And such changes are also looked on favorably by some House Republicans who don’t expect their version of the American Health Care Act to survive the Senate.
Lee and Sen. Ted Cruz (R-Tex.) are part of the 12-person Senate working group on health care, which has intensified its efforts following House passage of the amended American Health Care Act by a razor-thin margin last week.
“Conventional wisdom says the Senate normally moves things left or more moderate, but this has been a year of the unexpected,” said Tim Phillips, president of the conservative group Americans for Prosperity.
Cruz called the House bill a “positive step” that the Senate must improve on. He named selling insurance across state lines and medical malpractice reform as two other priorities for a Senate bill seeking to replace Obamacare, also known as the Affordable Care Act.
“The consequences of failure would be catastrophic,” he told conservative radio host Larry Kudlow on Saturday. “But it’s going to take senators across the Republican conference to sit down in good faith and work together.”
After a Tuesday meeting of the working group, Cruz told reporters that Republicans agreed on the need for governors having “the flexibility to design Medicaid programs to meet the needs of their populations.” But neither Cruz nor Lee has said publicly what must be in the final bill for it to gain their support.
But the effort to nudge the Senate’s health-care bill to the right could alienate moderates and complicate leaders’ push to keep the GOP conference united for a vote in which only two members can defect.
Some conservative priorities could also pose problems for the budget reconciliation process, which limits the kinds of provisions that can pass by a simple majority vote.
Despite several raucous town halls across the country with House members on recess, the health-care debate quickly receded from view with news of Trump firing James B. Comey as FBI director.
Senate Majority Leader Mitch McConnell (R-Ky.) pledged to remain focused on health care, but Democrats threatened to slow business down in an effort to force the appointment of a special prosecutor to take up the FBI-led investigation into Russia’s meddling in last year’s election. The Democrats’ power to do so appeared limited to short-term delays, however.
Still, as negotiations began, Republicans were optimistic that conservative senators had already climbed down from the GOP’s repeal-or-nothing positions of the Obama years, opening a tight path to victory.
In January, Lee and Cruz joined Sen. Rand Paul (R-Ky.) in a letter asking Republicans “to quickly consider legislation that repeals at least as much of Obamacare as H.R. 3762, which President Obama vetoed in December 2015.”
That bill repealed key components of the Affordable Care Act, including its insurance exchanges, individual mandate and medical device tax, and phased out the law’s Medicaid expansion.
Paul — the sole Republican ‘no’ vote in January on a budget measure touted as the Senate’s first step toward repealing Obamacare — has gone on to belittle the AHCA for directing “taxpayer money to insurance companies.”
But as members of the working group, Cruz and Lee have argued for a bit less than they got in 2015. All three senators have kept lines of communication open with the House Freedom Caucus — efforts that helped secure votes for a bill that fell short, too, of what House hard-liners had wanted.
“If it was up to me we’d just dust off the 2015 repeal and add some of what Rand Paul’s been talking about,” Adam Brandon, the president of the low-tax advocacy group FreedomWorks, said in an interview. “But it seems like that ship has sailed.”
Conservatives’ best-case scenario would make the AHCA’s refundable tax credits nonrefundable, in a nod to antiabortion activists who want to stop women from paying for abortions with tax credit dollars that flow to health-savings accounts. Making the tax credits nonrefundable would reduce their practical value to lower-income people, who have lower tax burdens.
The Senate bill, conservatives hope, will also make “able-bodied” adults ineligible for the ACA’s Medicaid expansion. This could affect as many as 11 million adults covered under the Medicaid expansion who did not become eligible because of parenthood or a disability.
Finally, conservatives want the Senate bill to repeal Obamacare’s insurance regulations — such as the requirement that plans don’t charge higher premiums to people with preexisting conditions — or make states opt in.
These changes could make the Senate’s health-care bill more conservative on the whole than the House version, which passed by a 217-to-213 vote on Thursday. That bill created a system of refundable tax credits, while allowing states to opt out of Obamacare’s insurance regulations.
It is unclear how strongly conservatives will insist on the changes.
The Senate effort is expected to play out as a kind of tug-of-war between moderate and conservative senators, who will have to compromise on some issues for the bill to win enough support to pass. Both factions are represented in the working group, along with Republican committee chairmen and members of GOP leadership.
A Republican aide rejected the notion that conservative demands could sink the Senate’s fledgling effort.
“They’re at the table,” the aide said of Cruz and Lee. “They’ve had meetings all year. They’re working with us to get a bill done.”
Conservatives suggested that they plan to hold a firm line, but they also indicated they are open to some negotiation.
“We’re not going to sign on to something, vote for something to say we did it. But we’re not in the ‘we’re just gonna let it collapse’ camp,” a conservative GOP aide said.
Lee and Cruz, along with Sen. Tom Cotton (R-Ark.), another member of the working group, have been in touch over the past month with House Freedom Caucus Chairman Rep. Mark Meadows (R-N.C.), according to a House GOP aide.
In a short interview last week, Meadows said he had met with more than a dozen senators beyond Cruz and Lee. And in a separate interview with the HuffPost, Meadows talked up an amendment from Sen. John Thune (R-S.D.) that would actually expand tax credits, suggesting that even hard-liners could be sold on it.
“He’s had some very thoughtful, meaningful ideas on how to address that that would certainly be accepted by conservatives, if that’s the direction the Senate decides to go,” Meadows said.
House conservatives, while wary of what might come back from the Senate, have girded themselves for higher Medicaid spending, but are counting on negotiators like Lee to shrink the tax credits, allowing them to say that they made minor changes to one entitlement but major changes to another.
Meanwhile, Cruz hinted at some of his own priorities in his interview with Kudlow.
"The compromise that was reached in the House allowing states to opt out of the [insurance] mandates — I think that was a good compromise, but I think more improvement is going to be needed in the Senate," Cruz said.
In addition to the ability to sell insurance across state lines, Cruz said he would advocate for the bill to allow people to pay health insurance premiums out of health-savings accounts.
On medical malpractice reform, Cruz said he has written an amendment to reward states with a 1 percent bonus to their federal Medicaid matching funds if they cap punitive damages for medical malpractice actions. "It creates an incentive for states to adopt tort reform law," he said.
The Texas Republican pointed to lower premiums as his chief goal — one shared by Republicans who say that they'd be able to run on lower health bills in 2018 if they succeed on AHCA.
"I agree the first House bill was not the best solution," Cruz said, referring to the Congressional Budget Office estimate that the original AHCA would increase the number of uninsured by 24 million. "In the Senate, we can improve it further. The best way to expand access is to drive down premiums."
Coming out of Tuesday's meeting, which focused on how to handle Medicaid cuts, the other members of the working group didn't rule out the conservatives ideas. Asking about making essential benefits "opt-out," Sen. Orrin G. Hatch (R-Utah) said he'd "look at" the idea.
In a separate scrum with reporters, Sen. Rob Portman (R-Ohio) said that advocates from states that had expanded Medicaid wanted a "soft landing."
The overall momentum toward passing a bill made outside advocates like Brandon optimistic.
"They need to be the voice in the Senate saying premiums need to go down," he said of conservatives. "The Freedom Caucus has made it clear that if it's not a good bill, they're not going to vote for it. And I have a lot of confidence this is going to get done."