A seven-year push by U.S. Republicans to dismantle Obamacare and kill the taxes it imposed on the wealthy reached a critical phase on Thursday when Senate Republican leaders unveiled a draft bill they aim to put to a vote, possibly as early as next week.
With Democrats deeply opposed to Republican attempts to overhaul former President Barack Obama's signature healthcare law, the route to passage was extremely narrow for President Donald Trump's party, with no assurances that moderates and conservatives will be able to bridge their differences.
The draft bill proposes repealing a 3.8 percent net investment income tax on high earners retroactively to the start of 2017, not at some point in the future, as some analysts had speculated. The tax, affecting high-income Americans and imposed to help pay for Obamacare, has been a key target for Republicans.
The legislation also curbs Obamacare's expanded Medicaid help for the poor and reshapes subsidies to low-income people for private insurance.
Senate Majority Leader Mitch McConnell and his lieutenants worked in secret for weeks on the bill, and he said debate on it would start next week.
Republicans who control the House of Representatives approved a more conservative version last month.
HOSPITAL STOCKS SURGE
U.S. hospital stocks traded sharply higher after the bill was released, adding to gains from earlier in the session.
HCA Healthcare Inc. rose 3.3 percent, while Tenet Healthcare Corp. surged 7.4 percent.
Health insurers also traded broadly higher, with large players Aetna Inc. and UnitedHealth Group Inc. each up more than 1.5 percent. Insurers that specialize in Medicaid also gained, with Centene Corp. up 2.2 percent and Molina Healthcare Inc. rising 2.4 percent.
The overall S&P 500 healthcare sector was up 1.3 percent and hit an all-time high.
Mizuho Securities' director of research, Sheryl Skolnick, said in a research note, “Hospital stocks are up on this news today. They should be, in our view, as the near-term risks would be abated if the subsidy and Medicaid provisions hold through Senate and House negotiations.”
The subsidies enabling low-income people to buy private health insurance are expected to be linked to recipients' income in the Senate bill, a "major improvement" from a measure approved last month by the U.S. House of Representatives that tied them solely to age, Republican Senator Susan Collins said.
Some of the Senate bill's provisions could be political land mines, with individual senators' reactions crucial to determining whether or not the Affordable Care Act, popularly known as Obamacare, survives a Republican attack that has been underway since its passage in 2010.
But even with control of the White House and both chambers of Congress since January, the Republicans have struggled to make good on their bold campaign promises to repeal and replace Obamacare.
The law is credited with expanding health insurance to millions of Americans. Republicans say it costs too much and involves the federal government too much in healthcare. Trump made Obamacare repeal a centerpiece of his 2016 election campaign.
Trump has urged the Republican-led Senate to pass a more "generous" bill than the one approved by the House. He privately described that version as "mean," according to congressional sources.
Democrats accuse Republicans of sabotaging Obamacare, and say the Republican bill will make healthcare unaffordable for poorer Americans while cutting taxes for the wealthy.
McConnell may have a tough job convincing enough Republican senators that the Senate bill improves on the House version. A Reuters/Ipsos poll this month found nearly 60 percent of adults believed the House bill would make insurance costlier for low-income Americans and people with pre-existing conditions. Only 13 percent said it would improve healthcare quality.
The nonpartisan Congressional Budget Office estimated the House bill would kick 23 million people off their healthcare plans. Healthcare is a top priority for voters, and many Republicans fear a legislative misstep could hurt them.
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