Senate Republicans returning from a July 4 recess are so divided over a health-overhaul bill that they are also struggling to agree on what to do if they fail to pass their legislation.

Some conservative lawmakers say an implosion of the Republican legislation would give them a chance to return to their goal of fully repealing the Affordable Care Act, putting off until later a decision about what system to put in its place. Others, including Senate Majority Leader Mitch McConnell (R., Ky.), are considering the possibility of legislation to shore up the law’s marketplaces where individuals buy health coverage, action that would involve working with Democrats.

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Democrats loudly complain that people will lose health insurance if the Affordable Care Act is repealed. They never mention those who lose jobs because the ACA remains.

The ACA includes a penalty on employers that fail to provide “adequate” insurance for full-time workers. Thanks to the ACA, hiring the 50th full-time employee effectively costs another $70,000 a year on top of the normal salary and benefits.

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According to widespread media reports, Senate Republicans are considering an amendment to the proposed Better Care Reconciliation Act from Texas Senator Ted Cruz under which, if a health insurer offered at least one Obamacare-like plan with community rating, it could also offer a plan in which healthier people would pay lower rates than the sick. Although this proposal might please conservatives otherwise worried that the BCRA is but “Obamacare-lite” and although it might mollify some moderates  — if you like your Obamacare you can kind of keep it — it creates an “income cliff.”  People who need expensive medical care will be far worse off if they make more money. Some additional modifications to the Republican bill could reduce this problem, but they are likely to be some combination of ineffective or expensive.

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The last man to pull out of the Republican race against Donald Trump was John Kasich, the Ohio governor, a long-shot contender for the presidential nomination whose chances had long since faded. But he has returned to the role of thorn in Mr Trump’s side as Republicans in Washington struggle to reform Obamacare, leading a group of governors trashing their own party’s plan.

The intra-party revolt is rooted in Republican proposals to gut Medicaid, a programme for the poor that provides insurance to 69m Americans. Republicans have long seen it as an emblem of mismanaged welfare programmes that distend government and discourage people from working. But Mr Kasich is showing change is afoot.

He was one of 16 governors from Republican-led states that took an option to expand Medicaid offered by Obamacare, adding 700,000 Ohioans to the programme, despite the broad distaste for Barack Obama’s reforms in his party. In recent weeks he has stressed its vital role in treating people ravaged by opioids and other drugs, which killedan average of 11 Ohioans each day last year, and those suffering from schizophrenia, bipolar disorder and other mental illnesses.

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If Republicans fail to pass a bill or weaken the Senate bill so much that it won’t make a difference, the result will be a calamity of a different kind. GOP Governors who declined to join ObamaCare’s new Medicaid will conclude that the expansion is permanent and the political pressure will rise to take the federal bribe. Medicaid costs will soar, and national Republicans will show that they’re incapable of doing what voters sent them to Washington to do.

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Republican efforts to pass health-care legislation are in jeopardy again, in part because of controversy over its potential impact on Medicaid. But the Republican reforms are more moderate, and more worthwhile, than they are getting credit for.

The CBO is exaggerating the effects of the Republican legislation on Medicaid enrollment, it’s worth putting Medicaid on a firmer footing, and any additional resources for health insurance for low earners should be directed toward enabling them to buy private coverage rather than pumped into Medicaid. On Medicaid, in short, the Republicans are on the right track.

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Senate conservatives wish the health-care bill was more ambitious on deregulation, and so do we, though the benefits of its state waiver feature are underappreciated and worth more explanation. This booster shot of federalism could become the greatest devolution of federal power to the states in the modern era.

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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.

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The ACA instituted, for the first time in over half a century, a tax on the value of employer-sponsored health insurance, known as the Cadillac tax. This step represented a significant shift in policy that has the potential to affect more than 150 million Americans covered by such insurance. While there are strong justifications for either repealing or reforming the Cadillac tax, policymakers should be apprised of the potential benefits and pitfalls of each approach. In this paper, we review the history of employer-sponsored health insurance and offer three options for replacing the Cadillac tax without returning to the undesirable pre-ACA status quo: 1) Eliminate the Cadillac Tax and the ESI tax exclusion; 2) Eliminate the Cadillac Tax and cap the ESI tax exclusion; and 3) Replace the Cadillac Tax and the ESI tax exclusion with income-based subsidies.

Senate Republicans and the White House have agreed to add at least $45 billion to their Obamacare repeal bill to address the opioid crisis and are near agreement on allowing consumers to use Health Savings Account money to pay for their premiums, according to people familiar with the matter.

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