Tuesday, July 18, 2017

Senate Republican Obamacare "Repeal and Replace" Bill Dead––Good Riddance To An Awful Public Policy Proposal

The Senate Republican Obamacare "repeal and replace" legislation––just like the House version––was an awful bill. Individual health insurance costs wouldn't have gone down they would have gone up and both bills would have screwed a lot of low-income people. The latest Cruz amendment bifurcating the market with the sick in one place and the healthy in another was the most cynical kind of public policy.
With two conservatives withdrawing their support this evening from the current McConnell bill, it is dead.

Somewhat surprisingly, it was not the moderates that killed at least this effort—it was two conservative Republicans—Lee of Utah and Moran of Kansas. My sense is the blistering insurance industry criticism of the Cruz amendment made it impossible for any conservative to argue this bill would reduce insurance costs.

That means there are now four hard no votes. It is also important to note that the Trump administration failed miserably this weekend at the National Governor’s Conference to persuade key Republican governors from Medicaid expansion states to support the Senate bill. That result would have likely meant a number of more moderate Republican Senators would not have supported this bill.

So, in the end, about half of the ultimate Republican opposition would have come from the moderate ranks and the other half from the conservative ranks.

While I can’t say the overall Republican effort to repeal and replace Obamacare is dead, it is hard to see any realistic steps that they could take to revive the effort.

McConnell now says he will bring up a repeal only bill which would be set to take effect in two years.

Trump is also now calling for just repealing and then replacing later.

That was Plan A in January and that idea was dismissed because it would just cause more market calamity without a known replacement. I can’t see many Republicans going for that.

And a repeal only strategy begs a question: How are you going to replace Obamacare in two years when you failed so miserably this time?

Trump apparently also believes in the foolish notion that if Obamacare implodes on his watch Democrats will be desperate to bail him out. I don’t know of any Republican Senators who believe that.

Trump has also previously threatened to kill the low-income cost sharing subsidies if a replacement bill was not passed. These subsidies are worth about $8 million a month for every 100,000 low-income participants an insurance company has on the books. I wouldn’t put it past him.

The Democrats, and some Republican moderates, will now call for a bipartisan effort and we might even begin to see some meetings between those Senators. But the fact is that there is no common ground that could garner more than a handful of Republicans willing to save Obamacare. Such an effort would almost certainly now take 60 votes and would require the cooperation of the Republican leadership in both houses willing to let some of their caucus give the Democrats an enormous victory.

As the individual market continues to spiral out of control could we get some sort of short-term—maybe a year or two—patch? Perhaps. But that would even be a long shot and if that happened it would likely come as part of a must pass bill that had Senate and House Republican leadership permission to proceed. And, if that happened it would really anger both conservative Senators and Representatives, as well as the base. Any Republican Senator or House member that cooperated with Democrats to prop up Obamacare would likely get primaried at their next election. It is also hard to see how either Leader McConnell or Speaker Ryan could survive such an effort.

Or, Republicans could just let things in the individual health insurance market get worse and take that to the 2018 elections!

I have always believed that the market imperative to act is what would finally force Republicans to figure this out.

That said, there is no clear path out of this just as the individual markets continue to spiral downward partly because of the inherent issues in Obamacare’s market architecture and partly because of Republican efforts to make things even worse.

The only wisdom I can give you comes from Laurel and Hardy: “Well, here’s another nice mess you’ve gotten me into.”

And, from this moment forward it is a Republican mess.


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