a dedicated $45 billion opioid treatment fund. The draft released last week includes only $2 billion.
Meanwhile, according to lobbyists briefed on the matter, negotiators are looking at how to provide states with more ways to opt out of the Affordable Care Act's insurance mandates — a key demand of conservatives. These rules include an essential benefits package that any ACA-compliant plan must offer, such as maternity and newborn care as well as preventive care and mental-health and substance-use treatment.
Republican Sens. Ted Cruz of Texas and Mike Lee of Utah have indicated they could potentially support the bill if leadership tacked on an amendment offered by Cruz, allowing insurers to opt out of all the Obamacare insurance regulations as long as they provided one fully compliant plan.
House conservatives also asserted themselves in the upper chamber's debate Thursday, as House Freedom Caucus Chairman Mark Meadows (R., N.C.) came over to the Senate side of the Capitol. Meadows said Cruz's amendment, or something similar, would be essential to win his support.
A growing number of senators have said they back the Cruz proposal but leaders worry that it may run afoul of Senate rules. McConnell is using the budget process to pass the health bill with a slim majority of 51 votes, rather than the 60 votes needed for most other legislation. But that also restricts the legislation to policies that have an impact on taxes, spending and the deficit.
Cornyn told reporters that leaders held a special meeting on Thursday to figure out if the Cruz amendment fits within those rules.
"We're trying to figure it out," Cornyn said. "Because there is a lot of support for the idea."
Lee spokesman Conn Carroll said he also wants a provision to ensure the executive branch can't single-handedly block states from revamping their ACA marketplaces. The current measure makes it much easier for states to use an existing federal waiver system, under Section 1332 of the law, to make changes as long as they are approved by the Centers for Medicare and Medicaid Services.
While the Senate bill gives states wide latitude to alter the marketplaces through this system, it would preserve a requirement that CMS has to determine that these changes would not increase the federal deficit. Lee wants an independent agency, such as the Government Accountability Office, to make that determination rather than a division of the Health and Human Services Department.
But if leadership added on the Cruz amendment, that might be enough to win over Lee's vote. "I think that would be enough for us," Carroll said in an interview.
Lee is also open to other changes to the bill that could appeal to moderates - such as rolling back some of its deep cuts to federal Medicaid spending - as long as it rolls back more of the insurance regulations contained in Title One of the ACA, Carroll said.
"Our top goal has been the [ACA's] Title One regulations, so if there's other changes that can get people on board, that would be fine," he said.
The main tax change conservatives are now seeking - allowing people to put more money into health-savings accounts - would also benefit wealthier Americans. Families earning over $60,000 made up nearly 65 percent of the total that contributed to HSAs in 2014, according to recent data from the Treasury Department. Nearly two-thirds of those people earned between $75,000 and $200,000.
The Washington Post's Paige Winfield Cunningham contributed to this report.