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The New Obamacare Dilemma

Republicans find themselves in a precarious position.

In theory, this is supposed to be the easy part. Republicans control the House, the Senate, and the presidency for the next two years, and they want to repeal and replace Obamacare. Now’s the time for them to carefully craft a new law and enact it.

It won’t be that simple.

Republicans’ biggest problem is that, unlike the Democrats in 2009 and early 2010, they don’t have a filibuster-proof majority in the Senate. Since Republicans don’t seem inclined to nuke the filibuster itself, they’ll need significant Democratic buy-in to enact a replacement. Specifically, they have just 52 of the needed 60 votes, and the extra votes will not come easily: Democrats are united in defense of the law.

The one workaround is the “reconciliation” process, which is filibuster-proof but can be used only for matters related to the budget. A bill passed through reconciliation can eliminate Obamacare’s taxes and subsidies, in other words, but it can’t touch the law’s mountain of other insurance regulations, including those that dictate plans’ pricing and coverage.

In response, the tactic Republicans have come up with is “repeal-and-delay”: kill the law’s funding through the reconciliation process immediately, but set the changes to take effect two to four years from now. This will force Democrats to the table and give Republicans time to craft a replacement based on the various blueprints that conservative groups have put together. It will also provide a big early win for the new Republican government and create a transition period for the 20 million people insured through the law. Congress could pass a repeal along these lines next month, and they aim to follow up with a full replacement plan later this year.

Even seen purely as a political maneuver, this will be tricky. For one thing, Republicans might not be able to hold together the 50 votes they’ll need for the repeal bill (Mike Pence will be the tiebreaker). Rand Paul already voted against the first step in the process over concerns about the debt, other Republicans have said they’d prefer to repeal and replace the law at the same time, and a couple of pro-choice Republicans might walk if the bill defunds Planned Parenthood, which House Speaker Paul Ryan decided to throw in the mix for some reason. Furthermore, some moderate Democrats are trying to lure defectors with promises of modest, bipartisan improvements to the law instead of a full overhaul.

And incredibly, despite having a 23-seat majority, Republicans in the House may not even have the support they need, owing to some jitters among budget-conscious conservatives.

Then, there’s bound to be considerable infighting as Republicans craft a replacement. Ryan has one plan; the more conservative Republican Study Committee has a stingier one. As conservative health wonks Joseph Antos and James Capretta recently noted in Health Affairs, the fact that some Republicans are talking about replacing Obamacare in a series of bills, rather than one comprehensive bill, indicates that they “may not have a clear vision of what they want to do.” Who could have imagined?

Finally, of course, moderate Democrats will have to decide whether to go along with the GOP’s replacement plan in the face of impending doom (and the 2018 elections). Absent Democratic votes, all Republicans can do is pass whatever additional reforms they can through the reconciliation process and hope for the best—or give up and undo the repeal.

And if the GOP can pull off the politics, repeal-and-replace is still risky as policy. Last year, even a lot of liberals started admitting that Obamacare needed some serious reforms. Premiums were rising, not enough healthy people were signing up, and major insurers were losing money and leaving the exchanges. This year, about one-third of the exchange market has no competition, meaning customers have to choose a plan from a single insurer. Many insurers aren’t even making money, but are sticking around in the hopes that the system will stabilize and they can turn a profit in the future.

Now that Republicans have the power to dismantle the law, there is even less reason for insurers to stay in the broken old system—and if the GOP openly sets a time bomb, the temptation to leave will be heightened considerably. Ironically, if Republicans go this route, they will be praying that liberal Pollyannas were right all along and Obamacare really is basically stable. If the system can’t stay afloat for a few years, buoyed by some executive orders, it will sink or be bailed out on the GOP’s watch.

On top of all that, House Republicans sued the Obama administration a couple of years back to block certain payments to insurance companies. Those payments compensate insurers for reducing poor customers’ out-of-pocket costs, which the law requires them to do, and the administration paid the subsidies even after Congress cut off funding for them. Republicans also refused to fund what they called “bailouts” for unprofitable insurance companies, which has also resulted in lawsuits, and there’s been talk of eliminating the individual mandate even while the rest of the law, which depends on it, remains in place. Now Republicans have to decide whether they really want to follow through on these moves and destabilize the market further.

Antos and Capretta, for their part, would do more with a reconciliation bill than just light Obamacare’s fuse. They suggest measures to stabilize the exchanges during the transition, possibly including an extension of the “bailout” provisions, which just expired. The bill should also “move[] U.S. health care more deliberately toward a functioning marketplace that is less dependent on federal coercion and control,” they write.

Rep. Kevin Brady, chair of the Ways and Means Committee, told the Washington Examiner last week that Republicans may include some reforms in the repeal bill. Other observers are confident that the bill will do what’s needed to stabilize the exchanges, just because it would be a catastrophe otherwise. But both of these come with tradeoffs: pressing forward with reforms will require a debate as to what those reforms should entail, delaying the repeal bill; stabilizing the exchanges means dumping money into the existing Obamacare structure.

Whatever the details, killing Obamacare through the reconciliation process—where it cannot be fully repealed, much less replaced—is a high-stakes game. If Republicans wreck the health-care market and aren’t able to fix it, the only winners will be their Democratic opponents.

Robert VerBuggen is managing editor of The American Conservative



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