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Government shutdown threat appears over, but Obamacare fight remains

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Congressional Republicans have privately proposed a funding bill that does not include money for the border wall, a Congressional source told CNN, a sign congressional Republicans are willing to buck the President to avoid a government shutdown.

The battle to prevent a government shutdown appears to be over for now, with the push over paying for a border wall sidelined.

But one key sticking points remains before a deal is finalized — on health care, again.

At issue: Money the federal government pays health insurers to reduce the out-of-pocket costs for low-income people trying to pay for health care. These are referred to cost-sharing reduction (CSR) payments. The payments are a major way Democrats ensured low-income people would be covered under the Affordable Care Act, but with a new Republican administration, their future is uncertain.

The fight over subsidies means there is a growing possibility on Capitol Hill to fall back on a week-long funding bill extension to avoid a shutdown and keep the negotiations moving forward, but few think the subsidies issue would lead to a shutdown.

A senior GOP aide familiar with the talks told CNN the standoff will ultimately need to be resolved by the President in consultation with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell, but no one expects it to block a deal in the end.

Democratic House Leader Nancy Pelosi spoke Tuesday with White House budget director Mick Mulvaney, telling him that the payments must be included in the spending bill, according to a senior Democratic aide familiar with the conversation. Mulvaney indicated that, while the Trump administration had continued the CSR payments, they had not yet decided whether they would make the May payment, according to the source.

If the Trump administration stops making the payments, insurers could try to pull out of Obamacare immediately, leaving up to 7 million people scrambling to find new — and costlier — policies. Many insurers have said they would likely exit Obamacare completely for 2018 or hike rates substantially — by 20% or more, Anthem said Wednesday morning — if the subsidies end.

Democrats want assurances in the spending bill that Republicans will continue making the payments. A senior Democratic aide told CNN that “the position of House and Senate Democratic negotiators is that the omnibus must include the CSR language.”

The GOP aide said that Pelosi and Mulvaney restated their positions ‎last night, and said the Democrats highlighting this fight is a “negotiating tactic.”

“It’s not insurmountable” the aide said, but admitted the talks “are going slower than expected.”

Ryan rejected the Democrats’ push on Wednesday morning.

“We’re not doing that,” Ryan told reporters, arguing that it is an issue that is not part of the annual spending bill process.

Mulvaney told CNN’s Jake Tapper on Tuesday that Democrats had made their request on Obamacare subsidies too late in the negotiating process.

“They dropped this Obamacare bailout, these insurance company payments, about two weeks ago,” Mulvaney said. “These are things they’ve brought to the table very late.”

Insurers are desperate to get some clarity on the issue and make sure the administration continues making the payments.

But, Republicans argue that the payments are part of mandatory spending and therefore shouldn’t be part of the negotiations.

Administration officials on Tuesday highlighted the concession of the border wall of sign of being reasonable and flexible negotiators to avoid a shutdown.

“We just thought that it would be a good first step to get these things that everybody agrees on and take that idea of a government shutdown off the table,” Mulvaney told CNN.

White House Chief of Staff Reince Priebus said Tuesday evening that Trump is “showing some reasonableness on the wall and border security” in an effort to avoid a government shutdown.

“As long as we get a significant amount of border security money for Secretary (John) Kelly to do his job between now and September and continue the conversation on more money for the physical wall itself, it’s something that the President made clear he’s willing to talk about,” Priebus told CNN and reporters from several news organizations.

In his West Wing office, Priebus touted the administration’s accomplishments in the countdown to the first 100 days of the Trump presidency. He said the President’s flexibility on funding for his signature border wall put Democrats “on their heels.” He did not address the mixed messages sent throughout the day from top administration officials about whether the President would accept a spending measure without funding for the border wall with Mexico.

“I think that, obviously, was a bit of a surprise to some of the Democrats, who now have to calculate whether or not they can fashion some fake controversy for us to fight over to shut the government down and blame us,” Priebus said.

Over the recess, Republicans and Democrats worked carefully to craft a must-pass spending bill that all parties could agree on and could be signed by the President, but the delicate negotiations have hit a few roadblocks in recent days.

The President continued to stand by his promise to build the wall Tuesday afternoon, though he did not specify when it would happen after being grilled by reporters.

“The wall’s going to get built, folks,” Trump said at the White House, when asked if he’d sign a continuing resolution without funding for his border wall. “In case anybody has any questions, the wall is going to get built.”

When asked when the wall would be built, Trump said, “Soon. We’re already preparing. We’re doing plans, we’re doing specifications, we’re doing a lot of work on the wall, and the wall is going to get built.”

CNN’s Gloria Borger, Eli Watkins, Jeff Zeleny and Tami Luhby contributed to this report.

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