The GOP Grapples With Creating a Better Obamacare

“Now Republicans own the difficulty of improving the health sector.”

The 2,409 pages of H.R. 3590, the Patient Protection and Affordable Care Act.

Photographer: Daniel Acker/Bloomberg

After spending much of the past seven years trying to repeal Obamacare, Republicans in Congress finally have the power to do it. And they got off to a quick start. A week before Donald Trump was sworn in as president, the House and Senate voted to begin the process of repealing the law.

Yet as Republicans rush to roll back President Obama’s signature health-care achievement, they’re still struggling to come up with something to replace it. At the heart of the problem is figuring out how to undo the intricate framework of mandates and taxes that form the basis of the Affordable Care Act. If you require insurance companies to cover someone, regardless of preexisting conditions, premiums would skyrocket. To keep premiums at reasonable levels, you have to insist that everyone buy insurance—even healthy people who think they don’t need it. To make sure low-income people can pay the premiums, you have to offer them subsidies. To fund it all without increasing the budget deficit, you need taxes.

Removing any one piece of the puzzle can lead the whole thing to collapse. This is the conundrum congressional Republicans face as they gather in Philadelphia on Jan. 25 for a three-day strategy session, where the prime focus will be devising a replacement plan. Even Republican veterans of the Obamacare fight admit the GOP hasn’t been able to solve the riddle. “We’ve struggled to try to coalesce around a replace plan, and it was always a challenge to come up with the funds needed,” says Eric Cantor, the former Republican House majority leader who led the fight against the ACA during much of the Obama presidency and lost his congressional seat to a Tea Party challenger in 2014. “If you repeal the revenue measures, what do you do? Republicans don’t like to raise taxes. If that’s the case, where does the money come from?”

President Trump plans to join lawmakers in Philly. While his election sealed their ability to dismantle Obamacare, in many ways he’s made Republicans’ job harder by promising to replace it with something that’s cheaper and provides “insurance for everybody.” The president has also vowed to keep one of the most costly pieces of Obamacare: the requirement that insurers cover people with preexisting medical conditions.

On his first day in office, Trump signed an executive order directing federal agencies to do everything they can to diminish the financial burden of the ACA, including waiving or delaying taxes on health insurers, medical devices, and prescription drugs. Yet those taxes are a key source of revenue for Obamacare. If they are eliminated in any repeal effort, Republicans would have to find the money from somewhere else if they don’t want to increase the budget deficit. That could put them in a position of having to raise taxes, which would violate a promise many Republicans made when they signed the “no new taxes” pledge promoted by Grover Norquist’s Americans for Tax Reform.

Signs of GOP disunity have already appeared. Early on, some more conservative party members wanted to repeal the law right away and figure out how to replace it sometime later. More moderate Senate Republicans concluded that rushing a repeal bill through might damage the insurance market if a replacement was uncertain. A Congressional Budget Office report suggests that repealing the ACA without an immediate replacement plan would lead to 18 million people losing their insurance within one year.

To avoid a Democratic filibuster in the Senate, Republicans decided to use the budget reconciliation process as the mode to repeal the ACA. Yet they can’t repeal the whole thing through reconciliation and will almost certainly need Democrats to help replace the law.

Democrats are in no rush to help. House Minority Leader Nancy Pelosi is reminding her members that a strategy of unconditional opposition helped them bury President George W. Bush’s attempt to privatize Social Security in 2005. Democrats are sponsoring the kinds of rallies and town halls they held then, reminding voters of the benefits of the ACA and railing against the Republican effort to dismantle it. “Democrats are thrilled to have the ACA off their backs, and now Republicans own the difficulty of improving the health sector,” says Doug Holtz-Eakin, an economist and former head of the CBO.

Of the several Republican replacement plans floating around, GOP leaders seem likely to build on ideas from House Speaker Paul Ryan and Georgia Representative Tom Price, Trump’s pick to lead the U.S. Department of Health and Human Services (HHS). In 2015, Price introduced a health-care bill that included tax credits to help people buy insurance on the private market, expanded health savings accounts, and federal funds for states to create high-risk purchasing pools designed to cover the sickest people. It would also eliminate Obamacare’s Medicaid expansion. Together those provisions would reduce the number of people who get insurance and could lead to significantly higher deductibles. At his Senate confirmation hearing on Jan. 24, Price refused to say whether people would lose coverage under his plan.

Republican Senators Susan Collins of Maine and Bill Cassidy of Louisiana have a replacement plan that allows states to decide whether to keep the ACA or pursue different approaches funded by the ACA’s taxes. This has the backing of a handful of prominent Republicans including Lindsey Graham of South Carolina and was designed to attract Democrats, but Senate Minority Leader Chuck Schumer has already rejected it as “an empty facade that would create chaos.”

This is all made more difficult by the Republicans’ self-imposed deadline. Now that Congress has begun the push to undo the ACA via the budget process, key committees are aiming to propose repeal legislation by Jan. 27. Lamar Alexander, the head of an influential Senate health panel, wants Congress to have a plan to “repeal and replace” Obamacare by March. “The Republicans have dined out on that phrase for three elections in a row,” Mike Leavitt, former HHS secretary under President Bush, told Bloomberg TV on Jan. 23. “They have to deliver.”

The bottom line: Republicans are trying to introduce ACA repeal bills by Jan. 27 but are struggling to come up with a replacement.

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