Tuesday, January 17, 2017

"Repeal and Replace" Obamacare: How Will All of This Sort Itself Out?

Will the Republicans Follow Through on Their Promise to Repeal Obamacare?
Yes.

You have probably been reading press stories that bring into question whether or not Republicans will actually keep their campaign promise to "repeal" the Affordable Care Act (ACA). In fact, there is much discussion going on among Congressional Republicans about repealing key funding elements of the ACA as part of a budget process prior to having a replacement ready to pass the Congress.

But, they will defund the core elements of Obamacare sooner rather than later on their way to replacement. They have to. Repealing Obamacare as a first priority was a core campaign promise. If Congressional Republicans and President Trump fail to do this they will suffer a precipitous drop in credibility with their base.

Do Republicans Have a Replacement Plan?
Yes––at least a pretty specific outline for what they would do.

Speaker Paul Ryan's "Better Way" outline, last year's very similar Burr, Hatch, Upton bill (my analysis here), and a number of other similar Republican proposals lay out a clear path for a preferred Republican alternative. Donald Trump said this weekend that his plan, likely very similar to these, will be released once his new Secretary of HHS is confirmed.

These plans share the same key elements but have not yet been put in legislative form or been "scored." Just exactly what the new subsidy/tax credit scheme would look like and how it would impact consumers compared to what we now have in Obamacare is the biggest unknown.

The problem isn't that they don't have a plan. The problem is that Republicans don't have a plan that will garner the required 60 votes in the U.S. Senate to become law. With 52 Republicans, they will need at least eight Democrats to join them. There simply are not the eight Democrats, or a guarantee that all 52 Republicans can be counted on, to ensure something like the general Republican replacement outline can become law.

Does This Mean That Republicans Will Retreat on Repeal Until Such Time as They Can Secure the Needed Democratic Support?
No.

First, Republicans are now in so deep on the repeal promise they can't retreat and maintain credibility with their Republican/Trump base.

Second, the reality is that Washington, DC wouldn't be able to find a bipartisan route to get past gridlock on such a complex and politically charged issue as Obamacare without facing hard deadlines for replacement.

Those that argue that Republicans should first have the replacement plan in place before proceeding make the assumption that without the imperative repeal/defund would create the two sides would be able to come to a bipartisan solution. In this Washington, DC? I just don't see that happening.

But Hasn't the Republican "Repeal and Replace" Strategy Now Put Them on the Defensive?
Yes.

Republicans are clearly losing the messaging battle with Democrats now on the offensive. A lack of a clear message about replacement creates a huge information gap that is easy to fill with bleak assessments for how the health insurance market will quickly collapse in the wake of Republican defunding.

Right now, Democrats are effectively, but disingenuously, arguing that repeal without a replacement will lead to millions of people losing their insurance. Disingenuous because Republicans have never intended to repeal without a seamless transition to replacement. But the Democratic arguments just had gasoline poured on them by the Congressional Budget Office (CBO) which today estimated that repeal without replace would eventually add 32 million to the uninsured.

But Republicans have only themselves to blame for losing the messaging because they so far haven't been able to fill the information vacuum with the detail for what they will do.

Don't Republicans Now Need to Put a Detailed Bill on the Table In Order to Assure Voters?
No.

They need to detail a series of commitments complete with a timeline for how repeal, transition, and replace will look and how it will provide insurance security.

Vague Republican assurances that there will be an orderly transition and that people won't lose their coverage whither in the face of all kinds of bad scenarios the Democrats are and will be coming up with. Republicans have now let the Democrats take what had been their worst domestic issue over the past six years and turn the tables on the Republicans. Bad start for Republicans.

The final bill will be the result of complex negotiations first inside the Republican caucus and then with Democrats. But people need to know the Republican bottom line. What is the minimum that consumers can expect and over what timeline?

Republicans are now looking at a strategy to introduce a series of piecemeal Obamacare replacements to be voted on in the near term––some under budget rules as they complete the next 2018 budget and some requiring 60 Senate votes––thereby forcing Democrats to vote against what could be popular alternatives one at a time. But even this strategy will hit snags––for example repealing Obamacare's popular preexisting condition reform and replacing it with a lesser Republican "continuous coverage" provision that would require 60 Senate votes.

My follow-up post at CNBC.com deals with how the two sides could come to a bipartisan compromise.

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