The Bipartisan Healthcare Hope of Repeal and Replace

The Bipartisan Healthcare Hope of Repeal and Replace
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After eight years Republicans are finally in a position to repeal the Affordable Care Act (ACA).  Many caution that repeal without concomitant replacement will lead to chaos in the insurance markets with millions losing coverage.  These fears are overstated. Yet replacement should accompany repeal for another reason - to maximize the chance that a good replacement package can be enacted.

Republicans hold 52 Senate seats.  While a repeal of much, but not all, of the ACA can occur with a simple majority vote through the reconciliation process for items with budgetary implications, repealing the entire law and enacting a replacement will require 60 votes. Republicans need help from at least eight Democrats.  They have the best chance of getting it if they combine repeal with a comprehensive replacement package that includes individual items that appeal to specific Democrats who will, therefore, be willing to vote for the entire package. The piecemeal approach of repeal and delay risks failing to attract enough Democratic defections needed to support important policy goals.

The ACA has been unpopular from before it was enacted until today. Public approval has never breached 50 percent.  Certain ACA features like the individual and employer mandates have been universally unpopular. The Independent Payment Advisor Board (IPAB) – a 15 member panel that can propose cost-saving measures for Medicare that Congress can only override with a super-majority vote – is popularly known as the “Death Panel.” Few people know that President Obama has not appointed a single member. Fewer still will mourn its demise.  Other ACA features though, like guaranteed insurance issue regardless of health status and coverage of children up to age 26 under their parents’ insurance, are widely popular.

Republicans greatest leverage derives from the fact that 23 of the 33 Senators up for re-election in 2018 are Democrats. Ten of these Democratic Senators are from states that Donald Trump carried this past election.  Six are in states that Trump carried by substantial margins. Five of these six states also went for Mitt Romney in 2012.  Republicans can pressure these Democrats to work with them on a replacement during the next 12 to 18 months with the threat that their failure to cooperate on replacing ACA will be used against them in the upcoming election. One of the vulnerable senators, Joe Manchin of West Virginia, has already proclaimed that anyone who thinks they can fix Obamacare is “living in fantasy land.” He said, "I'm willing to look at replacing, repairing, doing anything we can to make it better. But put something on the table."

The individual and employer mandates and IPAB could be repealed through reconciliation.  But why do that when Republicans can tell voters in the 10 Trump states that their Senators are holding up repeal and replacement of these unpopular provisions. Democratic senators who work with the Republicans will get to share credit for preserving popular provisions like guaranteed issue and the coverage of children up to age 26.

Two other Democratic Senators from Minnesota might also persuadable if the package includes repeal of the ACA’s unpopular Medical Device tax. Minnesota is home to several major device companies including Medtronics and St. Jude Medical and over 28,000 medical device workers.

A Republican replacement will likely resemble the replacement model promoted by Speaker Ryan and HHS secretary nominee Price – tax credits for individuals to purchase insurance in private markets, guaranteed issue at reasonable rates for sick people who have maintained coverage, subsidized high risk pools to insure the very sick, and converting the federal part of the Medicaid program into block grants to the states. It would preserve the ACA’s basic goal of providing the means to expand coverage but use incentives instead of mandates, expand consumer choice, and shift the healthcare center of gravity back from Washington to the states, giving them more flexibility to design and regulate at the local level. While the means are different the goals are similar enough to the ACA that some moderate Democrats should be able to sign on. 

Republicans are understandably anxious to repeal the ACA. Voters in 2016 clearly expected that would be the result of a Republican victory.  The recent election results plus the prospect of another election less than two years away mean that now is the optimal time for Republicans to extract cooperation from Democrats.  If they are able to do so the result will be a bipartisan bill that is far more likely to endure than the ACA.

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