Status of the New Republican Health Care Reform Bill
After marathon sessions in two House committees, the recently-released Republican health care reform bill, The American Health Care Act or AHCA (here), will now move to the Rules Committee and then to the floor of the U.S. House. So far, Democrats have been steadfast in their opposition to the proposed legislation. (here) A fair number of Republicans have expressed concern about the bill as well. (here)
Democrats and others on the left argue that everyone insured under Obamacare will lose their health insurance. They believe it’s either Obamacare or nothing. They neglect to mention that the Affordable Care Act (ACA) only insures 40 percent of people who were uninsured in 2010 when the legislation was signed into law. They also neglect to mention that Obamacare forced millions off their existing health insurance plans and that the law has done nothing to hold down the rapidly increasing cost of health care.
Multiple special interest groups that support Obamacare oppose the Republican plan. (here)
Many Republicans and Libertarians also oppose the bill because it didn’t go far enough in replacing Obamacare with less government and more patient-centered alternatives. After seven years of the failed Affordable Care Act, this is an understandable position.
The Congressional Republican leadership, however, has an enormous problem. First, they do not have 60 votes in the U.S. Senate. Reconciliation, dealing only with budgetary considerations, requires a simple majority vote. Consequently, the leadership has chosen to put forth a bill that only concerns itself with the financial parts of Obamacare.
Second, Republicans ran on repealing the ACA. Not attempting to repeal Obamacare is not a political option. Repealing Obamacare and not replacing it would create havoc in our health care system and would put many Republicans in jeopardy in the 2018 election.
Third, there is virtually no way the Republican leadership could successfully use the nuclear option in the U.S. Senate and pass a comprehensive free market replacement bill with a simple majority. At least four Republican senators are on record opposing such things as cuts to Medicaid and the complete elimination of government subsidies. (here) Republicans have only 52 votes in the Senate – losing more than two votes would sink the bill.
The Republican House leadership looks at health care reform as a three step process. Phase One is passage of The American Health Care Act. Phase Two is administration action on the 1,442 discretionary measures in Obamacare. These can be done by the president or more likely by Health and Human Services Secretary Tom Price. Phase Three is additional (hopefully) bipartisan legislation that expands patient-centered solutions.
Within the confines of reconciliation, the new bill addresses several critical areas in our health care system. For 75 years, employers have been providing “free” health care benefits for employees. Because of the favorable tax treatment of these benefit costs, the tax loss to the federal government is estimated to be $3.5 trillion over the next ten years. (here) Through the use of refundable tax credits, the AHCA is a start at giving individuals and small groups the same tax consideration as larger group employers and their employees. This would not only be fair, it would decouple health insurance from employment and would allow people to take their health insurance with them no matter where they worked or lived.
The bill would begin to unravel the government-imposed benefit mandates in insurance plans. The AHCA offers greater contributions to health savings accounts and allows for catastrophic insurance without the government mandates.
The AHCA doesn’t end Medicaid, but it does give states more control over the entitlement and is a start to ensure the program will truly function as a safety-net for the most vulnerable in our country.
The non-partisan Congressional Budget Office (CBO) will release its estimation of the financial impact of the AHCA next week. The CBO analysis of Obamacare was often wrong and changed almost on a yearly basis, but its financial predictions are still used by both political parties.
Republican leadership in Congress will be walking a tightrope the next few weeks. They must convince 218 members of the House and 50 members of the Senate to support the bill. If repeal and replacement of Obamacare are not successful with this bill, health care reform will, in all likelihood, be dead for the foreseeable future. The country will be stuck with Obamacare, the Medicaid expansion for able-bodied individuals, the distorting employer-paid model of health benefits, the financially unsustainable Medicare program, and more government central-planning.