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.

Paul Ryan Shares Responsibility for Republicans’ Obamacare Failure

On the last day of 2016, I sent the editing team at The Federalist a draft article that predicted events in the coming Congress. If those events came to pass, then it could publish, along with a notation indicating that I had written it months (or years) previously.

The piece described a scenario in which cross-pressures over repealing-and-replacing Obamacare led Paul Ryan to resign his speakership. Even then, before the 115th Congress officially convened, I envisioned conflicts between the “repeal” wing of the Republican Party and the “replace” wing, making success on health care unlikely and Ryan the likeliest “fall guy” in any such scenario. Even though Wednesday’s retirement announcement by the speaker officially rendered this outcome moot, I can’t help but reflecting on the prediction.

A Party Proves It Has No Idea How to Lead

A few months after I drafted that prediction, the worst-kept secret among Republican circles became the fact that House leaders didn’t start drafting health-care legislation until late January 2017, around the time of President Trump’s inauguration. On one level, the delay made some sense. After all, no one expected Donald Trump to win the presidency—not even Donald Trump.

But on the other hand, members and staff should have immediately sprung to work the morning after the election, to begin assembling options and drafting legislation. Congressional leaders had 72 days between November 9, 2016 and January 20, 2017 to develop both a coherent strategy and a bill. They certainly didn’t do the latter, and they probably didn’t do enough of the former. Those failures ultimately lie at Ryan’s feet.

Some may argue that congressional leaders’ initial support for a repeal-first approach—also called “repeal-and-delay,” for it would have postponed the repeal’s effective date to allow for enacting a replacement—justified the lack of action on a “repeal-and-replace” measure. After all, “repeal-and-replace” didn’t become the preferred option until the month of Trump’s inauguration. But Republicans were always going to need some type of “replace” legislation eventually, and delaying work on drafting that bill qualifies as legislative malpractice.

Hiding Your Heads In the Sand Isn’t a Plan, Guys

Once they did release their bill publicly, House Republicans didn’t hold hearings on the legislation before marking it up, leaving many members to defend their votes for legislation whose full implications they didn’t necessarily comprehend.

The fast timetable meant House leaders passed the bill in committee, and on the House floor, without final Congressional Budget Office scores. One staffer called this tactic a game of Russian roulette—a hope that final CBO scores would not blow up in members’ faces after they voted for the bill. These procedural shortcuts led to understandable concerns among the public about the rush to pass a bill, not to mention justifiable arguments of hypocrisy over how Republican critics of Obamacare’s lack of transparency used an even more secretive process.

Second, once they did draft a bill, time pressures contributed to Ryan’s initial take-it-or-leave-it strategy with his own conference. In part, House leaders’ talk of “binary choices”—“Either support the Republican plan as-is, or support Obamacare”—stemmed from their desire to pre-empt a rightward drift that might hinder the bill’s chances in the Senate. But it also came from their absurd prediction—which I called absurd at the time—that Congress could introduce, and pass, legislation remaking much of the nation’s health sector within six weeks.

The Party’s Mess Isn’t Ryan’s Fault, But Leadership Lack Is

To be clear, the Republican Party faced internal fissures on health care that Ryan could not have resolved by himself. Immediately after the election, I considered stalemate the likeliest option, and so it proved.

But had House leaders crafted a bill sooner, they could have 1) guaranteed a more open process, alleviating some member concerns and preventing bad headlines about the lack of transparency, or 2) discovered the intractable nature of the debate at an earlier stage in 2017, and pivoted away from health care sooner (perhaps to come back to it at some later date). Either option would have proved far preferable than the events of last spring and summer.

To sum up: House leaders’ failure to plan, and draft Obamacare legislation well in advance, led to members taking tough votes—votes that could cost members their seats in November—without either all the information they needed to make an informed choice or a process they could publicly defend. And it squandered the entirety of what little honeymoon President Trump had with voters last year.

In his first letter to the Corinthians, Saint Paul asked, “For if the trumpet give an uncertain sound, who shall prepare himself to the battle?” At the time when Republican Washington needed a path toward action on health care, another Paul proved to be a far from certain trumpet, with disastrous consequences for his party. It will stand as part of his legacy.

This post was originally published at The Federalist.

Conservatives Have Themselves to Blame for Ominous Omnibus

Several years ago, I kvetched to a friend about various ways I found myself unhappy with my life. My friend listened attentively, and when I had finished, responded calmly and succinctly: “Well, what are you going to do about it?”

Conservative members of Congress face a similar dilemma this week, as they return to Washington for the first time since Congress passed a massive omnibus spending bill just before Easter. Politico last week highlighted senators’ concerns about a closed process in the Senate. Sen. John Kennedy (R-LA) went so far as to say the floor process, and the lack of amendment votes, “sucks.”

Consider the floor process in the House. The morning after Congress passed the omnibus, a staffer bragged to me about how his boss voted against the sprawling spending legislation. But my follow-up query spoke volumes: “Did your boss vote against the rule allowing for consideration of the bill?” The staffer hung his head and said that he hadn’t.

Therein lies the problem. Fully 210 Republican members of Congress voted to approve a rule that allows the House of Representatives to vote on a 2,232-page bill a mere 16 hours after its public release. In so doing, they blessed House leadership’s tactics of negotiating a budget-busting bill in secret, springing it on members without time to read it, and ramming it through Congress in a take-it-or-leave it fashion.

Or, to put it another way, those 210 Republican members of Congress signed their judgment over to the Republican leadership, which made all the decisions that mattered regarding the bill. Conservatives complained that, for the rule governing debate on the omnibus, House Republican leaders gaveled the vote to a close too quickly. Fully 25 Republicans did vote against the rule bringing the omnibus to the House floor, and if a few more that wanted to vote no had been given time to do so, the rule might have failed.

The conservatives who would not vote against the rule governing the omnibus also bear responsibility for the next omnibus. Had conservatives voted down the rule governing the omnibus, they could have demanded concessions to prevent future instances of congressional leaders ramming massive spending bills down Congress’ throat.

For instance, they could have demanded that Senate Majority Leader Mitch McConnell (R-KY) commit the upper chamber to passing a budget, and considering spending bills individually on the Senate floor this summer. But because not enough conservatives voted against the rule, they received exactly no procedural concessions, ensuring Congress will resort to another massive, catch-all omnibus spending bill late this year or early next.

A very similar dynamic exists in the Senate. Despite their complaints, Kennedy and his Senate colleagues have failed to use their considerable powers to demand changes to that process. In the Senate, a single member can make long speeches, object to passing legislation by unanimous consent, and object to routine procedural requests. One senator or a handful of senators using such tactics for any period of time would quickly attract the attention of Senate leaders—and could prompt a broader discussion about how to open up Senate floor debate.

In democracies, people generally get the type of government they deserve. That axiom applies as much to the internal functioning of Congress as it does to Congress’ role in the country as a whole. If members of Congress don’t like the process their leaders have developed for debating (or not debating) legislation, they need only look in the mirror.

This post was originally published at The Federalist.

Republicans Omit Obamacare Bailout from Omnibus — DO NOT CONGRATULATE

Congressional leaders finally released the massive, 2,232-page omnibus spending bill late Wednesday, a measure they want Congress to pass within 24 hours. The version released Wednesday night omits language of an Obamacare “stability” package that Republican lawmakers released separately on Monday.

But, to borrow a phrase echoing throughout the Capitol since a Washington Post story appeared Tuesday night, “DO NOT CONGRATULATE” Republicans for leaving the bailout provisions out of the draft. On both process and on substance, congressional leaders did not cover themselves in glory. Far from it.

Republicans Bad on Substance…

A cynic would question why Republican leaders found this particular issue non-negotiable. After all, Republicans ran for four straight election cycles—in 2010, 2012, 2014, and 2016—on repealing Obamacare, only to turn around and propose more than $60 billion in spending to prop it up. From Democrats’ perspective, since Republicans did a complete 180 on repealing Obamacare, why not expect the GOP to perform a similar U-turn on taxpayer funding of abortion?

…And Just as Bad on Process

In general, the process surrounding the omnibus—as with most appropriations legislation, and most major legislation in general—stinks. After completing a secretive drafting process among a small group of staff behind closed doors—the swamp personified—leaders now will turn to ramming the legislation through Congress.

Facing a potential government shutdown at midnight on Friday, they will rush through the massive bill spending trillions of dollars in a matter of hours, well before members of Congress or their staff will have time to read, let alone digest and understand, its contents.

One specific issue stands out: As I previously wrote, Senate Majority Leader Mitch McConnell (R-KY) wants to grant Sens. Susan Collins (R-ME) and Lamar Alexander (R-TN) a separate vote on bailing out Obamacare. He apparently will attempt to do so despite the fact that:

  1. Other Republican senators never agreed to give Collins a vote. McConnell spoke only for himself in his colloquy with Collins last December.
  2. Collins demonstrably moved the goalposts on the size of her bailout. McConnell agreed to support $5 billion in reinsurance funds in December, while now she has demanded more than six times as much, or more than $30 billion.
  3. McConnell literally shut down the federal government rather than grant Sen. Rand Paul (R-KY) a vote on his amendment to an appropriations bill just last month—and Paul’s colleagues publicly trashed his attempts to obtain a vote as a “stunt” and “utterly pointless.”

To most individuals outside Washington, Republicans moving to bail out Obamacare, and attempting to pass 2,200-plus page bills in mere hours, signifies a degree of insanity. Unfortunately, however, Congress seems to engage in these types of activities (at least) every year, raising the specter of the trite saying that defines insanity as doing the same thing over and over while expecting different results.

This week’s spectacle should raise one obvious question: How many more of these sorry affairs will it take before conservatives summon the will to end it, once and for all?

This post was originally published at The Federalist.

Mitch McConnell’s Amendment Dilemma

Mitch McConnell has a problem entirely of his own making. The Senate majority leader promised a vote on Obamacare “stability” legislation to Sen. Susan Collins (R-ME). Collins wants a vote on the package as a Senate floor amendment to the omnibus appropriations legislation (that is, if and when congressional leaders emerge from their smoke-filled rooms and actually release an omnibus package for Congress to vote on).

Except that not six weeks ago, McConnell literally let the federal government shut down rather than grant his fellow Kentuckian Sen. Rand Paul a floor vote on his amendment to appropriations legislation.

It’s a fun choice McConnell gets to make—and he’s running out of time to do it.

Shutdown Showdown

Lest anyone forget what transpired a few short weeks ago, Paul asked for a clean vote on his amendment to budget and spending legislation, to preserve strict spending caps enacted as part of the Budget Control Act. (When it passed in 2011, McConnell said the Budget Control Act spending caps would slow down the “big government freight train”—a freight train that he now apparently wants to put into hyperdrive.)

McConnell and the Senate leadership refused to give Paul an up-or-down vote on his amendment. As Senate Republican Whip John Cornyn (R-TX) put it, “Why reward bad behavior?” Because under Senate rules Paul could speak for an extended period of time, and because Senate leadership did not allow enough time for a full floor debate on the legislation—apparently thinking it appropriate for the Senate to consider and pass in mere hours a 652-page bill allocating trillions of dollars—the federal government briefly shut down.

Susan Collins’ Precious Bailout

Enter Collins, who along with Sen. Lamar Alexander (R-TN) has been pushing for a bailout of Obamacare insurers for months now. Collins claims she has a commitment from McConnell to support an insurer “stability” package. Alexander said he would demand a vote, asking for senators “to be accountable” for their positions on the issue, because he thinks bailing out Obamacare will lower premiums for 2019 (it won’t).

However, as I noted just last week, Collins has moved the goalposts on the bailout package significantly. Whereas she initially requested “only” $5 billion in reinsurance funds, according to her December colloquy with McConnell, the new bill she and Alexander introduced this week contains more than $30 billion in spending on reinsurance—a sixfold increase. Because Collins has demonstrably walked away from her side of whatever bargain McConnell made with her, Senate leadership should have no qualms about doing the same.

Different Treatment?

However, the McConnell office appears inclined to give Collins her way, with multiple reports saying that McConnell was “open” to such an amendment vote to the appropriations bill. Compare that to the reactions Paul received from his colleagues last month, when he wanted an amendment vote to an appropriations bill. Congressmen called it an “utterly pointless” “stunt” that “doesn’t make any d-mn sense.” One unnamed Senate Republican aide called it “the stupidest thing to happen to Congress in three weeks….This is even stupider than the kid who didn’t recognize Justin Timberlake at the Super Bowl.”

Conservatives should watch with intense interest how the Senate floor debate plays out. If McConnell moves heaven and earth to get Collins a vote on her precious bailout, after moving heaven and earth to deny Paul a vote on retaining spending caps that McConnell himself used to support, they should neither quickly forgive, nor easily forget, the double standards created by Senate leadership.

This post was originally published at The Federalist.

Politico’s Dumbest Headline Ever Trivializes Rand Paul’s Budget Protest

So much for the romance surrounding the famous scene in “Mr. Smith Goes to Washington” where the title character successfully filibusters a bill, rousing the public to his side. Politico claimed that similar tactics surrounding a budget agreement last week led to the “dumbest shutdown ever.” In reality, however, the brief lapse in appropriations had serious underlying causes, and the flip way its correspondents covered the incident led to arguably the dumbest headline in Politico’s history.

To explain the shutdown in brief: Congressional leaders arrived at a budget agreement last week, just before the existing spending bill expired on Thursday at midnight. Having only introduced the bill hours previously, Senate leaders pushed to pass it Thursday afternoon, before the prior spending bill expired.

Paul’s actions protested two important issues: Skyrocketing spending and deficits, and Congress passing massive spending bills without reading them or allowing anyone to offer amendments. But the Politico report by Rachael Bade and Seung Min Kim trivialized the incident, calling it a “spectacle,” “extraneous drama,” and a “sideshow” full of “absurdity.” Their own phraseology amplified quotes such as those from an unnamed Republican aide, who called the floor drama “even more stupid than the name of the new Kardashian baby.”

So Paying for Stuff Congress Buys Is ‘Stupid’?

Why would reporters take such a cavalier attitude toward otherwise weighty matters? Four possible reasons come to mind.

First, the natural inclination to blame the individual or individuals perceived as responsible for causing havoc with the schedule. Few politicians or reporters on Capitol Hill expected to spend Thursday evening and much of Friday morning covering all-night drama surrounding the appropriations bill. The missed flights, cancelled dinner plans, and other last-minute chaos largely redounded on Paul’s head, even though Senate leaders could, and should, have avoided that drama by planning more than a few hours ahead.

If, instead of the headline at issue, Politico had led its story by pointing out that tactical stupidity by Senate Majority Leader Mitch McConnell (R-Kentucky) led to the shutdown—belying his November 2014 and December 2017 statements that “We will not be shutting down the government”—how quickly do you think the majority leader’s press staff would have responded to Politico reporters’ questions this week?

Always Selective ‘Concern’ for Process

Third, reporters’ natural bias towards bipartisan agreements, underpinned by an implicit assumption that bipartisan agreements are inherently good. Whereas last year’s partisan attempts to “repeal-and-replace” Obamacare led to myriad stories about Republicans violating their pledges for transparency (an exception to rule two above), the bipartisan budget deal aroused much less indignation from the press about the secretive process used to craft it.

A contrarian might ask the obvious question: If the bill is so good, why not give lawmakers time to read and understand its contents, rather than ramming through a 652-page bill spending hundreds of billions of dollars in a 24-hour period?

Of course not. But when officials at the Centers for Medicare and Medicaid Services (CMS) earlier this month tried to shut out a reporter for what CMS officials viewed as an inaccurate article—or, to coin a phrase, “bad behavior” by a journalist—the Association of Health Care Journalists filed protests with CMS, and published multiple stories on the kerfuffle (which Politico dutifully covered).

If they care about democracy as much as they claim, the reporters who consistently hyperventilate every time President Trump makes (idle) threats towards the press might spend more time promoting sunshine and accountability throughout government. But instead of highlighting Paul’s efforts to enhance transparency in government—is a single amendment vote on a 652-page bill really too much to ask?—the “dumbest shutdown ever” story ridiculed these efforts. It’s why the story represents Politico’s dumbest headline ever.

This post was originally published at The Federalist.

AHP Proposed Rule: Expanding Affordability, Washington Control, or Both?

Why would Sen. Rand Paul praise as “conservative care health reform” a proposed regulation that increases Washington’s power?

A proposed rule released Thursday regarding association health plans (AHPs) will likely provide more affordable health coverage options to the self-employed, or individuals working for small businesses. However, it would do so by increasing the number of individuals purchasing health coverage regulated by Washington, making it a mixed bag for conservatives.

A Look at Current Law

  1. Essential health benefits (including actuarial value requirements, limits on out-of-pocket expenses, and deductibles in the small group market);
  2. Risk adjustment payments;
  3. Single risk pool requirements (i.e., requiring insurers to consider all individual coverage, and all small group coverage, offered in a state as one block of business); and
  4. Premium variation requirements imposing strict limits on age-rating, and prohibiting variation by anything other than age, family size, geography, and tobacco use.

The absence of all these requirements gives large group coverage a decided regulatory advantage compared to individual and small group coverage. Self-insured health plans—that is, employer plans that retain the insurance risk themselves—are likewise exempt from the Obamacare requirements listed above, regardless of the business’ size (i.e., whether they have more or fewer than 50 employees).

However, for AHPs that currently buy coverage from insurance carriers (i.e., “fully insured” plans), the Obama administration in 2011 issued guidance that stated regulators would “look through” the association to its members to determine whether their coverage qualified as small group or large group. To give an example, consider an association of restaurant franchises with two members: one with 30 employees, and one with 75 employees. While the restaurant with 75 employees would meet the standard of a large group plan, the one with 30 would classify as a small group plan.

As a result of the 2011 guidance, coverage for the latter would have to meet all the Obamacare coverage requirements for small group plans listed above, making coverage for the larger employer either administratively cumbersome (because two employers would have two different regulatory benefit packages), costlier (because the larger restaurant would have to comply with the small group requirements as part of an association, even though that restaurant would not have to comply if it bought coverage on its own), or both.

What the Proposed Rule Does

In general, the proposed rule would:

  1. “Relax the existing requirement that associations sponsoring AHPs must exist for a reason other than offering health insurance.” Associations must still be run by their members—for instance, Blue Cross or other insurers couldn’t try to form, and run, an “association” just to offer group health coverage—but need not exist for other purposes.
  2. “Relax the requirement that association members share a common interest, as long as they operate in a common geographic area”—either a state, or a metropolitan area encompassing multiple states (e.g., greater Washington DC).
  3. “Make clear that associations whose members operate in the same industry can sponsor AHPs, regardless of geographic distribution.”
  4. “Clarify that working owners and their dependents,” including the self-employed, “are eligible to participate in AHPs.” These individuals must meet certain proposed requirements—working for the business at least 30 hours per week, or 120 hours per month, or generating income from the business equal to the cost of coverage for the owner and his/her family—designed to ensure individuals do not form “businesses” solely for the purposes of purchasing association health coverage.

The Effects on Insurance Offerings

Even prior to the rule’s release, liberal Obamacare supporters claimed the policy represents another attempt to “sabotage” the law, because healthier people will purchase AHP coverage lacking Obamacare’s “consumer protections.” Attempting to respond to that criticism, the proposed rule includes several non-discrimination provisions, prohibiting associations from discriminating in offering membership based on the health status of members’ employees, or varying premiums or eligibility for benefits based on health status. Liberals respond that employers could discriminate through benefit offerings—for instance, not covering chemotherapy to discourage businesses with cancer patients from applying.

However, large employers already exempted from the Obamacare benefits don’t have to offer any such coverage currently, and I have yet to hear any major reports about IBM or General Motors “discriminating” against patients with pre-existing conditions. If these employers haven’t used an exemption from Obamacare coverage requirements to offer shoddy health coverage, then why do liberals believe that other employers will?

How This Affects Federal Power

In general, the rule would expand cross-state purchasing of health insurance. However, it would not do so by allowing people to purchase coverage across state lines—for instance, allowing a Maryland resident to buy a policy regulated in Virginia. Instead, it would allow more individuals to buy federally regulated coverage, regardless of the state in which they live.

Because the rule would eliminate the need for AHPs to comply with Obamacare requirements, it would lower premiums in the short term. However, in the longer term, the nature of the proposal raises two risks. On the one hand, a future administration could revoke the rule, minimizing AHPs’ scope and impact. On the other, a new administration—or a Democratic Congress—could easily glom more federal regulatory requirements on to AHPs and other forms of group coverage.

As I have written previously, the regulatory regime represents the heart of Obamacare. The proposed rule attempts a “kludgy” work-around of that regime, but one that, by increasing federal control over health insurance, may end up causing more trouble over the long term. Congress can—and should—do far better, by repealing the regulatory regime outright, and returning control of health insurance markets where it belongs: To the states.

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.

What Exactly Is in the Obamacare “Stability” Deal?

Memo to Rand Paul: It’s time to fire up the copier again.

On Tuesday, the simmering controversy over Obamacare “stability” legislation came to the boil, as conservatives increasingly voiced objections at bailing out Obamacare and giving tens of billions of taxpayer dollars to fund abortion coverage in the process. But the controversy centers around a “deal” of which the precise contents remain a closely guarded secret.

But at least Democrats (eventually) made the text of the Cornhusker Kickback, Louisiana Purchase, Gator Aid, and other provisions public. For the Obamacare “stability” bill, Senate Republican leaders have yet to indicate exactly what legislation they wish to pass.

Substance and Process Unclear

As I noted last week, while Sen. Lamar Alexander (R-TN) recently claimed in an op-ed that the “stability” legislation would appropriate $10 billion in reinsurance funds for insurers, the public version of legislation to which he referred—a bill introduced by Sens. Susan Collins (R-ME) and Bill Nelson (D-FL)—appropriated “only” $4.5 billion in funds to health insurers. Collins and Alexander are apparently engaging in a bidding war with themselves about how many billions worth of taxpayer dollars they wish to spend on corporate welfare payments to insurance companies.

On the policy substance, Senate leadership has refused to disclose exactly what provisions comprise the “deal” Collins supposedly cut with Senate leadership. Did they promise $4.5 billion in reinsurance funding, $10 billion, or more than $10 billion? What other promises did they make in exchange for Collins’ support for repealing the individual mandate in the tax bill?

Did Republican leaders pledge merely to support an open process and a vote on the “stability” measure—as Senate Republican Conference Chairman John Thune (R-SD) implied on Tuesday—or its enactment into law? How exactly could they promise the latter, when any such bill would require 60 votes to break a potential Senate filibuster—a number that Senate Republican leaders do not have, even if they could persuade their entire conference to support bailing out Obamacare?

Then and Now

As noted above, we’ve seen this play before, when Democrats rammed through Obamacare through a series of backroom deals cobbled together behind closed doors, notwithstanding then-candidate Obama’s pledge to televise all health-care negotiations on C-SPAN. Here’s what McConnell had to say about that lack of transparency in a December 2009 floor speech:

Americans are right to be stunned because this bill is a mess. And so was the process that was used to get it over the finish line.

Americans are outraged by the last-minute, closed-door, sweetheart deals that were made to gain the slimmest margin for passage of a bill that is all about their health care. Once the Sun came up, Americans could see all the deals that were tucked inside this grab bag, and they do not like what they are finding. After all, common sense dictates that anytime Congress rushes, Congress stumbles. It is whether Senator so-and-so got a sweet enough deal to sign off on it. Well, Senator so-and-so might have gotten his deal, but the American people have not signed off.

Public opinion is clear. What have we become as a body if we are not even listening to the people we serve? What have we become if we are more concerned about a political victory or some hollow call to history than we are about actually solving the problems the American people sent us here to address?

Some may argue that passing “stability” legislation bears little comparison to home-state earmarks like the Cornhusker Kickback that plagued the Obamacare bill the Senate passed on Christmas Eve 2009. But when Alexander remains adamant about passing “stability” legislation about which senators of both parties now seem ambivalent at best, one must ask whether his insistence stems from the fact that it would provide a significant financial windfall to his biggest campaign contributor—making it a “sweet enough deal” for him too.

The fact that no Senate leaders will dare explain publicly what they have promised privately should tell the public everything they need to know about the merits of this secretive backroom deal. As McConnell might say, it’s “kind of [a] smelly proposition.”

This post was originally published at The Federalist.

What You Need to Know about President Trump’s Health Care Executive Order

On Thursday morning, President Trump signed an Executive Order regarding health care and health insurance. Here’s what you need to know about his action.

What Actions Did the President Take?

The Executive Order did not change regulations on its own; rather, it instructed Cabinet Departments to propose changes to regulations in the near future:

  1. Within 60 days, the Department of Labor will propose regulatory changes regarding Association Health Plans (AHPs). Regulations here will look to expand the definition of groups that can qualify as an “employer” under the federal Employee Retirement Income Security Act (ERISA). AHPs have two advantages: First, all association health plans regulated by ERISA are federally pre-empted from state benefit mandates; second, self-insured plans regulated by ERISA are exempt from several benefit mandates imposed by Obamacare—such as essential benefits and actuarial value standards.
  2. Within 60 days, the Departments of Treasury, Labor, and Health and Human Services (HHS) will propose regulatory changes regarding short-term health plans. Regulations here will likely revoke rules put into place by the Obama Administration last October. Last year, the Obama Administration limited short-term plans to 90 days in duration (down from 364 days), and prevented renewals of such coverage—because it feared that such plans, which do not have to meet any of Obamacare’s benefit requirements, were drawing people away from Exchange coverage. The Trump Administration regulations will likely modify, or eliminate entirely, those restrictions, allowing people to purchase plans not compliant with the Obamacare mandates. (For more information, see my Tuesday article on this issue.)
  3. Within 120 days, the Departments of Treasury, Labor, and HHS will propose regulatory changes regarding Health Reimbursement Arrangements (HRAs), vehicles where employers can deposit pre-tax dollars for their employees to use for health expenses. A 2013 IRS Notice prevented employers from using HRA dollars to fund employees’ individual health insurance premiums—because the Obama Administration worried that doing so would encourage employers to drop coverage. However, Section 18001 of the 21st Century Cures Act, signed into law last December, allowed employers with under 50 employees to make HRA contributions that workers could use to pay for health insurance premiums on the individual market. The Executive Order may seek to expand this exemption to all employers, by rescinding the prior IRS notice.
  4. Within six months—and every two years thereafter—the Departments of Treasury, Labor, and HHS, along with the Federal Trade Commission, will submit reports on industry consolidation within the health care sector, whether and how it is raising health care costs, and actions to mitigate the same.

How Will the Order Affect the Health Sector?

In general, however, the issues discussed by the Executive Order will:

  • Give individuals more options, and more affordable options. Premiums on the individual market have more than doubled since 2013, due to Obamacare’s regulatory mandates. AHPs would allow workers to circumvent state benefit mandates through ERISA’s federal pre-emption of state laws; self-insured AHPs would also gain exemption from several federal Obamacare mandates, as outlined above. Because virtually all of Obamacare’s mandated benefits do not apply to short-term plans, these would obtain the most regulatory relief.
  • Allow more small businesses to subsidize workers’ coverage—either through Association Health Plans, or by making contributions to HRAs, and allowing employees to use those pre-tax dollars to buy the health coverage of their choosing on the individual market.

When Will the Changes Occur?

The Executive Order directed the Departments to announce regulatory changes within 60-120 days; the Departments could of course move faster than that. If the Departments decide to release interim final rules—that is, rules that take effect prior to a notice-and-comment period—or sub-regulatory guidance, the changes could take effect prior to the 2018 plan year.

However, any changes that go through the usual regulatory process—agencies issuing proposed rules, followed by a notice-and-comment period, prior to the rules taking effect—likely would not take effect until the 2019 plan year. While the Executive Order directed the agencies to “consider and evaluate public comment on any regulations proposed” pursuant to the Order, it did not specify whether the Departments must evaluate said comments before the regulations take effect.

Does the Order Represent a Regulatory Overreach?

However, with respect to Association Health Plans, some conservatives may take a more nuanced view. Conservatives generally support allowing individuals to purchase insurance across state lines, believing that such freedom would allow consumers to buy the plans that best suit their interests.

However, AHPs accomplish this goal not through Congress’ Commerce Clause power—i.e., explicitly allowing, for instance, an individual in Maryland to buy a policy regulated in Virginia—but instead through federal pre-emption—individuals in Maryland and Virginia buying policies regulated by Washington, albeit in a less onerous manner than Obamacare’s Exchange plans. As with medical liability reform, therefore, some conservatives may support a state-based approach to achieve regulatory relief for consumers, rather than an expanded role for the federal government.

Finally, if President Trump wants to overturn his predecessor’s history of executive unilateralism, he should cease funding cost-sharing reduction payments to health insurers. The Obama Administration’s unilateral funding of these payments without an appropriation from Congress brought a sharp rebuke from a federal judge, who called the action unconstitutional. If President Trump wants to end executive overreach, he should abide by the ruling, and halt the unilateral payments to insurers.

This post was originally published at The Federalist.