Stalemate-and-delay: the future of the Obamacare fight?

The fight over Obamacare is poised to dominate much of President Trump’s first year in office.  Republicans are dead set on following through on years of political attacks against the law.  Democrats are equally adamant about saving President Obama’s signature achievement and the millions insured under it.

The problem is that congressional Republicans look increasingly unprepared to follow through on their rhetoric about replacing the law.  Yet they and the Trump administration is convinced the law is failing.  This leaves the GOP in a real bind.

But there may be a way out.  When it comes to Obamacare, the best outcome for everyone may be a stalemate.

As a basic matter of math, Republicans need Democratic support to replace Obamacare.  They could repeal the law with a bare majority in the Senate, but will need eight Democrats to go against the party and overcome a filibuster to enact a replacement.  Republican leadership, including Trump and House speaker Paul Ryan, has backtracked from the repeal-and-delay misfire, and has since come to promise that repeal and replacement will occur near simultaneously.  That requires Democratic votes.

The core question for Trump and the GOP is how to get them.  Trump believes that he is negotiating from a position of ever-increasing strength.  He thinks the law will crumble on its own, even telling congressional Republicans gathered in Philadelphia that he had thought about “doing nothing [on healthcare] for two years, and the Dems would come begging to do something” after “catastrophic” price increases.  Ryan has the same forecast for the law, repeatedly (and falsely) asserting that Obamacare’s individual marketplaces are in a “death spiral.”

Trump has hinted at this scenario before.  Earlier in January, Trump tweeted that the GOP needed to “be careful” about repealing Obamacare, because Democrats would be to blame when the law “fall[s] under its own weight.”  There is clearly a side of Trump that sees political advantage to continuing to hang Obamacare around the necks of Democrats—a side of him that splits from Republican leadership in Congress on the immediate urgency to erase the law from the books.  By sitting back and waiting, Trump suspects he could get a better deal.

Democrats, on the other hand, are confident that Obamacare is succeeding.  They point to the 20 million people insured under the law and signs that its marketplaces have stabilized.  Democrats are determined to resist GOP repeal efforts, and are increasingly drifting toward a strategy of all-out opposition to Trump across the board.

From the Democrats’ perspective, there’s no reason to disabuse Trump of his notion that Obamacare is a ticking time bomb with their names attached to it.  Suppose Democrats stick together as a uniform bloc in opposition to repeal and replace.  A frustrated Trump might see the Democrats as “ungrateful” for the GOP’s efforts to save them from their supposed healthcare mess.  Trump might then decide to wait until carnage from Obamacare’s “collapse” starts to hit in order to exact a better deal out of desperate Democrats at that time.

For Democrats, this result keeps Obamacare on the books, delaying the repeal fight until a day when Trump may be on even weaker ground in public approval, and a day that is that much closer to the 2018 midterm elections.  At that point, Democrats could spark a wave election to take back the House or Senate, stopping Trump’s agenda altogether.

But stalemate-and-delay makes sense for Republicans, too.  If Trump gets fed up with congressional gridlock over healthcare and with how much of his first year in office the issue has consumed, he may want to shelve repeal—especially if he expects to pin down the Democrats into agreeing to more favorable terms down the road.  But would the repeal-obsessed GOP Congress go along with this?  Almost certainly.  Trump owns the GOP now, and the party will largely do as he says.  If Trump says build a border wall, Ryan asks how high (while writing a $15 billion check, to boot).  There’s no reason to think the party would subvert him if he tired of the Obamacare battle.

Trump and other leaders take the position that even though they could wait and let the law implode on its own, they have a duty to come to the rescue of those suffering under the tyranny of Obamacare.  By postponing the repeal push, Republicans get to blast obstructionist Democrats for perpetuating the hellish suffering inflicted on the American people under Obamacare.

This relocates the Obamacare debate back into the Republicans’ comfort zone.  Republicans are most at ease using healthcare as a political piñata against Democrats.  But now that they have the power to decimate Obamacare, they have no plausible plan to put the piñata back together again.  At the GOP’s Philadelphia retreat this week, one member of Congress said that the party’s leaders have offered “zero specifics” on an Obamacare replacement so far.  A leaked recording of that retreat shows Republican members of Congress ill at ease with the party leadership’s lack of strategy and clarity on healthcare.

So for Republicans in Congress, postponing repeal buys more time to devise a replacement plan, while allowing them to continue to use Obamacare as a political battering ram to rally their base going into the 2018 midterms.  Even though they’ve spent seven years railing against the law, Obamacare repeal is a fight that the GOP is not ready for.  Republicans are animated by political opposition to Obamacare as an avatar for big government liberalism.  But they still aren’t equipped or prepared to translate that political opposition into policy language.  Stalemate-and-delay allows them to reap the benefits of the former while avoiding the embarrassment of the latter.

Conversely, it also avoids Republicans taking ownership over the country’s healthcare system going into those elections—something many in the party are loath to do.  “We’d better be sure that we’re prepared to live with the market we’ve created” with repeal, said Rep. Tom McClintock of California.  “That’s going to be called Trumpcare. Republicans will own that lock, stock and barrel, and we’ll be judged in the election less than two years away.”

There are risks in this gambit for Democrats, but those risks are tolerable.  The key is for Democrats to stick together in total opposition to GOP repeal efforts.  And they will be sticking together to defend a wounded healthcare law—one that the Trump administration will weaken to the fullest extent of its executive authority.  Trump already issued an executive order instructing his administration to relax enforcement of the law “to the maximum extent permitted by law.”  White House adviser Kellyanne Conway even suggested the administration may refuse to enforce the law’s controversial individual mandate.  And Trump also canceled planned advertising for the law’s individual marketplace plans in the final days of open enrollment in an apparent attempt to reduce sign-ups.  These are all attempts to loosen the screws on Obamacare’s three-legged stool.

But these risks were always going to be the case under a Republican administration.  Republican sabotage was inevitable, but it beats wiping the law off the books entirely.

So perhaps Obamacare’s future looks much like its past: a political lightning rod perpetually on the chopping block, but never actually chopped.  Trump can rationalize stalemate-and-delay as standing pat until a later day when he can bend Democrats to his will.  Republicans can keep rallying their base on the promise of repeal were it not for those obstructionist, big government Democrats.  And Democrats can appeal to their base having successfully fought Trump and continuing to stand up to Republicans intent on gutting Obama’s signature achievement.

And that might be Obamacare’s political sweet spot.  Democrats want to save Obamacare, and Republicans need an off-ramp from repeal.  For both parties to win, the solution might just be to stalemate.

The case for federalizing Medicaid

If Donald Trump ever moves on from bickering over the size of his inauguration crowd to actually governing, one of the first orders of business will be churning out a promised “terrific” Obamacare replacement plan. While we don’t yet know the exact details of Trumpcare, Trump adviser Kellyanne Conway confirmed this week that block granting the Medicaid program to the states will be a big part of it.

This isn’t a surprise. Republicans like Speaker Paul Ryan and health secretary nominee Rep. Tom Price have called for kicking Medicaid down to the states for years. Unfortunately, it’s the exact wrong direction we should be going toward.

Medicaid provides health insurance to nearly one hundred million people, including children, pregnant women, nursing home residents, people with disabilities, and low-income Americans. For over fifty years, the program has been managed jointly by the federal government and the states. Washington finances at least half of the program’s costs, and often substantially more in poorer states. Obamacare expanded Medicaid to cover those just above the poverty line, and even offered to pick up the entire tab for the first years of the expansion. Still, nineteen conservative-led states turned down free money, causing a Medicaid “coverage gap” currently ensnaring 2.5 million people that would have otherwise gained insurance.

Conservatives in Washington want to drastically change this arrangement by simply cutting a check to the states and letting them run Medicaid. Conservatives like this idea for a few reasons. For one, a block grant creates more predictable (and lower) costs for the federal government. It gets the federal government off the hook for covering a share of whatever costs program enrollees incur, and instead just subsidizes state Medicaid programs. A block grant transfers most of the commitment of insuring vulnerable populations from the federal government to the states.

The problem, of course, is that this is a barely-concealed way of cutting healthcare funding for the poor. The only way for block grants to save the federal government money is to systematically lowball the amount of the grant. For example, the block grant plan pushed by Price and other House Republicans would slash Medicaid spending by $1 trillion — nearly 25 percent — over the next decade. A similar plan offered by Paul Ryan in 2012 would have caused up to 20 million Americans to lose their coverage.

This leaves it to individual states to pick up the slack, but it’s far from guaranteed that they are willing or able to do so. Medicaid is already one of the costliest expenditures for states, consuming on average nearly 20 percent of their budgets (second only to K-12 education). Making up for a $1 trillion funding gap would be a stretch even during relatively good economic times. But during a recession, block granting would be a disaster. While the federal government can take on debt to finance deficit spending, almost every state is required to keep a balanced budget. When revenues dry up during a downturn, states take an axe to social spending to make up the difference. These cuts inevitably come disproportionately from low-income programs. So the end result of block-granting means Medicaid will get cut to the bone just when more and more people will need it.

Block-grant proponents want to give states more of a role to experiment with Medicaid. But just as some states may seize on new flexibility to experiment upward with better, more generous programs, others will ratchet Medicaid downward by providing stingier benefits. Those nineteen states refusing the federal Medicaid expansion in particular have political cultures deeply hostile to insuring the needy. In Texas, for example, childless adults are ineligible for Medicaid regardless of how poor they are, and even parents are “too rich” for coverage if they earn more than 18 percent of the poverty line — $2,118 a year.

Even though national Republicans package Medicaid block granting as an exercise in states’ rights, it’s not clear how many states want the privilege of taking the primary lead in running Medicaid. Even some Republican governors worry that block grants will reduce the effectiveness of their safety nets. Medicaid block grants could easily follow the pattern of welfare reform — another safety net program devolved to the states during years of economic growth that has since shriveled away due to chronic underfunding.

Instead of block-granting Medicaid to the states, a better course is to do the exact opposite: have the federal government assume full responsibility for Medicaid. This would eliminate harsh state-based eligibility restrictions like in Texas, and would guarantee coverage for all who qualify. Because the federal government can run budget deficits, it is better situated to protect the program during economic downturns. And federalizing Medicaid would relieve the states of a massive fiscal burden, freeing up money for education, infrastructure, tax cuts, and other state projects.

Putting Medicaid entirely in the hands of the federal government may also better tame the program’s costs. As Greg Anrig of the Century Foundations writes, “taking 50 separate state bureaucracies out of the picture would be a meaningful step in the direction of reducing confusion and wastefulness.” Congress and federal agencies would also be better able to experiment with cost-containment strategies without the states in the mix.

Federalizing Medicaid could also yield tax relief for low- and middle-income Americans. While new federal revenues would need to be raised, the states would be free to cut taxes. And because the federal tax code is more progressive than the states’, most of the new financing for Medicaid would come from the wealthy. The net result would likely mean lower taxes for most Americans.

Federalization is not a new idea, nor a partisan one. As Anrig points out, Ronald Reagan proposed federalizing Medicaid in 1982 in exchange for giving the states over other safety net programs. Even earlier, in 1979 Jimmy Carter proposed federalizing Medicaid as part of his health reform pitch.

On the campaign trail, Donald Trump promised that he would not cut Medicaid. That’s a promise he cannot keep while also block-granting the program. Instead of pawning Medicaid off on the states, the federal government should lift it off of their shoulders entirely. That would give the states real flexibility.

Note: This post is cross-posted at Medium.

A Red State Option on Steroids for Obamacare

The Affordable Care Act came under existential attack the minute it was signed into law.  Almost immediately, a slew of Republican state attorneys general rushed to the court house to have the law struck down on the grounds that its individual mandate to purchase insurance was unconstitutional.  Less noticed but just as consequential was a sidecar challenge to the law’s mandatory Medicaid expansion, arguing that it violated states’ rights.

When the case (known as NFIB v. Sebelius) reached the Supreme Court, it split the polarized justices.  Four conservatives were ready to toss out the law entirely, four liberals were bent on saving it.  In an apparent tacit compromise, Chief Justice Roberts agreed to provide the fifth vote to uphold the mandate as a tax, while liberal Justices Breyer and Kagan joined the majority in striking down the mandatory Medicaid expansion.

This was hailed as a victory for Obamacare, but the under-noticed Medicaid ruling has had dire consequences.  The Court’s decision opened up a “Red State Option,” and nineteen conservative-led states have opted not to expand their Medicaid programs to cover the near poor, ostensibly out of sheer partisan spite.  This has blocked 2.5 million people from obtaining insurance.

I point this out because a pair of Republican senators are proposing a large-scale version of the Supreme Court’s compromise today.  In order to replace Obamacare, Sens. Susan Collins of Maine and Bill Cassidy of Louisiana would create a sort of Red State Option on Steroids, allowing states to opt out of Obamacare entirely if they so choose.  As Vox’s Sarah Kliff explains:

The Patient Freedom Act would, as described by Sens. Cassidy and Collins, give states three options:

  1. Continue to run the Affordable Care Act as is without any changes
  2. Switch to a different health insurance expansion that emphasizes auto-enrolling all uninsured residents into a federally subsidized catastrophic plan
  3. Offer no coverage expansion at all, and the state would lose the money it currently receives for insurance subsidies and Medicaid expansion

Under Option 1 (let’s call it the “Blue State Option”), progressive states such as California and New York that like Obamacare can keep it.  Or at least, they can keep most of it—Cassidy-Collins would impose a 5 percent cut on subsidy payments to Obamacare enrollees.

Under Option 2 (the “Red State Super-Option”), conservative states like Texas and Kansas can ditch Obamacare entirely and opt into a not-yet-fleshed-out conservative replacement plan.  Cassidy and Collins haven’t yet fully formed what this replacement looks like, but it will involve auto-enrollment of the uninsured into high-deductible catastrophic insurance plans attached to health savings accounts.  The money that would have been spent on Obamacare subsidies in these states will be redistributed into these HSAs based on each individual’s age, rather than income.

Option 2 will tend to disadvantage low-income individuals, because it abandons Obamacare’s means-tested subsidies.  And it also undercuts the GOP’s current main objection to Obamacare: its high out-of-pocket costs.  With high-deductible plans, enrollees aren’t really insured at all until they first rack up thousands of dollars in medical expenses, and must self-fund everything else with their own savings.  This will aggravate healthcare-induced financial strain, not alleviate it.  For that reason, HSAs tend to be virtually useless to all except the wealthy.  Even so, Option 2 is a revealing look at the true conservative impulse of what right-leaning health reform would look like.

Option 3 is essentially a State of Anarchy Option.  As health economist Aaron Carroll says, “I have no idea why any state would choose [this option].”  This option would appeal only to states looking to mindlessly blow up the healthcare coverage expansion (there may be some…), but would otherwise seem to solely exist to prod states toward choosing one of the other two options so as not to lose federal money.

Under all three options, the ACA’s taxes are left in place—a concession sure to rankle congressional Republicans.  Annual and lifetime limits will stay, too, as will the ability of children to stay on their parents’ insurance until turning 26, and the prohibition on insurers excluding patients with preexisting conditions.

The Cassidy-Collins plan is plainly meant as an attempt to craft a bipartisan way out of the Obamacare repeal fight.  Republicans need eight Democratic votes to enact any replacement plan, and Sens. Cassidy and Collins hope that Democrats might settle for kicking the Obamacare decision down to the states.

For Democrats, the only reason to support this idea is because saving Obamacare in blue states is better than not saving it at all.  It’s a sort of second-best option that at least protects individuals in Democratic-led states.

But Cassidy-Collins will also amplify healthcare polarization from state to state.  The Medicaid expansion has already shown that some states will almost certainly not make this decision based on legitimate policy considerations around how best to expand health insurance.  The issue of healthcare has become too partisan, with the ACA serving as an avatar for anti-Obama resistance.  Perhaps that resistance will finally defuse now that Obama has left office, but Cassidy-Collins certainly gives the states the opening to widen the geographic gulf in our healthcare system.

And of course, the most vulnerable will be the ones who suffer.  As Topher Spiro of the Center for American Progress writes, “It’s unconscionable that access to quality health care would depend on where you happen to live.”  Cassidy-Collins puts the decision about who deserves health coverage in the hands of state elected officials, who are disproportionately conservative Republicans skeptical of universal healthcare in much of the country.

Perhaps the most significant outcome of Cassidy-Collins is that it signals that there is a cohort of Republican senators who are serious about committing to a replacement plan before killing Obamacare altogether.  Collins has already said that Republicans must have at least a “detailed framework” for a replacement before repealing the law.  Her vote is one that Republicans need in order to move in any direction on healthcare.

But Cassidy-Collins is also telling in other ways.  By punting the repeal fight to the states and presenting them with a menu of healthcare options, the proposal creates a sort of Choose-Your-Own-Adventure Federalism.  In a country growing increasingly divided by politics, Cassidy-Collins embraces polarization in policy.

Contrary to Obama’s 2004 convention speech, there clearly are Red States and Blue States when it comes to health policy.  Federal health policy ought to serve as a floor to guarantee certain rights and benefits regardless of state politics.  But the so-called “compromise” bill in the Senate would abscond from that duty and instead only heighten our political divide.  Whether or not it is a tenable compromise, the fact that such an outcome is viewed as a plausible off-ramp speaks volumes about the state of our politics.

The agonized are organizing

New post at Medium:

One day into the Trump administration, millions of those horrified by his presidency put that mantra into action, taking to the streets to peacefully defend their rights and values. The Women’s Marches were a historic display of civic resistance, but on their own, they will not be enough. The bursting energy on display from the marches’ grand scale must now be channeled into an equally fierce but targeted resistance to specific actions and policies promoted by the Trump administration.

Fortunately, there are early signs that this is already happening. Trump and congressional Republicans have vowed to roll back Obamacare — an act that would rip health insurance away from 32 million people while causing premiums to double for millions more, according to the nonpartisan Congressional Budget Office. The political anxiety countless Americans feel about a Trump administration is converging with a real and imminent bodily anxiety millions dread from the Republican Congress’s insistence on shredding health reform. The result is a percolating resistance to the new administration’s top legislative priority.

Read the rest here.