Obamacare repair, not replacement: more than a change in messaging

Please note: This blogpost is by Mark Weller and originally appeared February 13, 2017 on Soapbox: A Politics and Policy blog here. 

Mark is a Partner in the Public Policy & Regulation practice and Health Care practice at Dentons, a multinational law firm. Having worked on and around Capitol Hill for over 30 years, he is an expert in the politics around healthcare and knows the environment from every angle.

Note #2: Obamacare is a common reference to the Affordable Care Act (ACA). They are the same thing.

Last week Republicans on the House Energy and Commerce Health Subcommittee held a hearing on four Obamacare replacement bills. The move is consistent with recent Republican leadership comments that they plan to replace the Affordable Care Act with a series of small measures instead of one major replacement bill.

But at the same time, President Donald Trump in a Fox interview said that an Obamacare replacement may take until 2018. And now House Speaker Paul Ryan and leading committee chairs are saying they want to “repair” the ACA, not “repeal and replace” the law.

Legislating is hard

What’s going on here? The President is acknowledging what many policymakers already knew. Despite the campaign rhetoric that Obamacare would immediately be repealed and replaced, the process could have serious political repercussions if not done right.

There appears to be general agreement about moving away from the ACA’s insurance benefit mandates. Also, the aforementioned House subcommittee explored popular issues like how to deal with people with pre-existing health conditions, how to spur people to keep continuous coverage throughout their lives, and loosening age-rating bands. Alongside Democratic taunts that Republicans don’t know what to do after the “dog has caught the car,” or in some versions is actually trying to drive the car, the simple fact is finding a consensus on how to replace the ACA will take longer than expected.

 Individual mandate is instructive

The repeal of the individual insurance mandate provides a perfect example of the dilemma Republicans face. The mandate that individuals purchase health insurance or face a penalty is a core feature of Obamacare. Republicans hate mandates and see the provision as symbolic of Obamacare's overreach in attempting to correct deficiencies in the individual insurance market.

There is broad agreement that the law should bar insurers from discriminating against people with medical problems as long as they remained enrolled in an insurance plan. But if you eliminate the mandate that that people buy insurance, you’re left with a worsening and dysfunctional market that attracts high-risk enrollees and leaves insurers with a pool of customers who are older and less well.

To cover those with existing health conditions, Republicans have floated the idea of continuous coverage–requiring everyone to maintain health coverage throughout their lives–although that sounds like a mandate to many and the GOP is still figuring out how to do it. Other ideas, like levying a surcharge on those who fail to sign up for insurance or to automatically enroll individuals eligible for subsidized coverage who don’t sign up, don’t sit well with the more conservative wing of the GOP.

Crowded Congressional Calendar

The Congressional calendar looms large in the analysis of how to repair or replace Obamacare. During the Republican retreat in Philadelphia, Speaker Ryan said he planned to bring a budget reconciliation package–that requires only 50 votes to pass rather than the usual 60–to the House floor by the end of March. This measure is expected to contain repeal and some replacement elements.  But a leaked recording from the same GOP retreat last month shows a party that remains divided and uncertain about how to move forward.

The delay on ACA “repair” pushes back legislative activity on almost every other priority. In addition to action on Obamacare, Republicans want to address an overhaul of the tax code and a massive infrastructure bill. On top of that, Republicans hope to pass all 12 fiscal year 2018 appropriation bills before Oct. 1, including funding for a wall on the Mexican border. Congress hasn’t passed its appropriations bills in two decades. In addition, there are several must-pass deadlines. Congress needs to fund the government before money runs out on April 28 and raise the debt ceiling by this summer. There is widespread concern that Trump and GOP leadership have simply identified too many big-ticket, politically thorny items to tackle in year one.

On Obamacare, expect a drawn out fight, not just between Republicans and Democrats, but within the GOP. The Obamacare alternatives being considered may not prove any more popular.

Updates by Claire Sachs: March 13, 2017

House Speaker Paul Ryan introduced the American Health Care Act (AHCA) on March 6, 2017. It was referred to the Ways and Means Committee and the Energy and Commerce Committee on March 8, 2017, both of which approved it on March 9, 2017. The main differences between this law and the Affordable Care Act (Obamacare) are that:

• The Medicaid expansion would be phased out by 2020
• The individual mandate (tax penalties for not being insured) would be replaced by age-based refundable tax credits.
• Insurance companies could charge older patients up to 5x more than they charge younger patients instead of 3x.
• Insurance companies could charge a 30% penalty to people who let their coverage lapse.
• Taxes on health insurers, pharmaceutical and medical device manufacturers, and high-cost employer health plans (aka Cadillac plans) would be repealed.
• Medicaid would be barred from reimbursing Planed Parenthood.

Also on March 13, 2017, the Congressional Budget Office released its report on the AHCA. It would cut $337 billion from the deficit over 10 years, but it would also cut coverage to 14 million people by 2018, increasing to 24 million by 2026. Under the AHCA, insurance premiums would be 15-20% higher in the first year compared Obamacare, and 10 percent lower on average after 2026.

March 23, 2017

The House of Representatives was due to vote on the AHCA this evening. Earlier today, members of the House Freedom Caucus, the conservative wing of the Republican party, met with leadership and the President to negotiate last minute amendments to sway caucus members. They discussed rolling back maternity coverage and other possibilities, but negotiations were unsuccessful. Ultimately, the vote was postponed because there were not enough votes to pass the bill.

March 24, 2017

Late yesterday, President Trump issued an ultimatum to Congress: vote on the AHCA or he moves on to the next item on his agenda.

Congressional Republicans agreed and scrambled to negotiate with the Freedom Caucus. In order to make the bill more appealing, they removed the 10 essential health benefits Obamacare required in every plan. These benefits cover: outpatient services, emergency room care, hospitalization, maternity costs, mental health/substance abuse services, prescription drugs, rehabilitative and habilitative services, lab tests, preventive care such as vaccines and annual physicals, and pediatric vision and dental care.

In the end, it wasn't enough. Speaker Ryan pulled the bill off the floor after over three hours of debate because he could only afford to lose 22 Republican votes, and 36 Representatives had declared their opposition, with an additional 15 leaning toward a "no" vote.

Republicans can modify the bill and reintroduce it, but without significant changes, it is unlikely to win enough support to pass this congress.

How a (Healthcare) Bill Becomes a Law

This is complicated. I have two degrees in government and politics plus 18 years in Washington, and I still need to reach out and ask sometimes. But it is important to understand what our government plans for us. It’s not just about those who will be covered under new healthcare legislation; private plans will adjust to accommodate new laws as well. So, please bear with me as I lay it out. And if you need clarification, please feel free to contact me here.

Background

A healthcare bill isn’t always just a healthcare bill. Because there has to be a way to pay for additional coverage and administration of the new laws, healthcare legislation includes sections that raise taxes. If legislation “raises revenue” for the government, it falls under Article I, Section 7, Clause 1 of the Constitution, the Origination Clause, which says, “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”

So, even though the Executive Branch (President and Cabinet Agencies) may develop healthcare legislation, it must be introduced in the House of Representatives of the Legislative Branch (Congress). It’s official when the bill’s title is read on the House floor.

Setting the Stage

In January 2017, Congress went through a process called budget reconciliation. Budget resolutions do not usually become law. They do not go to the Senate and do not need presidential approval. Budget reconciliation is a way to get parts of a budget enacted as law.

Because Congress failed to pass a budget in 2016, Congressional Republicans knew that they were coming into session with majorities in both chambers. They passed a new budget resolution that included reconciliation shortly after the new Congress was sworn in. Under that resolution, Republican House and Senate leadership gave instructions to the committees with jurisdiction over healthcare to submit legislation changing taxation provisions in the Affordable Care Act (ACA – also referred to as Obamacare) so they comply with the new budget. This allows that particular legislation to pass the House and Senate with a simple majority instead of the 60 votes it would require to stop a Democratic filibuster. Since Obamacare includes tax provisions as a way to fund itself, a budget reconciliation could effectively strip those provisions and leave the ACA unfunded (the "repeal" part of the GOP plan to "repeal and replace").

However, there are some limitations. The provisions of the budget the committees would propose under reconciliation have to relate to taxes or government spending. This means that Republicans can’t repeal the entire ACA at once, just the parts dealing with how it funds itself. They cannot repeal the policies relating to who and what is covered. Additional actions can be taken, but the above process is what Speaker Ryan means when he says reconciliation is the first step.

Behind the Scenes

House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell are very influential in persuading their members to vote as they recommend. With the White House behind them, they have been working hard to assure the votes they need to pass Speaker Ryan’s plan, known as the American Health Care Act (AHCA). So why are so many Republicans expressing doubt? As Ezra Klein said in an interview with the Pod Save America podcast, Republican goals differ:

• Conservatives want to offer coverage while still controlling cost through the free market (private industry competition). Many in this group are members of the House Freedom Caucus.
• Libertarians want no Federal role in healthcare.
• Moderates want to improve coverage and lower costs.

For Speaker Ryan’s plan to succeed, he, Majority Leader McConnell, and the President will have to find a way to address the concerns of enough of the doubters to secure majorities in Congress. This is no small task.

Process

1. The House of Representatives

After being introduced and assigned a number, the bill is referred to the Ways and Means Committee, which is responsible for writing new tax legislation, the Energy and Commerce Committee, which regulates the insurance industry, the Budget Committee, which says what the government can tax and spend, and any other committee that has jurisdiction a particular function of the bill.

While the committees review the bill, they hold hearings, kind of like interviews of people whose expertise they need to understand the bill and what will happen and what will not happen if it is passed. Sometimes they also ask about the impact of not passing the bill. After the hearings, committee members mark up the bill. This is when they debate and propose amendments. The last step for the committees is voting on whether to accept all the changes they made during mark-ups.

Each Committee has three options: send the bill to a subcommittee for further debate, send it to the whole House for a vote, or “table” the bill, which means it never leaves the Committee. Tabled bills usually are not reintroduced until the next Congress.

When the bill reaches the floor of the House, it is accompanied by reports about why the committees recommended passage. Then the full body of the House debates and proposes amendments. The House Rules Committee sets the terms of the debate, time limits, and which amendments are offered. Each amendment is considered separately and subject to its own vote.

When the debate is over, there is a roll call vote. If the bill passes, the House sends the final version to the Senate.

2. Senate

Senate processes are very similar to those in the House. When the Senate receives the House bill, Senators decide whether to send the House bill to committee or offer their own version.

On the Senate side of the rotunda, healthcare bills go to the Finance Committee, which regulates taxes (among other things), and the Health, Education, Labor, and Pensions (HELP) Committee. The bill goes through hearings, debates, mark-ups, and committee votes as it did in the House. The reports that accompany the bill to the Senate explains any amendments accepted by the committee. The bill is then reported for floor action, where Senators can debate and offer amendments. Lastly, Senate votes. If the bill passes, the Senate sends it back to the House.

3. Conference Committee

Conference Committee works on a compromise between the two chambers. The House rarely accepts the Senate’s version of its bill, so the House adopts a motion to officially object to the Senate’s changes.

Conference Committee members are appointed by the Speaker of the House and the President of the Senate. Each side votes as a unit, and the majority party in each chamber controls the vote. The Committee debates and tries to reach a compromise, then sends the compromise bill to each Chamber for floor votes. If defeated in either chamber, the bill dies. If passed, Congress sends the compromise bill to the President for signature.

4. Executive Branch

When he receives the bill, typically the President asks for advice from Cabinet Agencies that (a) have expertise on the issue, and (b) would be responsible for enforcing the provisions of the bill should it become law. If the President decides to sign the bill, it becomes law immediately, and the relevant agencies begin writing and adopting regulations and policies necessary to enforce the new law. If the President vetoes (doesn’t sign) the bill, he sends it back to Congress with the reasons why he didn’t sign.

Once back at the Capitol, Congress has two options. It can accept the President’s recommendations and send the bill back to the White House for signature. The bill becomes a law. Or Congress can override a veto with a 2/3 supermajority vote in both the House (290 votes) and the Senate (67 votes). The bill becomes a law. However, if Congress doesn’t accept the President’s recommendations or can’t get the necessary 2/3 votes, the bill dies.

Simultaneous 

5. Congressional Budget Office

The Congressional Budget Office is a nonpartisan agency in the Legislative Branch of the government. It evaluates the economic impact of proposed legislation.

These are the guys and gals who figure out how many people will gain or lose health insurance coverage, how much increased or decreased coverage will impact the economy, and other things Members of Congress want to consider when debating new healthcare policy.

6. Lobbyists

Lobbyists and special interest groups are essentially the same thing. Lobbyists are usually hired to represent special interests. And before you bristle at the idea power and influence trading, consider that you are represented by special interest groups whether you are a member or not. There are special interest groups who lobby for women’s issues, specific industries (including yours), and people with chronic and autoimmune conditions, both individual conditions and the collective community.

Yes, there is a lot of money involved – lobbyists are highly paid advocates and expert fundraisers – but they are also an integral part of the process. Lawmakers need expertise from people who know the issues inside and out. There may be a few on Capitol Hill, but there are many more with diverse viewpoints outside of the government. For example, if my premiums are going up, a lawmaker will hear it and know it’s bad for some of his or her constituents, but not know the details of why the premium is going up or what to consider when constructing a viable solution.

Lobbyists can meet with anytime lawmakers before final floor votes. Often, they will meet several times with lawmakers to keep trying to persuade them to see their client’s point of view.

After

7. Judicial Branch

The courts only come into play if a situation arises where what should happen under the new law isn’t clear or contradicts existing law. A plaintiff makes a legal challenge in court to clarify the law, and the case makes its way from the lower courts to the higher courts. In these cases, it is up to the courts to decide if a particular action is legal and constitutional (The Supreme Court.)

If a case reaches the Supreme Court (they decide what cases they hear), all other state and federal courts have to decide their cases using the Supreme Court’s guidance. If the Supreme Court decides not to hear a case, the decision of the last court to rule stands.