Wednesday, December 28, 2016

The GOP’s ObamaCare Moment

A repeal first then replace strategy carries big political risks.

By Review & Outlook
The Wall Street Journal
December 28, 2016

With Republicans controlling both ends of Pennsylvania Avenue next year, they have a great, and rare, opportunity for reform. Ronald Reagan revived the economy, but some of his ambitions were checked by Democratic Congresses. The Gingrich Congress reformed welfare but crashed against other entitlements, and the George W. Bush-Tom DeLay GOP wasted a unified government after 2004.

The question now is whether Donald Trump and a new congressional generation can enact center-right reform solutions, and the first proving ground will be ObamaCare.


The Affordable Care Act is the first entitlement in U.S. history to fail as policy and politically. Premiums continue to surge, and enrollment to disappoint. The number of plans on the exchanges, already low, plunged 16% for 2017 as insurers quit or retrenched. In 30% of counties, Blue Cross Blue Shield alone is the sole insurer, and much of the competition is low-quality Medicaid managed care. National health spending is also re-accelerating as the law diffuses through the system.

Gallup reports that disapproval of the law remains as high as the post-2012 average of 52%. Eight of 10 support changing ObamaCare significantly (43%) or replacing it altogether (37%). Republicans have also been vindicated in their political opposition. The GOP was right to defend its free-market, pro-competition principles—and having campaigned and won on “repeal and replace” in 2010, 2014 and 2016, they must now follow through, and fast.

The GOP’s current two-stage strategy is first to repeal most of the law using budget “reconciliation,” which allows fiscal, deficit-reducing measures to bypass the Senate filibuster with 51 votes. Republicans wrote a repeal test bill in 2015 that cut the deficit by $474 billion even while repealing all of ObamaCare’s tax increases. President Obama vetoed it, but under Senate rules a similar bill could pass by mid-February.

The repeal bill would set a two- or three-year sunset for the law’s subsidies, which would then give Congress time to ensure a smooth and orderly transition to a new system. Congress will hold hearings, and the idea is to form coalitions about discrete replacement provisions that can attract 60 Senate votes.

This strategy is fraught with political risk, as any strategy would be. If Republicans don’t repeal ObamaCare immediately, the danger is that the natural inertia of Congress takes over and nothing changes. But the more time they put between repeal and replace, the more the danger will grow.

The biggest risk is that the two-stage maneuver will hand leverage to the most extreme wings of both parties. On the right, the incentive will be to denounce any replacement as ObamaCare Lite, and the leadership will have given up the leverage of “repeal” as an incentive to vote for a replacement. Conservatives from safe seats could kill reform if they attack as imperfect anything not designed by Ayn Rand.

Meanwhile, the incentive for Democrats will be to oppose any negotiations and let the GOP twist in the wind. Minority Leader Chuck Schumer has already signaled this strategy, telling reporters that “if they repeal without a replacement, they will own it. Democrats will not then step up to the plate and come up with a half-baked solution that we will partially own. It’s all theirs.”

Republicans could threaten to slip a health measure into a second reconciliation bill later in 2017, and the 10 Democrats running for re-election in states Mr. Trump won may reflect on their own political futures before concluding that they can safely oppose a deal. But the squalls of opposition will be fierce.

All the while, the media and the left will blame the repeal vote for any turmoil in insurance markets, and it won’t matter if Republicans attribute these problems to ObamaCare, however true that will be. Republicans will own health care, like it or not.

The Trump Administration will have regulatory tools to help stabilize insurance markets and minimize a insurer rush for the exits, and confirming Tom Price to run the Health and Human Services Department is the first vote for repeal. Mr. Obama’s HHS has exceeded its legal powers to control markets, and Mr. Price can reverse those excesses.


But that won’t relieve the GOP of the obligation to pass a replacement that provides more certainty as quickly as possible. Political capital ebbs with each day beyond Jan. 20. GOP leaders will have to maintain their resolve against the status quo constituencies on the left and right, and the rank and file may have to vote for some form of tax-credit subsidy to avoid the spectacle of millions losing their insurance.

If Republicans blow this opportunity, they’ll set up the next Democratic government for single payer. Now’s the chance to show they can reform the entitlement state with solutions that improve the daily lives of Americans.

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