The GOP's health-care bill is dead, and Mitch McConnell is to blame

Mitch McConnell has built himself a reputation for legendary legerdemain as a legislative strategist. The White House and a subset of the Senate Republican caucus have explicitly relied on that for their public predictions that the latest version of the ObamaCare repeal bill would finally pass on a majority vote, whenever McConnell managed to push it. Unfortunately, McConnell may have undone himself with a rare moment of indiscretion, and it might end up costing him dearly.

Last week, the latest version of the Better Care Reconciliation Act (BCRA) came under fire from governors concerned about the reductions in federal subsidies for the Medicaid expansion passed within the Affordable Care Act. The bill does not reduce spending over the 10-year period, but it rolls back hundreds of billions in planned increases by reducing the reimbursement rate to states from a planned floor of 90 percent to the average 57 percent rate that matches the reimbursement for core Medicaid enrollees. The costs for the expansion enrollments have rapidly ballooned far beyond initial projections, and the actuary reports from the Center for Medicare and Medicaid Services no longer project that the rate of increase will slow down. The reductions are critical to the bill's qualifying for the reconciliation process by showing the BCRA will have a significant impact on the deficit. Along with that reform is a new measure that would cap Medicaid spending growth by linking it to the Urban Consumer Price Index, a move that would restrict federal spending for the entire Medicaid program starting in 2026.

Nevertheless, the governors (and more than a couple of senators) balked at the implications of these cuts. The reduction in reimbursement rates and the new indexing would cut as much as 39 percent of projected subsidies over the next 20 years, according to an analysis by Avalere Health presented to the National Governors Association over the weekend. Those reductions would likely incentivize states to either cut back services in Medicaid or eliminate the expansion, both of which would be political dynamite. The White House was concerned enough about the reaction to send Health and Human Services Secretary Tom Price and CMS administrator Seema Verma to explain how the administration would manage the process for the states.

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While the governors got a direct presentation of the budgetary impact of the Medicaid expansion reductions, The Washington Post reported that McConnell told members of his caucus last week that the cuts to core Medicaid would likely never be more than theoretical. With the indexing scheduled for the ninth year of the plan, future Congresses would likely either delay or repeal the cuts under political pressure long before they took effect. "He's trying to sell the pragmatists like Portman, like Capito," one GOP lobbyist told the Post.

McConnell later denied saying anything of the sort, but it was enough to anger Wisconsin's Ron Johnson, a conservative who only reluctantly offered support for the BCRA. Johnson pulled his support from the motion to proceed to debate on the bill, claiming that McConnell had engaged in "a pretty serious breach of trust" after confirming the remarks with other senators. With Rand Paul (R-Ky.) and Susan Collins (R-Maine) already publicly opposing the procedural motion, Johnson's apparent rejection left McConnell at 49 votes — one short of the number necessary to start the floor process.

Actually, make that 47. Shortly after Johnson's public rebuke, his colleagues Mike Lee (R-Utah) and Jerry Moran (R-Kan.) also announced their opposition to the bill. In his statement, Moran blamed the "closed-door process" that created this version of the BCRA, a thinly veiled swipe at McConnell's maneuverings. Moran also argued that the bill "fails to repeal the Affordable Care Act or address health care's rising costs." Lee's statement offered similar arguments about the lack of "free space from the most costly ObamaCare regulations," and saying that it doesn't have enough impact on premiums for the middle class.

Both Moran and Lee kept the door open to another version of the BCRA that would address their concerns. Johnson might be open to another round of negotiations, too, but after having to win his seat all on his own in 2016, Johnson's not all that concerned about party unity as an overriding principle to policy. This time, the conservative wing will want to hold McConnell's feet to the fire on Medicaid spending caps, which means that McConnell won't be able to jolly along the moderates on the unlikelihood of a future Congress allowing those reforms from taking effect. The internal tension over widely divergent constituent issues relating to ObamaCare won't get papered over so easily, which makes a third version of the BCRA difficult to visualize, let alone achieve.

But don't count McConnell out quite yet. He may still pull the rabbit out of the hat on health-care reform. If McConnell can't make this sale, though, he may not have much magic or credibility left in the tank for tax reform and other key items on the Republican agenda.