Some early thoughts on ACA repeal — installment #1

Published November 14, 2016
Updated January 15, 2017

Republicans plan to use a parliamentary tool known as 'budget reconciliation' to pass a partial repeal of the Affordable Care Act (the ACA, aka Obamacare).

If reconciliation sounds familiar, it's because Republicans denounced it with great gnashing of teeth in 2010 when they claimed that Democrats were using it to ram the ACA through Congress. I was a Democratic congressional staffer at the time, working on budget policy for a member of the House Budget Committee; I can tell you, we didn't ram through the ACA, with reconciliation or otherwise. But don't take my word for it. Take John McCain's. Or read Jonathan Chait's short and 100% accurate piece: "Every Republican Lie About Passing Obamacare Is True About Repealing It." Or see Norm Ornstein's excellent "The Real Story of Obamacare's Birth," which also covers the myriad ways in which Democrats sought to work with Republicans.

But the reason why we couldn't have rammed the ACA through reconciliation is important to understanding what Republicans can and can't do now. More on that later.

Reconciliation bills come with one big benefit to Republicans—they can't be filibustered by Senate Democrats—and some equally big drawbacks that could turn this into a Pyrrhic victory for them. I'm not a fan of Sen. Chuck Schumer, but when he says Republicans are like "the dog who caught the bus" and now they "don't know what to do," he's absolutely right.


So what can Republicans do through reconciliation?

Anything in the ACA with a direct impact on the budget can be repealed through reconciliation. Think of things like the individual mandate (which is really just a fee for not buying insurance), the Medicaid expansion for low-income households, and the tax credits that help middle-income households purchase insurance on the exchanges.

Republicans can also use reconciliation to repeal the ACA's tax increases on wealthy households which pay for helping low- and middle-income households get insurance. (But if they do, they won't have the money they need to pay for an ACA replacement package.)

And, of course, Republicans don't need to limit themselves to just what's in the ACA. They could marry ACA repeal with the cuts to food stamps, Medicare, and original Medicaid that Paul Ryan has routinely included in his annual budget proposals—although they are expected to save these cuts for another reconciliation bill later in the year. I outline this process here.

Reconciliation will require the House and Senate to first pass identical budget resolutions authorizing the reconciliation process. There have been big disagreements within the party on other budget items—like the imminent return of sequestration and the need to raise the debt limit. I don't know how much of a role that will play in 2017.

In 2016, the divisions were so deep that House and Senate Republicans refused to even try to pass a budget resolution. But they will be strongly motivated to come together this year. And, cynically, I am expecting a reversal in Republican opposition to deficits and debt, with Republican congressional leaders already promising a single debt limit hike big enough to accommodate all of Trump's agenda at one time.

UPDATE 1/15/17: Score one for cynicism. Republicans have now successfully passed a budget resolution through both chambers. In the Senate, Rand Paul (R-KY) was the only Republican to oppose it, arguing that it would add nearly $10 trillion to the national debt over a decade. In the House, only nine Republicans voted no on the budget.

The lesson for 2017 is throw out everything you thought you knew about Republicans caring about the deficit. In 2014, David Brat successfully primaried then-Republican Leader Eric Cantor on the grounds that Cantor wasn't ideologically pure enough. But fast forward three years and he wants you to remember that the deficit has to be put into "the whole context." Right.

While there's disagreement among Republicans about how to proceed with dismantling the ACA (move a partial repeal right away or wait till there's a replacement bill in hand), they haven't given themselves any political leeway. They can't not move forward without enraging right wing media, pressure groups like the Heritage Foundation, and their Tea Party base. And don't forget, those tax cuts that come from repealing the ACA are really important to their donors. Politico's headline says it all: "Obamacare repeal could be biggest 2017 tax cut for wealthy"

Now that Republicans have authorized reconciliation through the budget process (as of January 15), they will get to work on the actual repeal bill. They have a template for this from 2015, which phased in the repeal over two years to give themselves time to come up with the replacement bill they never bothered to create in the previous six years.


Reconciliation's double-edged sword...

The big downside to using reconciliation is that it's much more restrictive than simply moving a full repeal bill. I promised we'd get to the ACA's history and here we are: Republicans claim that the ACA was rammed through using reconciliation. But in reality, the Senate passed the 906-page ACA with 60 votes in December 2009 under 'regular order.' In March 2010, the House passed that identical bill and then used reconciliation to pass a package of fixes that was just 55 pages long—including an unrelated package on student loans.

Why does that matter now? Because the full ACA couldn't have been passed through reconciliation, only the small package of fixes could.

It can't be totally repealed through reconciliation now.

And no comprehensive replacement plan can be passed through reconciliation.

Anything in the law without a defined budget impact will be subject to filibuster. For example, insurance companies will still have to cover everyone with a pre-existing condition, but without the protection of the individual mandate and without guaranteed financial support from the government. Unfixed, that will lead to skyrocketing premiums. The ACA isn't in a "death spiral" right now, millions of people are still signing up.

But if Republicans repeal both the mandate to buy insurance and the financial support to help people afford it, only the sickest people will be motivated to keep paying their premiums, while the healthiest people will drop out. That will make the overall insurance pool sicker and more expensive. And that will make premiums too costly for the next healthiest tier, forcing those people to drop out. And thus a "death spiral" is born.

Republicans can wound the ACA through reconciliation, but they can't kill it, and the longer it lingers in a zombie state, the more chaos it will cause through health insurance markets. That used to be good politics for them. Now it's poison.


Republicans must have a plan for that, right?

I am personally convinced that the filibuster is toast—Republican senators were promising to leave the Supreme Court at 8 seats indefinitely under a President Clinton; they aren't exactly loyal to Senate norms and traditions. I think it would be better for them politically in January, fresh off of their 2016 victory when fewer people are paying attention, and not a few months before another election, set against a looming crisis of their own making. I'm also of the view that Republicans eliminating the filibuster would be in the best long-term interests of our democracy, even if it means losing some short-term policy fights. But I digress...

If Republicans can pass a reconciliation-based repeal—I'm slightly more optimistic in January 2017 that they can't than I was in November 2016 when I first published this post—they'll create a big chaotic mess. It is an open question whether Senate Democrats will bail them out and vote for a replacement to fix that mess. Clearly, Republicans are banking on help from conservative Democrats running for re-election in 2018 (think Sens. Manchin, Heitkamp, Donnelly, McCaskill, Tester, Casey...).

Pre-2010, I think that would have been a safe assumption. But Republicans have re-written the playbook since then. Senate Democrats have seen firsthand that Republicans who engaged in unrelenting obstructionism, even in the face of looming disaster, faced no consequences.

I often think back to something an old boss once told me, long before any of this. He was a conservative Blue Dog in the House representing one of the reddest districts in the country during the Bush years and I was a new legislative staffer. The gist: all you need is one reason to justify voting against any big package. But if you vote for it, you own the whole thing.

What Republicans have suggested they might put forward is chock full of provisions a vulnerable incumbent could oppose—more on this here—if given public support. In Speaker Ryan's plan, for example, the protections for pre-existing conditions are paper thin. And selling insurance across state lines becomes harder to justify when it means insurance companies will be able to act like credit card companies and move to whichever state lets them write their own regulations.

Republicans counting on forcing Senate Democrats into a take-it-or-leave-it posture could find Democrats willing to leave it. No Senate Democrats joined Republicans during either the 2013 shutdown or the 2015 repeal vote. And, if they stick together, they force Republicans to either cede enormous power to a handful of Democrats or ... to kill the filibuster.


Fine, but can't the new administration gut the law on their own?

Yes. Lots of things can be killed without any congressional action at all. For example, contraceptive coverage without copay (aka free birth control) is made possible by the ACA, but it isn't actually in the law itself. The law simply instructs the Department of Health and Human Services to create a list of preventive services to be covered. That means that the Trump Administration has the power to unilaterally repeal birth control coverage without Congress having to lift a finger. HHS simply needs to drop it from the list of approved preventive services.

The problem for Republicans is that what while chipping away at the law and degrading how Americans engage with the health system has been great politics under President Obama, the calculation shifts going forward. For example, reinstating birth control copays in the 2018 insurance plan year will hit American households just as they're getting ready to vote on the merits of Republican control of government.

Counter-intuitively, those Democratic senators up for re-election in 2018 probably have a slightly better chance of winning re-election now than they did before Trump's victory. Once again, Republicans have backed themselves into a corner. They can't eliminate coverage without hitting voters and they can't not eliminate it without enraging their base.

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See my next installment HERE on the politics of Republican replacement plans.
See my third installment HERE for a checklist of what Republicans have done and an overview of what they're planning for the next two years.