Axios Vitals

A briefcase with a red cross on the front.

Good morning ... Well, that was awfully dramatic for a Monday night. Let's just get into it.

The fallout: Admit defeat and move on to bigger defeat?

The current version of the Senate health care bill is dead, following last night's opposition from Sens. Mike Lee and Jerry Moran — and Majority Leader Mitch McConnell's subsequent admission that the Senate's repeal-and-replace bill "will not be successful." He said the Senate will instead vote on straight repeal with a two-year delay.

It'll be a tough vote for McConnell's caucus, but holding it is probably the only way he can declare health care dead for good and move on.

  • Most of the Senate GOP caucus is already on the record supporting full repeal.
  • It's still likely to fail this time — and probably by a pretty significant margin, given that it's now obvious the Republicans won't be able to agree on a replacement at the end of the two-year delay.
  • (Technically, the vote that fails might be a procedural vote to begin this debate, rather than a vote on the repeal bill itself. Either way, repeal wouldn't happen.)
  • But President Trump wants to try it, as he tweeted last night: "Republicans should just REPEAL failing ObamaCare now & work on a new Healthcare Plan that will start from a clean slate. Dems will join in!"

What killed the bill: The biggest, most consistent obstacle was that the complaints within the GOP caucus were diverse, and a big part of that caucus was not especially invested in reconciling them.

  • As one senior GOP aide put it to Axios' Caitlin Owens last night, before McConnell's announcement: "How many more changes could possibly be made at this point. We're talking about people on the absolute ends of our spectrum. Every time you move toward one you move away from the other."
  • Lee wanted a new version of Sen. Ted Cruz's consumer-choice amendment — which allowed insurance companies selling Affordable Care Act-compliant plans to also sell non-compliant plans — with separate risk pools for each set of policies.
  • Moran and Sen. Ron Johnson complained mostly about the process, or the fact that the bill wasn't a full repeal. They're correct that it wasn't a full repeal. A longer process almost certainly wouldn't get it much closer to that goal. Or any other goal.
  • Who knows whether there was a move to the right that would have actually emboldened the moderates — other than Sen. Susan Collins — to stake out a firm position against any version of this bill. But as a matter of principle, the further it moved to the right, the harder it was going to be for McConnell to lock down Sen. Dean Heller & Company.

Out of the frying pan, into the fire

Who's breathing a sigh of relief, and who's breathing into a paper bag?

Pressure's off:

  • The Senate's moderates, who can now safely announce their opposition to the bill without being the ones who sent it over the edge (and thus earning Trump's ire).
  • The House Freedom Caucus: If anything had passed the Senate, the Freedom Caucus would have faced a very unpleasant choice (swallow the best deal possible, or hold the line on conservative principles). They — like Lee — will now get to maintain their ideological purity.

Pressure's on:

  • The moderates: The repeal-only bill would be much more disruptive in the individual market and Medicaid expansion, but wouldn't include the steep additional Medicaid cuts they found so objectionable in the Senate bill. Can they live with that? What if killing it means they'd have to step up and ... actually kill it?
  • Tax reform: Repealing the ACA has been Republicans' bedrock campaign promise since 2010. To win total control of the government and fail to deliver is a stunning setback, and one that will reverberate into other legislative goals. If tax reform fails, too, it's going to be awfully hard for even McConnell and House Speaker Paul Ryan — never mind Trump — to deliver on much of their agenda before 2020.
  • Cruz: The man who once made it his business to outflank almost the entire Republican party from the right decided to make a play for pragmatism — and found himself outflanked from the right.
  • Democrats: They've been eager to concede the ACA has some problems — which is undeniably true — and suggest bipartisan negotiations to fix those problems. We'll see whether Trump and McConnell have any interest in that (McConnell has at least said he might), but it may well be time to walk the walk on fixing the ACA.
  • Health and Human Services secretary Tom Price: He's been beating up on the ACA nonstop, in an effort to help get this bill passed — but it's still his job to implement the law he so despises.

House budget resolution still assumes repeal

In the "don't call it dead yet" category...the House is releasing its fiscal 2018 budget resolution this morning, and it assumes that all of the policies in the House-passed repeal bill, the American Health Care Act, will become law.

And that's not all. It also revives the GOP proposals for Medicare premium support — the overhaul Ryan has been championing for years, but also the one Trump has said he doesn't want to do.

The savings:

  • Medicare premium support: $487 billion/10 years
  • Medicaid and other health programs: $1.5 trillion/10 years

Reality check: It may not sound realistic, but everything about the budget is a negotiation — and House Republicans are loading up their budget with as many conservative priorities as they possibly can. It also calls for Medicaid work requirements, additional state flexibility beyond the House bill's Medicaid changes, and medical liability reform.

A quick reminder from CBO about straight repeal

Here's the latest thing the Congressional Budget Office wrote about straight repeal — a January report estimating what would have happened under the version Congress passed in 2015. Then-President Obama vetoed it, and it's going to be the model for this year's effort:

  • Coverage: 18 million more people would become uninsured in first year, 32 million in 10 years.
  • Premiums: 20% - 25% increase in individual market in first year. They'd nearly double in 10 years.

Important: Even this wouldn't be complete repeal of the ACA. It would just wipe out everything they can get at through budget "reconciliation" rules. One part that wouldn't be repealed: all of the insurance regulations conservatives say they hate.

Medicare drug plan power players

Back in May, we told you how four health insurance companies control more than half of the membership market for Medicare Advantage, the narrow-network version of Medicare. Well, the market is arguably even more consolidated for Medicare Part D, the privately run program that covers prescription drugs for seniors and the disabled.

Who's in control: The federal government just released updated data on Medicare Part D enrollment, and Bob Herman found that five insurers and pharmacy benefit managers enroll 83% of Medicare's 25 million prescription drug plan consumers. These companies have controlled Part D for a while, but it's still worth spelling out:

CVS Health: 5.5 million members (22%)UnitedHealth Group: 5.4 million members (21%)Humana: 5.1 million members (20%)Express Scripts: 2.8 million members (11%)Aetna: 2.1 million members (8%)Why it matters: High drug prices remain top of mind for the public, and Part D costs have risen by 8.3% on average annually over the last five years, according to recent Medicare trustees' report. That rate is well above the spending growth rate of regular Medicare and the economy, raising questions if the dominant companies running Part D are doing enough to keep costs under control.

VA removes top 2 officials at N.H. hospital

This was a pretty dramatic followup to a Boston Globe investigation: VA secretary David Shulkin got rid of the top two officials at the Manchester VA Medical Center yesterday and called for a "top-to-bottom" review, the Globe reports. This was a day after a Spotlight investigation that found the hospital's operating room was filled with flies and the surgical instruments were often unsterile — with the chief of medicine saying he had "never seen a hospital run this poorly."

Why it matters: The hospital director and chief of staff have been reassigned, not fired from the VA. But it's a sign that Shulkin wants to send a message that poorly performing VA officials aren't safe, especially in a case this bad.

Dissecting Trump's health care tweets

Trump's tweets about health care are not particularly substantive, and aren't always accurate, per an analysis from Philip Bump at The Washington Post. Trump has tweeted a lot about health care since the House first introduced its bill — more than he has tweeted about "fake news," even — but only five times in that span has he said anything you might refer to as policy.

Why it matters: It's been six months — no one should be surprised that Trump isn't a policy wonk. All the same, building support for a bill usually involves giving the public some sense of how it would benefit them. And that requires talking at least a little bit about what it would do.

What we're watching today: Today's Senate Republican lunch should be interesting. (Vice President Mike Pence will be there.) Also, House Budget Committee Republicans release the fiscal 2018 budget resolution, 10:30 a.m. Eastern.

Plus: UnitedHealth Group and Johnson & Johnson kick off second-quarter earnings season before markets open. House Energy and Commerce oversight subcommittee hearing on the 340B drug discount program, 10:15 a.m. Eastern. Livestream here. Senate Appropriations subcommittee marks up the funding bill for the Food and Drug Administration, 10:30 a.m. Eastern. FDA hearing on innovation vs. access, 9 a.m. to 5 p.m. Eastern. Details here.

What we're watching this week: House Budget Committee marks up budget resolution, Wednesday. House Appropriations Committee marks up funding bill for HHS, Wednesday. Senate Appropriations Committee marks up FDA funding bill, Thursday. Athenahealth earnings report, Thursday after markets close.

Tell us what else we should be watching: [email protected], [email protected]