Senate Budget Chair Knocks Down Possible GOP Debt-Ceiling Proposal

Senate Budget Committee Chairman Patty Murray (D-WA) and House Budget Committee Chairman Paul Ryan (R-WI) hold a press conference to announce a bipartisan budget deal, the Bipartisan Budget Act of 2013, at the U.S. Capitol on December 10, 2013 in Washington, DC. (National Journal)

House Republicans met Tuesday morning to discuss their options on the debt-ceiling increase, and already Senate Democrats are indicating their opposition to at least one of the GOP's top preferences.

Several Republican members are pushing a plan that would repeal the "risk-corridor" provisions included in the Affordable Care Act alongside an increase in the debt ceiling.

As our own Billy House reported, leadership is considering a procedural move whereby the House will combine the insurance-bailout repeal — or some other option such as approving the Keystone XL pipeline — with a debt-limit increase under one rule. That would allow members to vote in favor of a clean debt-ceiling increase without having to support the GOP riders. But they would have to vote on them. And as of Tuesday morning, Republicans were hopeful that they could garner Democratic support for those measures.

But not long after House Republicans met to discuss their options, the Congressional Budget Office released a report noting that the insurance bailouts will actually reduce the deficit by $8 billion between fiscal 2015 and fiscal 2017.

That's giving Senate Democrats, who have long advocated for a clean debt-ceiling increase some hope that they'll get their way.

"Today's CBO report shows that Republicans' most recent debt-limit ransom idea would not only cause premiums to skyrocket for American families, it would also add billions to the deficit," Senate Budget Chairwoman Patty Murray said in a statement. "Republicans are clearly flailing over the debt limit, but we are not going to let them hijack the economy over bogus demands that are targeted more at settling internal political disputes than actually moving our economy forward responsibly." Murray has taken the lead for Democrats in the debt-ceiling fight.

A House leadership aide said the CBO report won't impact the debt-ceiling debate, because "our members, unlike CBO, believe [the risk corridors] will be abused."

At issue is a series of programs dubbed by Republicans the Obamacare "insurance bailouts." Specifically, House Republicans are targeting a provision in the Affordable Care Act, called risk corridors, through which the federal government will partially reimburse insurance companies for individuals whose policies end up costing the insurers more than they paid in premiums by more than 3 percent. Typically, insurance companies rely on past data to ensure that they are charging appropriate premiums for their customers, but because the health care law is so new, the federal government is providing them a little wiggle room.

However, insurance companies whose premiums significantly exceed the costs incurred by their subscribers will have to pay some of that money back to the federal government. That's where the CBO estimate kicks in. Based on results within Medicare Part D, which also includes a risk corridor program, the CBO believes that insurance companies will pay the federal government more than the government pays them, resulting in $8 billion in net savings.

But House Republicans aren't buying it. Essentially, they argue that insurance companies will intentionally charge their customers the lowest possible premiums in the hopes that most customers won't cost them much money. For those few that do, the logic goes, they'll get some of that money back from the federal government.

Asked whether insurance companies were likely to engage in that type of activity, the leadership aide said mockingly: "Heaven forfend!"

The risk corridor program is temporary and will last for just three years under the Affordable Care Act, beginning this year.

The risk corridors have been a common target for Republicans since the health care law passed in 2010. And it was one of the favored programs targeted by members of the House majority at their retreat last week during their discussion of potential kick-backs in exchange for increasing the debt ceiling. The party has dubbed the program an "insurance bailout," a potential popular argument in their case against the Affordable Care Act during the 2014 midterm elections.

Elahe Izadi contributed to this article