(Jenny Starrs/The Washington Post)

Republican negotiations over how to overhaul the Affordable Care Act centered sharply Thursday on a divisive and ideological question: How much money should the Senate health-care bill spend on protecting vulnerable Americans, and how much on providing tax relief to the wealthy?

Senate Majority Leader Mitch McConnell (R-Ky.), in an effort to strike a balance between centrists and conservatives, is making concessions to both factions of his caucus, according to lawmakers and aides.

McConnell is rewriting his proposal to provide tens of billions more for opioid addiction treatment and assistance to low- and ­moderate-income Americans, in part with a major policy shift that has already alarmed conservatives who oppose it — potentially preserving a 3.8 percent tax on investment income provided under the ACA that the current draft of the Senate bill would repeal.

At the same time, the Republican leader hopes to placate the right by further easing the existing law’s insurance mandates and allowing higher tax deductions through expanded health savings accounts , several Republicans said.

By Thursday afternoon, Senate leaders had agreed to dedicate $45 billion to opioid funding, according to GOP aides — a concession that Sens. Rob Portman (R-Ohio) and Shelley Moore Capito (R-W.Va.) had been seeking for weeks. The draft released last week included only $2 billion.

Where the Obamacare exchanges might have zero insurance options in 2018
Many have said they’ll leave the marketplaces, citing rising costs and Trump-fueled uncertainty.

It remains unclear whether these changes, if adopted, would garner enough support for the bill to pass. But they may represent the most viable path forward if Republicans want to rewrite the 2010 health law known as Obamacare without any help from Democrats.

“We will, it appears to me, address the issue of ensuring that lower-income citizens are in a position to be able to buy plans that actually provide them appropriate health care,” said Sen. Bob Corker (R-Tenn.). “And with that, my sense is that the 3.8 percent repeal [in the current draft] will go away.”

On Friday, Trump added to the confusion by suggesting that GOP senators switch gears and seek to immediately repeal Obamacare if the impasse for the new health care plan cannot be broken.

The tweet by Trump was his first public statement since taking office in favor of bringing down Obamacare with no replacement system in place — a move that could send the U.S. health care system into deep turmoil.

“If Republican Senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date!” Trump wrote.

Trump call also at odds with the fallback plan McConnell has threatened should the current effort collapse — which is to work with Democrats.

“Either Republicans will agree and change the status quo; or markets will continue to collapse and we’ll have to sit down with Sen. Schumer,” he said after a meeting with Trump on Tuesday, referring to the top Senate Democrat.

(Jenny Starrs,Daron Taylor/The Washington Post)

But at least one GOP senator quickly lauded Trump.

Sen. Rand Paul (R-Ky.), who has advocated a repeal-first approach if GOP senators cannot reach agreement on their current plan, retweeted the president Friday morning. Later, he fired off a second tweet saying he had spoken to Trump and Senate GOP leadership “about this and agree. Let’s keep our word to repeal then work on replacing right away.”

Asked for the majority leader’s response to Trump’s tweet, a McConnell spokeswoman said she didn’t have any new announcements.

In a sign of the sharp disagreements that continue to plague Senate Republicans, Sen. Patrick J. Toomey (R-Pa.) disputed Corker’s notion that the tax cut would be jettisoned, calling the proposal a “very bad idea.”

“I’m not at all convinced that that’s where it’s going,” Toomey said.

The 3.8 percent tax applies only to individuals making more than $200,000 a year and married couples earning more than $250,000. Repealing it as of Dec. 31, 2016, as the bill does now, would cost the federal government $172 billion in revenue over the next 10 years, according to a recent analysis by the nonpartisan Congressional Budget Office.

The effort was complicated by the release of a new CBO estimate that showed significantly deeper reductions in Medicaid spending after the proposed legislation’s second decade than at the end of its first decade. The new analysis specifically looked at the legislation’s effect in its second decade, adding to an analysis of the first decade released at the start of the week and showing that 22 million fewer Americans would be covered by 2026.

By 2036, the new analysis said, the government would spend 35 percent less on Medicaid than under the current law, compared with a 26 percent decrease in the first decade.

The updated Medicaid estimate from the CBO, showing how spending would shrink over the next 20 years, underscored the extent to which McConnell’s plan would squeeze the long-standing public insurance program.

The current draft already cuts $772 billion over 10 years from Medicaid, which covers poor and disabled Americans as well as the elderly, children and pregnant women.

The updated analysis, requested by Sen. Ron Wyden (D-Ore.) and other Senate Democrats, calculated the effects of pegging the program’s inflation rate to the consumer price index for urban consumers, as opposed to the current practice of following the medical inflation rate.

According to analysts at the health consulting firm Avalere and the Committee for a Responsible Federal Budget, this would translate into a cut of at least $330 billion in 2036.

The report suggested that as the spigot of federal funding constricted over time, “there would be increasing pressure on more states” to cut costs or commit more of their own money to serve their Medicaid populations.

Sen. Chris Van Hollen (D-Md.) said in an interview that the CBO score makes it harder for Republicans to say that the legislation would improve coverage decades into the future.

“In many ways the bill was deceptively structured to try to hide this long-term effect in the traditional CBO analysis,” Van Hollen said. “Republicans are decimating the program by more than one-third, and it gets progressively worse.”

McConnell spokeswoman Antonia Ferrier dismissed the long-term forecast as speculative.

“CBO says the 20-year predictions are almost impossible,” she said in an email. “But they have confirmed the increased spending in Medicaid (rather than cuts) over the next ten years.”

With senators leaving town Thursday for a 10-day break over the July Fourth holiday, Republicans are not likely to reach an agreement until after their return next month. That would give time for the CBO to analyze the new proposals and for senators to hear from constituents, setting up a few more days of haggling when they return July 10 and a possible vote the week after that.

Corker, who met with GOP leaders Wednesday, said he believes “the route being pursued” is to preserve the tax and use that money to provide subsidies for lower-income people.

He added that he voiced directly to President Trump his unease with the idea of slashing taxes for the wealthy while “increasing the burden” on lower-income Americans.

Minutes later, Senate Majority Whip John Cornyn (R-Tex.) acknowledged that keeping the tax was being discussed, but he underscored that no final decision had been made.

Sen. Tim Scott (R-S.C.) said that while he thought it was a bad idea to use the investment tax to help fund the ACA’s existing programs, lawmakers may need to keep the tax. Scott said there is clear pressure from at least three senators to preserve it, and their votes are critical to passing the bill.

“Keeping it now is a whole new conversation,” Scott said. “particularly when you have three senators already heading in that direction.”

The dispute underscores the challenge Senate leaders face as they reexamine the tax portion of their Better Care Reconciliation Act. One bit of wiggle room in their negotiations is the CBO’s analysis of the bill’s effect on the federal deficit, which allows them to spend as much as $198 billion without violating Senate budget rules.

The draft bill that stalled this week would also repeal or delay $541 billion in taxes, primarily on wealthy Americans and insurers. While the cuts in Medicaid help offset these cuts, the idea of making them while easing the tax burden of corporations and the better-off has made some centrists uncomfortable.

The measure eliminates every tax imposed under the ACA except the “Cadillac” tax on employers offering generous health plans. That tax is suspended until 2026 to comply with congressional budget rules.

With Vice President Pence prepared to cast the tiebreaking vote, Republicans need the support of all but two of their 52 senators. In the Capitol on Thursday, Pence said that he and others were “working hard” to change minds on the bill.

Cornyn said leaders would “hopefully” send a revised version of the bill to the CBO on Friday, but he was not certain it would happen.

Meanwhile, according to lobbyists briefed on the matter, negotiators are looking at how to provide states with more ways to opt out of the ACA’s insurance mandates — a key demand of conservatives. These rules include an essential-benefits package that any ACA-compliant plan must offer, such as maternity and newborn care as well as preventive care and mental-health and substance-use treatment.

Sens. Ted Cruz (R-Tex.) and Mike Lee (R-Utah) have indicated they could support the bill if leadership tacked on an amendment, offered by Cruz, allowing insurers to opt out of all ACA insurance requirements as long as they provide one fully compliant plan.

A growing number of senators have said they back the Cruz proposal, but leaders met Thursday to determine whether it would run afoul of Senate rules. McConnell is using the budget process to pass the health bill with a slim majority of 51 votes, rather than the 60 votes needed for most other legislation. But that also restricts the legislation to policies that have an impact on taxes, spending and the deficit.

Lee spokesman Conn Carroll said he also wants a provision to ensure the executive branch can’t single-handedly block states from revamping their ACA marketplaces. The current measure makes it much easier for states to use an existing federal waiver system, under Section 1332 of the law, to make changes as long as they are approved by the Centers for Medicare and Medicaid Services (CMS).

While the Senate bill gives states wide latitude to alter the marketplaces through this system, it would preserve a requirement that CMS has to determine that the changes would not increase the federal deficit. Lee wants an independent agency to make that determination, but Carroll said that if leadership added the Cruz amendment, “I think that would be enough for us” to back the bill.

The main tax change conservatives are now seeking — allowing people to put more money into health savings accounts — would also benefit wealthier Americans. Families earning over $60,000 made up nearly 65 percent of the total that contributed to HSAs in 2014, according to recent data from the Treasury Department. Nearly two-thirds of those people earned between $75,000 and $200,000.

Paige Winfield Cunningham, Amy Goldstein and Mike DeBonis contributed to this report.