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House Repeal and Replace Bill Contains Important Conservative Reforms

The American Health Care Act is taking fire from all sides, not the least from the circular firing squad conservatives have formed, threatening passage of the only piece of repeal and replace legislation that House leaders say will be presented to members for a vote this year.

President Trump has made it clear to Congress that he is determined to fulfill his campaign commitment on Obamacare, and he fully supports the bill that now has cleared two committees in the House.

The Congressional Budget Office lobbed another bombshell into the debate on Monday with its estimates [1] of cost and coverage with the House AHCA bill. It said the bill would reduce federal deficits by $337 billion over the next 10 years, including a $1.2 trillion tax cut to the American economy.

But the problem was in the coverage estimates: CBO estimates that “in 2018, 14 million more people would be uninsured under the legislation than under current law. Most of that increase would stem from repealing the penalties associated with the individual mandate.” The CBO has consistently overestimated [2] the impact of the individual mandate, and has done so again.

By 2026, CBO says 24 million more people would be uninsured, largely as a result of changes to the Medicaid program.

But the CBO’s estimate is a static analysis that is unable to reflect the dynamics of changes in the marketplace and human behavior. More people will be offered more choices of plans at more affordable prices under the AHCA, but the CBO says if the coverage is not as comprehensive as the Ferrari-level coverage in Obamacare, it doesn’t count. That is not the way millions of Americans see it.  

Health and Human Services Secretary Tom Price, released the following statement yesterday after the CBO report came out:

The CBO report’s coverage numbers defy logic. They project that zeroing out the individual mandate – allowing Americans to choose whether to have insurance – will result in 14 million Americans opting out of coverage in one year. For there to be the reductions in coverage they project in just the first year, they assume five million Americans on Medicaid will drop off of health insurance for which they pay very little, and another nine million will stop participating in the individual and employer markets. These types of assumptions do not translate to the real world, and they do not accurately estimate the effects of this bill.

The White House and Congress are huddling now to see whether changes will need to be made to the House bill before it goes to the floor for a vote, likely next week.

Whatever bill is presented to them to repeal and replace Obamacare, Republican critics are caught in a dilemma: Vote yes on passage and face constituents who are angry that “repeal” doesn’t go far enough and that “replace” goes too far. Vote no and face voters angry that they didn’t fulfill their promise to repeal the law.

Some members of the right flank of the Republican Party, the Freedom Caucus, oppose the House bill because they object to the form of subsidies it offers for people without the offer of insurance at work or who don’t qualify for public programs. The subsidies would be in the form of refundable tax credits that can be advanced so the money is available when premiums are due. They say Republicans are creating a new entitlement.

House Republican Study Committee chair Rep. Mike Walker is railing against allowing the expansion of Medicaid—the joint federal-state program for lower-income Americans—to extend until 2020 to protect people until new options are available.

Others, such as Senate Health Committee chairman Sen. Lamar Alexander, are most worried about protecting the coverage his constituents in Tennessee have now, particularly because they want even more protections.

And many experts are concerned that leaving in place the bill’s regulatory provisions will lead to further distortions in the health sector, as The American Conservative’s managing editor Robert VerBruggen wrote [3] in these pages soon after the House repeal and replace legislation was unveiled.

The complaints go on. President Trump, House Speaker Paul Ryan, and dozens of their generals and lieutenants are fanning out explaining why the bill is structured the way it is. Much of it is driven by the tortured “reconciliation” process that is the only path to passage of the bill through the Senate and by a legislative calendar that is backed up behind this bill, giving an urgency to completing work before the Easter recess on April 6.

More than 15 months of work has gone into shaping this health reform package in the House, and Ryan believes this is the best answer to appease the many warring factions in his caucus while still trying to thread the needle of the process through which the bill must pass the Senate.

Because Republicans control only 52 seats in the Senate, Democrats can filibuster any bill that comes before the body in normal order. Instead, the bill is moving through the budget reconciliation process that allows passage with only 51 votes as long as its provisions directly impact the federal budget—taxes and spending.

That is why the regulations in the Affordable Care Act can’t be repealed wholesale—things like “guaranteed issue,” the requirement that health insurers must sell insurance to anyone who wants to buy a policy, even if they wait until they are sick to sign up. Even though this and other regulatory provisions, like dictating what must be covered in a policy, do increase costs, they are not expected to pass parliamentary muster in the Senate because regulations are not a direct budgetary issue.

The House also tried to get away from having the Internal Revenue Service so deeply entrenched in health care and decided to tie the refundable tax credits to age rather than income, as Obamacare does.

Under the AHCA, a single adult under the age of 30 would get $2,000 toward the purchase of health insurance, a couple in their fifties would get $7,000, and a family with dependent children could get as much as $14,000. There was to have been no income adjustment. Everyone would know how much of a credit they were entitled to, there would be no incentive not to work, and consumers would finally begin to put downward pressure on health insurance premium costs by demanding price transparency and better value for their dollars.

But that ran into a political buzz saw when members realized they would have to explain why a young single mom was getting only a few thousand dollars in credits while someone with a high six figure income in the same age bracket got the same amount of money. So they put an income cap on the age-based credit.

As President Trump said, [4] “Nobody knew that health care could be so complicated!” And the House bill is only about 100 pages long, a fraction the size of the 2,000-plus page ACA.

The AHCA, in fact, could be the most transformative entitlement reform in decades. It would begin to turn Medicaid into a program that would require states to be partners in managing spending to make sure the dollars cover as many services as possible and that those with the greatest need are getting the most help—the complete opposite of the current Medicaid incentives. Under Obamacare, states have a strong incentive to sign up able-bodied single adults for Medicaid, while people who are much needier and with much lower incomes linger on waiting lists.

The AHCA also repeals $1 trillion in taxes that were primarily hitting middle-income Americans in the form of higher health costs—taxes on health insurance, medical devices, prescription drugs, etc. The bill zeros out the fines for the individual mandate and employers mandate. It provides increased flexibility for people to open and use Health Savings Accounts to help pay routine bills and save for future healthcare needs.

It provides $100 billion over 10 years for the states to begin to innovate in providing extra help for those at the lower-end of the income scale, people with pre-existing conditions, and help to stabilize the individual health insurance markets that are near collapse.

And, perhaps most importantly, it provides a safety net for people currently on Obamacare, both those with private plans through exchanges and those on Medicaid through 2020, while the new marketplace for more affordable insurance develops. House leaders have worked closely with governors and state legislators in crafting the plan. Governors believe they can deliver on expanded coverage, despite the static projections of the CBO.

Republicans will face endless primary challenges in 2018 if they vote against the only repeal and replace bill that they will have a chance to vote on this year.

There may be a chance to amend the bill when it hits the Senate floor, likely the third week in March, but that will mean a round-trip to the House to approve the amended bill—a risky endeavor.

Speaker Ryan is assuring angry conservatives that many other targeted bills—such as allowing cross-state purchase of health insurance and medical liability reform—will move separately. Plus, Health Secretary Tom Price says he will use his regulatory authority to write rules that will be friendly to consumer choice, competition, and innovation.

President Trump is all-in to help get the House bill over the finish line, over to the Senate, and onto his desk to deliver on what he considers his top campaign promise. If he has to jettison some of the transformative conservative reforms in the bill, few believe he would hesitate to do that.

Conservatives may not like to hear it, but leaders and staffers have crafted what they believe is the best bill possible given the limits of the reconciliation process, the pressures of the legislative calendar, and the need to provide a safety net for those currently receiving ACA coverage.

Democrats want nothing more than to get Obamacare off their political backs. Any replace strategy is risky. But voting against “repeal” could be the death knell for Republicans in 2018.

Grace-Marie Turner is president of the Galen Institute, a non-profit research organization focusing on patient-centered health reform, and publisher of ObamaCareWatch.org

21 Comments (Open | Close)

21 Comments To "House Repeal and Replace Bill Contains Important Conservative Reforms"

#1 Comment By njoseph On March 14, 2017 @ 10:15 pm

Why oh why does TAC, a glorious bastion of independent thinking, put its reputation on the line publishing this ALEC and dark-money funded hack?

The Galen Institute is a spin machine for big pharma and right-wing ideologues. Unworthy of TAC.

#2 Comment By A LIbertarian Guy On March 15, 2017 @ 12:39 am

Author Grace-Marie Turner is essentially defending how the Swamp operates.

There isn’t anything in the US Constitution– as specified in the 17 powers granted to Congress in Article I, Section 8– that authorizes the federal government to be steeped in healthcare; nor is there any authority to mandate the purchase of health insurance. Thus, Obamacare is unconstitutional.

The Republican alternative to Obamacare is the American Health Care Act (AHCA), which does not fully repeal Obamacare. Like Obamacare, the AHCA also has unconstitutional provisions in it (click here: [5] , and then scroll down to “Comparison between ACA and AHCA”).

Because of the unconstitutional parts of it, the AHCA cannot rightly be called “conservative.” How is taxing “Cadilac” plans conservative? How is forcing insurers to cover pre-existing conditions a conservative policy? (That’s one of the reasons why health care premiums went up under Obamacare.) How is covering 25-year-olds as if they were children a conservative idea?

The establishment Washington Republicans have conceded a philosophical victory to Democrats over government involvement in healthcare, and have offered a not-as-left-wing counter-proposal. The AHCA deserves to be derided as, “Obamacare Lite.”

Conservatives and libertarians expected Republicans to keep their promise to repeal Obamacare. Now, the GOP leadership in the house is pushing something less than complete repeal. Speaker Paul Ryan et al. are on the wrong side of this issue; indeed, they’re acting like Swamp-things.

Rand Paul and Company are on the right side of this issue. I hope they prevail over Paul Ryan and the compromising GOP establishment.

If Congress fails to repeal Obamacare, it will be the fault of Speaker Ryan and the Republicans who side with him. It will NOT be the fault of Rand Paul and Company.

#3 Comment By simeon On March 15, 2017 @ 5:33 am

Did … Did Paul Ryan write this?

#4 Comment By KevinS On March 15, 2017 @ 7:21 am

“More than 15 months of work has gone into shaping this health reform package in the House.”

Utter and complete nonsense. They started working in earnest only after Trump’s surprise victory.

“More people will be offered more choices of plans at more affordable prices under the AHCA.” Please explain how you know this.

#5 Comment By DJ On March 15, 2017 @ 8:05 am

They did not spend 15 months working on this. Reading this bill makes it quite apparent. And the didn’t repeal a tax on health insurance. Early talks said that they wanted to tax the health insurance themselves but chose not too.

#6 Comment By Llllurker On March 15, 2017 @ 8:53 am

It seems like the logic in this article doesn’t hold together very well, I wonder why? And I wonder how a person who works at a “non-profit research center” can afford to spend time writing nice articles like this?

“The Wall Street Journal published an op-ed by Galen Institute president Grace-Marie Turner … the Galen Institute reportedly receives funding from the pharmaceutical and medical industries, which obviously have an interest in the outcome of Congress’ health care reform deliberations.”

Oh gosh golly gee whiz! Could this possibly explain why the logic in this article doesn’t make any sense? And is it possible that this article was intentionally written to (gasp!) mislead the reader?

Libertarian Think Tank = Corporate Spinmeister

#7 Comment By collin On March 15, 2017 @ 9:38 am

I did figure the two biggest problems of any Trump Republican plan was:

1) The core Trump supporters were the WWC and they are hardest hit in KY, WV, AK, and AR. The plan cuts their medical insurance and he did promise better coverage in 2016 election. Voters will notice this one and don’t seem positive about this plan. (Did you notice Bernie Sanders at a opaid discussion in WV last week?)
2) Everybody hates their insurance plan but it is better than not being covered. (This goes for employer plans.)

The main reason I did support Obamacare was I thought it would slowly weaken and replace employer health insurance in the long run. I did not like HR departments decide your plan and I don’t job lock. (The planners assumed it might impact this offer but it has not happened.)

#8 Comment By Derek Johnson On March 15, 2017 @ 10:04 am

“There isn’t anything in the US Constitution– as specified in the 17 powers granted to Congress in Article I, Section 8– that authorizes the federal government to be steeped in healthcare; nor is there any authority to mandate the purchase of health insurance. Thus, Obamacare is unconstitutional.”

This might be the dumbest, laziest political argument I have ever read. By this logic, there is nothing in the Constitution about the prohibition of murder or how traffic laws should be structured. Thus, murder and traffic laws are unconstitutional.

Maybe, just maybe, the Constitution is a framework that leaves room for lawmakers to respond to the needs of the populace as long as they don’t run afoul of the general principles enshrined in said framework. Maybe the Constitution wasn’t meant to be the only legal document in American government. Crazy!

#9 Comment By Mont D. Law On March 15, 2017 @ 10:27 am

(Democrats want nothing more than to get Obamacare off their political backs. Any replace strategy is risky.)

It fell off their backs on November 8.2016. Elections have consequences.

(Republicans will face endless primary challenges in 2018 if they vote against the only repeal and replace bill that they will have a chance to vote on this year.)

True. For the Freedom caucus. Opening a bunch of safe seats up to competition.

(But voting against “repeal” could be the death knell for Republicans in 2018.)

For 3 to 5 senators voting for it could have the same effect,

Governance. It’s what’s for dinner!

#10 Comment By milton w grenfell On March 15, 2017 @ 12:25 pm

I think Anne Colter is on the right track, return health care to a free market.Before government got involved to “help us”, fifty or so years ago, we had no healthcare crises. If gov. run healthcare is going to work, why is the VA such an ongoing disaster despite it being a very well funded “boutique” (i.e. small) system. Fix VA then come talk to us.

#11 Comment By SteveM On March 15, 2017 @ 2:21 pm

There is little that is “free market” about U.S. health care waiting to be unleashed. Rather U.S. health care consists of a collection of Crony cartels saturated with collusion on pricing, opaque pricing for services, inefficient and unnecessary barriers to entry (e.g., limited medical school and residency slots) and a strong incentive to over-service.

The Republicans inherited an incipient economic catastrophe. Their “reform” will only move the “who pays” the Health Care Cartels food around the plate. More specifically:

• The current insurance pricing models (high premiums, exploding deductibles) will not go away even if Obamacare goes away.
• The expansion of the age ratio from 1 to 3 (young to old) to 1 to 5 will probably result in the insurance companies fixing the base rate at the current young price and increasing the premium costs for older policy holders by 67%. E.g. $250 (young) to $750 (old) adjusted to $250 to $1,250. In other words, premium prices will not go down for younger people and will explode even more for older consumers.
• The proposed tax credits will be insufficient for the unemployed or lower wage workers to buy insurance.
• Like Obamacare, RepubCare stratospheric deductibles will be an economic barrier to health care access for many. I.e. those with medically complex but not critically acute conditions will not seek treatment because of the unaffordable first dollar costs ($6,000+).
• HSA’s will be meaningless for no wage/low wage workers with no income to save.
• Companies will adopt the government health benefit profile. I.e., they will offer high premium, high deductible coverage to their employees. Low wage employees will also experience economic rationing for non-critically acute medical conditions.
• The passage of tort reform leading to lower malpractice insurance rates will only provide value to the doctors. They will pocket the difference, not lower their fees. Consumers will see nothing.
• Physician practices increasingly utilizing NP’s and PA’s as adjunct providers will bill at them at MD rates with the physician-owners pocketing the difference. Consumers will see nothing.
• Purchasing insurance across state lines is an obviously flawed gimmick. That the proponents don’t see it or acknowledge it tells you something.
• The embedded Health Care Cartels (AMA, Big Insurance, Big Hospital, Big Pharma) will not be challenged. E.g. There is a severe shortage of physicians. Which suits the AMA just fine to minimize competition and keep physician fees stratospheric.

There are no free market “good guys” on the supply side of health care, (including Beltway insider Dr. Tom Price who is an AMA front.) All of the above economic pathologies are the result of no/low competition engineered into the system.

This will be a political train wreck for the Republicans as more Americans are deprived of effective access to care. Republicans just happen to be in the wrong place at the wrong time as the inevitable health care implosion happens. Ironically, the “Deplorables” who voted for Trump are the ones sweating bullets for access to affordable care. They won’t get it with this proposal. Obamacare is the set-up. RepubCare will be the finish.

Both political parties avoid the required existential objective – significantly reduce the aggregate per capita cost of health care in the U.S. while still delivering quality services in a timely manner. German health care costs 47% less per capita than American per capita cost. And Germans are not falling over in the street from illness.

An objectives statement by both Congress and the President should put a stake in the ground at a specific per capita cost reduction target. Because there are alternative models out there with empirical cost structures, that objective is not theoretically infeasible. Reducing the U.S. – German per capita differential from 47% to just 37% would free up ~ $2.9 Trillion. The German system is not perfect, but the Perfect is the enemy of the Good Enough, so why not harvest what works from other systems?

That’s easy enough, because then EVERY stakeholder (demand and supply) has to be lined up for some level of hair-cut. And nobody in DC has the will to take up the clippers.

The health care model can’t be reformed, it can only be blown up. My prediction is a populist revolt with or without Republican changes when a critical mass of people are afraid to go to the doctor because they can’t afford it.

P.S. others above are spot on about the Galen Institute “research organization”. It’s a front for the Cronies.

#12 Comment By Ethan On March 15, 2017 @ 3:06 pm

It’s time for the only sane and ethical approach to healthcare—adoption of a single payer national healthcare system. It is inexcusable that affordable healthcare is not a basic right in one of the richest countries on earth. In addition, on a per capita basis, we spend twice as much on healthcare as any of the other advanced economies on the planet. What we have in the current health care system is the worst of all worlds. And the Republican alternative is even worse than that. By eliminating the middle men (the insurance companies), we can achieve great savings right off the start (and that alone will ensure Republican hostility to the idea for decades to come). A system of steeply progressive deductables will create some measure of a marketplace for healthcare. It would take political courage, but the Democrats might consider using single payer national healthcare for all as their core issue for the 2018 midterm elections. Certainly, the Republicans are already foundering on health care and they are only 2 months into the Trump Presidency, and it is difficult to see how they can spin this into their advantage.

#13 Comment By Bmidde On March 15, 2017 @ 3:09 pm

This is largely what TAC runs instead of ads. Paid placed content. May be less annoying. May also be less honest. To be fair, TAC has to pay their bills too; it’s the price we pay for their good articles, but yeah this piece is pretty odious.

#14 Comment By Logan On March 15, 2017 @ 4:38 pm

For pity sake, why should Americans die early or become debilitated early due to the lack of basic medical care, solely because of their lack of economic status? Cut all the welfare programs you want, but this is one issue that ensuring fairness and equality in accessing basic medical care that makes sense. $500 billion for defense every year, a trillion dollars flushed into the cesspool of Iraq and Afghanistan and nobody cares . . . sigh.

#15 Comment By Intelliwriter On March 15, 2017 @ 7:27 pm

Here’s the problem: Healthcare is not now, nor will it ever be a free market. I recently had major surgery. Do you think there’s a chance I could’ve gotten a price beforehand? As it stands, I’m fighting the insurance company for all the services I received “out of network,” even though I went to an “in-network” hospital.

Then there’s the issue of receiving services while under extreme duress. You get hit by a bus, lying unconscious in the street, when an ambulance is called and takes you to the local hospital. When is the price negotiation supposed to take place?

The health sector needs some regulations to function. Counting on free market principles is a fool’s game.

#16 Comment By peanut On March 15, 2017 @ 8:13 pm

“This is largely what TAC runs instead of ads. Paid placed content. May be less annoying. May also be less honest. To be fair, TAC has to pay their bills too; it’s the price we pay for their good articles, but yeah this piece is pretty odious.

You have any evidence this is placed content? Because that’s a serious charge.

#17 Comment By peanut On March 15, 2017 @ 8:15 pm

“I think Anne Colter is on the right track, return health care to a free market.Before government got involved to “help us”, fifty or so years ago, we had no healthcare crises. ”

Please elaborate the economic model under which a 75 year old American is insurable under free market rules. Thanks.

#18 Comment By A LIbertarian Guy On March 16, 2017 @ 3:11 am

On March 15 at 10:04 am, Derick Johnson slammed my earlier post as dumb and lazy. I can assure everyone that I’m not lazy in composing my posts. I don’t expect to sway a constitutionally-illiterate left-winger like Johnson, but I will rebut his comment anyway.

The US Constitution was mainly designed to govern government, not the citizenry, by putting limits on government. Congress’ authority is outlined in Article 1, Section 8. The Constitution bestows most governmental powers on the individual states.

It is the individual states that have the authority to outlaw murder– and all 50 states do just that. It is the states that have the authority to make traffic laws– and all 50 states do have laws for operating motor vehicles on public roads. Such things are not the role of the federal government.

Johnson is correct in saying the Constitution wasn’t meant to be the only legal document in American government. But the Constitution’s primary purpose is to limit government– especially the federal government– and to otherwise protect individual rights; hence, the ratification of the Bill of Rights.

#19 Comment By SteveM On March 16, 2017 @ 11:50 am

Re: peanut, “You have any evidence this is placed content? Because that’s a serious charge.”

I can’t speak for TAC’s motivations in publishing Turner’s op-eds. However a review of the IRS Form 990 (2014, available online) for the Galen “Institute” such as it is suggests that “president” Grace-Marie Turner is the enterprise.

In 2014 Turner paid herself $337,249 in total compensation. The Form 990 lists 5 total employees however “other salary and wages” apart from Turner totaled only $68,249. So what those other people did could not have been much.

Also Turner’s husband was paid $45,000 for “accounting services”, (to do the books for what is probably a 1 or 2 person organization.)

Note too that the institute expensed $34,256 for Travel. That’s a lot of travel of for Grace-Marie.

The Galen Institute is common Beltway model set up as a “Think Tank” front for Cronies. AEI and Heritage are heavily funded by the Defense Contractors. The “scholars” there pump out Neocon fear-mongering non-stop because they know what side their bread is buttered on.

The supposedly Libertarian Cato Institute is heavily funded by Silicon Valley. That Cato is for open borders to maximize STEM immigration that crushes American tech workers is not surprising.

Hispanic front La Raza has cheap immigrant labor seeking corporations on its “Board of Corporate Advisors.” La Raza president (and “political activist”) Janet Murugia is paid over $440,000 a year.

Likewise, Galen is no doubt a boutique marketing arm of the Crony companies that shovel Turner huge money to carry their water. Note too that Turner who is paid over $300 Grand has no real P/L or operational responsibilities consistent with a real business. All she has to do is gin up the propaganda scripted by her benefactors and distribute it to vehicles like TAC.

Nice work if you can get it…

#20 Comment By bmidde On March 16, 2017 @ 4:48 pm

@peanut

“You have any evidence this is placed content? Because that’s a serious charge.”

I do not think it’s particularly serious. All websites need a revenue stream; people cannot put out news or political analysis for free and we as readers cannot, or at least we should not expect them to. I generally believe that TAC readers are relatively sophisticated and can sort through the wheat from the chaff. In terms of evidence, I feel its relatively obvious, but to the extent it needs to be laid out:

1) Scroll over this page. Note TAC runs a single ad at the top and one political ad on the right. Now go to another website such as the new york times, cnn, reuters or breitbart. Notice the difference? Any other non governmental news site, runs five to ten ads on a page, often in video. TAC runs two. That ad differential has to be made up from revenue elsewhere. I doubt that TAC’s subscription numbers exceed the New York Times.

2) Millman, Dreher and Larison all have a unique perspectives that inform their work. I do not always agree with them, but their ethical core informs their world view. Sometimes their perspective is deeply enlightening. Sometimes their perspective provokes an almost visceral dislike. Still, I have never doubted that each of them are bright, well intentioned, ethical individuals. Compare with the one off authors that occasionally appear, such as the piece above. It’s a muddle of logic designed to advance a political cause, as opposed to a principled argument based on an ethical core.

3) Quality. Compare the quality of this article with the daily stuff that is put out by the regular contributors. The difference is stark, and not in this article’s favor. I cannot believe that the normal contributors would allow articles of this low quality absent some other consideration.

Given these three points of evidence. The only reasonable deduction, in my opinion, is that this article appears on TAC for some other reason than its febrile logic. Again, it does not particularly concern me that article is paid. It enables us to read the other excellent content.

Please feel free to rebut my evidence, circumstantial as it may be, but I feel that I have done enough damage hijacking the comment section as is, so I will cede the last word to you sir or madam.

#21 Comment By paradoctor On March 19, 2017 @ 2:03 am

If the Republicans pass AHCA, then they will lose the midterms:
If the Republicans do not pass AHCA, then they will lose the midterms:
The Republicans must not lose the midterms:
Therefore the Republicans must neither pass nor not pass AHCA.
That’s Logic!