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Happy markup day! We're about to start a nice, long day of Obamacare repeal action in two House committees — and no guarantee we'll be done by the end of the day. Plus, it looks like conservative support for the bill is collapsing. So sit back and watch the Republicans fight it out. Also, the Democrats will be there.

Why the Obamacare repeal plane isn't gaining altitude

Giphy

If you got dizzy from all of the Obamacare repeal news yesterday, here's the bottom line: Two House committees are about to take up the Republican repeal and replacement bills this morning with no path to the 218 votes needed to pass the House. That's because conservative Republicans are in full rebellion, even after President Trump's endorsement and an afternoon of sweet talking from their former colleague, Vice President Mike Pence.

Rep. Raul Labrador's warning last night after a meeting of the conservative Freedom Caucus: "I don't think there's any tinkering that will get us to 218."

Here's where things stand heading into today's committee markups:

  • A meeting of the Freedom Caucus last night that was supposed to get everyone behind the bill instead proved that conservatives are running away from it. Read Caitlin Owens' story here.
  • Before the meeting, House Republican leaders and conservative Republicans spent the day holding dueling press conferences about whether the plan is conservative enough — not exactly a sign of confidence.
  • First, Ways and Means Committee chairman Kevin Brady and Energy and Commerce Committee Greg Walden — with Brady warning, "We can act now, or we can keep fiddling around and squander this opportunity to repeal Obamacare."
  • Then, Sen. Rand Paul and Rep. Jim Jordan, announced they're introducing the 2015 repeal bill and calling for a vote on that — because, Jordan says, the House Republican replacement bill is "Obamacare in a different form."
  • Then, House Speaker Paul Ryan declared he takes a back seat to no Republican: "I've been doing conservative health care reform for 20 years."
  • At a White House meeting with the House Republican whip team, Trump said he was "proud to support" the House bill. He told the group he wants the bill to pass "largely intact," per the Washington Post.
  • Later, Trump tweeted at Paul: "I feel sure that my friend @RandPaul will come along with the new and great health care program because he knows Obamacare is a disaster!"
  • Senate Majority Leader Mitch McConnell said he hopes to take up the bill in the Senate before the April recess, after the House passes it.
  • Jordan's main complaints: the GOP bill doesn't get rid of the Medicaid expansion (though it is phased out), and it doesn't repeal all of the tax increases (the Cadillac tax returns in 2025). He didn't get specific about what else is different from the 2015 repeal bill.
  • At the White House press briefing, Health and Human Services secretary Tom Price said there will be "three phases" of Obamacare repeal: passing the House bill, regulatory changes that he'll make, and then passing other health care reforms that can't be done through the budget "reconciliation" process.
  • Conservative groups are trying to build opposition to the bill, with the powerful Heritage Action calling it "bad politics and bad policy." (Shane Savitsky compiled a helpful list of the opponents here.) And conservative news sites are attacking it. Trump is supposed to meet with conservative leaders this afternoon.
The bottom line: Conservatives will get their chance to amend the bills in the House committees. But if they fail, and they're still complaining after that, Ryan has made his intentions clear: He's moving ahead anyway.

Why it's like Obamacare, and why it's not

There are good reasons for Republicans to be on the defensive about their bill. For a party that used to promise to wipe Obamacare off the map, it doesn't totally do that. Caitlin Owens has a good rundown of the pieces of the Obamacare regulatory system that would be left in place: pre-existing condition coverage, young adult coverage, no lifetime or annual limits, essential health benefits, and limits on out-of-pocket costs.

That said, no one should think there would be no changes. Here are a few of the ones Republican leaders like to talk about:

  • The taxes, individual and employer mandate penalties, and subsidies would be repealed (though the Cadillac tax would return in 2025).
  • The income-tested Obamacare tax credits would be replaced with age-based tax credits that phase out for higher-income people.
  • Medicaid would be turned into per-capita caps — what Energy and Commerce Committee chairman Greg Walden called "the biggest entitlement reform in the last 25 years."
  • Instead of using the individual mandate to bring healthy people into the mix, a "continuous coverage" provision would do it by penalizing anyone who doesn't keep themselves insured.
  • They'd expand health savings accounts.
And a few they don't like to talk about:
  • The tax credits aren't means-tested, so they wouldn't help low-income people as much — and might not cover as many of them.
  • Older people could pay as much as five times more for their health insurance as young adults — up from three times under Obamacare.
  • By ending Medicaid expansion and imposing per-capita caps, it could shift as much as $370 billion in costs to the states over 10 years, per the liberal Center on Budget and Policy Priorities.
  • Health savings accounts are usually tied to high-deductible plans — even though rising deductibles are one of the biggest criticisms they've made against Obamacare.

Rand Paul, then and now

"If Congress fails to vote on a replacement at the same time as repeal, the repealers risk assuming the blame for the continued unraveling of Obamacare." — Paul in January, in Rare.

"We are united on repeal, but we are divided on replacement." — Paul yesterday, arguing for separate repeal and replacement votes.

Republicans push back: Not everyone waits for CBO

Yesterday we wrote about how much heat the Republicans are getting about moving ahead with today's markups without waiting for the Congressional Budget Office estimates. So it's fair to look at their counterargument: that other major health care bills have moved through committees without CBO estimates too, including the original 21st Century Cures bill and the MACRA payment reform bill.

"Committees regularly go through the markup process without a formal CBO score," a House GOP aide told me. "The important thing to remember is that this is a fiscally responsible piece of legislation that will improve health care for millions of Americans and protect taxpayers." And at a press conference yesterday, Energy and Commerce Committee chairman Greg Walden noted that CBO isn't always right — its original estimates for how many people would be covered in the Obamacare exchanges were way off.

The bottom line: CBO's estimates should never be taken as the word of God — but there's more on the line for Republicans when the issue is how many people might lose health coverage.

The health insurer that really doesn’t like the plan

Dr. J. Mario Molina, CEO of Molina Healthcare, was pretty candid when he told Bob Herman his thoughts yesterday on the Obamacare replacement plan: "There's not a lot of good stuff here in this bill, unless you're a budget hawk and you want to see Medicaid cut."

Big carriers like Aetna and UnitedHealth Group have been mum on the bill, but Molina's critiques are arguably more important for the fate of the individual and small-group markets since his company is far more invested in the exchanges. Molina covers more than a half million Obamacare enrollees. These are the biggest problems for Molina:

  • Medicaid: Most of Molina's members are on Medicaid, and he's not a fan of the per capita caps or repealing the expansion. "Medicaid is going to see severe cuts. That's going to have a ripple effect throughout the entire economy."
  • Age-adjusted tax credits: "Somebody who is a retiring executive is not going to need as much money in a tax credit as someone who's working in a gas station who is 23 years old."
  • Cost-sharing reductions: Those subsidies help people in silver Obamacare plans pay down deductibles and copays but would go away in 2020. That will immediately lead to higher costs. "A lot of people are going to look at that and say, 'I can't afford that.'"
The bottom line: Molina still won't commit to participating in the exchanges next year. The GOP plan "doesn't reassure me that the marketplace is going to be more stable in the future," he said.

Why research costs can't explain high drug prices

Drug company officials often point to high research-and-development costs as a reason for rising prices — but a team of researchers checked it out and said they're not high enough to explain it all. In a study posted on the Health Affaiirs blog, they estimated the "excess revenue" compared to other countries for 15 drug companies and compared it to their R&D costs. They found that the companies earned "substantially more than the companies spend globally on their research and development."

Yes, but: That's not the only factor the drug industry blames for rising prices. It's also focusing on other causes, like the role of pharmacy benefit managers, the middlemen in drug price negotiations.

What we're watching today: House Ways and Means Committee and Energy and Commerce Committee markups of the the Obamacare repeal bills, both at 10:30 am Eastern. Ways and Means livestream here, Energy and Commerce livestream here. Trump meets with conservative leaders on health care at 5:05 pm, per the White House. He also meets with Democratic Rep. Elijah Cummings at 2:30 pm — drug prices are likely to come up.

What we're watching this week: Senate confirmation vote for Seema Verma, likely Friday.

What we're watching next week: House Budget Committee is expected to mark up the budget "reconciliation" package tying together the repeal bills, assuming Ways and Means and Energy and Commerce approve them.

Hang in there and let me know what we've missed: david@axios.com.

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Roy Moore refuses to concede

Republican U.S. Senate candidate Roy Moore looks at election returns. Photo: Brynn Anderson / AP

Republican candidate Roy Moore said late Tuesday night that the election for Alabama's U.S. Senate seat wasn't over.

"God is always in control. Part of the problem with this campaign is we've been painted in an unfavorable and unfaithful light. We've been put in a hole, if you will...what we've got to do is wait on God, and let this process play out...The votes are still coming in and we're looking at that." However, Alabama's Secretary of State told CNN the people of Alabama had spoken, and Doug Jones was the winner.

Go deeper: How Alabama elected Doug Jones.

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Winners & losers from the Alabama special election

Photo: John Bazemore / AP

A Democrat will serve as an Alabama Senator for the first time in two decades after Republican Roy Moore's campaign collapsed following allegations of child sexual abuse.

Why it matters: This is a big, unexpected win for Democrats, and follows another key victory in the Virginia governor's race. It's bad news for the Steve Bannon brand of conservatism and President Trump, who went all in for Moore in the closing weeks.

​Winners:

  • Doug Jones, who had never run for public office before, and won as a Democrat in a red state.
  • Democrats​ now have another important notch on their belt, and will close the gap in the Senate to 51-49.
  • #MeToo: Many voters believed Moore's accusers, and the accusations brought down his campaign.
  • Mainstream Republicans: Moore's baggage would have presented plenty of problems for the GOP down the road, even if they are losing a vote in the Senate.

Losers:

  • Roy Moore: He did the unthinkable, and lost to a Democrat in a statewide Alabama race.
  • Steve Bannon: He was the one promoting Moore from the beginning, over fierce objections within his own party.
  • The Republican Party: The RNC and the president backed an accused sexual predator, and lost. They're also now down a Senate seat.
  • President Trump: He decided to throw his full-throated support behind Moore, and in so doing made his second incorrect bet on the Alabama race. Not to mention, he was the one who appointed Jeff Sessions as Attorney General — considering it a safe seat.
Featured

Trump, Biden, Clinton react to Doug Jones' victory over Roy Moore

Democrat Doug Jones pulled out a victory over Republican Roy Moore on Tuesday night, after a race that was turned on its head by allegations of child sexual abuse against Moore. Moore was the second Alabama Republican endorsed by President Trump to lose, after he Moore defeated Trump-backed Luther Strange in the primary. Trump congratulated Jones on "a hard fought victory."


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Both Trump-endorsed candidates lose in Alabama

Trump told voters to elect Roy Moore. Photo: AP

President Trump has now twice endorsed the losing candidate in Alabama. He backed Luther Strange in the Republican primary, and threw his weight behind Roy Moore for the general election. Moore was defeated by Democrat Doug Jones tonight.

The big picture: Trump won Alabama by almost 20 points in the 2016 election, but Alabama voters rejected his favored candidates in the Senate race. The same thing happened on Nov. 8 in Virginia, when voters elected Democrat Ralph Northam over Trump-backed Republican Ed Gillespie by a 9-point margin.

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FBI agents on Russia probe called Trump an "idiot"

Photo: AP

Two FBI agents who were assigned to investigate alleged collusion between the Trump campaign and the Kremlin exchanged text messages in which they referred to President Trump as an "idiot," Politico reports, citing copies of the messages provided to Congress by the Justice Dept.

The backdrop: Special Counsel Robert Mueller fired one of the agents, Peter Strzok, from the investigation in late July, "immediately" after he learned of the text exchange, the Justice Dept. told Congress. Lisa Page, the other agent in question, had already left Mueller's team by that point.

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In tax plan negotiations, corporate rate currently sits at 21%

Rubio. Photo: Pablo Martinez Monsivais / AP

The corporate tax rate currently stands at 21%, according to three sources familiar, as lawmakers work to finalize the tax bill they hope to vote on by next week.

  • Why it matters: Both the House and Senate passed bills that would cut the top corporate rate to 20%, but hours after the Senate bill passed, President Trump said he would accept a 22% rate.
  • Sen. Marco Rubio tweeted on Tuesday, likely referring to reports that the individual rate is being lowered to 37%: "20.94% Corp. rate to pay for tax cut for working family making $40k was anti-growth but 21% to cut tax for couples making $1million is fine?" Rubio had wanted to raise the corporate tax to pay for a more generous child tax credit, but was shut down.
Featured

Charming Charlie becomes 20th major retailer to file for bankruptcy this year

Charming Charlie, the Houston-based jewelry and accessories retailer, announced Tuesday that it reached an agreement with lenders and equity sponsors to clear the way for its filing of Chapter 11 bankruptcy.

What went wrong: Charming Charlie's bread-and-butter, affordable jewlery, is an ideal product for online sellers, given that it can be warehoused and shipped cheaply. What's more, even as business migrated online, Charming Charlie overextended itself, opening 79 stores between 2013 and 2015.

Why it matters: It's the twentieth major retailer to have filed for bankruptcy protection in 2017.

Charming Charlie burst onto the retail scene in 2004, with stores uniquely organized by color, and offering products at prices between high-end jewlery stores and discount shops like Claire's, which is aimed at the teenage market.

Featured

Tillerson says he'd meet with North Korea without preconditions

Photo: Susan Walsh / AP

Secretary of State Rex Tillerson said on Tuesday that the U.S. was dropping the precondition that North Korea give up its nuclear weapons before sitting down together, according to CNN.

"We are ready to have the first meeting with precondition...Let's just meet, and we can talk about the weather if you want. Talk about whether it's going to be a square table or a round table, if that's what you are excited about. But can we at least sit down and see each other face to face, and then we can begin to lay out a map, a road map of what we might be willing to work towards."

Why it matters: Tillerson said demanding North Korea denuclearize is "unworkable," and that Trump agrees it isn't plausible. Tillerson did demand, however, that North Korea "ensure a period of quiet during talks," per CNN.

  • The White House released a statement in regards to Sec. Tillerson's comments, saying: "The President's views on North Korea have not changed. North Korea is acting in an unsafe way not only toward Japan, China, and South Korea, but the entire world. North Korea's actions are not good for anyone and certainly not good for North Korea."
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Washington Post reporters barred from Moore's election night party

Photo: Brynn Anderson / AP

The Moore campaign has revoked press credentials from reporters for the Washington Post and asked them to leave an election party tonight in Alabama. The campaign also reportedly notified the Post on Monday that its reporters' credentials were denied. It was the Post that broke the story of the first sexual misconduct allegations against Moore.

Featured

Trump's lawyer says Mueller is done interviewing White House staff

Photo: Andrew Harnik / AP

Ty Cobb, President Trump's White House lawyer, says "all the White House interviews are over” in Special Counsel Robert Mueller's Russia probe, NBC reports.

  • The big picture: Trump's team has repeatedly tried to take the president out of the spotlight of Mueller's investigation and stated that the probe will wrap up this year.
  • The backdrop: Jay Sekulow, one of Trump's private lawyers, told Axios' Mike Allen that he believes a second special counsel is needed, to investigate potential conflicts of interest in the FBI and Department of Justice.