Republicans Crash and Burn on Health Care

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Republicans Crash and Burn on Health Care

The seventeen-day standoff between Republicans from different sides of the aisle ended with President Trump stepping away from any health care legislation entirely. The Republican’s failure on health care reform has left many Americans questioning their elected representative’s campaign promises. It has also left members of Congress questioning where they politically stand on health care and other divisive issues. Health care is perhaps the most fundamental issue in American politics, and rightly so as according to the World Bank health care costs represent 17.1% of the economy as a percentage of GDP – up from 13.1% in 1995. As we have seen with the Affordable Care Act (also known as ObamaCare), when you pass a massive piece of legislation, without bipartisan support, the political consequences can be dire.

The House bill, the American Health Care Act, which was originally crafted in secret, came under immediate scrutiny from all sides. Congressional officials, on the left and right, dove in front of news cameras like rabid dogs to share their displeasure with the hastily crafted legislation. The Freedom Caucus has said they couldn’t support the bill because it left parts of the Affordable Care Act in place and didn’t go far enough. The President, for his part, visited Capitol Hill several times to show Republicans some marginal level of support for their reckless push into the abyss. President Trump’s apparent handshakes and arm-twisting had little effect on GOP members though, as the bill was removed from the legislative calendar twice before being abandoned completely.

The newly elected majority on Capitol Hill rightly believe they have a responsibility to fulfill the promises made to their voters during the tumultuous 2016 campaign. However, as in 2010, this could have a disastrous political impact in future elections. As President Trump alluded to in a press conference from January, … “We don’t wanna own it, we don’t wanna own it politically. They own it right now. So the easiest thing would be to let it implode in ’17 and believe me, we’d get pretty much whatever we wanted, but it would take a long time.”

Politically, the President is right on point, the Pottery Barn rule applies … if the Republicans break health care, they will own it in the next elections. That could have explained the President’s lackluster public support for the legislation throughout its seventeen-day existence. Moreover, ideas like risk pools are outdated solutions to modern problems, especially given the Republicans promise to protect those with pre-existing conditions similar to ObamaCare.

The issues facing ObamaCare are undeniable. Currently, they rest solely in the lap of the Democrats on Capitol Hill and, even more so, upon former President Obama himself. The Republican Plan, which appears to have been haphazardly contrived in the dead of night, would have shifted the responsibility for health care in the United States to the Republicans.

From a political perspective, the ideal solution would have been to pass the legislation in the House, only to later have it die in the Senate. However, that outcome never came to fruition. That scenario would have provided some measure of political cover for House Republicans who have promised to repeal ObamaCare since its inception. This could have been a well-rounded political solution if it had succeeded. But in this case, it seems the ideals of the perfect outweighed the logistics of the good.

Politics aside, the legislation itself had a lot of issues and unknowns. In that respect, it was not dissimilar from the passing of the Affordable Care Act. As most will recall then-Speaker Pelosi’s statement, “we have to pass the bill so that you can find out what is in it, away from the fog of the controversy.” The proposed Republican Plan maintained many of ObamaCare’s foundational principals in an effort ensure passage in the Senate by reconciliation. Since the election of President Trump, there has been a noticeable increase in the approval ratings of the Affordable Care Act. This likely played a large role in the decision-making of moderate Republicans as they came to their final determination.

With the release of the Republican’s plan, the Congressional Budget Office (CBO) presented its estimate of the legislation prior to any scheduled votes. The one positive is that the original estimate indicated that the federal deficits would decrease by $337 billion over a ten-year period. However, that estimate was later reduced significantly based upon alterations to the bill, in an effort to sway more conservative votes. According to the CBO, the largest savings would have come from reductions in outlays for Medicaid and from the elimination of ObamaCare subsidies for non-group health insurance plans.

Despite that positive point, the CBO also estimated that in 2018 alone, an estimated 14 million more people would be uninsured in comparison to those under current law. Furthermore, the CBO’s estimate suggested that the plan would have eliminated the coverage of an additional 10 million within ten years.

The Republicans’ fetish-like infatuation with health care instruments like Health Savings Accounts, or HSA’s, is exceedingly evident. The assumption in Congress is that individuals would put a portion of their salaries into a savings account, dedicated to health care, in exchange for tax incentives. In practice, this may have been an incentive for higher wage earners, but has been very impractical to expect deposits to savings accounts from those who earn lower salaries. Moreover, HSA’s are not designed like 401(k)’s where there is an employer match which increases the incentive to save.

So, what are we to think? It seems safe to surmise that our current health care system, created under the Affordable Care Act, will remain unchanged and in place for the foreseeable future. Republicans, and more particularly President Trump, seem unwilling to dedicate any more time or political capital to this political quagmire.

President Trump has repeatedly stated that his “Plan B” for health care would be to allow ObamaCare to collapse under its own weight. However, it appears unlikely that ObamaCare will collapse as quickly as President Trump and Republicans have suggested. Nonetheless, Republicans and Democrats will eventually need to go back to the drawing board if they want to fix this politically toxic issue. Indeed, suggestions have already been made that a bipartisan deal could be reached at some point later down the road ….and most likely, much later.

The most problematic aspects of the Affordable Care Act; the rising costs of premiums and deductibles, as well as the increasing lack of market-based insurance solutions for many around the country are not likely to change without government intervention. So, for now, everyone will just have to wait and see. For many, they can rest more comfortably knowing the health care system as they’ve come to know it will remain unchanged.

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