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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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These truckers are helping Silicon Valley to automate their jobs

Starsky Robotics

Bloomberg Businessweek profiles startup Starsky Robotics, which is using machine learning to train its semi-trailer trucks to one day be completely self-driving. Starsky is earning revenue hauling loads while it tests its self-driving technology, but because its vehicles are still in beta, they are manned by a truck driver and an AI specialist for safety and research purposes.

The arrangement makes for strange bedfellows, as the folks who drive trucks and those in cutting-edge computer science tend to live worlds apart, culturally speaking. But apart from being a sociologically revealing portrait of America in 2017, Starsky's staff might also foreshadow changes to the workplace that will arrive in other industries in the years to come.

  1. Though long-haul employment is plentiful — there are 3.5 million trucker jobs in the U.S. — it's grueling and low-paid work, contributing to turnover rates of 71% a year, according to American Trucking Associations.
  2. Starsky is training drivers to operate trucks remotely, with software that enables monitoring of up to three trailers at a time.
  3. This makes it economical to pay above-market wages for the most reliable workers.
But more efficiency means there won't be room to train every would-be truck driver to monitor the algorithms doing their old job. What's more, labor-backed campaigns to stop companies from adopting and governments from funding self-driving car technologies have begun to sprout in recent months.
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The Economist goes after India’s “nationalist firebrand” PM

AP

The Economist cover story about Narendra Modi, India's PM, argues he's "a nationalist firebrand" who "is more energetic than his predecessor... but he has not come up with many big new ideas of his own...":

"His reputation as a friend to business rests on his vigorous efforts to help firms out of fixes — finding land for a particular factory, say, or expediting the construction of a power station. But he is not so good at working systematically to sort out the underlying problems holding the economy back."

Why it matters: "Political conditions are about as propitious for reform as they are ever likely to be. ... Modi's admirers paint him as the man who at last unleashed India's potential. In fact, he may go down in history for fluffing India's best shot at rapid, sustained development."

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Trump "tapes" scapegoat: Obama administration

Alex Brandon / AP

President Trump told Fox & Friends' Ainsley Earhardt that his original tweet suggesting there could be tapes of his Oval Office conversations with ex-FBI Director James Comey came from concerns that the Obama administration may have been surveilling the White House:

The quote: "You never know what's happening when you see that the Obama administration, and perhaps longer than that, was doing all of unmasking and surveillance and you read all about it... the horrible situation with surveillance all over the place... But when [Comey] found out that I, you know, that there may be tapes out there, whether it's governmental tapes or anything else, and who knows, I think his story may have changed."

  • Should Mueller recuse himself from special counsel? "[H]e's very, very good friends with Comey, which is very bothersome... we'll have to see. I can say that the people that have been hired are all Hillary Clinton supporters... I mean the whole thing is ridiculous."
  • On health care: "I've done in five months what other people haven't done in years... It's a very complicated situation from the standpoint, you do something that's good for one group but bad for another."
  • On rumors Pelosi is being ousted: "I hope she doesn't step down. I think that it would be very, very sad for Republicans if she steps down. I'd be very, very disappointed if she did. I'd like to keep her right where she is, because our record is extraordinary against her."
  • Democrats being obstructionists: "I think they'd do much better, as a party, if they got along with us... I honestly think they'd do better at the polls... boy, would the people love to see two parties getting together and coming up with the perfect health care plan... I don't think that's going to happen, but that is what should happen."
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Study: $13 minimum wage didn't cause Seattle job losses

Elaine Thompson / AP

Seattle has been the vanguard of the newly energized minimum wage movement, hiking its pay floor from $8.55 in 2010 to between $11 and $15 in 2017. Other cities have followed suits — in all, nine big cities and eight states have passed minimum wages between $12 to $15, depending on the size of the employer and other factors.

Berkeley's Institute for Research on Labor and Employment is out with a new study on the effects of Seattle's wage policies, and found that there was no job loss as a result of the mandate.

How did they do it? They uses an algorithm that tests combinations of different counties across the U.S. to create a "synthetic" Seattle, mirroring its employment and wage characteristics for six years. The only difference is that these counties did not increase their minimum wage.

What they found: There was no negative effect on employment, even up to a wage floor of $13, a much higher level than previous research has studied.

Not so fast: The authors of the study admit that their synthetic Seattle may be failing to reflect important qualities about the real Seattle that could be preventing job loss. The IRLE plans to conduct similar studies in Chicago, Oakland, San Francisco, San Jose and New York City, and elsewhere, which will help respond to this critique.

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Venture capital investment in AI skyrockets

Venture capitalists are pushing a lot of cash into artificial intelligence and machine learning technologies, more than doubling the investment into virtual reality technologies in 2016, according to PitchBook data via the National Venture Capital Association.

Why it matters: U.S. investors want an edge on the development of next-generation technologies that center around AI, including self-driving cars. Other countries such as China are also charging ahead.

Data: PitchBook; Chart: Chris Canipe / Axios

President Trump yesterday told venture capitalists and emerging tech company execs that his administration wants to help "unleash the next generation of technological breakthroughs that will transform our lives and transform our country, and make us number one in this field." The White House gathering was largely focused on drones, 5G wireless technologies and connected devices.

Big bets: AI technologies have also captured the mindshare of the biggest tech companies such as Google, Facebook and Amazon who are investing a lot of research and development resources into machine learning, deep learning and neural networks. AI-related technologies are at the core of emerging systems like self-driving cars. In 2016, there were 322 deals worth a total of $3.6 billion in investment into AI and machine learning companies, compared with only 31 such deals in 2007.

Virtual reality and augmented reality are also attracting investments, but those applications are seen as more narrowly tailored for specific uses, as opposed to the mass adoption potential seen for AI. There were 99 deals worth a total of $1.485 billion in this area in 2016, up from 23 deals in 2007.

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The ACA is more popular than the GOP health care bill

We knew the Republican health care effort wasn't polling well, but a new Kaiser Family Foundation poll out this morning puts a finer point on it: It's way less popular than the Affordable Care Act that it's supposed to replace.

Data: Kaiser Family Foundation Health Tracking Poll; Chart: Lazaro Gamio / Axios

Just 30% of the public likes the American Health Care Act, the House health care bill. (The poll was done before the Senate bill came out.) Meanwhile, the ACA, which has never been loved, is slowly becoming more accepted. It's now favored by 51% of the public — the first time it's topped 51% since Kaiser started polling on it in 2010.

Other highlights:

  • Republicans still support the AHCA, but their support has gotten softer. It's down to 56% (was 67% last month).
  • Nearly three-fourths of the public have favorable views of Medicaid — but 70% say states should be able to impose work requirements for non-disabled adults, as Republicans want.
  • Good news for Republicans and Democrats: the public doesn't blame either of you for insurers pulling out of the ACA markets. It blames the insurance companies — four in 10 Americans say the insurers are withdrawing because of profit-driven decisions.
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The Senate health bill is out. Here's your speed read

J. Scott Applewhite / AP

You can read it here, and a summary here. The highlights:

  • Ends the Affordable Care Act's mandates and most of its taxes.
  • Phases out its Medicaid expansion over three years, ending in 2024.
  • Limits Medicaid spending with per capita caps, or block grants for states that choose them. The spending growth rate would become stricter in 2025.
  • States could apply for waivers from many of the insurance regulations — though not protections for people with pre-existing conditions and coverage for young adults.
  • The ACA's tax credits would be kept in place, unlike the House bill — but their value would be reduced.
  • Funds the ACA's cost-sharing subsidies through 2019, but then repeals them.

Want more? Keep reading.

  • There's a stabilization fund to help states strengthen their individual health insurance markets.
    • $15 billion a year in 2018 and 2019, $10 billion a year in 2020 and 2021.
    • There's also a long-term state innovation fund, $62 billion over eight years, to help high-cost and low-income people buy health insurance.
  • The ACA tax credits continue in 2018 and 2019.
  • After that, they'd only be available for people with incomes up to 350 percent of the poverty line.
  • The "actuarial value" — the amount of the medical costs that insurance would have to cover — would be lowered to 58 percent, down from 70 percent for the ACA's benchmark plans. That's likely to reduce the value of the tax credits.
  • All ACA taxes would be repealed except for the "Cadillac tax" for generous plans, which would be delayed.
  • Medicaid spending growth rate under per capita caps would be same as House bill until 2025. Then it switches to the general inflation rate, which is lower than House bill.
  • States would be able to impose work requirements for people on Medicaid, except for the elderly, pregnant women and people with disabilities.
  • Children with complex medical needs would be exempt from the per capita caps.
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Don't expect House to water down Russia sanctions

Pablo Martinez Monsivais / AP

The New York Times reported Wednesday that the White House has been "quietly lobbying House Republicans to weaken a bill overwhelmingly passed by the Senate last week that would slap tough new sanctions on Russia for its meddling in the 2016 election and allow Congress to block any future move by President Trump to lift any penalties against Moscow."

Meanwhile, Democrats and some sources in the corporate sector are speculating that a procedural delay is merely cover by House leaders to slow-walk and ultimately water down the bill.

Not so fast: three House Republican sources involved in the process tell me the House bill is shaping up to look very similar to the Iran-Russia sanctions bill that passed the Senate. And it's likely to move pretty fast. House Speaker Paul Ryan wants tough sanctions on Russia, as does Foreign Affairs Committee chairman Ed Royce, who is driving the process.

  • A GOP aide close to issue told me there could be minor technical fixes to the bill that even some Senate staffers who worked on the original privately acknowledge need to be made. The bill would then be sent back to the House and if Chairman Royce gets his way it will proceed quickly to the floor and to the President's desk.
The big question: will President Trump risk using his veto pen on this legislation if it passes as originally written? Most GOP sources I've spoken to doubt it. While Secretary of State Rex Tillerson has said the administration needs more flexibility to over the Russia-Ukraine conflict — and believes the new sanctions package is unhelpful to that end — Trump can't risk getting his veto overridden by Congress. It looks like there'd be more than enough votes to do so, given the Senate voted 98-2 in favor of the original sanctions package.
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Ex-CIA officer charged with selling top secrets to China

Vincent Yu / AP

Thomas Mallory, a former CIA officer, has been arrested and charged in federal court with selling top secret documents to Chinese intelligence officials, per The Washington Post.

What allegedly went down: Originally contacted by a supposed recruiter for a Chinese think tank, Mallory realized he was in contact with Chinese intelligence officials before traveling to Shanghai in March and April. He then provided a Chinese intelligence operative with three documents — one labeled top secret — in May. Around the same time, he wrote his Chinese contact: "Your object is to gain information, and my object is to be paid for it."

The potential consequences: Mallory will have a preliminary hearing this week, but he faces up to life in prison.

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Fed: U.S. banks could withstand global recession

Matt Rourke / AP

The Federal Reserve's stress test results are in and, according to their calculations, the 34 largest U.S. banks would be strong enough to withstand a global or U.S. recession if one were to hit right now.

Why we care: The banks weren't prepared for the 2008 financial crisis. Right now they are, according to the Fed. Plus, the stress test will reassure investors.

The test: To see if banks with more than $50 billion in assets have a large enough capital buffer to keep lending in the case of "severely adverse" scenarios resulting in billions of dollars in losses. The next part of the stress testing will be out June 28, and will reveal which banks have "passed" and "failed" their tests.