Republicans’ Obamacare Efforts Collapse

The Republican efforts to repeal or replace Obamacare have fallen apart, and at this time there is no clear path ahead.

On July 17, conservative senators Mike Lee (R-Utah) and Jerry Moran (R-Kan.) each announced they would not support the Better Care Reconciliation Act (BCRA), a Senate bill drafted in two versions, released on June 22 and July 14, to reform the Affordable Care Act (ACA), also known as Obamacare.

Since Republican senators Rand Paul (R-Ky.) and Susan Collins (R-Maine) had previously announced their opposition to the bill, this doomed its chances of even coming to a vote. To do so would require votes from 50 senators, plus the tie-breaking vote of Vice President Mike Pence, and the Republicans only have a total of 52 senators. With Lee and Moran joining Paul and Collins in opposition, reaching 50 votes was impossible.

In fact, the opposition to the BCRA may be greater than this suggests, as several moderate senators had not committed to voting for it.

Late at night on July 17, in response to the failure of the BCRA, Senate Majority Leader Mitch McConnell announced he would offer a bill, which was passed in December 2015 by the Republican-controlled Congress but vetoed by President Barack Obama, that repealed the taxes and subsidies of Obamacare. The repeal would be delayed for two years, allowing Congress to put in place a plan to replace it.

On the morning of July 18, three Republican senators—Collins, West Virginia’s Shelly Moore Capito, and Alaska’s Lisa Murkowski—announced they would not vote to repeal Obamacare, killing McConnell’s initiative less than 24 hours after he announced it.

The failure of the Republican efforts has to do with a caucus at odds with itself, with different views on how to handle Medicaid and subsidies for insurance, and unable to get its message out.

Conservatives Versus Moderates

The two senators who first announced their opposition to the BCRA did so for nearly opposite reasons, illustrating the difficulty Republicans face in wrestling with health insurance policy.

In a July 14 opinion piece, Paul defended his intention to vote against the BCRA in defense of capitalism in the United States. He wrote that Senate Republicans supporting BCRA “will be voting to keep the main premise of Obamacare and all its attendant distortions and market disruptions.” Only a repeal of Obamacare would be consistent with Republican principles and promises.

Collins, in a series of tweets on June 26, said she wanted to work with her colleagues “to fix the flaws in the ACA.”

Paul wants to tear down Obamacare, while Collins wants to fix it up.

In general, the conservatives in Congress, including the House Freedom Caucus and individual senators such as Paul, Ted Cruz (R-Texas), and Mike Lee (R-Utah), want the United States to move toward a market-based health care system. This requires doing away with Obamacare’s mandates, subsidies, and required health benefits and other regulations, while reforming Medicaid.

For moderate Republicans, like Collins, Capito, Murkowski, and others in the Senate and the Tuesday Group in the House, the emphasis has been on protecting those they view have been helped by Obamacare’s expansion of Medicaid and system of subsidies for those purchasing private insurance.

McConnell, in drafting the BCRA, tried to find a solution that would satisfy both camps, but failed.

Medicaid and Subsidies

Cruz is famous, or notorious, for speaking for 21 hours on the floor of the Senate in September 2013 in a futile attempt to stop Obamacare from being funded. The Washington Examiner reported a statement that Cruz made at a 2013 meeting with the Kingwood, Texas, tea party that gave a rationale for his last-ditch effort to stop Obamacare.

Cruz said: “[Obama] knows that in modern times, no major entitlement has ever gone into effect and been unwound. Never been done. His strategy is to get as many Americans as possible hooked on the subsidies, addicted to the sugar.”

Collins, Capito, and Murkowski, the three senators who announced they would not vote to repeal Obamacare, most likely would not describe the benefits their state’s populations receive as “sugar.”

In Maine, nearly 20 percent of the population receives Medicaid; in West Virginia, 30 percent; in Alaska, 25 percent. Alaska also has insurance premiums 75 percent higher than the national average, making ACA’s subsidies relatively more important there than in other states.

Medicaid, pre-Obamacare, served the poor in the following categories: the elderly, parents, pregnant women, and children. It also served the blind and disabled. Obamacare expanded Medicaid to serve abled-bodied adults who made less than 138 percent of the federal poverty level.

The expansion of Medicaid was encouraged by the federal government increasing the reimbursement rate. For the first three years, the federal government paid 100 percent of the cost for each able-bodied adult added to the Medicaid rolls. In 2017, that fell to 95 percent, and the reimbursement rate will eventually fall to 90 percent in 2020 and thereafter. States are reimbursed for the other categories of Medicaid beneficiaries according to the state’s average income; those rates are around 50 to 75 percent.

The difference in reimbursement rates for the able-bodied versus legacy Medicaid made the expansion of Medicaid very attractive to some states, and individuals responded to the new insurance, with enrollment exceeding expectations. The Kaiser Family Foundation estimates that 14.1 million enrolled in Medicaid following the passage of the ACA.

But the states that expanded have found that their costs now exceed their resources, leading in some cases to new taxes and fees.

An unintended consequence of the expansion of Medicaid is that a program that had previously performed poorly has had to stretch limited medical resources to cover more beneficiaries; the aged and disabled now compete with the able-bodied for scarce slots in doctors’ offices.

The BCRA’s proposed reform of Medicaid would have slowed and then halted the expansion of Medicaid to the able-bodied. The able-bodied poor would be offered tax credits they could use to buy conventional insurance. The cost of the legacy Medicaid program would be tied to inflation, figured each year. States would be given their federal funds in a block grant to provide an incentive to root out fraud and waste, as well as give them the flexibility to innovate their individual Medicaid programs.

The CBO estimated that the June 22 version of the BCRA would spend $772 billion on Medicaid less than current law over the next decade.

Conservatives have seen this package of reforms as a once-in-a-lifetime opportunity to improve the federal social program that serves the most vulnerable. Conservative health policy expert Avik Roy has written that the BCRA would transform American health care.

Moderate senators, and particularly senators from states who have expanded their Medicaid rolls, have looked with concern at changes that would reduce the federal dollars flowing to their states and would remove the able-bodied poor, who may never have had insurance before, from Medicaid. West Virginia used the Medicaid expansion to reduce its uninsured rate from 17 percent to 5 percent.

With subsidies, Obamacare offered credits to individuals at less than 400 percent of the poverty line. The BCRA, working on the assumption that the plans it would support would be cheaper than those offered by Obamacare, reduced the limit for subsidies to 350 percent of the poverty line. This translates into some lower middle class homes no longer receiving subsidized insurance.

Selling the Republican Plan

Health insurance policy is complicated, particularly when starting from the complex structure of the ACA, and the Republicans have done a poor job of explaining their Medicaid reform, their approach to subsidies, and many other changes they have proposed.

As a result, the Republican plans have been hammered in the polls. A June 28 NPR/PBS Newshour/Marist poll found that only 17 percent approved of the BCRA and 55 percent disapproved.

Multiple headlines have referred to how the Republicans plan to “gut” Medicaid. An L.A. Times headline refers to the bill’s “hidden horrors.”  

In this atmosphere, some Republican senators may have quailed at the prospect of the BCRA vote.

But simultaneously, many Republicans expect that their failure to repeal or replace Obamacare will at least cost them their majority in the House.

Meanwhile, the program continues to fail. The latest metric describing its collapse, added to skyrocketing premiums and deductibles, is counties with only one insurer. Health and Human Services Secretary Tom Price estimates that almost 40 percent of counties are in that situation.

After running for seven years on promises to replace Obamacare, how did the Republicans end up scrambling for seven months to come up with a plan, only to end up in defeat?

Sen. Pat Toomey (R-Pa.) told Time magazine that legislators didn’t expect Trump to win. If the Republicans had remained in opposition following a Clinton victory, then there would be no need to craft a winning health insurance strategy.