Politics & Policy

Obamacare Repeal and Replace, R.I.P.

Sen. Mitch McConnell and fellow Republicans on Capitol Hill, July 25, 2017. (Reuters photo: Aaron P. Bernstein)
Republicans formally laid their effort to rest this morning.

‘Repeal and replace” made Republicans electoral Supermen; “pre-existing conditions” were their kryptonite.

Senate Republicans played out the final scene of their legislative tragedy in the early hours of Friday morning, when they formally laid to rest their seven-year effort to repeal the law.

Through four election cycles, Obamacare’s rising premiums, burdensome cost-sharing, narrow networks, and plan cancellations helped fuel GOP electoral victories at every level of government.

But having won their mandate, congressional Republicans abruptly retreated, recognizing that the most unpopular aspects of the law are the direct consequence of its most popular provisions — requiring insurers to issue policies to all comers and pay to treat diseases their customers acquired before they bought insurance, while forbidding them to charge lower premiums to those in good health. Once the conversation turned toward relaxing these requirements, the political tide turned against Obamacare repeal.

People intuitively understand that they can’t buy life insurance on a deceased loved one, renter’s insurance after their apartment has been burgled, or auto insurance after they wreck their car. You can’t insure against the past, only the future.

Voters seem to take a different view of health insurance. The prospect that a disease or injury might rob them at once of their health and their savings made them grow deeply attached to a regulatory regime that encourages people to wait until they are sick to buy health insurance.

House Republicans didn’t push back. Instead of doing the hard work of convincing voters that popular regulations had deeply unpopular consequences, many House Republicans who had vowed to repeal and replace Obamacare took the easy way out. Some of that had to do with the constraints of the budget-reconciliation process, which is better suited to curbing entitlement spending than to rewriting regulations. But many House Republicans were reluctant to scuttle Obamacare’s creaky framework. So the House passed a bill that largely acquiesced in the law’s subsidies and Medicaid expansion, while allowing only a little room for states to experiment with alternative regulatory approaches.

Even that bill discomfited Senate moderates. Although it retained Obamacare’s extension of Medicaid coverage to non-disabled, childless adults, the House-passed measure phased out a reimbursement arrangement that required the federal government to pick up 90–100 percent of their medical expenses. By contrast, the average federal reimbursement rate for other categories of Medicaid recipients — children, the elderly, pregnant women, people with disabilities — is 58 percent. The House bill gradually erased this inequitable reimbursement scheme.

GOP governors of states that had expanded their Medicaid programs couched their opposition in moral terms, but their motives were transparent. This was not a debate over coverage or compassion. It was a debate about money.

Moderates won that debate. But even that wasn’t enough. In the end, three of them joined with Democrats to squash a measure that left Obamacare almost completely unchanged. It deviated from the law mainly in two respects, repealing the employer mandate and the tax on the uninsured, a deeply unpopular provision that has failed to induce those in relatively good health to buy a product they neither want nor feel they need.

The Senate vote will do inestimable reputational damage to the Republican party. The political consequences of its failure may run deeper.

Obamacare created winners and losers. The GOP has now sided with its winners, even though data from regulatory filings analyzed by Edmund F. Haislmaier and Drew Gonshorowski of the Heritage Foundation suggest that the losers are at least equal in number.

Between December 2013 and December 2016, the number of people with public or private coverage increased on net by 15.7 million. This is overwhelmingly the result of more people joining Medicaid; Haislmaier and Gonshorowski find that the Medicaid rolls grew by just over 14 million, most of that growth occurring in states that enlarged their programs to cover expansion adults. They join nearly 7.7 million people with government-subsidized private policies. In the private market as a whole, although 5.3 million people gained individual coverage, 3.6 million fewer people had job-based coverage at the end of the period.

Those who now have Medicaid or government-subsidized private insurance, generally those with incomes less than 200 percent of the federal poverty level ($24,000 for an individual), are Obamacare’s winners. Its losers include the 9.4 million people who must pay their own premiums without government assistance or face a tax penalty. The number of people in the fully insured group market — largely those who work for small firms that, unlike larger corporations, are unable to escape the Obamacare regulatory thicket by self-insuring — also has shrunk, from nearly 61 million in December 2013 to 52 million in December 2016. Those small enterprises that continue to sponsor coverage for their employees also have endured higher premiums and the erosion of coverage.

Obamacare’s losers will continue to lose, because congressional Republicans sided with the law’s winners.

As Haislmaier and Gonshorowski put it, “Obamacare may be shifting from insuring the uninsured to un-insuring the previously insured.”

A Republican White House and Congress now are implicated in this shift. Obamacare’s losers will continue to lose, because congressional Republicans sided wiih the law’s winners. They have tacitly adopted the progressive ethic that regards welfare enrollment and dependency as indices of social progress.

Many of them also seem prepared to buy into that other curious aspect of the progressive ethic, lavishing corporate subsidies on well-heeled insurers that agree to continue to sell Obamacare policies. Welfare, it turns out, isn’t merely for the poor; it also extends to the well-capitalized and well-connected.

Just months after an improbable presidential election, the Republican Congress has confirmed Trump’s animating premise: that the governing class favors the interests of those at the top and bottom of the economic scale, at the expense of people in between.

The Senate’s Obamacare face-plant will linger in the minds of these voters.

— Doug Badger is a former White House and U.S. Senate policy adviser and currently a senior fellow at the Galen Institute.

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