Third time was not the charm for McConnell's vow to end Obamacare

In less than 14 hours, Senator Majority Leader Mitch McConnell's plan to hold a repeal-and-delay vote on Obamacare died. Three of the five female Republican senators said they would not agree to open debate on a bill that would cut off subsidies for low- and moderate-income buyers in the individual market and end the Medicaid expansion. With that, the Senate's effort to repeal Obamacare without a replacement lacked majority support, even with an assist from the vice president.

"As I have said before, I did not come to Washington to hurt people," Sen. Shelley Moore Capito (R-W.Va.) said as she refused to support McConnell's "Plan C" to end Obamacare.

This was McConnell's third attempt to make good on a seven-year campaign promise to repeal Obamacare, coming just hours after the Better Care Reconciliation Act died as more senators refused to back the bill.

President Donald Trump said on Tuesday afternoon he was very disappointed that Republicans could not agree on a way forward.

"We'll just let Obamacare fail. I'm not going to own it," he said. "And then the Democrats are going to come to us, and say, 'How do we fix it? How do we fix it?' "

Democrats have ideas to fix problems in the individual market, including appropriating money for cost-sharing reductions for the lowest-income customers and restoring funding for reinsurance that would reduce insurers' liabilities for very high-need clients.

Those solutions have garnered support from healthcare companies and associations.

"We have consistently urged that there be immediate, certain funding for the cost-sharing reduction program, which helps those most in need with out-of-pocket costs when they access medical care, and other actions to stabilize the market including dedicated funding to care for those with significant medical needs," said Justine Handelman, senior vice president for Blue Cross and Blue Shield Association, which represents companies with the largest share of the individual market.

The American Medical Association also called for near-term action to stabilize the individual health insurance market.

But the easiest way to let Obamacare fail would be for the administration to stop paying the cost-sharing reductions, as Trump has repeatedly threatened to do in order to force Democrats to the bargaining table. The adminstration's deadline to pay next month's cost-sharing reductions comes this week. HHS did not comment on whether it will make the payments.

Julius Hobson, a healthcare lobbyist with Polsinelli, said the administration could "absolutely" decide to stop funding cost-sharing reductions this week.

"They might do it this month; they might do it next month," he said. "They seem to be under the delusion that if the Affordable Care Act implodes, the Democrats will run to the table and say: 'Let's reason together.' "

Joe Antos, an American Enterprise Institute healthcare scholar, said he doesn't expect Congress to appropriate the money for cost-sharing reductions, and certainly not in time for insurers to know how to price their plans by September deadlines.

"I think Democrats will come back in September, digging at the wound" of the Republicans' failure to repeal and replace, he said. Antos described Democrats' attitude as: "Here's what you have to do; we're smarter than you are; you have to go along with it."

That will not produce a bipartisan fix to the individual market's problems, he said. "This is not going to be negotiating; this is going to be grandstanding."

But even if Senate Democrats and moderate Republicans come to a consensus on healthcare reform, it's unlikely House Speaker Paul Ryan will bring the bipartisan proposal to the floor, as it would anger the party's conservative wing, according to Antos.

"So it's a wasted exercise," Antos said. "People tend to forget, the House gets to vote again."

The BCRA's failure will have a worse short-term impact on health insurers on the exchanges than the bill's passage—the BCRA called for funding cost-sharing reductions through 2019, as well as restoring reinsurance—though insurers vehemently opposed bifurcating the individual market into skimpy plans and comprehensive plans.

The bill's death has virtually no downside for providers, as the increase in coverage hasn't significantly affected them, but the wider availability of Medicaid to adults in 31 states has made a substantial difference in revenue. Medicaid expansion has gradually become more successful around the country, even as the private market founders.

Polsinelli's Hobson, who represents providers, said now that the bill is dead, the unified voice of insurers, providers and patients is unlikely to last—even though government health insurance could still be targeted for cuts.

The House Budget Committee will soon mark up a proposed budget that has some Medicare provisions in it. That outline would reduce Medicare spending by $487 billion over the next 10 years, and reduce spending in Medicaid and other health programs by $1.5 trillion.

Like Antos, Hobson can't imagine that Democrats and Republicans will work together on bipartisan fixes, even though he said everyone's talking about it.

"The lack of trust between the two parties is just beyond compare," Hobson said. "And you've got a problem in the White House, because the occupant of the White House could be with you this morning and trashing you this afternoon."

"I just don't know how the two parties will come together."