Magazine April 17, 2017, Issue

The Health-Care Crack-Up

(Roman Genn)
The Republicans stumble

Republicans are showing more eagerness to blame one another for defeat on health care than they ever did to gain a victory. After the House leadership’s health-care bill had to be pulled from the floor for lack of votes, the party’s various factions read from their familiar scripts. Speaker of the House Paul Ryan’s allies lashed out at the conservative die-hards in the House Freedom Caucus for rejecting the bill. Those conservatives blamed Ryan in return, saying he had given them a lousy bill — one that a significant number of Republicans on the left and in the middle of their House conference had also rejected. Trump critics blamed Trump for his erratic leadership.

None of these groups is entirely right. But a just apportionment of blame should be secondary to moving health policy in a conservative direction, which is still achievable in this Congress if Republicans turn their attention from their rivalries to that task.

After being surprised by Trump’s Election Day victory, Republicans — led by Senate majority leader Mitch McConnell — decided on a two-part strategy. Republicans would repeal much of Obamacare early, using “reconciliation” procedures to allow a simple majority of the Senate to act without being filibustered by the Democratic minority. Later, they would repeal the rest of Obamacare and enact a replacement. One attraction of this idea was that repeal was a relatively simple matter. Republicans had already passed a reconciliation bill repealing Obamacare’s taxes and subsidies when President Obama was in office. (He vetoed it, of course.) Replacement would, on the other hand, require Republicans to overcome their disagreements.

It became clear, however, that McConnell’s plan would not work, in large part because insurance markets could collapse in the interim. This danger arose because the initial bill in the plan would not touch Obamacare’s regulations. The reconciliation procedure was invented to deal with budget bills, and it was thought that the Senate parliamentarian would not allow legislation to include regulatory changes, even changes with incidental effects on the budget. If the bill included enough regulatory changes, the parliamentarian could rule that the Democrats could use a filibuster to keep the Senate from taking it up at all. But if Obamacare’s regulations were to stay in place, then its subsidies and taxes could not simply be eliminated.

So Speaker Ryan adopted a new plan, in which the first bill would replace as well as repeal much of Obamacare. Crucially, though, he continued to seek fast action even though it required coming up with a new bill rather than taking one off the shelf. The House leaders devised a bill that they said accomplished as much of both repeal and replacement as the parliamentarian would allow. Without giving much in the way of advance notice of its content to their normal allies, they released this bill and fast-tracked it for committee votes and floor consideration.

The most conservative Republicans in the House, many of them affiliated with the House Freedom Caucus, balked at the legislation. The bill scrapped Obamacare’s tax credits for people without access to Medicare, Medicaid, or employer-provided insurance, but created its own credits for them — a feature that many previous Republican plans had also included. But many of the conservative critics, at least by the end of the debate over the bill, were willing to accept that tax credits were necessary. What continued to concern them was that so many of Obamacare’s regulations were left in place.

Republican moderates had a different set of concerns. The Congressional Budget Office reported that the number of people with health insurance would drop precipitously under the bill. The insurance rolls would shrink by 14 million people in 2018. While the CBO’s numbers were exaggerated — it has repeatedly overestimated the effectiveness of Obamacare’s fines on people without insurance as a means of getting them to buy it — the basic forecast of severe disruption in insurance arrangements was plausible.

That problem could have been addressed by being less aggressive in rolling back Obamacare’s expansion of Medicaid, the health program for the poor, and by making the tax credits more generous to people with incomes a little too high for Medicaid and people nearing retirement. But these steps would have driven conservatives further away from the bill. Alternatively, the bill could have eliminated or eased Obamacare regulations. The CBO had said that a repeal of Obamacare’s regulations as well as its spending would lead to higher coverage levels than just a repeal of its spending, presumably because more people would find it worthwhile to buy the cheaper policies that getting rid of the regulations would enable. But further deregulation appeared to be blocked by the Senate’s reconciliation rules.

The result was a bill that satisfied nobody and was deeply unpopular. Republicans who voted for it would be responsible for lower levels of insurance coverage and a short-term increase in premiums (if the CBO was to be believed), and would not even be able to say honestly that they had repealed Obamacare.

Then Senator Mike Lee of Utah, an ally of the Freedom Caucus, reported that the parliamentarian had told him that nobody had asked her about the permissibility of some specific deregulatory steps. (She appears to have spoken similarly to others.) This added to the caucus’s skepticism of the bill. House Republican leaders threw in a bit more deregulation to appease them, but lost some moderates.

Throughout this process President Trump remained supportive of the legislation both in public statements and in private conversations with legislators, even as some of his biggest fans in the media blasted it as the misbegotten handiwork of Ryan. He was, however, incapable of horse-trading on policy, knowing as he did few specifics about the legislation. Growing tired of cajoling congressmen on the issue, he said that he was pushing for an immediate vote. His top aide, Stephen Bannon, reportedly told the conservatives that they had no choice but to support the bill. These tactics failed.

With the legislation stuck about a dozen votes short of a majority, Trump and Ryan then canceled the vote and announced that, in Ryan’s words, “we’re going to be living with Obamacare for the foreseeable future.” Republicans moved on to finger-pointing, and Democrats to gloating. The survival of Obamacare, the latter said, proved that the law was sensible and moderate, that Republicans’ attacks on it were demagogic, and that their alternative health-care ideas were either bad or unpopular or both.

What it really shows, above all, is that legislating is easier when you have 60 rather than 52 senators on your side. The Democrats had a much freer hand in making regulatory changes when they passed Obamacare and did not need to structure their bill around the reconciliation process. They also had more votes to spare in the House. And they didn’t have these majorities primarily because their health-care ideas were so popular. When President Obama was elected, he was opposed to one of the main components of his law: the fines on uninsured people. (He was also opposed to taxing employer-provided insurance plans, which became part of the law as well but has never been implemented.)

But it’s also true that Republicans could have done better. A presidential candidate who ran on a health-care plan might have been able to unify his party behind it in the process of winning the election. Trump, who has never shown much interest in health-care policy, was not going to be that candidate. During the campaign he had a brief outline of a plan that made little sense, and he dropped it in favor of letting the Congress come up with something. He consented to putting the bill at the top of the agenda even though he lacks interest in it, because he also has no serious legislative agenda on anything else. Ryan and McConnell, meanwhile, should have adopted a slower and more deliberate pace. The House Freedom Caucus, while it made some reasonable arguments against the leadership’s bill, leaned too heavily on its not being a full repeal. That was true, but a bill could have been a major improvement without meeting that description.

The party’s worst mistake on health care, though, would be to quit at the first sign of difficulty. Flawed as the bill was, it did help to bring the Republicans closer to a common policy. The most conservative Republicans accepted a tax credit, and the least conservative ones accepted a restructuring of Medicaid. Nothing is stopping the Republicans from spending the next year hammering out a bill that they like better, refining it as they go so that it enables more people to buy coverage they actually want.

Many Republicans, including President Trump, are rationalizing inaction on health care on the ground that Obamacare is collapsing as it is. Republicans have used this excuse before. But it’s not clear that Obamacare’s exchanges are collapsing, as opposed to performing badly. And if they are, it is all the more important to have legislation ready to limit the damage their failure can inflict on vulnerable people. Medicaid, meanwhile, is capable of continuing indefinitely to deliver poor results for the money spent.

Most Republicans now embrace moving toward a market in which all Americans have the option to buy renewable catastrophic coverage and in which such coverage competes with more comprehensive plans on a level playing field. That was the right stance to take before President Obama got elected, and it remains the right one after the failure of Speaker Ryan’s bill. Once that failure recedes a bit into the distance, they will see that they have no reason to let a few weeks of clumsy legislating doom that cause for all time.

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

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