Feb 27, 2017

Axios Vitals

Good morning, and happy Monday? Feels like Friday was about two weeks ago. Bit of health care news since then: A draft of the House Republican Obamacare replacement bill leaked, Republican governors had a Medicaid plan but aren't on the same page anymore, and the estimates are starting to look really bad. And today, President Trump is about to talk everything over with the governors and then some health insurance execs.

Thanks for reading, and remember, you can sign up for all of the Axios newsletters and breaking news alerts right here. And stay tuned, because there's going to be more on the way very soon.

The GOP's big problem: Lost health coverage

The warning signs are becoming inescapable for Republicans: Their most likely Obamacare replacement plans are getting terrible estimates on how many people they'll cover. Republicans have been pretty open that they're not trying to compete with Democrats on enrollment numbers — they just want to make sure everyone has access to coverage if they want it. But now the consequences are becoming more real.

  • This weekend, Caitlin Owens reported that a leaked presentation to the National Governors Association warned of massive coverage losses under a standard GOP proposal — and states could lose anywhere between 65 and 80 percent of their federal health care funding.
  • The Washington Post reported that the Congressional Budget Office believes the GOP's new, age-based tax credits "would cost the government a lot of money and would enable relatively few additional Americans to get insurance."

Why it matters: The danger isn't just that Democrats will tear them apart if they don't get better coverage numbers. Republican governors are also starting to sound the alarm. "We've had 29,000 Alaskans that now receive health care" because of Obamacare's Medicaid expansion, Alaska Gov. Bill Walker said at the governors' meeting. Ohio Gov. John Kasich promised to "stand up for the people wouldn't have the coverage if they don't get this thing right."

Not the best setup for Trump's meetings with the governors this morning and health insurance executives later today. On the bright side, Jonathan Swan reports that the Trump administration and House Republicans are narrowing their differences on a replacement — though the Post reminds us that there's always a chance that Trump will veer off in some other direction, as he almost did after talking with Kasich.

What happened to "governors to the rescue"?

But wait, there's more: There are also signs of disagreement among Republican governors on Medicaid, even though the Trump administration and Congress was going to look to them for advice.

  • The Republican governors were supposed to have a plan that called for big changes to the program, as long as they didn't face big federal cuts, the Associated Press reported.
  • But in reality, the GOP governors are divided on the future of Medicaid and didn't reach a consensus during the NGA meeting this weekend, per the Wall Street Journal.
  • Vox's Sarah Kliff got leaked drafts of Republican governors' memos that show they're still trying to decide two crucial questions: whether to let states keep the current Medicaid funding system if they want, and whether to accept less federal money if they get something in return.
What happens if GOP and Democrats don't work together

Kasich was pretty clear this weekend on what has to happen next: House Republicans will have to get some Democratic votes for an Obamacare replacement, and Democrats should help them. Otherwise, Republicans won't get their conservative hardliners to vote for a replacement, and they could just end up with repeal only. "What's at stake is not some political thing. What's at stake here are 20 million Americans," Kasich said on CBS's Face the Nation.

Reality check: Democrats have zero incentive to help the Republicans with a repeal-and-replacement vote. Why? Because if they don't help the Republicans make up the votes they'll lose from the Freedom Caucus, the result won't be a repeal with no replacement. The result will be that repeal doesn't pass — and Obamacare stays in place. (The Wall Street Journal reports that GOP leaders are betting that the Republican holdouts won't actually block it.)

The bottom line: Republicans may have to go through the repeal exercise to satisfy their voters, but if it fails, they'll have to turn it into a "fix and repair" exercise. That's the only way to get the other side to help. As one Democratic strategist told me: "No Democrat would help rip up the health care law when resisting results in protecting it. While lots of Democrats are willing to help fix and improve it, none are willing to help repeal and destroy it."

What does Ohio want from Trump, anyway?
  • "I can't read his mind, but I felt it was very positive. He responded very positively to a number of the ideas I had." — Ohio Gov. John Kasich, on CBS's Face the Nation, on his talks with Trump about Medicaid reform and expansion
  • "We didn't tell the American people we're going to repeal it except we're going to keep the Medicaid expansion ... We told them we were going to repeal it ... And I'm confident President Trump wants to do that." Ohio Rep. Jim Jordan, on ABC's This Week with George Stephanopoulos
While you were weekending ...
  • On Fox News Sunday, Wisconsin Gov. Scott Walker called his state "a model" for how to expand coverage after Obamacare is replaced, but wouldn't guarantee that all 200,000 state residents who gained coverage would keep it.
  • In a blog post, American Hospital Association president Rick Pollack warned against Medicaid cuts and said the current federal waivers are a better way to give states flexibility.
  • NPR reported that Indiana's claims about its Healthy Indiana Program, the Medicaid redesign by then Gov. Mike Pence and Centers for Medicare and Medicaid Services nominee Seema Verma, don't check out.
  • Mercer warned that limiting the tax exclusion for employer health coverage, as included in the leaked draft of the GOP health bill, would hit low-income people the hardest — and the health plans with the most older workers and women.
Taking aim at a Medicare Advantage spending cap

Warning: Wonky Medicare policy ahead. The Better Medicare Alliance — an advocacy group funded by Aetna, UnitedHealth Group and other industry players with stakes in Medicare Advantage — is planning to lobby to change an obscure Obamacare policy that was supposed to restrain Medicare Advantage spending, Bob Herman reports.

The issue: Insurers want the program's "benchmark cap" lifted. That cap essentially cuts bonus money insurers can get, which was supposed to be a way to keep Medicare spending down. But insurers say the policy hurts high-quality and efficient plans. "We are making a very deliberate push to encourage the [Centers for Medicare and Medicaid Services] to take action," Allyson Schwartz, a former Democratic House member and CEO of the Better Medicare Alliance, told Axios. Her group is also launching a campaign telling seniors to make noise on Capitol Hill.

Why this matters: Health plans say removing the benchmark cap will improve care and lower costs for seniors, but it's also about getting more revenue and helping insurers boost their market share. However, the independent Medicare Payment Advisory Commission has argued for the cap to be eliminated.

What we're watching today: President Trump's meeting with the governors, 9:30 am Eastern; Trump's meeting with health insurance executives, 10:30 am Eastern.

What we're watching this week: Trump's speech to Congress, Tuesday; House Energy and Commerce health subcommittee hearing on reauthorizing the Food and Drug Administration's generic drug and biosimilar user fee programs, Thursday.

Thanks — now stop reading this and go start your week. You know where to reach me: david@axios.com.