Senate Mulls Health-Law Rewrite Pushing ACA Change to 2020

The health insurer has seen results from Affordable Care Exchange individual plans improve markedly after raising rates, but the uncertainty from Washington is threatening those gains. "We're seeing the market begin to stabilize after three years of coverage," Tajlili said in a statement.

Senate Republicans say there is a growing consensus that they want a slower phase-out of the Affordable Care Act's expansion of Medicaid health coverage for the poor than in the House bill, which would cut the program by about $800 billion. Senators from states that elected to take advantage of the Medicaid expansion, including Rob Portman of Ohio, want a several-year phase-out to avoid a "cliff" that would occur if the expansion ended in 2020 as the House bill requires.

Republican Sen. John Hoeven of North Dakota, a member of the 13-person working group, said the longer phase-out has some support, as well as a proposal to give states more flexibility to shape their own approaches under Medicaid.

(Related: Collins and Cassidy Unveil Partial ACA Repeal Bill)

He said there's some early interest in his idea to allow states that achieve Medicaid cost savings to retain the money as a rainy-day fund for future years.

'A Bad Year'

"Then if they have a bad year they draw on those savings," Hoeven said.

Meanwhile, Republicans including Lamar Alexander of Tennessee and Thune are addressing the affordability of individual coverage on the insurance exchanges, including the tax credits available to consumers. Thune said there is momentum behind his idea of ensuring that tax credits are based not just on age, as the House bill allows, but also on income levels.

"I think they did some things with the tax credit that we would want to refine and change it, for sure," Thune said. "If that's how you want to cover the people who aren't eligible for Medicaid but can't afford to buy insurance on the individual marketplace on their own, you have to have a mechanism to do that."

Members of the 13-member working group and in Collins' group say there is little interest in using state-run high-risk insurance pools to cover the chronically ill and those with pre-existing conditions. The House bill allows states to opt out of the Affordable Care Act ban on higher premiums for those with pre-existing conditions if they provide high-risk pools, with federal funding help.

High-Cost Customers

Because of evidence that high-risk pools are expensive and have been underfunded, Senate Republicans say they're weighing using reinsurance instead. That approach would provide money to individual-market insurers to help pay for high-cost customers — an effort to discourage insurers from setting higher premiums for those people.

"High-risk pools have not had a stellar record," said Sen. Bill Cassidy, a Louisiana Republican who is part of the bipartisan negotiations. "I think reinsurance is a better way to go."

"There is growing consensus" for the reinsurance idea, Hoeven said.

Senators say they're examining the idea of automatically enrolling people who lack coverage into private insurance plans and are seeking advice from outside groups about whether that's a good replacement for Obamacare's mandate that people have insurance or pay a penalty.

"We haven't figured out exactly how you identify people and get them auto-enrolled," Thune said. "I think that would be a challenge, but it's certainly an idea that's of interest to me."

—With assistance from Doni Bloomfield and Arit John.

— Read Senate ACA Replacers May Tap Medicare Surtax and Net Investment Tax on ThinkAdvisor