The battle to end Obamacare is just getting started

What's in the Republican health care bill
What's in the Republican health care bill

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What's in the Republican health care bill 03:18

Lanhee J. Chen is the David and Diane Steffy research fellow at the Hoover Institution at Stanford University. He was the policy director for Mitt Romney's 2012 presidential campaign and was a senior aide at the US Department of Health and Human Services during the George W. Bush administration. The views expressed in this commentary are his.

(CNN)The fight to repeal and replace the Affordable Care Act is just getting started.

President Donald Trump and House Speaker Paul Ryan deserve significant credit for getting their alternative, the American Health Care Act, or AHCA, across the finish line. But the version of health reform that the Senate will send back in the coming weeks or months will likely look very different from the legislation the House passed Thursday. And that's a good thing. While the House bill included a number of important reforms, the Senate has an opportunity to improve upon what was passed and address some of the concerns that the bill's critics have expressed over the last several weeks.
There are at least three key policy issues that Senate Majority Leader Mitch McConnell and the Trump administration will need to address to get the consensus necessary among Republicans to pass a bill through the upper chamber. These are difficult issues to resolve, but the GOP has little choice but to act, given the promises the party has made for seven years about getting rid of Obamacare and replacing it with more market-driven reforms.
First, Medicaid reform will be a sticking point. The AHCA fundamentally changes Medicaid from an open-ended entitlement program, where the federal government is on the hook for a theoretically limitless amount of spending, to one where it spends a fixed and predictable amount of money per year. This change could be particularly problematic for states that chose to accept Obamacare's Medicaid expansion, which extended eligibility to anyone making less than 138% of the federal poverty level (about $16,000 a year in 2017). The challenge is that these states aren't all governed by Democrats -- 11 GOP governors, including John Kasich and Chris Christie, took Obamacare's Medicaid expansion. Republican senators from these states are concerned about how the transition will affect Medicaid coverage and will therefore be looking for a gentler transition from the current financing system to the new one proposed by the AHCA.
Democrats sing 'Hey, hey, hey, goodbye' after vote
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Second, there will be a debate over the nature and magnitude of assistance offered to low-income Americans for the purchase of health insurance. The AHCA includes a refundable tax credit, based on the age of the recipient, to assist in the purchase of private coverage outside the employer-sponsored system. Some analysts have complained the tax credit is too skimpy, while some conservatives have attacked the subsidy as creating yet another government entitlement. The Senate is likely to make the tax credits more, not less, generous, in an effort to help cover more people. Targeting more assistance to low-income Americans on the cusp of Medicaid eligibility will also help more of them acquire private coverage and push them away from Medicaid, which is an outcome most conservatives favor.
Finally, the issue of how best to help those with pre-existing conditions will likely be the most politically volatile of the debates to come. Obamacare's approach was to mandate a set of essential health benefits, impose restrictions on an insurer's ability to deny coverage based on health status and limit the factors on which insurers could base their premiums as well as the extent of variance in those premiums. Many Republicans who voted against the AHCA, as well as almost all Democrats, have accepted that this is the only way to deal with the issue.
But the House-passed legislation shows there is a different, more targeted way, to address the problem. It offers states the opportunity to opt out of the Affordable Care Act's rigid regulatory regime and includes a significant amount of funding (up to $123 billion over 10 years) to build mechanisms at the state and federal levels to ensure those with pre-existing conditions get access to affordable coverage. This, in turn, will help to lower premiums for everyone else purchasing insurance on the individual market. Senators looking for middle ground might try to add even more funding to address this problem. But the two approaches to addressing pre-existing conditions represent fundamentally divergent views about the role of government, the scope of the problem and what policy is needed to solve it.
There are likely many more twists and turns in the road ahead for the effort to repeal and replace Obamacare. Some senators have even suggested they might never take up the AHCA and instead start afresh with their own legislation.
Whatever approach the Senate takes, these significant policy disagreements between Republicans must be tackled and resolved if, as conservatives have long hoped, Obamacare is to be wiped away once and for all.