Minnesota’s Border Battles: COVID-19 edition
Last year, I wrote a report titled ‘Minnesota’s Border Battles‘ in which I compared the economic outcomes in Minnesota counties bordering other states with the outcomes in the border counties…
On Monday House Republicans revealed draft language to repeal and replace Obamacare. The proposal met an immediate backlash from conservatives. Sen. Rand Paul called it “Obamacare Lite.” FreedomWorks, Heritage Action, the Club for Growth and Americans for Prosperity (AFP) all offered similar critiques and pledged to launch campaigns to oppose the current language.
Critics do have reason to complain and demand change, but the current response recklessly sets up the expectation of a full repeal among those in the conservative base, an expectation that Congress cannot meet. Upon failing to meet this expectation, the base may become needlessly demoralized and distrustful.
Nearly everyone who pays close attention to congressional procedures agrees that a full repeal would require a filibuster-proof 60 votes in the Senate, a threshold Republicans cannot meet with their 52 Senate seats. Among conservatives, Avik Roy of Forbes, Joel Zinberg of the American Enterprise Institute, Alexender Hendrie of Americans for Tax Reform, Sally Pipes of the Pacific Research Institute, and Doug Holtz-Eakin of the American Action Forum all agree a full repeal needs 60 votes. Michael Cannon of the Cato Institute stands as a lonely voice arguing everyone else is mistaken.
Republicans can repeal a substantial portion of Obamacare with a simple majority through the budget reconciliation process, but this process only allows Republicans to repeal those portions with a budgetary impact. Democrats operated under similar constraints when they used reconciliation to help pass Obamacare after they lost their filibuster-proof majority.
Repealing just items with a budgetary impact leaves in place the insurance regulations that are currently driving up health care costs and spinning many state insurance markets into death spirals. Specifically, the reconciliation process can’t repeal Obamacare’s essential health benefit requirements that force people to buy very generous and, therefore, very expensive health plans. Most troublesome, reconciliation cannot repeal insurance regulations that force insurers to sell coverage to everybody, regardless of whether they responsibly maintained coverage. This allows people to wait until they are sick before gaining coverage.
Despite this obstacle, Heritage Action released a statement from their chief executive officer Michael Needham that declares, “congressional Republicans should fully repeal the failed law.” A letter to House leaders from AFP similarly urges them “to keep your promise, reject the House bill, and pass the full Obamacare repeal that Americans deserve.” And Rep. Jim Jordan—the most outspoken opponent in the House—told The Hill, “You have to get rid of Obamacare completely.”
On top of setting expectations Congress can’t meet, they fail to communicate any appreciation for how difficult replacing Obamcare will be if its most damaging elements—the insurance regulations—can’t be immediately repealed.
A key problem is that repealing the individual mandate without repealing the requirement on insurers to guarantee coverage increases the incentive to wait to buy coverage until you need it. That is why the House plan imposes a 30 percent penalty on people who buy coverage who failed to maintain continuous coverage. This penalty has been panned by critics, but anyone who studies health insurance markets will tell you something like this is necessary, so long as Obamacare regulations remain in place.
Understanding that a full repeal is not immediately possible, another point too often lost in the debate is the role the Trump administration will play in complementing Congress’s work. Though certain regulations cannot be immediately repealed, the Trump administration can modify regulations through the rule-making process. For instance, the Department of Health and Human Services (DHHS) can authorize a much more affordable set of essential health benefits. DHHS has already proposed important changes to stabilize individual insurance markets.
Again, critics do have reason to complain. Leaked versions of the bill would have pulled back Medicaid expansion far more, a key provision for anyone who agrees the broken Medicaid system is the wrong way to expand coverage. The bill also fails to chart any meaningful path to give consumers real control over their health care dollars. Expanding health savings accounts is good, but the government and employers continue to control most of the health care dollars.
Much of the rest of the bill is open for reasonable debate among conservatives—such as those refundable tax credits to buy health insurance—and critics are certainly entitled to their strong opinions and encouraged to share them.
But it’s dangerous if, to foment a public outcry to force changes to the bill, critics instill within the conservative base a sense that full repeal is possible if not for those weak-kneed Republicans elected to Congress. If conservative leaders set unattainable expectations, they will create a perception of failure in Congress that will deflate the conservative base.
Deflating enthusiasm among conservatives does not help anyone. The conservative base is a powerful and positive force for change. They’re responsible for putting people who believe in free markets and limited government back in power, and their support will be indispensable in adopting an enduring set of free market health care reforms.