The Cato Institute

Obamacare Lives On. Why?

Republican hopes to repeal Obamacare are all but officially dead, at least for now. This isn’t just a failure, this is an epic failure. This is the legislative failure by which all future legislative failures will be judged. But how did it come to this?

When Republicans took power in January, they controlled both branches of Congress and the presidency, Obamacare was hugely unpopular with voters, and the health care law was spiraling into failure. Yet somehow, Obamacare not only survives, it is now more popular than ever. So, what went wrong?

1. It’s hard taking things away from people: Republicans tried hard to pretend that there were no losers under their proposals, but the public understood that, if you slowed the growth of Medicaid or reduced subsidies, some people would either pay more or get less. It was always going to be hard for Republicans to repeal or replace Obamacare even if they got everything else right. As we saw, they didn’t.

2. Institutional barriers: Provisions — like allowing the sale of insurance across state lines — were not only among the most popular Republican ideas, they were also important for making insurance more affordable. But, proposals such as this were not possible to include in the bill

3. No plan: For 7 years, every Republican running for president or Congress (or any other office for that matter) campaigned on opposition to Obamacare. Congress even voted some 50 times to repeal all or part of the health care law. But once the stakes became real rather than symbolic this year, it quickly became apparent that Republicans had no actual plan for what would replace Obamacare.

4. No Message: The average American has no idea what the Republican bill would do to their premiums, their coverage, their ability to see the doctor of their choice. There is a compelling case to be made for how free market health care reform can bring down costs, while improving quality and choice. No one ever made that case.

The Republican failure to repeal Obamacare suggests that the rest of their agenda, from tax reform to the budget is in trouble too. None of the dynamics are going to change. Democrats, firmly in “resist” mode, will remain adamantly against anything Republicans propose. 

The question, then, is whether the president and congressional Republicans have learned anything from this defeat. So far, there’s no evidence that they have.

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This Is Obamacare Expansion, Not Repeal

Given the response from Democrats and the media, you’d think Republicans were really about to repeal Obamacare. They’re not…

Republicans have been promising full Obamacare repeal for seven years. That means repealing all of Obamacare’s regulations, mandates, bailouts and subsidies, including the entire Medicaid expansion. 

Last week, the Senate finally released the text of their long-awaited health care bill, the “Better Care Reconciliation Act.” The Senate bill is not even a step in the right direction. 

Like its counterpart, the House-passed “American Health Care Act,” the Senate bill would not repeal Obamacare. Indeed, it’s not even fair to call it a partial repeal or “Obamacare-lite.”

The Senate bill actually expands Obamacare, and its provisions would be worse than doing nothing to repeal the Affordable Care Act.

1. It expands eligibility for Obamacare’s so-called “premium-assistance tax credits” to 2.6 million people in the 19 states that didn’t expand Medicaid, which is effectively a Medicaid expansion by other means.
2. The Republican bill would expand Obamacare beyond what a Democratic Congress created. The Democratic Congress that enacted Obamacare authorized but did not fund those subsidies — which, a federal judge ruled, makes the Obama and Trump administrations’ payment of those subsidies to insurers unconstitutional. Rather than let those unconstitutional subsidies die, The bill would fund Obamacare’s “cost-sharing” subsidies — something not even Democrats ever did.
3. Senate Republicans could be hiding that their bill would increase federal deficits and/or even increase actual spending on exchange subsidies. Senate Republicans ordered the nonpartisan Congressional Budget Office to “score” their bill against spending and revenue projections that overestimate the number of exchange enrollees and exchange spending. Comparing their bill to inflated spending estimates allows Republicans to spend more Obamacare money than honest budgeting would.
4. Obamacare supporters would be able to blame the ongoing harm their law causes on free markets rather than the actual culprit.  Senate Republicans will claim that their bill repeals Obamacare and replaces it with free-market reforms. It does neither.
   

If this is the choice facing congressional Republicans, it would be better if they did nothing. 

Consumers would continue to struggle under Obamacare’s regulations, but those costs would focus attention on their source. The lines of accountability would be clearer if Republicans signed off on legislation that seems designed to rescue Obamacare rather than repeal and replace it.

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Did Republicans Just Repeal Obamacare?

Short answer: No. 

House Republicans have approved a bill to revise Obamacare with only one vote to spare. Democrats and the media are having such conniptions about the American Health Care Act, you’d think Republicans were really about to repeal Obamacare. They’re not.

Rather than do what their supporters sent them to Washington to do — repeal Obamacare and replace it with free-market reforms — House Republicans are pushing a bill that will increase health-insurance premiums, make health insurance worse for the sick, and ensure that Republicans rather than the real cause (Obamacare) will take the blame.

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Five Unavoidable Obamacare Reform Realities

The congressional Republican bill is flawed, but so are many of the talking points being used against it…

It has been barely a week since the Republican plan to (sort of) repeal and replace Obamacare was unveiled and already the proposal has been savaged from both left and right, by most of the media, by various interest groups, including doctors, hospitals, and insurance companies, and by virtually anyone else with an opinion. Outside of Paul Ryan, it is hard to find anyone who truly likes this bill.

While it is true that the American Health Care Act is a deeply flawed bill that perpetuates — and in some cases exacerbates — some of Obamacare’s worst aspects, many of the talking points being used against it are even worse.

Here are the top five things to keep in mind about healthcare reform…

1. There will be losers as well as winners. Every piece of legislation creates winners and losers. Obamacare did. There were far more losers than winners, but some of those who won under Obamacare will be losers under the Republican plan. 
   
2. There will be more winners than losers. Premiums would be lower under the GOP plan starting in 2020, about 10 percent lower by 2026. Plus, the more than $1 trillion in tax cuts — many for the middle class — and the $337 billion reduction in deficits over the next ten years mean more jobs and economic growth, a big win for everybody.
   
3. 14 million people are not having their insurance taken away. Much of the projected decline in coverage stems from CBO’s belief that, without the individual mandate, many people would choose not to buy insurance. 
   
4. Of the 25 million fewer insured in 2026, 14 million would come from a reduction in Medicaid enrollment. That may sound alarming, but Medicaid was not only fiscally unstainable in its current form, it provided barely minimal care. Reforming Medicaid in a way that encourages states to innovate and focus more of their resources on the most vulnerable populations can only benefit those most in need.
   
5. The alternative is Obamacare not utopia. Projections of how many people would be insured or what premiums would be ten years from now assume that Obamacare would survive that long. It couldn’t, not in its current form.
   

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“Replacing” Obamacare with…Obamacare-Lite?

The House Republican leadership bill does not replace Obamacare. It merely applies a new coat of paint to a building that Republicans themselves have already condemned….

Earlier this week, the Republican leadership of the House of Representatives released legislation it claims would repeal and replace ObamaCare, but the House leadership bill isn’t even a repeal bill. Not by a long shot.

Instead, the bill is a train wreck waiting to happen that would repeal far less of Obamacare than the bill Republicans sent to President Obama one year ago. 

The Obamacare regulations it retains are already causing insurance markets to collapse. It would allow that collapse to continue, and even accelerate the collapse, leaving seriously ill patients with no coverage at all. Instead of fixing the issues caused by the ACA once and for all, this new bill would mean Congress would have to revisit Obamacare again and again to address problems they failed to fix the first time around. 

Here are some of the major issues…

• Medicaid Expansion
• The House leadership’s bill would not even start to repeal ObamaCare’s Medicaid expansion until 2020, more than two and a half years from now, and even then would repeal it only one enrollee at a time. It is likely that the number of states participating, and the number of people enrolled in the Medicaid expansion will be higher after “repeal” than before, which means the Medicaid expansion may never disappear at all. 
• Medicaid Reform
  
• States would get additional federal dollars for each additional person they enroll in their programs. But states would face the full marginal cost of providing new or existing benefits to enrollees. Just as Obamacare’s Medicaid expansion creates incentives for states to expand their programs to able-bodied adults, while reducing access to care for the aged, blind, disabled, children, and pregnant women, the House leadership bill would create (or preserve) an incentive to expand enrollment to less vulnerable populations while cutting benefits for more vulnerable populations.
  
• Private-Insurance Overhaul
  
• The House leadership bill retains the very Obamacare regulations that are threatening to destroy health insurance markets and leave millions with no coverage at all. 
• Taxes
  
• The House bill zeroes out the individual and employer mandates and outright repeals all manner of ObamaCare taxes. In a pretty crass budget gimmick, the bill retains the “Cadillac tax” on high-cost health plans but delays its onset until 2025. Conservatives deny any similarities between an individual mandate and a tax credit for health insurance. However, the bill’s modified tax credits are the functional equivalent of ObamaCare’s individual mandate. 
• Swallowing the Republicans’ Agenda
  
• Republicans don’t seem to have any concept of the quagmire they are about to enter with this bill. If Congress gets health reform wrong on its first try, health reform could consume most of President Trump’s first term. Pressure from Democrats, the media, and constituents could prevent Republicans from moving on to tax reform, infrastructure spending, or even Supreme Court nominees.
• Partial Repeal Is the Road to Single Payer
  
• Flubbing Obamacare would at once united and embolden Democrats while dividing the GOP base, driving the former to the polls in 2018 and 2020 while causing the latter to stay home. Obamacare opponents often muse that supporters designed the law to fail because it would give them the excuse to enact a single-payer system. Republicans have a choice. They can either prevent that future from unfolding, or they can help it along.

Making health care better, more affordable, and more secure requires first repealing all of ObamaCare’s regulations, mandates, subsidies, and taxes. Congress needs to enact reforms that make health care more affordable, rather than just subsidize unaffordable care.

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