Story updated at 5:49 CST.
The dramatic collapse of the GOP's efforts to repeal and replace the Affordable Care Act have, for now, minimized the threat of significant Medicaid funding cuts. All eyes now turn to what the Trump administration and Congress will do about a shaky individual insurance market.
The administration could put its thumb on the scale for an Obamacare failure it has been rooting for by cutting off cost-sharing payments to insurers. Thus far, President Donald Trump has threatened to let the system go into a freefall, but hasn't fully followed though since it has continued to make those critical payments.
"As I said from the beginning, let Obamacare implode, then deal. Watch!" the president tweeted at 2:25 a.m. Friday, barely an hour after the Senate failed in a 49-51 vote to pass a so-called skinny repeal of the ACA. Republican Senators John McCain, Susan Collins and Lisa Murkowski crossed the aisle to vote with all 48 Democrats and kill the repeal-and-replace effort.
Despite the early morning tweet, the administration's stance toward cost-sharing reduction payments, which are used to help insurers offset the cost of providing more affordable plans to low-income people, is hazy.
"We are still considering our options," said White House spokesman Ninio Fetalvo.
Timothy Jost, a health reform expert and emeritus law professor from Washington & Lee University, Lexington, Va., thinks the most likely path for the administration to keep making the payments, but that Trump will continue to threaten to stop.
"Trash talking has its own effect," Jost said. "We could see Anthem withdraw from all the markets in all the states if they think he's about to do something really stupid."
The need to address the individual market, however, isn't lost on some Senate leaders. Even before last week's floor debate, Sen. Lamar Alexandar (R-Tenn.), chairman of the Health, Education, Labor and Pensions Committee said he would hold hearings on health policy. At about 3 a.m. Friday, he put out a statement saying that the failed vote "leaves an urgent problem that I am committed to address—Tennessee's state insurance commissioner says our individual insurance market is very near collapse."
Sen. Amy Klobuchar (D-Minn.) said she has faith in Alexander's ability to get complex legislation done. She noted that Minnesota and Tennessee have added reinsurance to their ACA markets, and that should be a priority nationally.
Trade groups for insurers are also pressing for a solution, including permanent CSR appropriations and reinsurance.
"We will continue to work on solutions to ensure a smooth open enrollment period and to stabilize the individual insurance market for the long-term," said Justine Handelman, senior vice president of policy and representation at the Blue Cross Blue Shield Association.
But it's not clear whether there are a dozen Senate Republicans who want to spend billions on restoring reinsurance in in the individual market.
"Bailing out insurance companies with no thought of any reform is not something I want to be a part of," Senate Majority Leader Mitch McConnell said shortly after Friday's vote. There's also no guarantee that House Speaker Paul Ryan would allow a bipartisan bill of that kind on his side of the Capitol, especially given the hard line some in the Freedom Caucus have been taking on federal spending.
Chris Jacobs of the Juniper Research Group, a former policy staffer for then-Sen. Mike Pence and the Senate Republican Policy Committee, said he's more optimistic than most that Republicans in the Senate will take another stab at repealing some part of Obamacare, though he didn't express confidence something would pass.
"McConnell may think he's done with healthcare, but I don't know that healthcare's done with him," he said.
Community Health Options CEO Kevin Lewis, whose company serves about 33,000 on Maine's ACA exchange, would also like to see Congress fix the ACA's affordability problems for those who don't get subsidies, or get relatively small subsidies. A 60-year-old nonsmoker in Maine who doesn't get a subsidy will pay $764 a month for a Bronze plan in Portland, Maine, next year, assuming Maine Community Health Options' request is approved. That's a 20% increase from this year.
Lewis said getting federal reinsurance back for customers who make more than $90,000 a year in claims could moderate those increases by 5 percentage points.
While the future is still hazy for insurers in the individual market, the situation looks a little more secure for hospitals and other providers who have relied on Medicaid expansion to bolster the ranks of the insured.
Health care lobbyist Julius Hobson, Jr., with Polsinelli, said this vote showed a majority of Republicans do not support scaling back spending on Medicaid, either generally, or for the Medicaid expansion population.
The House budget resolution, which is needed to set the stage for a vote on tax reform in the Senate, contains $200 million in entitlement cuts, with changes to Medicaid and Medicare. Although approved by the Budget Committee, it has not had a vote on the floor, because moderate Republicans do not support those cuts.
"I think they have the same problem on the budget resolution as they had in health care. The Republicans have divisions among themselves that are almost insurmountable," he said. "I would say Medicaid is safe until the next election."
Jacobs said that could be true, but that it will take a few months to be sure.
Ultimately, though, Jacobs thinks entitlement reform has to be on the table.
"If some Republicans don't want to touch Medicaid, the president doesn't want to touch Medicare, that's just not a fiscally sustainable dynamic," he said.
Alex Kacik contributed to this article.
An edited version of this story can also be found in Modern Healthcare's July 31 print edition.
