Republicans' Struggles to Replace Obamacare Feel Like Deja Vu All Over Again

  • Republicans hit same roadblocks that stymied 2014 effort
  • ‘We’re firing with real bullets now,’ says Senator Flake

Alice Rivlin Sees a Sensible Agreement on Obamacare

Republicans in Congress are hitting roadblocks as they try to devise a plan to replace Obamacare, stuck over issues like how to structure tax breaks they want to give people to buy insurance.

The party stalemated on many of the same obstacles in 2014 during its most extensive effort to devise an alternative, according to lawmakers and aides involved with that effort.

"It wasn’t easy for us," said Eric Cantor, then the House majority leader, who led the effort. "There were a lot of thorny issues. The easy way was to gloss over the thorny details and the intra-party divisions."

Republicans, who have spent more than six years vowing to smash the Affordable Care Act, swept into control of the White House and Congress pledging a swift repeal. But they’ve made little progress in deciding how to do that, or what should come next.

The 2014 effort, which began after Cantor promised members in January that the House would pass an Obamacare alternative that year, featured biweekly meetings between the majority leader and key committee leaders, and weekly meetings among staff. Republicans agreed on vague concepts such as tax breaks, letting insurers sell across state lines and letting states run Medicaid.

But then they hit a wall.

QuickTake Q&A on why repealing Obamacare is harder than it sounds

Cantor, now with investment bank Moelis & Co., argues that GOP leaders failed to achieve consensus in 2014 because, with a guaranteed veto from then-President Barack Obama, they lacked a forcing mechanism to achieve consensus. But other Republicans see a potentially larger obstacle today: They have to live with the consequences of their actions.
"We’re firing with real bullets now," said Senator Jeff Flake of Arizona.

Take the tax credit debate. House Speaker Paul Ryan and newly installed Health and Human Services Secretary Tom Price have proposed an age-based refundable tax credit. Senator Rand Paul wants individuals to have the same unlimited tax deduction that employers get. Representative Mark Walker has floated a health-care tax deduction capped at $20,500 for families.

"It’s not moving fast enough," said Representative Jim Jordan of Ohio, a conservative who’s had ambitions of becoming speaker. "Obamacare is a mess."

Tax Break

Back in 2014, lawmakers argued over whether the tax break should be a deduction or a credit, how large it should be and whether it should be apportioned by age. They also fretted that Medicaid block grants without coverage guarantees would face pushback from governors. 

"We knew there was going to be blowback from states," Cantor said. They feared businesses would fume if the employer tax exclusion was capped. "We heard from employers that it was a necessary part of their benefit packages," Cantor said. They worried about how to fund their plan if they axed Obamacare’s tax hikes.

And the biggest fear of all was chaos in the health-care system: "How are you going to make sure there’s not a total collapse?" the former GOP leader said.

The same problems now confront a GOP in control of the White House and Congress vowing to finish legislation this year to wipe out Obamacare and set up a superior system. Ryan’s blueprint, which he has said will be the basis for a replacement, adopts the same ideas that Cantor said were discussed in 2014, but without details or legislative language.

‘Scurrying Around’

Some Republicans fear the efforts are stalling.

Representative Scott Perry of Pennsylvania said the failure to reach consensus in recent years has put the GOP in a tough spot. "We’re scurrying around and that’s unfortunate," he said. "Because I think the time was there and we should have stood for something. And that puts us behind right now."

The lack of progress mirrors the 2014 effort. Cantor’s goal was to have a vote by July 4. But he didn’t come close, and the meetings went in circles, said Doug Heye, then Cantor’s deputy chief of staff.

"You’d meet on the first Tuesday or Wednesday of the month with members, and the next time we’d meet with them it’d almost be as if we were going back to where we were that previous meeting," Heye said. "There were a lot of ideas being talked about. But getting to substance or real language just didn’t happen."

The effort ended abruptly when Cantor lost his primary in a surprise upset. Other players from the 2014 debate have also moved on. Dave Camp, who chaired the Ways and Means Committee, has left Congress, as has John Kline, who led the Education and the Workforce panel. Fred Upton of Michigan remains in Congress, but no longer chairs the Energy and Commerce Committee. 

Angry Voters

Top Republicans in 2014 were concerned the Congressional Budget Office would analyze their plan as insuring fewer people than Obamacare, according to two GOP leadership aides at the time. What would they tell constituents who stood to lose their coverage? That fear has proven prescient as angry voters flood into town halls demanding that Republican lawmakers not strip away their Obamacare benefits.

Today, Republicans are knee-deep in Obamacare alternatives, but none have a consensus. One plan with some momentum, offered by Senators Bill Cassidy of Louisiana and Susan Collins of Maine, would allow states that like Obamacare to keep it, or let them use the Obamacare taxes to set up an alternate system. But conservatives like Jordan oppose it.

Another outline by Representative Mark Sanford would replace the law with a deregulated market structure that provides health care tax credits for individuals. But that plan could be disruptive to existing coverage.

‘No Complete Coalescing’

To Jordan, there’s some deja vu to 2014.

"There was no complete coalescing around one plan," he recalled. "There was some coalescing around a handful of plans."

Rory Cooper, Cantor’s communications director at the time, said one of the lessons of 2014 for the GOP today is that any major change will include downsides. Republicans need to be honest about them, he said, particularly after slamming Democrats for making promises they couldn’t keep.

Whether they can achieve that daunting task in 2017 is uncertain.

"It’s impossible to tell this soon," Cooper said. "We’re in such a different political and media environment than we were eight years ago that it’s hard to predict what by the end of the year Republicans can accomplish."

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE