The death of the American Health Care Act has been greatly exaggerated — not because it is likely to be revived (at least in its current form) but because it might never have really been alive in the first place.
Many of the provisions of the bill were unlikely to survive contact with the Senate, and there was a very strong chance that the bill that was released from a House–Senate conference would radically differ from the AHCA. Perhaps realizing the limits of the AHCA, some defenders of the AHCA supported the measure principally as a way of getting to conference. However, there is no reason to believe that the tensions that pulled down the AHCA on Friday would not similarly undo the resulting House–Senate conference bill. Some Republicans would still be upset that the conference bill was not a full repeal of the Affordable Care Act, and moderates (along with some populists) would be pulled into a tug-of-war with budget-cutters over the size of Medicaid cuts.
Matthew Continetti has observed that the American Health Care Act allowed procedure to dictate policy. Because the bill was designed to be passed through reconciliation, it focused on the government financing of health care. When at the eleventh hour Utah senator Mike Lee suggested that the Senate parliamentarian might allow certain regulations to be changed, regulatory changes were quickly added to the bill. But that was all too late and too fast. Moreover, the fact that the AHCA was essentially a tax- and entitlement-reform bill caused it to accentuate tensions between populists and other factions of the GOP.
There is no inherent reason, though, why the main Republican effort at health-care reform has to be done through reconciliation. In fact, there are some ways in which trying to pass health-care reform through reconciliation is worse in terms of policy and political outcomes. A reconciliation-centric strategy nearly guarantees that the GOP health-care effort will be passed on a party-line vote, which means that Republicans will own all the warts of the resulting health-care system. Moreover, because reconciliation is mostly limited to finance-related pieces of legislation, the reconciliation process gives Republicans less room to promote an expansive reform effort, which would allow for more far-reaching reforms to the medical system. The fact that a reconciliation-oriented bill does not include these important reforms makes it more likely that there will be more policy warts for Republicans to be the lucky owners of. The policy limitations of a reconciliation effort compound the political dangers.
Republicans do not need to return to health-care reform immediately. There are many other issues, from infrastructure to immigration, that would more closely align with the animating issues of the Trump campaign and where important reforms are needed. However, there could be a political risk in not making some attempt at health-care reform. Republicans have had significant electoral victories over the past few cycles in part because of public frustration with the many shortcomings of the Affordable Care Act, and the U.S. medical system is in need of reform. If Republicans do return to health care, they could simply seek an outright repeal of the Affordable Care Act. They could also try to pass a slightly different bill through reconciliation or offer a more comprehensive health-care bill that does not need to go through reconciliation. Or they could use some combination of these strategies. But whatever approach they take, Republicans might be wise to develop an affirmative vision for health-care policy.
Pascal-Emmanuel Gobry has argued that conservatives should do the following policy two-step: “Slash regulations. And then subsidize health care.” There’s a certain logic to this process. It would allow Republicans to focus on health-care efforts that might be more popular (market-oriented reforms) while avoiding parts that might be more divisive (such as cutting Medicaid for the poor and working class). Rather than “repeal and replace,” it could instead be called “reform and retain.” Medical regulations could be reformed (including many of the new regulations in the ACA), but many subsidies for low-income Americans would be retained. Reform and retain might end up repealing many elements of the ACA, but the focus would be on improving the American health-care system — not simply eliminating the ACA. (Of course, the Affordable Care Act has inflicted damage on the health-care system, and any effort at reform would have to confront those injuries.)
Republicans do not need to return to health-care reform immediately. However, there could be a political risk in not doing so eventually.
A way of promoting reform and retain might be to design a moderate health-care bill that prioritizes reforming the insurance system (by expanding insurance options, for instance) and the medical-delivery system. It might include allowing insurance to be sold across state lines, increasing the number of medical residencies, or devising mechanisms to encourage more-diverse forms of licensing. This measure might include some tax incentives to help purchase medical insurance, and it might repeal or revise certain taxes (such as the medical-device tax). But the main goal would be to promote policies that would make the medical industry more competitive, more nimble, and more responsive to consumers. Over the long term, these efforts would hopefully reduce the cost of medical care.
Along with these reforms, many health-care subsidies for the poor and working class might be retained, though the precise financing mechanisms might be changed. A health-care bill that keeps subsidies in place would certainly not please everyone in the Republican coalition. Members of the House Freedom Caucus might be upset about the continued government spending on Medicaid, and market-oriented reforms might irritate some corporate lobbyists. But this approach would have the advantage of advancing the principles of innovation while protecting Republicans from accusations that they are indifferent to the poor. Members of the Freedom Caucus might accept a bill that continues some government subsidies while also reforming the health-care system in order to reduce the demand for even more subsidies.
Moreover, a reform-and-retain bill could put some Democrats in a tough spot. It would make the political battle not about how much to cut Medicaid but instead about how much to expand the diversity of insurance products and medical-delivery institutions. Austerity politics are often a loser in American life, but market-oriented reforms have a stronger track record.
Senate Democrats might intend to use the filibuster to block any significant piece of legislation, hoping that political paralysis will replenish their congressional majorities in 2018. But that strategy runs into trouble if Republicans offer moderate measures with broadly popular policy centerpieces. Then, Democrats risk looking out of touch and partisan. That risk for Democrats is especially great on health care: Republicans can say that they are trying to remedy the defects of the Affordable Care Act but Democrats are blocking these middle-of-the-road reforms.
A swing-state Democratic senator like Bob Casey (Pa.) could fairly easily justify voting against a Republican health-care-reform bill that cuts Medicaid. He’d have a much harder time opposing a bill that keeps Medicaid subsidies in place, offers some tweaks to the financing of health care, and makes significant reforms to the health-care market. Swing-state Democrats may decide that going along with these centrist, market-oriented reforms would be politically safer than trying to block them. And if Democrats do block that kind of reform, Republicans could use that to hammer then in the 2018 midterms. For conservatives, good policy and good political outcomes could follow.
Beltway hysterics to the contrary, the failure of the American Health Care Act on Friday was not an extinction-level event for Republicans; in fact, the grave political risks associated with passing the AHCA helped deny it a majority in the House. Still, this failure might teach Republicans that more work still has to be done in developing conservative policies that address current problems and that can win popular support.