For Conservatives, Health-Care Reform Is Not Optional

by Avik Roy

The proximate reason, of course, for the failure of the GOP effort to repeal and replace Obamacare is that moderate Republican senators voted against it: in the most recent instance, Susan Collins, Lisa Murkowski, and John McCain. But Republicans’ health-care struggles stem from a solvable, but more fundamental problem: uniting both moderate and conservative Republicans around a single bill.

Moderate Republican senators, often representing purple or blue states, were reluctant both philosophically and politically to endorse legislation that increased the number of Americans without health insurance. Conservative Republican senators focused on the commitment they (and most of the moderates) had made to repeal and replace Obamacare, and more broadly, their commitment to limited government.

How Democrats passed Obamacare

When Democrats passed Obamacare — after many failed attempts in the 20th century to do something similar — they did so by uniting their ideological and pragmatic wings. The ideological wing hated the idea of paying private companies to cover the uninsured, strongly preferring single-payer. The pragmatists, looking to maintain their cred in purple-to-red states, sought to borrow ideas, however imperfectly, from Mitt Romney et al.

Democrats recognized the central importance of the Congressional Budget Office in bringing their two wings together. When Democrats retook Congress in 2006, they appointed Peter Orszag to head the CBO, as part of a deliberate strategy to stack the CBO in favor of their health-care agenda. Orszag proceeded to build out the entire health policy wing of the CBO — representing dozens of staffers — with like-minded individuals. After Obama won the 2008 election, Orszag captained the health-reform effort at the White House’s Office of Management and Budget.

It would be more fair to call Obamacare “CBOcare” given how much the Affordable Care Act reflects the CBO’s worldview. While Senator Obama opposed the individual mandate, the CBO believed it would add 16 million covered lives to the ACA’s ledger. While the Romneycare model involved covering the uninsured solely with private coverage, the CBO believed that expanding coverage through Medicaid would be cheaper.

Republicans failed to reform the CBO

Compare and contrast that to the GOP’s effort. When Republicans had the opportunity to appoint a CBO director in 2015, they chose not to hire someone with deep health-care expertise, such as the University of Minnesota’s Stephen Parente, and instead hired Keith Hall, a labor economist. There was no comparable strategy, either by Hall or by Congress, to rebalance the CBO’s center-left tilt with individuals more knowledgeable about how health insurance markets actually work.

Hence, because any GOP bill would need to repeal Obamacare’s individual mandate, the CBO was poised to make any GOP bill look bad. The CBO compounded this, at critical points, by refusing to disclose key aspects of its estimates.

The CBO refused to break out the proportion of GOP Medicaid savings that were driven by long-term entitlement reform (per capita caps) vs. the repeal of Obamacare’s Medicaid expansion. The CBO’s deliberate opacity allowed journalists at the New York Times, the Washington Post, and every Democrat to dishonestly claim that per capita caps would “cut $800 billion from Medicaid,” even though nearly all of the Medicaid savings were from repealing and replacing the Obamacare expansion.

Similarly, the CBO refused to break out — until the very end, after it had leaked — the fact that nearly three-fourths of the “coverage losses” under the GOP bill would come from people voluntarily choosing to forgo coverage due to the repeal of the individual mandate.

Uniting moderate and conservative Republicans

The failure to reform the CBO put Republicans at a huge disadvantage when it came to uniting moderate and conservative senators. Moderates wanted a bill that preserved coverage for the uninsured. On the flip side, many conservatives wanted a bill that repealed Obamacare, full stop, with relatively less interest in the replacement part.

These poles were always going to be difficult to reconcile, but there was (and still is) a policy path forward.

It involves uniting moderates and conservatives around Ronald Reagan’s principle that “no one in this country should be denied medical care for lack of funds.” There are ways to substantially reduce the government’s role in health care while expanding the number of people with health insurance.

Key to achieving this synthesis is a combination of reforming the CBO and repealing Obamacare’s individual mandate. So long as the individual mandate is on the books, and the CBO has the point of view it has, no Republican bill will be scored by the CBO as competitive with Obamacare on coverage. Repealing the mandate would reset the CBO’s baseline such that the broader GOP repeal-and-replace effort could fare much better. That’s why the failure of the so-called “skinny bill” was such a huge strategic defeat for conservative health reform.

But it also requires a reorientation of conservative rhetoric. Conservatives must morally and rhetorically embrace the cause, as Reagan did, of ensuring that no American is denied medical care for lack of funds. (The emergency room only encompasses a narrow range of medical care.)

While conservatives and Republicans often said the right things in public, too many of them believe deep down that the only way to cover the uninsured is through more government. That’s not true. Government intervention is the reason that American health care is uniquely expensive, and a full-throated agenda to make health care more affordable could win much broader public support.

Democrats failed many times before they passed Obamacare. In that context, this initial Republican failure is not surprising — indeed, it’s actually impressive that they came within one vote of conservative progress.

But the GOP cannot simply “move on” and give up on health care. Health care is the biggest driver of our debt and deficit, the biggest driver of growth in government, and one of the biggest drivers of economic insecurity for those in the middle class and below.

Take some time to reflect, yes. Come up with a better strategy, yes. But to give up on health-care reform is to give up on everything conservatives stand for.

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