Dueling Band-aids

It’s par-tay time! bandaid At least, that was the spirit among House Republicans Thursday afternoon, after they passed their bill to repeal and replace Obamacare, otherwise known as the AHCA.  And I mean, who wouldn’t feel like celebrating after taking the first big step toward yanking insurance away from approximately 24 million people, right??[1] Oddly enough, some Democratic officials seemed oddly joyful as well.  Perhaps just trying to make the lemonade out of the most bitter lemons, many Democrats celebrated the political peril this vote would likely cause for a number of House members in swing districts.  Unfortunately it will be a while before we’ll know how that will really play it.  In the meantime, I fear that on the substance, this bill presents the worst case scenario – both for those who rely on Obamacare to help them get health insurance and for the Democrats & others who want to see Obamacare do well as a matter of politics.

But Isn’t the Bill Going to Completely Change in the Senate Anyway??

As just about everyone has acknowledged – Democrats, Republicans & pundits alike – the bill that just passed the House will almost certainly not pass the Senate in its current form.  The two big reasons for this are: (1) most GOP Senators have to appeal to a much more politically diverse constituency than many of their counterparts in the House do, and (2) Republicans in the Senate have a much smaller margin for error than Republicans in the House, as they can only afford to lose 2 GOP votes (assuming VP Pence comes in to break a tie)[2].

Much of the conventional wisdom so far seems to assume that the bill that comes out of the Senate will be significantly different from the one that just passed the House. That may turn out to be true, but I don’t think we should base our expectations on it.  This recent article from Axios makes it sound as though the Senate has only fairly minor disagreements with the House-passed bill, and the changes they’ll require will be largely cosmetic.  In other words, it sounds like they mainly want to change just enough to be able to claim they made fixes to certain troublesome provisions, similar to the way the Upton amendment was used to claim that the preexisting conditions issue was fixed in the House bill, even though it made a negligible difference in the actual substance of the bill. Axios might not have it right either, but one thing we should have learned by this point is that the conventional wisdom often isn’t that wise when it comes to today’s politics, so don’t rest easy on widespread assumptions.

In any case, whether the Senate bill ends up being substantially different from the House bill or not, the general framework of the bill will likely still look the same: i.e. it will (1) leave in place a default system that will still nominally be Obamacare (though certain crucial aspects of Obamacare will have been removed, which I’ll touch on below, so it may end up not being much like Obamacare at all. But because it will retain some of the key Obamacare regulations it will become the “Obamacare” proxy in this debate) and then (2) give the option for states to waiver out of Obamacare regulations almost entirely.  This of course would be only if (and it’s a big IF) such a bill is able to overcome the procedural hurdles of the Senate[3].  Senators Bill Cassidy and Senator Susan Collins presented their own proposal for an Obamacare replacement several months ago and it took a form along those lines (though it wasn’t as austere as the bill that just came out of the House. It also got very little pickup in the Senate).

Even though neither of those two Senators are on the committee writing the Senate bill,[4] they are supposedly giving their input into the drafting, and this seems to be one idea that everyone in the GOP, from all the various factions, can agree on.  So I believe this opt-out (or waiver) construction will remain.  This is just a guess on my part, and it may turn out that the final bill doesn’t take this form at all (especially because the aforementioned procedural issues may make it impossible even if the entire Party wants it).  But at this point, I believe this is a potential outcome, so the rest of this post proceeds on this basis.

 The Waiver Option is the Worst Case Scenario for Dems

Trump & the GOP already have a history of sabotaging Obamacare

A GOP health care law that retains “Obamacare” as a default and then gives states a waiver option would be the worst case scenario for those of us who want and need to see Obamacare succeed.  A set-up that divides the country in “Trumpcare” states vs. “Obamacare” states would give Trump & the GOP the ultimate motivation to hope for (and help) Obamacare to fail.  Trump and the GOP are already working to sabotage Obamacare even as things stand right now.  In a post a couple weeks ago, Obamacare Wars – Part 3, I wrote about 2 crucial decisions Trump & the GOP need to make that will determine the fate of the Obamacare markets. I explained how the choices they make on those 2 key questions will tell us if they’re trying to stabilize or sabotage the markets.  To get a full understanding of why these decisions are so crucial to the future of Obamacare & how Trump/the GOP are manipulating them, please read that post.

But in short, Trump and/or the GOP need to decide: (1) whether they will reimburse insurance companies for cost-sharing reductions (CSRs) for low income customers.  The CSRs significantly reduce out-of-pocket costs for millions of Americans.  Insurance companies take the hit on the front end and then are supposed to be reimbursed by the federal government; and (2) whether they will meaningfully enforce the individual mandate.  Trump/the GOP have given no final answers on either of these questions yet, but so far, all indications are that they’re taking a route that will do significant – perhaps fatal – damage to Obamacare (e.g. refusing to make any commitment on the CSRs and even threatening not to fund them, and appearing to soften enforcement of the mandate through the IRS).

And simply by delaying any final the answers to these questions, they are already doing enormous harm to the viability of the markets. These companies are making their decisions right now about whether to stay in the markets next year, so by failing to give insurance companies the assurances they need about whether the markets will be stable in 2018, Trump/the GOP are leaving many companies with no choice but to pull out of the markets or drastically increase premiums.

Additionally, Trump did significant damage to Obamacare this year by hurting 2017 enrollment.  As soon as Trump took office, he canceled the Obamacare outreach efforts that had been an integral part of the Obama administration’s strategy.  This affected the last couple weeks of enrollment which, in prior years, was an important time for getting the crucial young, healthy customers enrolled.  Later analysis of 2017 enrollment shows that Trump’s interference significantly dampened sign ups.

And years before Trump even took office, Republicans, led by Senators Marco Rubio and Jeff Sessions (now Trump’s Attorney General) dismantled an important stabilization mechanism that Democrats had built into Obamacare, called “risk corridors.”  This was a provision that was included in the bill because the drafters knew that for the first few years, insurers would likely have a difficult time figuring out how to price their products accurately – some would likely price way too high, some would price way too low.  The “risk corridors” program was intended to help spread this risk of errant pricing among the insurers so that no individual insurer took on huge losses during Obamacare’s first few years, thus giving the insurance companies a few years to adjust to the new markets.  Rubio, Sessions and the rest of the Republicans got rid of this program, causing many companies – particularly the smaller co-ops – to suffer devastating losses. (Both of these topics are explained in more detail in this post, Obamacare Wars – Part 2).

Trumpcare states vs. Obamacare states will mean even more incentive for sabotage

Once Republicans pass a health care law of their own,assuming it takes this waiver form, the GOP will have incentive to step up these sabotage efforts even further.  And sure, they’ll make some nice noises toward responsible governing, to make it sound like they’re doing the right thing with Obamacare. But it’s their actions that will really matter. And the first and most important piece of evidence we have about how Republicans intend to handle Obamacare (or whatever’s left of it) after their bill has passed is this: sabotage is built into the bill. How? It kills Obamacare’s individual mandate. Of course, this detail might change once the bill moves from the House to the Senate – there’s no guarantee this will be in the final bill.  But of all the concerns we’ve heard from different Senators about the House version of the bill, this particular item has not been mentioned at all even though it’s been in there since the first iteration of the bill came out two months ago.

dollar-signSo you’ll remember that a few paragraphs back I explained that softening the enforcement of the individual mandate was on of the key ways that Trump/the GOP were already sabotaging Obamacare.  This is because without the individual mandate bringing younger, healthier people into the risk pools for balance, Obamacare almost certainly can’t survive.  The mandate is one of the core principles Obamacare was built on. As of now, the Trump administration has only softened its enforcement of the individual mandate.  But under the House bill, the tax penalty that Obamacare uses to enforce the mandate would be completely eliminated.  For all intents and purposes, this gets rid of the mandate itself.[5]  What will be left for the states that want to keep Obamacare and the protections it provides (such as preexisting conditions protections, essential benefits, etc) will be something that everyone still calls Obamacare, but it will be completely crippled, almost certainly unable to survive because one of its key elements has been struck by the GOP.

Sabotaging Obamacare is the GOP’s best “insurance” against failure

So we can see from the way they’ve written their own bill that the GOP will almost certainly sabotage whatever remains of Obamacare once their bill is enacted. But now let’s look at how else we can predict that sabotage is the likely route the GOP will take. Since we don’t know exactly what the final GOP health care bill will look like, we don’t know exactly what outcomes will be expected to arise in the “Trumpcare” states.  But we can surmise – based on the various proposals we’ve seen so far – that the effect will be to cause significant numbers of people to lose insurance, both in the private markets and from Medicaid.bad news

Additionally, many people who do retain insurance will find that their insurance plans come with fewer benefits and protections than the plans sold under Obamacare.  As with the rollout of Obamacare, and the first few years of its implementation, these downsides and any other hiccups will get an inordinate amount of coverage.  Now, Trump is certainly far better at marketing his successes (and even his failures to look like successes) than Obama was, but even still, if there are significant coverage losses under Trumpcare, and particularly if there are dramatic stories that can be highlighted, this will make news.

The best way for Trump and the GOP to guard against any negative news about Trumpcare is to have a comparison waiting in the wings: “but look how much better it’s doing than Obamacare.”  They do a variation on this right now when they are confronted about the flaws in the bill, such as analyses showing that people with preexisting conditions will have to pay tens of thousands of dollars more in premiums.  GOP members/leaders often respond by saying something along the lines of, “well, Obamacare is in a death spiral, and it’s not insurance if you have a card but can’t get care, so we’re trying to give people care.”  They avoid actually addressing the flaw in their bill by focusing on (their vision of) how terrible Obamacare is, the gist being that anything they can offer is necessarily better in comparison.  This argument will only become more common if their law goes into effect and they have to combat any resulting bad news.

And the GOP desperately needs to slay the “Obamacare” dragon

And who knows? Maybe Trumpcare will surprise us and do well.  Maybe they’ll somehow figure out a way to lower premiums and still keep people with preexisting conditions insured.  But even in that case, think how much more satisfaction Republicans – and Trump in particular – would get out of touting their law’s success if they can put it up against the failure of Obamacare in the blue states (presuming it would be mostly blue states that would keep it).  If their “free market” plan does well in the red states, but Obama’s “socialist” plan is also doing well in the blue states, what will they really have won? This argument that’s been going on for almost a decade now (not to mention the bigger philosophical argument underlying it) won’t be resolved by both sides winning.  The only way they can slay this dragon is for their plan to succeed and for Obamacare to fail.[6]

But won’t Republicans be more responsible once health care “belongs” to them?

Some have argued that once the GOP passes a healthcare law, they’ll behave more responsibly, because they’ll “own” healthcare, in its entirety. But they won’t feel that they “own” it, in fact it will be just the opposite, they’ll feel entirely freed of responsibility for the Obamacare(-ish) states.  They’ll argue that they’ve given states the choice of a “better” system, so any states that choose to stick with the Obamacare(-ish) system, well, that’s their own problem.

Besides, saying that the GOP will take responsibility for health care (as a whole) because logically they should take responsibility for health care is assuming that they’ll behave like a rational party that’s concerned about blowback from voters.  It ignores that they just rushed to pass a bill that had a 17% approval rating when last polled and then hopped on a bus to the Rose Garden to celebrate giddily.  It ignores that they spent the entire campaign promising voters that their health care bill would protect preexisting conditions & make sure people would not be charged more, and then they went ahead and passed a bill that would cause premiums for people with preexisting conditions to skyrocket, all while continuing to  claim that their bill does protect preexisting conditions and does it even better than Obamacare.

It ignores that they spent the last eight years (falsely) accusing Democrats of rushing Obamacare through Congress without giving people a chance to see what was in it or how much it would cost, and then they rushed their own bill through so fast that their own members didn’t have time to read it, let alone find out how much it would cost or how many people would lose insurance. And it ignores that the same guy who criticized Democrats over these things is now claiming that attacks about reading the bill or waiting for scores are “bogus.” It ignores that the President from their Party ran on a promise not to cut Medicaid yet they just passed a bill that cuts nearly a trillion dollars from Medicaid and they’re defending it by claiming there are no cuts to Medicaid and in fact there are  “increases in spending.”

And finally it ignores the years that they’ve spent already sabotaging Obamacare – not only without paying a price for it – but being rewarded for it with the House, the Senate, the Presidency and Governorships and state houses all over the country.  Yes, logic tells us the consequences may be different for them now that they hold the Presidency, but they’ve had years of wins now based on nothing but obstruction and sabotage.  And that might be a hard habit to break.

Let’s be better prepared for what’s coming this time

So I’m writing this, because this time Democrats – and all those who support Obamacare – need to be prepared for however Obamacare might be undermined. Because if you actually look at all of those examples above, along with the vast range of Republican’s extreme, obstructionist behavior over the last decade, you’ll see that this is either (a) a party that is not concerned about blowback from the electorate because they believe they can talk their way around anything; (b) a party that is not concerned about blowback from the broader electorate because they’re too busy being fearful of their base; or (c) a party that is not behaving rationally.  No matter which of these it is, there’s no reason at all to believe that this Party is suddenly going to think it has a responsibility to make sure Obamacare works, if and when it has finally achieved their holy grail of passing an Obamacare “repeal” law.[7]



[1] Of course, we don’t know the exact number of people who will lose insurance under the AHCA because the GOP didn’t wait to see a new CBO score before taking their vote.  So we can only look to the score of the previous version of the bill and guess that this new version will be somewhere in the same ballpark.  The changes to Medicaid alone (cuts of nearly a trillion dollars over a decade) were projected by the CBO to cut 14 million people from the program on the first go ‘round.  The newer version of the GOP plan – the one that just passed the House – did not change anything from the earlier version as far as Medicaid goes (other than adding a provision that allows states to impose a work requirement on some recipients), so those projections should stay about the same.

[2] The GOP is planning to pass the bill through the Senate using a procedure called “reconciliation,” which allows them to pass it with a simple majority vote.  Democrats will not be able to filibuster.

[3] As mentioned in footnote 2, above, the GOP is planning to use a special procedure called reconciliation to pass this bill through the Senate.  This method limits the types of things that can be included in the bill to only items that affect the budget. So provisions that would get rid of certain Obamacare regulations (i.e. much of the waiver sections) may not be permitted to pass through reconciliation.  However, the rules are not so clear cut, and it’s sometimes possible to argue that things have a budgetary effect, even when the effect is tangential.

The House has a Parliamentarian who makes the determination on questions such as these.  It’s possible though that if the GOP doesn’t like her rulings they can fire her.  Additionally, when the first House bill went down in flames because House conservatives thought it wasn’t far right enough, they were told that certain provisions they wanted wouldn’t be able to get through Senate procedures.  As a result there was talk about ignoring the Parliamentarian entirely.  The Parliamentarian simply makes the calls on whether or not something adheres to the rules, but she has no power of enforcement.  So if the GOP really does choose to ignore her rulings, there’s nothing preventing them from plowing ahead anyway.

[4] The Senate put together a committee of 13 members to write its version of the bill.  The committee contains no women but includes two of the most far right members of the Senate, Ted Cruz and Mike Lee.

[5] The reason the AHCA gets rid of the tax penalty but not the individual mandate itself is because of the procedural limits placed on the bill by “reconciliation” described in Note 3 above.  Remember, only items that affect the budget can be included in a bill passed through reconciliation.  Thus, the mandate’s tax can be removed, but the mandate itself can’t be.  But by removing the tax, the GOP will likely achieve the intended effect of neutering the mandate, because without the enforcement mechanism, the force of the mandate is mostly gone. And many people will likely believe the mandate itself is gone once they hear they are no longer required to pay the penalty.

The AHCA attempts to replace the Obamacare tax penalty with a 30% surcharge (paid to the insurance company) on anyone who purchases insurance after a gap in coverage of more than 63 days.  In theory, this is supposed to serve the same purpose as the mandate by encouraging people to maintain insurance and not wait until they get sick to purchase it.  However, in reality, it would likely have a backfire effect and end up discouraging many people from purchasing insurance, by penalizing them with that extra fee if they, for whatever reason, had to go without for some period of time.  This would actually end up leading to older, sicker insurance pools, the exact opposite of the intended effect.  (See #9 here for a more thorough explanation).

The current version of the House bill also sabotages Obamacare in other ways, such as by ruining Obamacare’s very well thought out premium subsidy system and replacing it by a very poorly thought out tax credit system that does not help the people who actually need it.  This will obviously result in significantly fewer people being able to purchase insurance.  However this, and other issues, seem more likely than the mandate problem to be at least moderated (though probably not entirely fixed) in the Senate.

[6] Plus, let’s face it, everything we know about Trump as a person (and for him, everything is personal – we have yet to see him separate the political from the personal) tells us that he will need the personal satisfaction of seeing Obama’s law destroyed, of watching Obama “lose” while he “wins.”  The only way this factor gets taken out of play is if there is actually an adviser in Trump’s orbit who has the ability, the courage, and the sense to talk him it out of that.  So far, that doesn’t seem to exist.

[7] And one final note, I’ve only focused here on the question of whether or not the GOP would continue to sabotage Obamacare, but there’s actually more to the issue than that.  Because Obamacare has been so weakened already, both by GOP attacks and by some mistakes made by Democrats (also discussed in Obamacare Wars – Part 1), for Obamacare to thrive at this point would take some affirmative nurturing  by the administration.  So Obamacare’s future relies not just on Trump/the GOP not sabotaging it, but on them being willing to take steps to actively help it succeed. Expecting that from them really seems like a fantasy at this point.  I hope I’m wrong.  For the sake of the people who depend on Obamacare for insurance, I hope I’m wrong about this whole thing and that Trump & the GOP will help Obamacare succeed even after they pass a bill of their own.  Only time will tell.

2 thoughts on “Dueling Band-aids

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