GOP leaders prepared to make big boost to healthcare innovation fund

Top Senate Republicans are signaling that they are willing to dramatically increase funding for a special state innovation fund in order to persuade wavering moderates to support their floundering healthcare reform bill, according to sources involved in negotiations. 

One Republican senator said leaders could double the amount of money in the bill’s long-term state innovation fund.

The legislation, as currently drafted, dedicates $62 billion over eight years to encourage low-income people with high healthcare costs to buy insurance, according to a summary posted by the Senate Budget Committee.

{mosads}A GOP aide said leaders are prepared to “pour a lot of money” into the fund to address concerns from a variety of moderates that the bill’s tax credits are not generous enough to help low-income people buy insurance.

The aide said the increase could possibly double the amount allocated.

The money could come from the $321 billion in savings projected from the legislation over the next decade or from eliminating a proposed capital gains tax cut for the wealthy.

A spokesman for Senate Majority Leader Mitch McConnell (R-Ky.) declined to comment on ongoing talks. 

It would come on top of $50 billion the legislation includes in its short-term stabilization fund, which is designed to reduce premium costs and give consumers “more choice in insurance markets,” according to the Budget panel summary.

Republican negotiators have concluded that not much more money can be spent through the short-term fund given the limits of the market to absorb it, according to the aide.

Senate Republican Whip John Cornyn (Texas) on Thursday afternoon endorsed the idea of giving money to states to devise alternatives to ObamaCare’s heavily regulated insurance exchanges.

“That’s going to be an important part of this,” he said. “What it represents is a devolution of power and money from Washington back to the states. So the states are going to have a lot of resources and a lot of flexibility.

Cornyn said the legislation would also modify Section 1332 of the Affordable Care Act to make it easier for states to exempt insurance plans from some federal regulations.

Cornyn said that tax credits combined with funding in the innovation fund would allow low-income people in Texas, which did not expand Medicaid enrollment, to buy private insurance for the first time.

“That’s about 800,000 in my state alone,” he said.

Some lawmakers who are undecided about the bill, however, are skeptical of whether boosting the long-term stabilization fund will help lower-income people afford plans.

Part of that stems from uncertainty over how the money will be spent.

Sen. Bob Corker (R-Tenn.), who wants to eliminate a capital gains tax break for the wealthy and spend more money to help poor people buy insurance, said increasing money in the long-term innovation fund “is a proposed way of dealing with some of the subsidy issues.”

“The question people have is, ‘Is that really what it’s going to be used for?’” Corker added.

“There is a desire for people to understand specifically how we’re going to deal with this issue of lower income people being able to purchase affordable healthcare that actually covers the needs that people have,” he said.

“It’s like flooding the zone with a bunch of money, but is it really getting to the place that people wish it would get to?”

The Senate bill took a major hit this week when the Congressional Budget Office estimated that an additional 22 million people would be uninsured by 2026 as a result of the legislation.

The analysis also found that low- and middle-income people would likely spend huge portions of their earnings to buy health insurance.

For example, a person aged 64 with an annual income of $26,500 would pay $6,500 for a mid-level health plan in 2026 under the Senate GOP proposal — more than three times what they’re projected to pay under ObamaCare.

Someone the same age who earns $56,800 a year would pay $20,500 for a mid-level plan under the Senate bill, compared to $6,800 under the current law.