Easier Said than Done

While November was disappointing, the Democrats did gain seats in the Senate.  As a result, the Republicans only hold a 52-48 majority.  If three Republican Senators vote no on any confirmation or bill, it fails.  We are already seeing signs that the next two years could get very interesting — even if the Democrats are more responsible in using the filibuster than Republicans were.

Right now, the Republicans want to repeal the Affordable Care Act.  The Republicans have never been able to exactly what they don’t like about the Affordable Care Act other than that it was passed by a Democratic President and a Democratic Congress.   For seven years, the Republicans have been asserting the need to repeal and replace the Affordable Care Act.  While the Republicans have been relatively unified on their desire to repeal the Affordable Care Act, they have never been able to reach a consensus on how to replace it.

The current idea floating in Washington is to pass “repeal” now, but to delay the effective date to give the Republicans more time to agree on how to “replace.”  There are several problems with this proposal.

First, it will cause great uncertainty.  The Affordable Care Act requires consumers and the insurance industry to “buy in” on the system.  If there are about to be further major changes in the near future, the insurance industry is going to be reluctant to take risks if the reward might disappear.  Similarly, the changes contained in the Affordable Care Act include certain incentives to the health care industry to alter how they provide health care.  If those incentives might disappear, the health care industry is unlikely to adopt those proposed reforms.

Second, as with any major piece of legislation, the Affordable Care Act was imperfect.  It is not unusual (in fact it is unavoidable) for unexpected problems to develop during the implementation phase that need to be fixed.  Republican opposition has prevented any fix from passing over the past several years.  Delaying the effective date of any change means that these problems will continue unfixed for the next several years.  What damage such a delay might mean to the health care is difficult to predict, but it could be significant.

Third, depending upon how complete the repeal is, not having put in place a replacement would open the door to attacks on Republicans in 2018 for what they have repealed.  There are several “positive” features of the Affordable Care Act that would likely be included in any replacement.   A complete repeal of the Affordable Care Act would allow Democrats to claim that Republicans want to get rid of those features.  A partial repeal — eliminating the things that people like, but getting rid of the things that people don’t like which are needed to make those “positive” features work — would potentially leave to very negative consequences over the next two years (like dramatic increases in insurance premiums that make 2016’s increase look small).  Additionally, a complete repeal with no proposed replacement would significantly increase the deficit.

The combination of these facts has led several Republican Senators to express opposition to a “repeal now, replace later” strategy.  While things can change with the right concessions, the Republicans currently do not have fifty votes to pass a delayed repeal.  At least four Republican Senators have tentatively expressed the belief that any repeal bill must also include replacement.

Replacing is also not simple.  The difficulty in reforming the health care industry was what made it difficult to pass the Affordable Care Act in the first place.  Insurance companies make a profit by getting higher income from premiums and investments (on required reserves) than they pay for health care and administrative costs (agents to sell policies, staff — including attorneys — to process claims).  Insurance companies traditionally have kept costs low by putting caps on lifetime payments, by denying care for pre-existing conditions, and by negotiating with local health care providers to pay less than the “list price.”  Alternatively, insurance companies increase revenue by charging higher premiums to those in “high risk” groups or to cover pre-existing conditions.  Needless to say, potential customers don’t like most of the things that insurance companies do to make a profit.  They don’t want to pay more because some “bean counter” thinks they are a high risk patient.  They don’t like lifetime caps that deny them coverage when they most need it.  They don’t like being locked into one company when they get seriously ill because they can’t get new coverage.  Similarly, while everybody wishes for more competition in the insurance industry, the traditional companies offering coverage in an area tend to have better deals with more providers, making it hard for new companies to enter the market (even more so than the differences in state laws as to what must be covered and the rules governing how insurance operates.

Getting rid of some of the consumer unfriendly tactics of the insurance industry represents the popular side of the Affordable Care Act.  To make it work, the Affordable Care Act tried to guarantee the insurance industry that it would have more customers — by subsidies to working families with lower incomes and a mandate that everyone get coverage.  Even with these techniques, not enough “healthy” customers have purchased insurance.  It is unclear how changes that would reduce the incentive to get coverage would increase the number of healthy customers buying insurance.   The lack of a clear better alternative that includes all of the benefits to consumers of the current law is a key reason why Republicans have not been able to reach a consensus on changes.

Before 2009, Democrats had been talking for over two decades about different ways to use private insurance to get health care coverage to everyone.   Similarly, there was the working example of Massachusetts.  While the exact details needed to be settled, there was a general outline in place.  Still, Republicans complained about the Affordable Care Act being passed in less than a year.  To get it passed, the Democrats had to make numerous compromises to get and keep sixty Democratic Senators on board.  It is hard to see how the Republicans in the Senate could reach a consensus on the replacement to the Affordable Care Act quickly with the Republicans being in roughly the same position of needing to keep every Republican Senator on board.  It is difficult to see any bill that would satisfy Ted Cruz, Mike Lee, and Rand Paul on one side of the party without losing Susan Collins, Lisa Murkowski, Dean Heller, and Rob Portman on the other side of the party.

Thanks to the way that the U.S. elects our national government, the Republicans now have “control” of both Houses and the White House.  Given the very real internal divides in the Republican Party, the party that has spent the past eight years blocking everything now has the responsibility of getting stuff done.  While, as Americans, we wish for a workable government, it’s hard to see how the current Republican Party can govern.


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