“I’m Not Dead Yet!”: Three Theories of Where Healthcare Reform is Headed

Last week, it seemed that the drama surrounding the Obamacare repeal had reached its apex. Republican Senate Plan B – a watered-down version of the original Republican Senate bill – was going down in flames after the defection of two conservative Republicans, Senators Lee and Moran, unsatisfied with the level of Medicaid spending cuts. The next morning, Majority Leader McConnell had no sooner unveiled Plan C, “Repeal and Delay,” when three more moderate Republicans, Senators Capito, Collins, and Murkowski, announced they were opposing it, effectively sending the message that the 50 votes necessary were out of reach. In all of the excitement, many people expected that the efforts to repeal the Affordable Care Act were dead, opening up the opportunity to shift from “Repeal” to “Repair.”

Not so fast. Last night, we had the breaking news that Senator McCain, who disclosed days earlier that he is fighting for his life against glioblastoma and expected to be out of commission for weeks, is flying back to Washington, D.C. The only way to read McCain’s decision is that his vote is critical for the Republicans getting to the 50 votes necessary to proceed to debate the various Republican proposals to repeal the ACA. [Post-script: The vote to proceed took place Tuesday evening and passed narrowly, 51-50.] What’s going on? What does today’s vote mean? Is “Repeal and Replace” or “Repeal and Delay” still alive?

There are three possible ways to read the current efforts. Let’s call the alternatives “Saving Face,” “Sweet-talking Holdouts,” and the “Skinny Bill”.

1.      Saving Face: The prospect of not even getting to a vote is a black eye not only for Majority Leader McConnell but for the entire Republican Party. When we wrote From ObamaCare to TrumpCare, we predicted that there would be tension to be navigated in passing a repeal bill between the more liberal and ideologically diverse Senate Republican caucus and the more conservative House caucus. But we never guessed that the Republican Congress would not find a way to bridge those differences. The intramural Republican divide has highlighted the weakness of a fractured party, divided between the “true believers” who see tax reform as the end-all, be-all, and the pragmatists, who have found that Medicaid coverage for their out of work, lowest income voters has been a good thing. President Trump, facing his own challenges on other issues, is wasting no time beating up on Republican healthcare hold-outs.

In this reading, Senator McConnell is well aware that there is no way to bridge the gap between those Republican senators who want to see deep Medicaid cuts to enable tax cuts and those Republican senators steadfastly opposed to cuts to the part of ObamaCare that is actually working in their states, covering 1 in 3 adults and half of all children. That divide dooms a complete repeal, because the Democrats are united in favor of saving the Medicaid expansion that took us from 50 million Medicaid beneficiaries in 2009 to 72 million today. Nevertheless, proceeding to a vigorous debate shows that McConnell has genuinely tried, and will showcase the Senate doing its best to wrestle with difficult issues. President Trump, Speaker Ryan, and the Republican faithful may be frustrated, but at least McConnell and the Republican Senate caucus can hold their heads up and say they did their best. This may be a big part of what's going on.

[Post-script: The Senate voted on Plan B, the updated, comprehensive repeal-and-replace Tuesday evening, and it failed 43-57. Taking a vote that had no chance of passing can be read as validating the "Saving Face" theory.]

2.      Sweet-Talking Holdouts: A few months ago, I had a chance to schmooze and talk healthcare reform with former Nebraska Senator Ben Nelson. It was not long after House Speaker Ryan had finally passed the House version of healthcare reform on the third try. I asked Senator Nelson what he expected from the more divided Republican Senate caucus, and he shared that he wouldn’t be surprised by a whirlwind day of backroom deal-making to get it done. 

That was what happened in the House. Republican Congressman Fred Upton defected over the provisions in the bill that would take coverage away from people with preexisting conditions, and was promptly brought back into the fold to support the bill by an announcement of additional $8 billion in funding for people with preexisting conditions. Never mind that policy analysts agreed that the $8 billion was a drop in the bucket and nowhere close to the actual funding need for preexisting conditions. Congressman Upton had gotten political cover. He could claim victory in doing more to protect his constituents and taking a stand.

What I took away from Senator Nelson was the sense that, no matter what our elected officials say, most of them can be moved when they are able to save face. The Republican pragmatists blocking Medicaid rollback are not standing on deeply held principles. They are being practical. If offered the chance to hold up the “spoils” of their efforts and say credibly to their constituents, “Look what I did for you,” many of them will take it. Even Senate Plan B had some political goodies: there was a provision to prevent any Medicaid cuts in Alaska, nakedly offering cover for Senator Murkowski. It may be easier in small states like Alaska, but when the Republicans are only a few senators’ votes away from the 50 necessary to pass something, don’t rule out the possibility of more hand-outs. After all, the Medicaid populations of states like Alaska, West Virginia, and Maine, are a drop in the bucket -- and there will be no backlash against Republicans for taking an axe to Medicaid in Blue states with large populations, like California, New York, and Illinois.

It's not all carrots. The stick, being threatened hand in hand with the “pork,” is the effort that will be invested in contesting the races of the Republicans who defected. Rest assured that efforts are underway to run conservative candidates against every Republican senator who dares to buck the leadership. When forced with the choice of some political cover and avoiding serious opposition from within the party, it would not be surprising to see some Republican opponents of the previous bills cave. This may be the only pathway still open to Republicans trying to salvage tax reform: roll back Medicaid in Blue states and there may still be a glimmer of hope for delivering a tax cut.

[Post-script: Although I read allowing the Senate to vote on a comprehensive repeal-and-replace plan could be read as a way to suss out Republican troublemakers, the failure of the vote on Plan B 43-57 and the failure of Plan C by the same measure means that the "carrot and stick" approached failed. Of note, Senator Murkowski highlighted her independence by voting with eight GOP colleagues against Plan C. Look for these nine senators to be targeted by conservatives for potential primary challenges.]

3.      Skinny Bill: The last, and perhaps most likely option is a “skinny bill” (not to be confused with the “skinny benefit” insurance plans that Republicans want to see made available). The Republicans may not be able to agree on what to do with the Medicaid expansion, but there are plenty of issues that all Republicans can agree on, which would allow them to pass a bill and move forward with a conference committee for reconciliation with the House bill. 

A skinny bill would focus on the part of Obamacare that Republicans (and even many Democrats) agree is broken – the insurance exchanges in which middle class uninsured Americans were forced to participate. For all the disagreement among Republicans about Medicaid, there is unity among them in supporting the repeal of the individual mandate, which forced healthy Americans to buy insurance if they didn’t qualify for Medicare or Medicaid and if their employer didn’t provide it. The key is to listen whenever Democratic and Republican elected officials talk about healthcare is that Democrats tend to talk about how effective Medicaid expansion has been, while Republicans talk about how broken the insurance exchanges are. The two parties are like ships passing in the night.  Republicans can unite and celebrate doing away with the individual mandate and shifting to a penalty imposed by insurers for people who allow their coverage to lapse. This would lead to more uninsured people, but a much smaller number than the bills to date. And even when middle class Americans have insurance, it's no panacea when the benefit level is thinner and deductibles and co-pays are sky high.

There are other parts of Obamacare that all or most Republicans oppose, like the medical device excise tax and the mandate requiring employers with 50 or more employees to provide insurance coverage. A scaled down bill would allow the Republican Party and President Trump to claim victory in a partial repeal.

So what’s it gonna be? I’m predicting the Republicans get the votes to proceed to debate. Look for long, hot, messy August. We won’t know about all the goodies and accompanying threats, but don't bet against a skinny bill...

[Post-script: The "Skinny Repeal" option went down with John McCain casting the deciding vote. Next stop ahead: what the Administration is already doing to disrupt the Afffordable Care Act without a change in the law. Stay tuned for my next post.]