Republicans’ Mixed Messages on Federalism

Care to take a guess how many Republican senators are willing to take a stand over federalism? Would you believe just two?

On Monday night, when the Senate considered legislation sponsored by Sen. Susan Collins (R-ME) about “gag clauses” in pharmaceutical contracts, only Utah’s Mike Lee and Kentucky’s Rand Paul voted no. Lee and Paul do not believe the federal government has any business providing for blanket regulation of the health-care sector.

Gag Clauses, Explained

I have experienced the distorted ways the drug pricing system currently operates. When looking to refill a prescription for one of my antihistamines, my insurance benefit quoted me a charge of $170 for a 90- to 100-day supply. But when I went online to GoodRX.com, I found online coupons that could provide me the same product, in the same quantities, for a mere $70-80, depending on the pharmacy I chose.

I found even greater discounts by purchasing in bulk. I ended up buying a nearly one year’s supply of my maintenance medication for $210—little more than the price for a 90-100 day supply originally quoted to me by my insurer. Had I used my insurance card, and refilled the prescription repeatedly, I would have paid approximately $300 more over the course of a year. Because my Obamacare insurance is junk, I have little chance of reaching my deductible this year, short of getting hit by a bus, so it made perfect sense for me to pay with cash instead.

In theory, anyone can go to GoodRX.com (with which I have no relationship except as a satisfied consumer), or other similar websites, to find the cash price of prescription drugs and compare them to the prices quoted by their insurers. But in practice, few try to shop around for prescription drugs.

Why Federalism Matters

In general, conservatives would support efforts to increase transparency within the health-care marketplace, and prohibiting “gag clauses” would do just that. However, some conservatives would also note that the McCarran-Ferguson Act of 1947 devolves the business of regulating insurance, including health insurance, to the states, and that the states could take the lead on whether or not to eliminate “gag clauses” in insurance contracts. Indeed, a majority of states—26 in total—have already done so, including no fewer than 15 state laws passed just this year.

Lee’s office reached out to me several weeks ago for technical assistance in drafting an amendment designed to limit the scope of federal legislation on “gag clauses” to those types of insurance where the federal government already has a regulatory nexus. Lee ultimately offered such an amendment, which prohibited “gag clauses” only for self-insured employer plans—regulated by the federal government under the Employee Retirement Income Security Act of 1974 (ERISA).

Unfortunately, only 11 senators—all Republicans—voted for this amendment, which would have prevented yet another intrusion by the federal government on states’ affairs. Of those 11, only Lee and Paul voted against final passage of the bill, due to the federalism concerns.

More Federalism Violations Ahead?

One of the prime sponsors of the discussion draft? None other than Sen. Bill Cassidy (R-LA), the author of legislation introduced last year that he claimed would “give states significant latitude over how [health care] dollars are used to best take care of the unique…needs of the patients in each state.”

The contradiction between Cassidy’s rhetoric then and his actions now raise obvious questions: How can states get “significant latitude over” their health care systems if Washington-based politicians like Cassidy are constantly butting in with new requirements, like the “surprise medical bill” regulation? Or, to put it another way, why does Cassidy think states are smart enough to manage nearly $1.2 trillion in Obamacare funding, but too stupid to figure out how to solve problems like drug price “gag clauses” and “surprise bills?”

Politics Versus Principle

The widely inconsistent behavior of people like Cassidy raises the possibility that, to some, federalism represents less of a political principle to follow than a political toy to manipulate. When Washington lawmakers want to punt a difficult decision—like how to “repeal” Obamacare while “replacing” it with an alternative that covers just as many people—they can hide behind federalism to defer action to the states.

Reagan had another axiom that applies in this case: That there is no limit to what a person can do if that person does not mind who gets the credit. Lawmakers in literally dozens of states have acted on “gag clauses,” but that matters little to Collins, who wants the federal government to swoop in and take the credit—and erode state autonomy in the process.

It may seem novel to most of official Washington, but if lawmakers claim to believe in federalism, they should stick to that belief, even when it proves inconvenient.

This post was originally published at The Federalist.

Why Members of Congress Secretly Like Unpopular Omnibus Bills

On this website last week, conservative leaders Sen. Mike Lee (R-UT) and Rep. Jim Jordan (R-OH) wrote a joint op-ed echoing my column from a few weeks previously, saying Congress remains on course for yet another omnibus spending bill debacle unless and until it reforms its procedures, and specifically starts considering, and passing, spending bills one-by-one, rather than in a catch-all bill enacted in a lame-duck session after the November elections.

All that sounds logical enough, at least to most individuals outside the Beltway. Why shouldn’t Congress do its job, and consider bills in a deliberative fashion, rather than jamming an entire year’s work into one must-pass vehicle totaling thousands of pages—a literal and figurative “Christmas tree” that usually passes in the waning days of December?

Reason 1: Members of Congress Are Lazy

I don’t mean “lazy” in the sense of goofing around. Most members work long hours, including difficult commutes back and forth to their districts every week. I mean “lazy” in the sense of not wanting to vote on difficult or politically controversial issues. In 2015, the House halted its consideration of appropriations bills because Republican leaders “worried that Democrats could try to offer more amendments related to the display of the Confederate flag that could again tie the GOP into knots.”

In Congress, appropriations bills generally operate under free-wheeling procedures, in which members can offer germane (i.e., relevant) amendments. Because the appropriations bills collectively cover all federal operations, and because members have few opportunities to offer amendments to other bills in both the House and the Senate, the spending bills become magnets for every conceivable controversy.

Consider some amendments that might get offered this year were Congress to consider spending bills individually:

  • Conservatives, particularly in the House, could seek to reduce or even eliminate funding for Special Counsel Robert Mueller’s investigation—amendments that moderate Republicans, or even Republican leaders, might oppose.
  • A bipartisan coalition would again offer amendments regarding medical marijuana—amendments that the chairman of the House Rules Committee, Pete Sessions (R-TX), has largely prevented from being considered on the House floor.
  • Democrats could offer political messaging amendments on issues ranging from President Trump’s tax returns to cabinet officers’ travel-related controversies to the emoluments clause—all issues that moderate Republicans, or Republicans with tough re-election campaigns, would not want to vote on prior to the midterm elections.

Members of Congress have become so accustomed to avoiding votes on tough issues that many recoil at the thought of reinstituting an open process. They may not say so outright, but many would prefer that leadership make the tough decisions for them behind closed doors, rather than forcing them into votes that could undermine their re-election prospects.

Reason 2: Members Want to Rig Outcomes

The Confederate flag flap also illustrated this dilemma for congressional leaders: “Some Republicans, primarily representing Southern states, found out about the amendment [banning display of the Confederate flag] after the fact and threatened to vote against the entire bill if it remained intact.” In other words, because some members did not achieve an outcome they wanted on the specific amendment, they were willing to take down the entire measure.

As I noted last fall, the House Freedom Caucus, which Jordan helped to found, has engaged in these kinds of tactics. Last summer, after moderate Republicans and Democrats combined to defeat an amendment prohibiting the use of taxpayer funds for soldiers’ gender-reassignment surgery, conservatives went to congressional leaders and told them to insert the amendment in a spending bill, the prior vote notwithstanding.

As the old saying goes, the true test of a principle comes not when that principle proves convenient, but when it proves inconvenient. Only when members find themselves willing to take tough votes, and to abide by the outcome of those votes, even if it results in policy outcomes they disfavor, will the process become more open and transparent.

As I noted a few weeks ago, members already have the power to bring about that open and transparent process—the only question is if they have the wherewithal to use it.

This post was originally published at The Federalist.

Congress’ Bipartisan Spending Addiction

Did you hear the joke that circulated around the Capitol over the holidays? It’s called Congress’ ability to control government spending.

Shortly before departing for their Christmas break, lawmakers of both parties voted to waive provisions of existing law that would have led to spending reductions over the coming decade. The move represented but the latest instance of the bipartisan addiction to federal spending that plagues our nation’s capital.

Because the final tax bill increased the deficit by nearly $1.5 trillion on a static basis—that is, not taking into account the economic growth that tax relief will produce—the PAYGO law would have required commensurate automatic reductions in spending in the coming years had Congress not enacted a waiver. However, as I noted last month, while a $1.5 trillion reduction in spending sounds large, it would represent less than 3 percent of all federal spending over the next decade.

Empty Democratic Threats

Prior to passage of the tax bill, Democrats threatened that statutory PAYGO would result in spending reductions to government programs. In August, the liberal Center for American Progress published a list of all the programs potentially subject to sequester spending reductions. In November, House Minority Whip Steny Hoyer (D-MD) used a Congressional Budget Office analysis he requested to decry “the complete elimination of all funding to dozens of mandatory programs next year” if Congress enacted a deficit-increasing tax bill.

Hoyer added that “while it is possible to avoid the PAYGO enforcement cuts triggered by their added deficits, Republicans would need Democratic votes to do it, requiring them to abandon their go-it-alone partisan strategy.” On that count, Hoyer needn’t have worried. On the spending bill that waived the PAYGO spending reductions, 14 Democrats voted for the measure in the House, and 18 Democrats voted for the bill in the Senate.

However, Senate Democrats could have insisted on the removal of the PAYGO waiver as their price to allow the spending bill to overcome a Senate filibuster. They did not do so. In fact, every Senate Democrat voted to “waive all applicable budgetary discipline” for the spending bill. That motion passed the Senate on a 91-8 vote, with Republicans providing all eight of the nays.

The PAYGO Law Is a Joke

For all their willingness to talk a big game before Republicans passed their tax measure, Democrats folded like a cheap suit on applying statutory PAYGO spending reductions to the tax bill. Earlier in December, their threats rattled moderate Republicans like Sen. Susan Collins (R-ME), who before voting for the tax measure forced Republican leaders to pledge that the spending reductions would never go into effect.

But Republican leaders could only make such a pledge—which, as Hoyer rightly noted in November, required Democratic votes—because they knew Democrats would never follow through on their empty threats to let the spending reductions occur. Liberals love government spending, and their saber-rattling over statutory PAYGO amounted to empty rhetoric towards Republicans: “Don’t pass a tax cut, or we’ll shoot ourselves in the foot by cutting programs we like!”

Only eight of 51 Senate Republicans voted against waiving budgetary discipline for the spending bill, and only two of those, Kentucky’s Rand Paul and Utah’s Mike Lee, voted against the bill’s final passage. Likewise, only 16 Republicans voted against the spending bill in the House, and several of those voted no not because the bill cancelled automatic spending reductions, but because the bill didn’t spend enough on federal defense programs.

The press critics who claim the death of bipartisanship should have watched the debate on waiving PAYGO. Both they and federal taxpayers would benefit from more closely examining the bipartisanship on display in waiving any semblance of fiscal discipline.

This post was originally published at The Federalist.

CBO, the Individual Mandate, and Tax Reform

This week, word that the Congressional Budget Office (CBO) was preparing to re-estimate the fiscal impact of repealing the individual mandate prompted consternation among Republican ranks. Sen. Mike Lee (R-UT) claimed the budget office was playing a game of “Calvinball,” constantly revising its estimates and making up rules a la the comic strip Calvin and Hobbes.

CBO is reassessing the effectiveness of the mandate in light of research published earlier this year by a team of researchers including Jonathan Gruber—yes, that Jonathan Gruber—that examined the effectiveness of the Obamacare mandate in the law’s first few years.

Consternation about CBO aside, the debate speaks to larger concerns about the effects on both health policy and tax policy of repealing the mandate.

Inconvenient Truths are Truths Nonetheless

Lee will find no argument from this observer about the need for CBO to increase its transparency. As previously noted, I’ve seen it up close and personal. Former CBO Director Doug Elmendorf repeatedly failed to disclose to Congress material omissions in CBO’s analysis of Obamacare’s CLASS Act—omissions that could have led the budget office to conclude that the program was financially unstable before Congress enacted Obamacare (with the CLASS Act included) into law.

That said, some people on the Right apparently think that difficulties with CBO allow them simply to ignore or dismiss its opinions. Witness this response back in July, when I noted that CBO believed one version of the Senate “repeal-and-replace” bill would raise premiums by 20 percent in its first few years:

The reconciliation bill being used as the vehicle for tax reform does not include reconciliation instructions to the House Energy and Commerce and Senate HELP Committees, the primary committees of jurisdiction over Obamacare’s regulatory regime. Because the tax reform bill cannot repeal, waive, or otherwise alter any of the Obamacare regulations, repealing the mandate as part of tax reform will definitely raise premiums.

Do Republicans Want to Repeal Obamacare’s Regulations?

This criticism shouldn’t apply to Lee, who fought hard to repeal as much of the Obamacare regulations as possible during the budget reconciliation debate in July. However, many other Republicans have demonstrated a significant lack of policy forthrightness on the issue of Obamacare’s regulatory regime. For many reasons, the claim that Republicans can “repeal” Obamacare while retaining the status quo on pre-existing conditions presents an inherent policy contradiction.

Health Policy Is Taking a Back Seat to Tax Policy

Whatever the merits of using the revenue from the mandate’s repeal to help the tax reform effort, Republicans did not campaign for four straight election cycles on enacting tax reform. They campaigned on repealing Obamacare.

From a health policy perspective, enacting a “solution” that involves repealing the mandate and walking away from the issue would represent a bad outcome—one measurably worse than the status quo. Insurance costs—the health care priority that Americans care most about—would rise, only alienating voters who objected to Democrats not delivering on the $2,500 per-family reduction in premiums Barack Obama promised in 2008.

Done right, tax reform can rise and pass on its own merits. But using repeal of the mandate to pass tax reform—which would lead to another round of high premium increases in (you guessed it!) the fall of 2018—represents a game of policy and political Russian roulette that Congress should not even contemplate.

This post was originally published at The Federalist.

The Binary Choice Behind a “Skinny” Health Care Bill

Are you for The Swamp—or are you against it?

It’s really that simple. Text of the supposed “skinny” bill—or the “lowest-common denominator” approach, if one prefers—has not yet been released. But based on press reports, it appears the legislation will repeal the individual and employer mandate penalties, along with the medical device tax, and little else, so the House and Senate can set up a conference committee to re-write the bill—if the House does not decide to pass this “skinny” bill outright.

  • It will embolden Senate leadership to keep bullying rank-and-file members on future pieces of legislation, pulling bait-and-switch moves at the last minute and daring members to vote no;
  • It will move the health-care debate from an open Senate floor process into a conference committee, where after one token public meeting most legislative work will occur behind closed doors;
  • It will concede that the “world’s greatest deliberative body” cannot deliberate as an institution, and instead empower unelected leadership staff in a secretive process to cobble together a new bill that can pass both chambers;
  • It will continue a process that Republican staffers themselves have described as “making it rain” on moderate senators through various backroom deals and spending sprees—bringing parlance heretofore used in strip clubs to the U.S. Congress;
  • It will raise premiums an estimated 20 percent, by eliminating the individual mandate penalty, but leaving all of Obamacare’s regulations intact;
  • It will all-but-guarantee a future Obamacare bailout, destabilizing insurance markets such that carriers will come running to Congress demanding corporate welfare payments to keep offering exchange coverage; and
  • It will prioritize K Street lobbyists who have fought for years to repeal the medical device tax, virtually guaranteeing that provision will remain in the final legislation, while raising premiums on hard-working American families.

If senators support the above scenarios, then they should vote for the bill. If not, perhaps they should consider another course.

Blast from the Past

Conservatives have seen these games played before—and rejected them. In 2015, House Republican leaders initially offered a bill eerily similar to the rumored “skinny” legislation. That bill repealed the individual and employer mandates, the medical device tax, the “Cadillac tax,” the Obamacare prevention “slush fund,” and a few other ancillary provisions. Conservative groups could have supported it—just to keep the process moving, and continue the momentum for a broader repeal—as leadership is asking them to do right now. They did not because:

The bill would not restore Americans’ health care freedom because it leaves the main pillars of Obamacare in place, nor would it actually defund abortion giant Planned Parenthood. This bill violates an explicit promise made in the budget, which ‘affirm[ed] the use of reconciliation for the sole purpose of repealing the President’s job-killing health care law.’

That statement comes from Heritage Action, which key-voted against passage of the “skinny” repeal bill in 2015. Likewise, in the fall of 2015 conservative senators Mike Lee (R-UT), Marco Rubio (R-FL), and Ted Cruz (R-TX) said publicly they could not support what they viewed as an insufficient attempt at repeal:

On Friday the House of Representatives is set to vote on a reconciliation bill that repeals only parts of Obamacare. This simply isn’t good enough. Each of us campaigned on a promise to fully repeal Obamacare and a reconciliation bill is the best way to send such legislation to President Obama’s desk. If this bill cannot be amended so that it fully repeals Obamacare pursuant to Senate rules, we cannot support this bill. With millions of Americans now getting health premium increase notices in the mail, we owe our constituents nothing less.

The bill does not even touch Obamacare’s main two entitlement expansions: The Medicaid expansion and the Exchange subsidies. The bill leaves all of Obamacare’s new insurance rules and regulations in place. It also leaves many of Obamacare’s taxes in place….

The Obamacare repeal movement has been successful in the last 5 years in keeping full repeal intact. It has recognized that it will be much easier to repeal Obamacare as a whole if all of the mandates and entitlement expansions are repealed at once, since we know that the law is vastly unpopular when taken as a whole. The threat is that ‘repeal’ is defined-down to simply mean repealing a couple high-profile provisions, while allowing the main pillars of the law to continue untouched. This package threatens that very outcome: defining down ‘full repeal’ and jeopardizing the entire repeal effort. [Emphasis mine.]

Need for Consistency

In the past several days, conservatives have attacked Senate moderates—rightly—for flip-flopping on a full repeal of Obamacare, voting for it in 2015 but opposing it now. Those who face a similar situation from the Right—that is, those who opposed a “skinny” bill two years ago—should not fall into the same trap as those from the center. On both policy and process, conservatives should reject the minimalist approach floated by leadership, and continue working to repeal Obamacare.

This post was originally published in The Federalist.

Self-Righteous Sanctimony from an Obamacare Hypocrite

Why would someone who never truly believed in repealing Obamacare attack others for wanting to keep it? Maybe because Mitch McConnell asked him to.

Avik Roy’s piece blasting Sen. Mike Lee (R-UT) for “preserving every word of Obamacare” contains flawed logic on several fronts. Let’s examine that first, before considering the source.

Roy essentially argues that the 2015 reconciliation bill that Sen. Lee and others supported did not repeal or reform any of the regulations raising premiums, but this year’s Senate Republican bill did. The first point is accurate but misleading, and the second point inaccurate, at least from a conservative perspective.

When it comes to the 2015 reconciliation bill, Republican leaders made a strategic choice—as current White House adviser Paul Winfree noted just after the election—not to litigate with the Senate Parliamentarian whether and what insurance regulations could be repealed under the special budget reconciliation procedures. Conservatives such as myself have argued that, while that 2015 bill represented a good first step—demonstrating that reconciliation could be used to dismantle Obamacare—lawmakers needed to go further and repeal the regulations outright.

It’s unclear from his piece whether Roy knew of this strategical gambit back in 2015, or knows, but doesn’t want to admit it—and to be candid, both could be true. The article contains the following statement of “fact:”

Senate rules require that the reconciliation process can only be used for fiscal policy—taxing and spending—not regulatory policy. To boot, reconciliation can’t be used to change Medicare or Social Security. [Emphasis mine.]

The first part of this argument does not follow: He’s claiming that reconciliation cannot be used for regulatory policy, while also arguing that the bill currently before the Senate—which is a budget reconciliation bill—would make massive changes to Obamacare’s regulatory apparatus, such that it warranted Lee’s support.

The second part of this argument is flat-out false. While the Senate’s “Byrd rule” prohibits changes to Title II of the Social Security Act (as per 2 U.S.C. 644(b)(1)(F) and 2 U.S.C. 641(g)), Congress can—and does—make major changes to Medicare under budget reconciliation. For instance, the Balanced Budget Act of 1997—a bill considered under budget reconciliation—included over 200 pages of legislative changes to Medicare, including major changes to Medicare managed care (then called Medicare+Choice) and the creation of the infamous Sustainable Growth Rate Mechanism for physician payments. Roy has previously argued that lawmakers could not make changes to Medicare under budget reconciliation—he was wrong then, and he’s wrong now.

So why should anyone believe the procedural and tactical arguments of someone who 1) never worked in the Senate and 2) has repeatedly made false claims about the nature of the budget reconciliation process? Answer: You shouldn’t.

Back to the arguments about the Senate bill’s regulatory structure. Roy claims that the bill currently being considered would make significant modifications to those regulations. But from a conservative perspective, the bill doesn’t attack some of the costliest drivers of higher premiums—specifically Obamacare’s guaranteed issue regulations. Moreover, it doesn’t actually repeal any of the regulations themselves, choosing instead to modify or waive only some of them.

If a bill can modify regulations under the budget reconciliation procedures, it can repeal them too—moderate Senators just lack the political will to do so. If you’re like me—a supporter of federalism who doesn’t believe Washington should impose a regulatory apparatus on all 50 states’ health insurance markets—then you might find the Senate bill did not sufficiently dismantle the Obamacare framework to make it worth your support. It appears Sen. Lee also came to that conclusion.

Now it’s worth examining why the article specifically attacks Mike Lee. The piece fails to note until the 16th paragraph of a 19-paragraph story that other Senators came out and opposed the bill as well. Continued concern from moderates—who didn’t want to repeal Obamacare—made it obvious that the bill was going to die—but no one wanted to deliver the coup de grace. Sen. Lee finally came out and did so, along with Sen. Jerry Moran (R-KS). It’s disingenuous for Roy to claim, as he does for most of the piece, that Senator Lee was solely, or primarily, responsible for killing the bill.

Why might he make such a claim? Jonathan Chait may have sniffed out an answer several weeks ago, when Roy made a winking non-admission admission that he had worked with Senator McConnell’s office on drafting the Senate bill. Given that fact, and the way in which Senate staff promised to “make it rain” on moderates by giving out “candy” in the form of backroom deals, it’s reasonable to ask whether Roy coordinated his attack on Senator Lee with Senator McConnell’s office—and was promised anything for doing so.

Nearly three years ago, Avik Roy published a piece claiming that “conservatives don’t have to repeal Obamacare” and that “there are political benefits to implementing the plan without repeal.” Last night, Roy didn’t even attempt to explain on Twitter how he could reconcile those prior statements with his purported support for Obamacare repeal. Yet now he wants to attack Mike Lee for not sufficiently supporting repeal? It’s a disingenuous argument.

When it comes to Roy’s flip-flopping on repeal, his factual inaccuracies, or his not-so-secret ties to Senate leadership on the legislation, when evaluating his attack on Mike Lee, conservatives would be wise to consider the source.

Lessons of the AHCA Collapse

Like the British evacuation of Dunkirk more than seven decades ago, Friday’s abrupt decision to halt proceedings on the American Health Care Act (AHCA) prior to a House vote represented victory only in that it averted an even costlier defeat—an embarrassing floor vote seemingly destined to fail, or passage of a bill unloved by wide swathes of the public and lawmakers alike.

Whether that decision is ultimately viewed as a “deliverance”—as Winston Churchill dubbed the 1940 Dunkirk evacuation—will depend in no small part on whether lawmakers can, both individually and collectively, learn the right lessons from an entirely predictable defeat.

Republicans Need to Remember How to Govern

Leadership outlined its strategy—such as it was—in a February 27 Wall Street Journal article: “Republican leaders are betting that the only way for Congress to repeal the Affordable Care Act is to set a bill in motion and gamble that fellow GOP lawmakers won’t dare to block it.”

Irrespective of what one thinks of the bill’s policy particulars—whether the bill represents a positive, coherent governing document and vision for the health care system—this thinking demonstrates that Republicans have to re-learn not just how to govern, but also how to legislate.

As a legislative strategy, the House’s gambit represented a puerile cross between the “chickie run” in “Rebel Without a Cause” and Hans Christen Andersen’s “The Emperor’s New Clothes.” Daring lawmakers to challenge the process, and attempting to bully and browbeat them into submission—“testosterone can get you in trouble,” as Rep. Mark Sanford (R-SC) reportedly noted during one meeting—does not a durable process make. Unsurprisingly, that process broke down after a mere 18 days.

In circumstances such as these, there is a fine line between learning lessons and pointing fingers. Focusing on the personalities behind the legislative failure would only further enflame tensions, while serving little productive purpose. On the other hand, understanding the reasons the legislation was in many ways doomed from the start can help prevent future calamities. Of the flawed premises that lay behind the legislative strategy, three seem particularly problematic.

1. Starting with the House

The House’s decision to consider the legislation first seemed ill-considered at the time, given the difficulties the chamber encountered the last time it moved first on repealing Obamacare. In the fall 2015, Congress considered and passed, but President Obama vetoed, repeal legislation under special budget reconciliation procedures. Passing the bill represented a “dry run” testing what a Republican Congress could do to dismantle Obamacare, but for the Democratic president who remained in the White House.

But as I noted the week after last November’s election, the House’s 2015 repeal reconciliation bill suffered from numerous procedural flaws. That legislation originally repealed Obamacare’s Independent Payment Advisory Board (IPAB), even though such Senate procedures meant that this provision, with an incidental fiscal impact, could not remain on a budget reconciliation bill. The House-reported legislation also increased the deficit in the years beyond the 10-year budget window, subjecting it to a potentially fatal point-of-order in the Senate.

Given that near-death experience fewer than 18 months ago, it made much more sense for the Senate to take the lead in crafting a reconciliation measure. At minimum, House staff needed to solicit greater feedback from the Senate regarding that chamber’s procedures during the drafting process, to ensure they wrote the bill consistent with the Senate’s budget reconciliation rules. Neither happened.

House leadership claimed they wrote their bill to comply with the Senate’s reconciliation rules. But experts in Senate procedure could readily see that AHCA as released suffered from multiple procedural flaws, several potentially fatal to the entire bill. Last week, days before its scheduled floor consideration, the relevant House committees released a managers amendment re-drafting the measure’s tax credit, precisely because of the procedural flaws in the initial version.

All of which makes one wonder why the House insisted on initiating action. The Senate not only has more detailed and arcane procedures to follow than the House, Republicans also hold a narrower majority in the upper chamber. While no more than 21 of 237  House Republicans (8.9 percent) can defect on a bill passing solely with Republican votes, no more than two of 52 Senate Republicans can defect in the upper chamber, a much narrower (3.9 percent) margin.

2. The Unrealistic Timetable

The day before House leadership released a document outlining their vision for what became AHCA, I published a lengthy analysis of the legislative environment. I concluded that any legislation featuring either comprehensive changes to Medicaid or a refundable tax credit—the former I generally favored, the latter I did not—just could not pass in the timetable allotted for it:

The likelihood that House Republicans can get a comprehensive “repeal-and-replace” bill—defined as one with either tax credits, Medicaid reform, or both—1) drafted; 2) cleared by the Senate parliamentarian; 3) scored favorably by CBO [the Congressional Budget Office]; and 4) with enough Member support to ensure it passes in time for a mark-up on March 1—two weeks from now—is a nice round number: Zero-point-zero percent.

Likewise the chances of enacting a comprehensive ‘repeal-and-replace’ bill by Congress’ Easter recess. It just won’t happen. For a bill signing ceremony for a comprehensive ‘repeal-and-replace’ bill, August recess seems a likelier, albeit still ambitious, target.

Nothing in the above passage proved inaccurate. House leadership even skipped steps in the process I outlined—going forward with markups without a CBO score, and not writing the bill to comply with Senate procedure until just before a scheduled House vote—yet still couldn’t meet their targets. This would lead most people to believe those targets were just too ambitious.

Two vignettes show the problems caused by the sheer haste of the process. First, the managers amendments released last Monday night had to be re-written on Tuesday night. In both cases, the House committees had to submit second-degree amendments “to address drafting issues,” because the original managers amendments had no fewer than ten separate drafting errors among them.

Second, the managers amendment included an extra pot of funds to increase the refundable tax credits given to those near retirement age. However, the legislation created that pot of money not by increasing the refundable credits, but by lowering thresholds for a deduction available to those who itemize medical expenses on their tax returns.

The decision to provide the additional funds through a deduction, rather than by adjusting the credits themselves, was almost certainly driven by the mechanics of budgetary scoring, and ultimately the bill’s timetable. While the Joint Committee on Taxation (JCT) could estimate the relatively straightforward financial effects of a deduction quickly, altering the tax credit levels for individuals aged 50-64 would create knock-on effects—would more individuals take the credit, would more individuals retire early and drop employer-sponsored coverage, etc.—taking CBO staff a week or more to model.

So, rather than “wasting” time coming up with a policy and finding out the effects of said policy, prior to House passage, congressional staff instead created a $90 billion “slush fund” and pledged to sort the details out later.

Just before Obamacare’s passage in March 2010, former House Speaker Nancy Pelosi infamously said “we have to pass the bill so that you can find out what is in it.” House Republicans took her multiple steps further: By including a “slush fund” designed to change later in the process, and proceeding to both committee markups and a vote on House passage without a final CBO score, congressional leadership guaranteed that anyone who voted for AHCA would not by definition have known what was intended to be in the bill, let alone the fiscal effects of such policies.

The end result was a group of members in vulnerable districts who voted for the bill in committee without a CBO score—and could suffer serious, if not fatal, political consequences for having done so. Some of these moderates hold substantial disagreements with conservatives on how to structure an Obamacare repeal. But it was not conservatives that compelled the moderates to cast a tough vote for the legislation in committee without a CBO score analyzing the bill’s fiscal and coverage impacts—it was the hyper-aggressive timetable.

3. Unproductive White House Coordination

While publicly President Trump and others made statements insisting that his administration was “100 percent behind” the House Republican plan, the divisions within the administration were an open secret on Capitol Hill. From staff to officials, many had misgivings about the policy behind the bill, the legislative tactics and strategy, or both.

Those differences helped affect the ultimate outcome. Ryan attempted to turn his legislation into a “binary choice”—either support this bill, or support Obamacare—granting conservatives some concessions during the drafting process, but few thereafter. By contrast, factions within the administration attempted to woo conservatives and fought House leadership, which resisted making changes.

Ironically, had the administration halted negotiations sooner, and demanded an immediate vote earlier last week, they might have had a better chance of winning that tally. (Whether that victory would have ultimately proved Pyrrhic is another story, but they might have eked out a victory nonetheless.) But because the White House and congressional leadership weren’t on the same page, the former’s negotiations with conservatives left moderates to slowly trickle away from the bill, such that by Friday, it was virtually impossible to find a coalition to reach 216 votes whichever way leadership turned.

Even as the momentum slowly sapped from the bill, the administration and Capitol Hill leaders remained at odds on tactics. The New York Times reported on Saturday that some in the administration wanted to hold a House vote, even an unsuccessful one, to find out who opposed President Trump. But making such a demand misunderstands the dynamic nature of votes in the House of Representatives.

While AHCA might have passed narrowly, it would not have failed narrowly. Once a critical mass of 30 or so Republican “noes” signaled the bill’s clear failure, members would have abandoned the politically unpopular legislation en masse—likely with the implicit or explicit support of House leadership. Having witnessed these “jailbreak” votes in the House, it’s possible that, had the White House forced the issue, the bottom could have fallen out on support for the bill. As a tactic to snuff out disloyal behavior, calling a vote on a doomed bill would have yielded little in the way of political intelligence—only more political damage.

Underneath Tactical Errors Is Philosophical Disagreement

Beneath the obvious tactical errors lie some fundamental disagreements within the Republican party and the conservative movement about Obamacare, the future of our health-care system, and even the role of government. As I have written elsewhere, those differences do not represent mere window-dressing. They are as sizable as they are substantive.

That divide between ‘repealers’ and ‘replacers’ represents a proxy for the debate between reducing costs and maximizing coverage.

On the one hand, the conservative wing of the party has focused on repealing Obamacare, and lowering health costs—namely, the premiums that have risen substantially under the law. By contrast, moderates and centrists remain focused on its replacement, and ensuring that those who benefited from the law continue to have coverage under the new regime.

That divide between “repealers” and “replacers” represents a proxy for the debate between reducing costs and maximizing coverage, a debate that precedes Obamacare by several decades, if not several generations. Some have argued that facts on the ground—the individuals gaining coverage as a result of Obamacare—necessitate an approach focused on maintaining coverage numbers.

Others believe that “repeal means repeal,” that Republicans ran, and won, elections on repealing the law—including as recently as five months ago—and that breaking such a deeply ingrained pledge to voters would represent political malpractice of the highest order.

The drafters of the House bill attempted to split the ideological divide, in part by retaining the popular parts of Obamacare while minimizing the law’s drawbacks. Both the House bill and the Better Way plan that preceded it maintained Obamacare’s restrictions on pre-existing conditions, its requirement that insurers cover dependents under age 26, and its prohibition on annual and lifetime limits for health insurance.

But policy decisions come with trade-offs, and in health care in particular those trade-offs can prove troublesome. Barack Obama did not wish to impose a mandate to purchase health insurance, having fought against one during his 2008 primary campaign; but CBO scoring considerations forced him to endorse one in the bill that became Obamacare. Similarly, the “popular” insurance regulations that Republican leadership maintained in its bill were the same ones that raised premiums so appreciably when Obamacare went into effect.

The AHCA approach of repealing Obamacare’s mandates and subsidies while retaining most of its insurance regulations created what Yuval Levin, a policy wonk close to Ryan, called a “twisted, fun-house mirror approach” to prior conservative health policy that yielded “substantive incoherence.” Dropping the individual mandate while retaining most of the insurance regulations created a CBO score that showed substantial coverage losses while failing to lower premiums appreciably—the worst of all possible policy outcomes.

The ideological divisions within the Republican Party, and the incoherent muddle of legislation that attempted to bridge the two, may have been overcome had the House released its bill the morning after the election, on November 9. But it did not release the bill on November 9, or on December 9, or on January 9, or even on February 9. The House introduced its bill on March 6, with the goal of passing legislation through both chambers by April 6. That timetable didn’t envision reconciling ideological differences so much as it hoped to steamroll them. It was all-but-guaranteed not to end well.

Lessons For the Future

What then of the future? One can only but hope that Republicans follow the example of Kipling’s poem “The Lesson,” written during the Boer War: “Let us admit it fairly, as a business people should; We have had no end of a lesson: It will do us no end of good.”

But what are those lessons, and what good might result from heeding them? While the policy differences within factions of the Republican Party are sizable, the only way to bridge them lies through an open, transparent, and deliberative process—negotiating outcomes among all sides from the start, rather than imposing them from on high through fiat.

If, as President Reagan famously noted, “personnel is policy,” so too then process provides a key to optimal policy making. A good process by itself cannot create good policy, but bad process will almost assuredly result in bad policy outcomes. In the short- and long-term, five principles can provide the initial glimmer of a path forward from last Friday’s dark outcome.

1. Let the Senate Lead

The procedural details surrounding budget reconciliation, and the narrower margins in the upper chamber, both augur toward the Senate re-starting any action on health care. As a practical matter, tensions remain far too high—with tempers short, friendships among members and staff frayed, and patience thin—for the House to initiate any legislative action for at least the next few weeks.

On upcoming legislation ranging from appropriations to tax reform to additional action regarding Obamacare, the “world’s greatest deliberative body” will have to exercise its deliberative powers. The ideological gaps are no less narrow in the House than in the Senate—can Mike Lee and Susan Collins reach consensus on a path forward regarding Obamacare?—but the recriminations and scars of the past month smaller.

If the Senate, with its smaller margins and arcane procedures, can deliver a quality policy product, the House, having seen its legislation sink in mere weeks, might be much more inclined to adopt it as its own.

2. Listen

House leadership rightfully notes AHCA had its origins in the Better Way policy white paper released last June. Prior to that document’s release, leadership staff spent significant time and effort reaching out to members, interest groups, the think-tank community, and others to gain thoughts and feedback on their proposals.

But actual legislation is orders of magnitude more complex than a white paper. Moreover, Better Way and AHCA deviate from each other in multiple important respects. The Better Way proposal includes numerous provisions—incentives for wellness, conscience protections for health care professionals, and proposals to repeal sections of Obamacare regarding Medicare, and Medicare Advantage—never included in AHCA, or mentioned in any great detail as part of the House’s “three-phase” approach.

Meanwhile, AHCA doubles the funding for grants to states when compared to the Better Way proposal, and uses significantly different parameters for the state grants than the 2009 House Republican alternative to Obamacare referenced in the Better Way document.

It’s possible to speculate on why House leadership made all these changes, but leadership itself made very little attempt to communicate exactly why they made them, or even that they were making them at all. Saying that Better Way led to AHCA is like saying the Model T led to the DeLorean. The former are both health-care proposals just as the latter are both cars, but each differ in significant ways.

The process that led from Better Way to AHCA was almost as significant as the process that led from the Model T to the DeLorean, but was opaque to all but a few closely held staff. Even lawmakers who understood and supported every single element of the Better Way plan could rightfully feel whipsawed when presented with AHCA, told it was a “binary choice,” and they had to publicly support it within a few weeks of its introduction, or otherwise they would be voting to keep Obamacare in place and undermine a new president.

When the Republican Study Committee unveiled its health-care legislation in 2013, its public release culminated a months-long process of consultation and scrutiny of the legislative text itself. RSC staff reached out to dozens of policy experts (myself included), and spent hours going through the bill line-by-line to make sure the legislation would accomplish its intended goals, while keeping unintended consequences to a minimum.

AHCA would have benefited immensely from this type of under-the-radar analysis, rather than subjecting legislation not yet ready for prime time to the intense scrutiny that came with a white-hot political debate and a hyper-accelerated timeline.

3. Trust Experts

A note at the bottom of page 25 of a leaked draft of AHCA provides an important hint toward a larger issue. The bracketed note, in a passage regarding per capita cap reforms to Medicaid, calls for staff to “review with CMS [the Centers for Medicare and Medicaid Services] any conforming amendments required.”

Congressional staff I spoke with over the past few weeks questioned whether anyone within the relevant agencies had in fact reviewed the legislation, to provide the technical expertise necessary to ensure that AHCA could be implemented as written, and would actually result in a workable health-care system.

Games of legislative hide-and-seek and talk of ‘binary choices’ preclude the received wisdom of all but the select few participating in the policy-making.

At the time the legislative process began, the Department of Health and Human Services (HHS) had relatively few political appointees—no more than a few dozen out of about 150 total spots filled, and a CMS administrator not confirmed until the week prior to the scheduled House vote. The combination of a stretched staff and mistrust between political and career appointees within the agencies could well have limited the exchange of critically important details regarding how to draft, and implement, the legislation.

In addition to working with career personnel at the agencies, congressional staff should also utilize the institutional knowledge of their predecessors. While working for the House Republican Conference in 2009, I made it a point to start the Obamacare debate by finding out what I didn’t know, reaching out to those who had gone through the “Hillarycare” debate 15 years prior. My idea came from an unlikely source—former senator Tom Daschle, who in his 2008 book “Critical” described how lawmakers went through a “Health Care University” of policy seminars in 1993. In trying to replicate those seminars for both members and staff, I hoped we could obtain some of the collective wisdom of the past that I knew I lacked.

As I had previously noted in November, most of the senior Republican health-care staff working on Capitol Hill during the Obamacare debate in 2009-10 have moved on to other posts. But they, and others like them, are not far removed from the process. Based on my experience, most would gladly offer technical guidance and expertise; in many cases, even the lobbyists would do so with “client hats” removed, in the hopes of arriving at the best possible product.

But reaching out in such a manner requires a deliberative and inclusive process; games of legislative hide-and-seek and talk of “binary choices” preclude the received wisdom of all but the select few participating in the policy-making.

4. Be Honest

The House Ways and Means Committee’s section-by-section summary of AHCA illustrates the dilemma lawmakers faced. Page three of the document, discussing verification of eligibility for the new tax credit, states that “the Secretary of the Treasury is empowered to create a system—building upon already developed systems—to deliver the credit.”

There’s just one minor detail missing: The “already developed systems” for verifying eligibility Ways and Means referenced are Obamacare eligibility systems. This goes a long way toward explaining the omission: If the House is using an Obamacare eligibility system to deliver a refundable tax credit (also included in Obamacare), how much of the law is it really repealing?

Capitol Hill leadership could never reconcile the inherent contradictions in their product. On MSNBC, Ways and Means Chairman Kevin Brady (R-TX) called AHCA “the best opportunity to deliver on our promise to repeal the awful law of Obamacare”—eliding the fact that the bill explicitly retains and utilizes portions of that “awful law.” When pressed, leadership staff relied upon absurd, legalistically parsed statements, afraid to admit that the bill retained portions of Obamacare’s infrastructure.

These Clintonian definitions—“It depends upon what the meaning of the word ‘repeal’ is”—do nothing but build mistrust among members and staff alike. At least some in the policy community felt that House leaders were relying upon Elizabeth MacDonough, the Senate’s parliamentarian, as a de facto human shield—claiming the House couldn’t repeal portions of Obamacare under budget reconciliation, when in fact leadership wouldn’t, for policy or political reasons.

The fact that House leaders claimed their bill comported with reconciliation requirements, yet had to re-write major portions of AHCA at the last minute because it did not, gives added credence to this theory.

Whenever “repeal-and-replace” legislation comes back before Congress, the leaders and committees preparing the legislation should include a list of all the major provisions of Obamacare not repealed by the measure, along with clear reasons why. Even if some members want a more robust repeal than that offered, transparency would at least prevent the corrosive mistrust—“You’re not being up-front about this, so what other things are you hiding?”—that comes from an opaque process.

5. Be Humble

More than perhaps any bill in recent memory, AHCA represented a feat of legislative hubris. As a policy matter, Obamacare imposed a more sweeping scope on the nation’s health-care system. But the tactics used to “sell” AHCA—“We’re doing this now, and in this way. Get on board, or get out of the way”—were far more brutal, and resulted in a brutal outcome, an outcome easily predicted, but the one its authors did not intend.

There is a different approach, one I’ve seen on display. Some job interviews are thoroughly unremarkable, but two during my tenure on Capitol Hill stand out—the chief of staff who described himself as a “servant leader,” one who ensures all the members of the team have the tools they need to succeed; and the legislative director who told me, “We want to make sure you have a voice.” Of course I took both jobs, and felt myself privileged to work in such inclusive and empowering environments.

In some ways, the process that led to AHCA represents the antithesis of servant leadership, with members being given a virtual ultimatum to support legislation many neither liked nor understood. But in its purest form, public service should be just that—service—to one’s constituents, and, in the case of elected congressional leaders, to the members who chose them.

A more humble, inclusive, open, and transparent process will not guarantee success. The policy differences among the disparate Republican factions are real, and may not ultimately be bridgeable. But an opaque, authoritarian, and rushed process will almost certainly guarantee failure, as it did in the case of AHCA.

Listening Is Crucial

Ultimately, the failure to legislate on AHCA lay in a failure to listen to the policy concerns of Members, and to the warning signs present from the start. One can only hope that Republicans learn from this proverbial mule-kick, and start listening to each other more carefully and more closely. That process can yield the wisdom and judgment that comes from understanding, which can only help to heal the many breaches within the party following the events of recent weeks.

On November 8, Republicans received an important gift from voters—the chance to serve the country. Recovering from last week’s setback will require leaders of a humbled party to recommit themselves to service, both to the American people and to each other, in service of a common good. The chance to serve the American people is solely within the public’s gift. That gift, if and when squandered, will likely not be renewed for a long time.

This post was originally published at The Federalist.

A Status Update on Repeal

With Congress heading towards its first recess at week’s end, it’s time to summarize where things stand on one of Republicans’ top objectives—repealing Obamacare—and might be headed next. While those who want further details should read the entire article, the lengthy analysis below makes three main points:

  1. Congress faces far too many logistical obstacles—the mechanics of drafting bill text, procedural challenges in the Senate, budgetary scoring concerns, and political and policy disagreements—to pass a comprehensive “repeal-and-replace” bill by late March, or indeed any time before summer;
  2. Congressional leaders and President Trump face numerous pressures—both to enact other key items on their agenda, and from conservatives anxious to repeal Obamacare immediately, if not sooner—that will prevent them from spending the entire spring and summer focused primarily on Obamacare; therefore
  3. Congressional leaders will need to pare back their aspirations for a comprehensive “repeal-and-replace” bill, slim down the legislation to include repeal and any pieces of “replace” that can pass easily and swiftly with broad Republican support, and work to enact other elements of their “replace” agenda in subsequent legislation.

What Has Happened In the Last Month

Before the New Year, congressional leaders had endorsed a strategy of repealing Obamacare via special budget reconciliation procedures, using legislation that passed Congress (but President Obama vetoed) in late 2015 and early 2016 as a model. Subsequent efforts would focus on crafting an alternative to the law, whose entitlements would sunset in two or three years, to allow adequate time for a transition.

Due to Trump’s intervention and angst amongst some Republicans toward moving forward with a repeal-first approach, congressional leaders pivoted. Various press reports in the last week suggest House committees are drafting a robust “replace” package that will accompany repeal legislation. This “repeal-and-replace” bill will use the special reconciliation procedures that allow budget-related provisions to pass with a 51-vote majority (instead of the usual 60 votes needed to break a filibuster) in the Senate, with non-budgetary provisions being considered in subsequent pieces of legislation.

The press reports and strategic leaks from House offices attempt to show progress towards a quick markup—a March 1 markup date was floated in one article—and enactment before Congress next recesses, in late March. But these optimistic stories cannot hide two fundamental truths: 1) Enacting comprehensive “replace” legislation along with repeal will take far longer than anyone in Congress has yet admitted; and 2) Leadership does not have the time—due both to other must-pass legislation, and political pressure from the Right to pass repeal quickly—necessary to fashion a comprehensive “repeal-and-replace” bill.

He may not realize it at present, but in going down the simultaneous “repeal-and-replace” pathway, President Trump made a yuuuuge bet: holding the rest of legislative agenda captive to the rapid enactment of such legislation. Once it becomes more obvious that “repeal-and-replace” will not happen on its current timetable—and that other key elements of the Republican agenda are in jeopardy as a result—it seems likely that Speaker Ryan, President Trump, or both will scale back the “replace” elements of the “repeal-and-replace” bill, to allow it to pass more quickly and easily.

Adding Layers of Complexity

But every element added to a piece of legislation makes it that much more complex. Republicans have an easy template to use for repealing Obamacare: the reconciliation bill that already passed Congress. That bill has been drafted, passed procedural muster in the Senate, and received both a favorable budgetary score and enough votes for enactment.

Conversely, crafting “replace” policies will require more time, conversations with legislative counsel (the office in Congress that actually drafts legislation), discussions about policy options for implementation, and so forth.

House Republicans did engage in some of these conversations when compiling their Better Way agenda last spring. But that plan ultimately did not get translated into legislative language, and the plan itself left important details out (in some cases deliberately).

It seems plausible that House Republicans could fairly easily incorporate some elements of their “replace” agenda—for instance, HSA incentives or funding for high-risk pools—into a repeal reconciliation bill. There are several “off-the-shelf” (i.e., previously drafted) versions of these policy options, and the budgetary effects of these changes are relatively straight-forward (i.e., few interactions with other policy elements).

But on tax credits and Medicaid reform, House Republicans face another major logistical obstacle: Analysis by the Congressional Budget Office (CBO). Longtime observers and congressional historians may recall that CBO was where Hillarycare went to die back in 1994. While Republicans are not necessarily doomed to face a similar fate two decades later, the idea that budget analysts will give “repeal-and-replace” a clean bill of fiscal health within a fortnight—or even a month—defies both credulity and history.

Running the CBO Gauntlet

As someone who worked on Capitol Hill during the Obamacare debate eight years ago, I remember the effect when CBO released one of its first scores of Democrats’ legislation. As the New York Times reported on June 17, 2009, in a piece entitled “Senate Faces Major Setback on Health Care Bill”: “The Senate Finance Committee is delaying its first public drafting session on major health care legislation until after the July Fourth recess, a lengthy setback but one that even Democrats say is critically needed to let them work on reducing the costs of the bill…. The drafting session had been scheduled for Tuesday. But new cost estimates by the Congressional Budget Office on health care proposals came in much more expensive than expected, emboldening critics and alarming Democrats.”

Given the role CBO played in delivering Hillarycare a mortal blow in the 1990s, and the more than nine-month gap between the initial (horrible) CBO scores of Obamacare and that law’s enactment, House leadership’s implication that its “repeal-and-replace” legislation can move straight to passage by receiving a clean bill of health from CBO on the first go-round seems highly unrealistic.

Just like any player moving up from the minor leagues will need time to adjust to big-league pitching, so too will any legislation with as many moving parts as a comprehensive “repeal-and-replace” bill require several, and possibly significant, adjustments and tweaks to receive a CBO score Republicans find acceptable.

While House Republicans’ Better Way plan included a much less complicated and convoluted formula for providing insurance subsidies than Obamacare, they may face other difficulties in achieving a favorable CBO score, particularly regarding to the number of Americans covered under their refundable tax credit regime. These include the following.

No Mandate:  While conservatives view the lack of a requirement to purchase insurance as a feature of any Obamacare alternative, CBO has a long history of viewing a mandate’s absence as a bug—and will score legislation accordingly. In analyzing health reform issues in a December 2008 volume, CBO published an elasticity curve showing take-up of health insurance based on various levels of federal subsidies. The curve claimed that, even with a 100 percent subsidy—the federal government giving away health insurance for “free”—only about 80 percent of individuals will actually obtain coverage. In CBO’s mind, unless the government forces individuals to buy insurance, a significant percentage will not do so.

President Obama didn’t want to include a mandate in Obamacare, not least because he campaigned against it. But CBO essentially forced Democrats to include one to receive a favorable score on the number of Americans covered. If Republicans care about matching the number of individuals insured by Obamacare (some view it as more of a priority than others), the lack of a mandate will cost them on coverage numbers. Alternative mandate-like policies such as auto-enrollment may mitigate that gap, but CBO may not view them as favorably—and they come with their own detractors.

Age-Rated Subsidies: Obamacare uses income as a major factor in calculating its insurance subsidy amounts, which creates two problems. First, because subsidies decline as individuals’ income rises, Obamacare effectively discourages work. CBO has previously calculated that, largely because of these work disincentives, the law will reduce the labor supply by the equivalent of 2.5 million full-time jobs.

Second, the process of reconciling projected income to actual earnings creates administrative complexity. It poses large paperwork burdens on the Internal Revenue Service and taxpayers alike, and requires some individuals to forfeit their refunds and pay back subsidies at tax time.

House Republicans have proposed a simpler system of insurance subsidies, based solely upon age. However, because the subsidies are solely linked to age, low-income individuals receive the same subsidy as millionaires. While much more transparent and fair, this system also does not target resources to those who would need them most. To borrow an analogy, it spreads the peanut butter (i.e., insurance subsidies) more evenly, but also more thinly, over the proverbial piece of bread (i.e., Americans seeking insurance). Given CBO’s beliefs about the likelihood of individuals purchasing insurance outlined above, this change could also cost Republicans significantly in the coverage department.

Medicaid Reform: Republicans have consistently argued that providing states with additional flexibility to manage their Medicaid programs in exchange for a defined federal contribution will allow them to reduce program spending in beneficial ways. Rhode Island’s innovative global compact waiver provides an excellent example of providing better care within an overall budget on expenditures.

However, CBO analysts have publicly taken a different view. In analyzing per capita spending caps for Medicaid—the policy option House Republicans are reportedly incorporating into their alternative—last December, CBO wrote that “States would take a variety of actions to reduce a portion of the additional costs that they would face [from the caps], including restricting enrollment. For people who lose Medicaid coverage, CBO and the staff of the Joint Committee on Taxation estimate that roughly three-quarters would become uninsured.”

CBO has therefore made rather clear that it will score reforms to Medicaid as increasing the number of uninsured.

Speaker Ryan may have pushed for the comprehensive “repeal-and-replace” strategy in part to appease Republican members of Congress who want to see their alternative to Obamacare provide as many Americans with insurance as current law. But it seems highly improbable that CBO will score any Republican tax credit proposal as covering as many Americans as Obamacare. It is also not outside the realm of possibility for CBO to score an alternative as covering fewer Americans than the pre-Obamacare status quo.

The first two CBO scoring issues nixed any attempt by House Republicans to include tax credits as part of their alternative to Obamacare in 2009, when I worked in House leadership. Sources tell me unfavorable scores also nixed House Republicans’ attempt to include a refundable tax credit when the party was crafting responses to a potential Supreme Court ruling striking down the law’s subsidies in 2015. It therefore ranges from likely to certain that an initial CBO score of a comprehensive “repeal-and-replace” bill will go over about as well as it did for Republicans in 2009 and 2015—with generally poor coverage figures compared to Obamacare.

In theory, Republicans could work to surmount some of these obstacles and achieve more robust coverage figures. But such efforts would require time to sort through policy options—time that Republicans don’t currently have—and money to fund insurance subsidies, even though Republicans don’t have an obvious source of funding for them.

Pay-For Problems

Over and above the purely technical problems associated with scoring a “repeal-and-replace” bill, other issues present both policy and political concerns. To wit, if Republicans include refundable tax credits in their plan, how exactly will they finance this new spending? The possibilities range from unpalatable to implausible.

  • They could try to keep some of Obamacare’s tax increases to fund their own spending. But key Republican lawmakers and key constituency groups have strongly supported repealing all of Obamacare’s tax hikes. It seems unlikely that a bill that failed to repeal all of the law’s tax increases could gather enough votes for passage.
  • They could include their own revenue-raisers after repealing all of Obamacare’s tax hikes. For instance, House Republicans could limit the value of employer-provided health coverage. But while economists of all political stripes support such efforts as one key way to reduce health costs, members of the business community would likely oppose this measure, judging from recent news stories. Unions and the middle class likely wouldn’t be keen either. Moreover, by using limits on employer-provided health coverage as a new source of revenue rather than reforming the tax treatment of health insurance in a revenue-neutral way, Republicans would repeal Obamacare’s tax increases, but replace them with other tax increases—an unappetizing political slogan for the party to embrace.
  • They could use Medicaid reform to fund the credits, but that causes the potential problems with coverage numbers outlined above, and will likely generate additional squabbling among governors and states over the funding formula, as outlined in greater detail below.
  • They could use the remaining savings after repealing Obamacare’s tax increases and entitlements—which in the 2015/2016 reconciliation bill totaled $317.5 billion—to fund a new insurance subsidy regime. But such a move raises both policy and political problems. While Republicans could re-direct the $317.5 billion in savings during the first ten years to pay for insurance subsidies, the subsidies would likely have to expire after a decade. Creating a permanent new entitlement (the subsidies) funded by temporary savings would result in a point of order in the Senate—one that takes 60 votes, which Republicans do not have, to overcome—because budget reconciliation bills cannot increase the deficit in any year beyond the ten-year budget window. Thus any subsidies funded by the reconciliation bill’s savings would have to sunset by 2026—a far from ideal outcome. On the political side, the savings in last year’s reconciliation bill came from keeping Obamacare’s reductions in Medicare spending. If Republicans turn around and use that money to fund a new subsidy regime, they would be “raiding Medicare to fund a new entitlement”—the exact same charge Republicans used against Democrats to great effect during the debates over Obamacare.

To put it bluntly, while some Republicans may want to include refundable tax credits in their Obamacare alternative, they have no clear way—and certainly no pain-free way—to fund these credits. Even if they do push forward despite the clear obstacles, finding the right blend among the options listed above will require conversations among members and constituency groups, and multiple rounds of CBO scores for various policy options—all of which will take much more time than House leadership currently envisions.

Then There Are the Political Obstacles

Layered on top of the pay-for difficulties lie other political obstacles preventing quick enactment of a comprehensive “repeal-and-replace” package.

Medicaid: With 16 Republican governors ruling states that expanded Medicaid under Obamacare, and 17 Republican governors in states that did not, the fate of Medicaid expansion remains one of the thorniest questions surrounding repeal. Many states that did expand wish to keep their expansion, while states that did not do not want to be disadvantaged by making what they view as the conservative choice to turn down the new spending from Obamacare. Lawmakers have admitted they have yet to craft a solution on this issue. Attaching Medicaid reform to a “repeal-and-replace” measure will only complicate matters further, by giving states another issue (namely, the new funding formula for the per capita spending caps) to fight over.

House-Senate Differences: While House Republicans gear up to pass a comprehensive “repeal-and-replace” package, reports last week also indicated that Senate leadership still intends to consider legislation more closely resembling the 2015/2016 reconciliation bill. If Speaker Ryan continues to craft a “repeal-and-replace” bill while Majority Leader McConnell pushes “repeal-and-delay,” something will have to bring the two leaders to an agreement reconciling their disparate approaches.

Insurers: Those opposed to the “repeal-and-delay” strategy initially advocated by congressional leaders cited the needs of insurers as reason to pass a full “replacement” of Obamacare concurrent with repeal. Insurers will need to start submitting bids for the 2018 plan cycle by spring, and will want some certainty about how next year’s landscape will look before doing so. Hence the call for a full “repeal-and-replace,” to give insurers fast reassurances about the policy landscape going forward.

But if “full replace” will take until summer to pass—as it almost invariably will—then that argument gets turned on its head. In such circumstances, Congress should act swiftly to include some type of high-risk pool funding for those with pre-existing conditions, to prevent the insurer community from ending up with an influx of very sick, very costly enrollees.

Passing a repeal bill with high-risk pool funding may provide insurers with less certainty than a full “repeal-and-replace” measure, but it would yield infinitely more certainty than Congress arguing until September over the details of “full replace,” with the entire legal and regulatory realm in limbo as insurers must prepare for their 2018 plan offerings.

Conservatives: Some conservatives have philosophical objections to refundable tax credits, or indeed to any “replacement” legislation. Sen. Mike Lee this week called including “replacement” provisions on a repeal bill a “horrible idea.” Lee was one of three Republicans (the others being Ted Cruz and Marco Rubio) who in fall 2015 pushed for more robust repeal legislation, issuing a statement demanding that year’s reconciliation measure include the greatest amount of repeal provisions possible consistent with Senate rules. After the conservatives laid down their marker, the Senate ultimately passed, and the House ratified, the reconciliation measure repealing the law’s entitlements and all of Obamacare’s tax increases.

Some within the party have acknowledged the fractious nature of the “replace” discussions. Ramesh Ponnuru has publicly worried that some conservatives agnostic or skeptical on the merits of a “replace” plan would do nothing following repeal, and therefore wants to link repeal with replace, to force conservatives to vote for a vision of “replace.”

Such maneuvering pre-supposes that conservatives will swallow a “replace” plan they dislike to repeal Obamacare, a dicey proposition given conservatives’ success at obtaining a more robust repeal measure in 2015. It also pre-supposes that conservatives will stand idly by while leadership takes the months necessary to create full-scale “replace” legislation.

If the process continues to drag on in the House, it would not surprise me one bit were conservatives to introduce a discharge petition to force a House floor vote on the 2015/2016 reconciliation bill. Conservatives in the House Freedom Caucus and the Republican Study Committee, likely in conjunction with outside conservative groups, would turn the discharge petition into a litmus test for Republican members of Congress: Are you for repeal—and repeal in the form of legislation that virtually all returning Republicans voted for one short year ago—or not?

While a discharge petition needs 218 member signatures before its sponsor can force a floor vote, the mere introduction of a discharge petition would increase the pressure on House leadership to move quickly on repeal. Moreover, it would highlight the fact that neither Speaker Ryan nor President Trump can afford to spend the entire spring and summer slogging through a long legislative process regarding Obamacare.

Now We Come to the Opportunity Costs

Most of this year’s major action items require the Obamacare reconciliation bill to pass. Once and only once that legislation passes can Congress pass a second budget, allowing for a second budget reconciliation measure to move through the Senate. Specific items held in limbo due to the Obamacare debate include the following.

Tax Reform: Republicans want to use the second reconciliation bill to overhaul the tax code. (President Trump may also want to use the tax reform bill to finance his planned infrastructure package.) But because the current budget does not include reconciliation instructions regarding revenues, Congress must pass another budget with specific reconciliation instructions before tax reform can move through the Senate with a simple (51-vote) majority. But before Congress passes another budget, it must first pass the reconciliation bill (i.e., the Obamacare bill) related to this budget.

Debt Limit: The current suspension of the debt limit expires on March 15. While the Treasury can use extraordinary measures to stave off a debt default for several months, Congress will likely have to address the debt limit prior to its August recess. As with tax reform, the debt limit (and spending and entitlement reforms to accompany same) can be enacted with a simple majority in the Senate via budget reconciliation. But, as with tax reform, doing so first requires passing another budget, which requires enacting the Obamacare reconciliation bill.

Appropriations: The current stopgap spending agreement expires on April 28. Congress will need to pass another spending measure by then—quite possibly including a request by the president for additional border security funds—and begin considering spending bills for the new fiscal year that starts September 30. Here again, passage of these legislative provisions would be greatly aided by passage of another budget to set fiscal parameters, but that cannot happen until the Obamacare reconciliation bill is on the statute books.

As other observers have begun noting, many of the major “must-pass” and “want-to-pass” pieces of legislation—tax reform; Trump’s infrastructure package; a debt limit increase; appropriations legislation; funding for border security—remain essentially captive to the Obamacare “repeal-and-replace” process. The scene resembles the airspace over New York during rush hour, with planes circling overhead while one plane (the Obamacare bill) attempts to land. Unfortunately, the longer the planes circle, one or more of them will run out of fuel, effectively crashing major pieces of the Trump/Ryan agenda due to legislative inaction and neglect.

The Available Political Options

With a legislative process for “repeal-and-replace” likely to take months longer than currently advertised, and a series of other competing priorities contingent on it, Speaker Ryan and President Trump face three options.

Punt: Focus on passing the other agenda items first, and come back to Obamacare later;

Plow Ahead: Remain on the current course, knowing that Obamacare will jeopardize much of Trump’s and Ryan’s other agenda items; or

Pivot/Pare Back: Return to something approaching last year’s reconciliation bill, and postpone major “replace” legislation until a future reconciliation measure.

Given the current environment, the third option seems the clear “least bad” outcome. The first would represent a major political setback, effectively admitting defeat on the president’s top agenda item and betraying Republicans’ seven-year-long commitment to repeal that conservatives sharply opposed to Obamacare will never forget, and may never forgive. The second jeopardizes, if not completely sacrifices, most of the party’s legislative agenda, including items the president will want to tout in his re-election bid.

Therefore, it seems likely that Ryan, Trump, or both will eventually move to pare back the current comprehensive “repeal-and-replace” legislation towards something more closely resembling the 2015/2016 repeal reconciliation bill.

The legislation may include elements of “replace,” but only those with a clear fiscal nexus (due to the Senate’s rules regarding reconciliation) and broad support among Republicans. HSA incentives and funding for high-risk pools might qualify. But more robust provisions, such as Medicaid reforms or refundable tax credits, will likely get jettisoned for the time being, to help pass slimmed down legislation yet this spring.

Time’s a Wastin’

To sum up: The likelihood that House Republicans can get a comprehensive “repeal-and-replace” bill—defined as one with either tax credits, Medicaid reform, or both—1) drafted; 2) cleared by the Senate parliamentarian; 3) scored favorably by CBO; and 4) with enough member support to ensure it passes in time for a mark-up on March 1—two weeks from now—is a nice round number: Zero-point-zero percent.

Likewise the chances of enacting a comprehensive “repeal-and-replace” bill by Congress’ Easter recess. It just won’t happen. For a bill signing ceremony for a comprehensive “repeal-and-replace” bill, August recess seems a likelier, albeit still ambitious, target.

Republicans have already blown through two deadlines on “repeal-and-replace”: the January 27 deadline for committees to report reconciliation measures to the House and Senate Budget Committees, and the President’s Day recess, the original tentative deadline for getting repeal legislation to President Trump’s desk. Any further delays will accelerate both conservative angst and the same types of process stories from the media—“Republicans arguing amongst themselves on repealing Obamacare”—that plagued Democrats from the summer of 2009 through the law’s enactment.

Some may find this analysis harsh, or even impertinent. Some may want to take issue with my assumptions—Newt Gingrich would no doubt dispute CBO’s scoring methods, long and loudly. But policy-making involves crafting solutions given the way things are, not the way we wish them to be. And every day that goes by while Congress remains on the current “repeal-and-replace” pathway—which seems increasingly like a strategic box canyon—will only jeopardize the success of other critical policy priorities.

For all his wealth, Trump gets the same amount of one thing as everyone else: Time. For that reason, his administration and Speaker Ryan should re-assess their current strategy on Obamacare—the sooner the better. Time’s a wastin’, and the entire Republican agenda is at stake.

This post was originally published at The Federalist.

Three Lessons from Last Year’s Obamacare Repeal Effort

In a move virtually ignored outside Washington and largely unnoticed even within it, last December the House and Senate passed legislation repealing much of Obamacare. President Obama promptly vetoed the measure — an obstacle that will disappear come January 20. As reporters and policymakers attempt to catch up and learn the details of a process they had not closely followed, three important lessons stand out from last year’s “dry run” at repealing Obamacare.

The Senate Should Take the Lead

The legislation in question, H.R. 3762, made it to President Obama’s desk only because Republicans used a special procedure called budget reconciliation to circumvent the Senate’s 60-vote requirement to overcome a Democratic filibuster. While reconciliation allowed the bill to make it to the president’s desk, it came with several procedural strings in the Senate. Reconciliation legislation may only consider provisions that are primarily budgetary in nature; policy changes, or policy changes with an incidental fiscal impact, will get stripped from the bill. In addition, reconciliation legislation may not increase the budget deficit.

Unfortunately, the original version of the bill the House introduced did not comply with the Senate requirements. The legislation repealed Obamacare’s Independent Payment Advisory Board (IPAB) — but because that change was primarily policy-related and not fiscal in nature, it did not pass muster with the Senate parliamentarian. Likewise, according to a cost estimate by the Congressional Budget Office, the House-passed bill would have increased the deficit in the “out years” beyond the ten-year budget window, making it subject to another point-of-order challenge that would require 60 votes to overcome. Ultimately, the legislation contained enough of these procedural flaws that Senate majority leader Mitch McConnell had to introduce a completely new substitute for the bill as it came to the Senate floor, to ensure that it would receive the procedural protections accorded to a reconciliation measure.

The arcane and technical nature of the budget-reconciliation process means that the Senate will play the key role in determining what passes — simply because Senate procedure will dictate what can pass. While the House has the constitutional prerogative to originate all tax legislation, and by custom it initiates most major spending legislation, the Senate may do well to initiate action in this particular case. House Republicans proposed an Obamacare-replacement plan earlier this year, Paul Ryan’s “A Better Way,” but what good is passing that through the House if much of it ends up on the Senate’s proverbial cutting-room floor?

Personnel Matters, Because Institutional Memory Is Scarce

The original reconciliation bill was introduced in the House on October 16, during what amounted to an interval between leaders. John Boehner had announced his intention to resign the speakership, but Paul Ryan had not yet assumed that title. And while House members played another round of “musical chairs,” staff underwent their own turnover, as Speaker Boehner’s longtime health-policy adviser departed Capitol Hill a few weeks before Boehner announced his surprise resignation.

To say that relevant leaders and committee chairs have swapped places in the House recently is putting it mildly. Not one has served in his current post for more than two years. Two years ago, Paul Ryan chaired the House Budget Committee; his reign at Ways and Means lasted a brief nine months before he assumed the speakership. Elsewhere in leadership, both Majority Leader Kevin McCarthy and Majority Whip Steve Scalise assumed their jobs after the defeat of Eric Cantor in August 2014. At the committees, Budget Committee chairman Tom Price and Ways and Means Committee chairman Kevin Brady succeeded Paul Ryan in leading their respective committees last year. And the Energy and Commerce and Education and Workforce Committees will soon choose new chairmen to assume their gavels in January.

While Senate leadership has remained more stable at the member level, most of the staff in both chambers has turned over since the Obamacare debate of 2009–10. I served in House leadership during 2009, and Senate leadership from 2010 to 2012; most of my former colleagues have long since moved on, whether to lobbying jobs, grad school, or even outside Washington altogether. Both at the member level and the staff level, the critically important institutional knowledge of what happened to Democrats — and when, why, and how — during the Obamacare debacle eight short years ago is dangerously thin.

The Washington gossip circles seem most interested in playing the parlor game of who will fill what post in the new administration. But particularly if the administration defers to Capitol Hill on policy, the true action in determining what happens to Obamacare — and what replaces it — may well lie at the other end of Pennsylvania Avenue. Both reporters and would-be job applicants should react and plan accordingly.

An Influential Troika of Senate Conservatives

In addition to its procedural shortfalls, the original House reconciliation bill represented something much less than full repeal of Obamacare. While the law as enacted contains 419 sections, four of which had already been repealed prior to last October, the House’s reconciliation bill repealed just seven of them. Admittedly, much of Obamacare contains extraneous provisions unrelated to the law’s coverage expansions: nursing-home regulations, loan-forgiveness programs, and the like. But the original House reconciliation bill left intact many of Obamacare’s tax increases and all of its coverage expansions, leaving it far short of anything that could be called full repeal.

Into the breach stepped three conservative senators: Mike Lee, Marco Rubio, and Ted Cruz. The day before the House voted to pass its reconciliation bill, they issued a joint statement calling it thin gruel indeed:

On Friday the House of Representatives is set to vote on a reconciliation bill that repeals only parts of Obamacare. This simply isn’t good enough. Each of us campaigned on a promise to fully repeal Obamacare, and a reconciliation bill is the best way to send such legislation to President Obama’s desk. If this bill cannot be amended so that it fully repeals Obamacare pursuant to Senate rules, we cannot support this bill. With millions of Americans now getting health premium increase notices in the mail, we owe our constituents nothing less. 

Knowing that the bill lacked the votes to pass the chamber without support from the three conservatives, Senate leadership significantly broadened the bill’s scope. The revised version that went to the president’s desk repealed all of the law’s tax increases and all of its coverage expansions. It was not a one-sentence repeal bill that eradicated all of Obamacare from the statute books, but it came much closer to “fully repeal[ing] Obamacare pursuant to Senate rules,” as the three senators laid out in their statement.

The conservatives’ mettle will be tested once again. Already, Republican congressional sources are telling reporters that they intend to keep the law’s Medicaid expansion, albeit in a different fashion. “One of the aides said this version of the bill [that passed last year] was mostly about ‘messaging,’ and that this time, ‘We’re not going to use that package. We’re not dumb.’”

Apart from the wisdom of calling a bill that their bosses voted for less than one year ago “dumb,” the comment clarifies the obvious fissure points that will emerge in the coming weeks. Will conservatives such as Lee, Rubio, and Cruz hold out for legislation mirroring last year’s bill — and vote no if they do not receive it? Conversely, what Republican who voted for the reconciliation bill last year will object if it returns to the Senate floor? Will senators be willing to vote against something in 2017 that they voted for in 2015?

As I noted last week, Republicans’ path on Obamacare could prove more complicated than the new conventional wisdom in Washington suggests. If past is prologue, last year’s reconciliation bill provides one possible roadmap for how the congressional debate may play out.

This post was originally published at National Review.

Gov. Jindal Op-Ed: Supreme Court Decision Is Not the End of the Debate

As a matter of law, the Court’s decision upholding subsidies for states participating in the federally run insurance exchange, healthcare.gov, violates the plain text of Obamacare. The statute expressly restricted insurance subsidies to those individuals purchasing coverage through an “Exchange established by the state.” But just as Chief Justice Roberts three years ago decreed that the individual mandate functioned as a tax, even though both Congress and President Barack Obama stated that it wasn’t, the Court decided that “Exchange established by the state” meant any type of Exchange, whether established by states or by Washington.

It’s a sad outcome for the rule of law — and the English language. But when it comes to the political debate surrounding Obamacare, the Court’s ruling ultimately decides little. Of course, Obama, who took an entirely predictable victory lap yesterday, would have you believe otherwise. But we’ve seen his triumphalism before — and have seen it come crashing back to reality.

Three years ago, Obama stated he wouldn’t “refight old battles,” mere hours after seven Supreme Court justices — including his own former solicitor general — struck down the law’s mandatory Medicaid expansion as unconstitutional “economic dragooning” of the states. On election night 2012, the president promised to “move forward” — months before at least 4.7 million Americans received insurance cancellation notices thanks to Obamacare. And this April, the president arrogantly declared that “the repeal debate is and should be over” — mere weeks before his native state of Hawaii shut its failed insurance exchange, an effort the federal government spent more than $200 million funding.

So, much as the President would like the debate on Obamacare to be over, it isn’t. The debate persists in large part because the law has singularly failed in its prime objective: Containing health care costs. Consider why this Supreme Court case mattered so much to the administration in the first place. The law spends over $1.7 trillion on subsidized coverage to make insurance more “affordable,” largely to offset the new mandates and regulations that have raised the price of insurance.

And with myriad insurers proposing double-digit premium increases for next year — some as high as 50% — candidate Obama’s 2008 promise to lower insurance premiums by $2,500 per family is further away then ever. No wonder the law remains singularly unpopular. When it comes to winning the debate on Obamacare, there is still all to play for.

But in order to win, we conservatives first have to play. That means outlining our alternative vision for health care: How we would restore freedom and choice to a health care sector currently lacking for both — and most importantly, how we would slow, and hopefully reverse, the trend of skyrocketing health care costs.

As I write this, I stand as the sole major declared presidential candidate (with the possible exception of Bernie Sanders) to put forward my vision on health care, and an alternative to Obamacare. As proud as I am of my plan, that is a boast I wish I were not able to make. Because Republicans, from the top down, must outline a clear and coherent vision for health care to win the trust of the American people to repeal this President’s health law.

While we should be shouting our vision from the rooftops, many of my fellow candidates have managed barely a whisper about how exactly they would repeal Obamacare, or what they would do to tackle the main issue plaguing our health care system: rising costs. Sen. Mike Lee recently stated that lack of an Obamacare replacement plan should be a disqualifier for any conservative presidential candidate. He’s absolutely right. We owe it to the American people to release our plans well before November 2016, and to have a robust debate within our party about what should come after Obamacare.

Because, contrary to this President’s self-proclaimed edicts, yesterday’s Supreme Court decision is not the end of the debate on Obamacare.

Now that the Supreme Court has ruled, the debate shifts back to the elected branches of government — the ones that caused our health care mess in the first place. It is there that conservatives can complete our work to repeal Obamacare.

This post was originally published at Time.