MICHEL MARTIN, HOST:

Thursday, Senate Republicans revealed their approach to repealing and replacing the Obama administration's signature health care initiative, the Affordable Care Act. The Senate bill, which they call the Better Care Reconciliation Act, resembles the version passed by House Republicans last month but with some key differences.

Overall, though, Republicans say their version of health care will stabilize insurance markets and cut health care costs. But Democrats and state lawmakers are deeply opposed to cuts in Medicaid funding among other things, arguing that those provisions will do far more harm to Americans' health than good.

We've already been hearing from lawmakers, medical advocacy groups and insurers these last couple of days, so we wanted to turn to somebody who has been covering health policy for quite some time. That's Julie Rovner, chief Washington correspondent at Kaiser Health News. We reached her in Aspen, Colo., where she's attending a conference. Julie, thank you so much for joining us.

JULIE ROVNER: My pleasure.

MARTIN: So what does the Senate bill do? And just - can you give us just a couple of ways in which it differs from the House bill?

ROVNER: It differs in some significant ways. One thing that the Senate bill did, they tried to rewrite the way the tax credits work to help people purchase coverage. They actually stop them at a lower level of income at 350 percent, so three and a half times poverty rather than four times poverty, which is current law.

Another thing the Senate credits do is that they go down to more poor people, but the credits themselves will be smaller. And plans might be able to offer less coverage. So basically people would get help, but they would still have to pay even more of their medical bills. Or as one economist described it, they'll face a choice between paying a premium they can't afford or paying a deductible they can't afford.

MARTIN: How do the Republicans get to the argument that this will actually bring costs down for consumers?

ROVNER: Well, they've been kind of skirting that. One of the things, of course, they say is that by making it less expensive for young people - would also make it more expensive for older people - more young people might go ahead and purchase insurance. If the risk pool is healthier, premiums would rise more slowly. I don't know that they would come down but they wouldn't go up as fast. That's their argument. But what this would also end up doing is it would leave sicker people and older people with dramatically higher costs that they'd be expected to pay.

MARTIN: What parts and programs of the Affordable Care Act are most at stake with this new version of the Senate Republicans' bill?

ROVNER: Well, the piece of the Affordable Care Act that's most at stake is what we've just been talking about, the people who buy their own insurance in the individual market. Interestingly, the people who have been most hurt by the Affordable Care Act are the people who earn too much to get tax credits but they buy their own insurance. They've borne the full brunt of these increased premiums.

This bill wouldn't actually do very much to help those people. Those are exactly the people the Republicans have been complaining about. Of course, the other big piece of this bill that has nothing to do with the Affordable Care Act is a capping of federal funding for the Medicaid program, which is something that Republicans have been trying to do since Ronald Reagan was president.

MARTIN: This is also a longtime goal, mainly Republicans but also some Democrats, to kind of rein in this very significant entitlement program. How would it work under this Senate bill?

ROVNER: It's somewhat similar to the House bill, although the cuts would go even deeper. At some point, over a period of years, the federal government would basically limit what it pays for Medicaid, which has always been a shared program between the states and the federal government. It covers whatever people are eligible - for basically whatever they need medically.

And the federal government says yeah, states, we're going to pay this much and no more. And that amount is going to go up every year slightly, but in the Senate bill would be based on just regular inflation, whereas medical inflation has always been faster. So it would basically erode the ability of states to pay for their Medicaid programs.

MARTIN: How would this work at the state level? Essentially the state governments become the primary decision makers on who gets Medicaid now as opposed to having it be available to everybody who meet certain criteria?

ROVNER: Exactly. States would have, you know, a number of choices, none of them would be very pleasant. We're already seeing governors complain. They could cut benefits. They could cut who's eligible. They could raise taxes. They could lower what they pay healthcare providers, which is already pretty low for the Medicaid program. That's pretty much the options that would be on the table for states, and none of them are very pretty financially.

MARTIN: And politically, where do things stand with this in the Senate right now?

ROVNER: Well, of course, there's only 52 Republicans in the Senate. And the Democrats have said none of them will support this. So Senate Majority Leader Mitch McConnell can afford to lose two members of his caucus but no more and still have the bill pass. As of now, there are at least five senators who have said they can't vote for the bill in its current form. Now, this is a discussion draft. Everyone expects changes to be made.

We're going to have to see what the Congressional Budget Office says about what this would do the insurance system and what it would do the federal deficit. But whichever direction they move the bill, they're likely to lose votes at the other side. If they make it better for moderates, the conservatives will peel off. If they make it better for conservatives, the moderates will peel off. So it's still a very difficult battle for Senator McConnell to get this bill through.

MARTIN: That's Julie Rovner. She's chief Washington correspondent for Kaiser Health News. She was kind enough to join us from the Aspen Ideas Festival in Aspen, Colo. Julie Rovner, thank you so much for speaking with us.

ROVNER: Anytime. Transcript provided by NPR, Copyright NPR.