What Jon Stewart’s Rant Ignored about Congress

Congress ended up in some hot water recently—and for once, lawmakers did little to cause the trouble. At a House Judiciary Subcommittee on the Constitution hearing on legislation to reauthorize the 9/11 Victim Compensation Fund, television personality and hearing witness Jon Stewart went on a rant.

Noting many empty spaces on the committee dais, Stewart said, “You should be ashamed of yourselves for those that aren’t here, but you won’t be, because accountability doesn’t appear to be something that occurs in this chamber.” Noting that lawmakers tweeted about never forgetting the heroes of 9/11 on that sad anniversary, he accused them of “callous indifference and rank hypocrisy.”

1. The Hearing Wasn’t Really Empty

As a reporter pointed out on Twitter, most subcommittee members did attend the hearing. But because the hearing took place in the full committee hearing room—that has a dais where all the members of the full committee can sit—the space looked empty.

Holding a hearing in a bigger room than was actually required doesn’t represent “callous indifference and rank hypocrisy” so much as Congress not prioritizing the “production values” Stewart might find on a typical television or film set.

2. The Bill Ended Up Passing Anyway

3. Members of Congress Juggle Lots of Priorities

Because I’ve worked in both the House and Senate, I would use many words to describe the average member of Congress, but “lazy” and “indifferent” don’t often come to mind. Members sit on multiple committees, and multiple subcommittees within those committees. They often have to hop back and forth between hearings, and between the various congressional office buildings, to monitor witness testimony and ask questions.

On top of as many as half a dozen committee hearings and markups in a typical legislative workweek, members of Congress also have to juggle votes and speeches on the House and Senate floor, meetings with constituents, time with their staff to manage the office and discuss priorities, and—yes—raise funds for their re-election.

It might seem callous for a member to take the “drive-by” approach to a hearing—show up, ask questions, then leave—but frankly, most members of Congress don’t have time in their schedules to spend hours listening to witnesses speak at a hearing.

4. Most Congressional Hearings Are Boring

Take, for instance, Wednesday’s hearing on single-payer health care. The Hill called the hearing “mostly partisan and light on substance, with Members using their allotted time to rail for or against the proposal instead of questioning the panel of health care experts and advocates at the witness table.”

I watched much of the four-hour affair, and the publication delivered a spot-on description. Most members used their five minutes for “questions” to give a four-minute speech, followed by a softball inquiry or two to a friendly witness: “Don’t you agree with my point?” I spent the last two hours wondering how many more lawmakers had yet to ask their “questions,” so the hearing could mercifully conclude.

As I noted recently, most members of Congress don’t ask particularly sharp or hard-hitting questions—and in many cases, don’t ask questions at all. I could do with far fewer hearings myself, or at least proceedings that replace the oral element with written testimony. But congressional committees hold hearings to signal their priorities, and establish a written record for future legislative action. I wouldn’t call congressional hearings entirely theatrical in nature, but they do have a strong theatrical element.

5. The Alternatives Are Far Worse

The first would disappoint many issues, causes, and organizations, who want congressional committees to take time to spotlight “their” issue. It would make Congress a less diverse institution, with a smaller bandwidth to examine the many national and international issues worthy of attention from policy-makers.

It would also subject Congress to the equivalent of a “heckler’s veto,” whereby the few hearings committees did hold would focus on issues with celebrity supporters—to prevent rants like Stewart’s from putting Congress in a bad light—rather than unheralded topics that might warrant greater attention.

As to the second, some numbers might put the issue in perspective. The Constitution originally suggested that every member of Congress would represent 30,000 constituents. At that rate, and given a population of around 330 million, the House of Representatives would currently have 11,000 members—more than 25 times its current size.

Such an enormous legislative body would not just become unwieldy, it would raise federal spending. According to the Republican Study Committee, the House of Representatives has proposed $3.97 billion in spending on its operations over the next fiscal year. If an increase in the size of the House led to a proportional increase in spending, expansion to the size originally contemplated by the Constitution would result in roughly $100 billion in spending on members of Congress and their staffs—a figure the public would likely find unacceptable.

Congress has many faults worth addressing and reforming. But Stewart’s comments notwithstanding, compelling greater lawmaker attendance at hearings does not rank high on that list.

This post was originally published at The Federalist.

Republicans’ Plan to Raise Health Care Costs

Who would purposefully design a legislative strategy whereby whoever wins actually loses? Congressional Republicans, that’s who.

On Tuesday evening, Republican leaders in the House introduced another continuing resolution to fund the federal government for four more weeks (through February 16). In an attempt to win Democratic votes, the bill includes a six-year extension of the State Children’s Health Insurance Program, without any of the conservative reforms congressional leaders said they would fight for back in 2015.

Inane Tax Treatment of Health Insurance

Since an Internal Revenue Service ruling (later codified) during World War II, the federal government has excluded health insurance and other fringe employment benefits from both payroll and income taxes. Economists on all sides of the political spectrum agree that this exclusion encourages workers to over-consume health insurance, and thus health care.

Taxing wages but not health benefits encourages firms to offer more generous benefits—with lower deductibles, co-payments, and so forth—and that lower cost-sharing encourages people to consume extra health care. (“I’m not sure how sick I really am, but because I only have a $10 co-pay, I might as well go to the doctor and find out.”)

Obamacare attempted to change that dynamic through its “Cadillac tax” on “high-cost” employer plans. The tax applied for every dollar of benefits provided over a defined amount, encouraging firms to make their benefits less rich, to avoid exceeding the threshold that would trigger the tax.

As for the Bad Strategy

However, Republicans could easily remedy the “Cadillac tax’s” flaws with another alternative. The alternative could limit the tax preference for employer-provided health insurance—without a punitive 40 percent tax rate, and while not raising any additional revenue over a decade. President George W. Bush proposed this concept more than a decade ago, and the Republican Study Committee and others have since endorsed it.

However, repealing the “Cadillac tax” outright would effectively sabotage any ability to reform or replace it. As with Obamacare’s Independent Payment Advisory Board (IPAB), removing a constraint on health spending now with the intent of replacing it later would almost certainly mean that “later” will never arrive. That of course means Republicans, consistent with their insatiable desire to postpone difficult decisions, want to repeal both the “Cadillac tax” and IPAB without constructing replacements.

Tuesday evening’s spending bill would postpone the “Cadillac tax”—already delayed once, until 2020—for another two years, until 2022. It would likewise suspend Obamacare’s medical device tax for two years, and its health insurer tax for one year. It would also exempt these changes from the Statutory Pay-As-You-Go Act, which requires offsetting spending cuts to fund this tax relief—because heaven forbid Congress be forced to reduce spending.

This post was originally published at The Federalist.

A Delayed Medicaid Phase-Out Is No Phase-Out at All

As the Senate attempts to develop its version of Obamacare “repeal-and-replace” legislation, lawmakers have floated a lengthy phase-out of the enhanced federal match associated with Obamacare’s Medicaid expansion. Reports indicate Majority Leader Mitch McConnell (R-KY) has suggested a three-year phase-out running from 2020 to 2023, while Sen. Rob Portman (R-OH) and others have suggested a phase-out that would continue until 2027.

Discussion of both proposals to date has omitted one key fact: Implementation of either phase-out plan—and thus scaling back a major part of Obamacare, on which Republicans have run the past four election cycles—hinges almost entirely on Republicans winning another presidential election. In the case of the Portman plan, it would also hinge on continued Republican control of the White House following the 2024 election.

Incentivizing States to Run Out the Clock

While neither McConnell nor Portman have released bill text (or even legislative specifications) for their respective proposals, it seems likely that each would use a phase-down approach to the enhanced Medicaid match. Rather than keeping the enhanced match at 90 percent for several years then dropping it down to the regular Medicaid match rate (which ranges from 50-74 percent this year), the proposals would likely ratchet down the match rates a few percentage points at a time each year—say, from 90 percent to 85 percent to 80 percent, and so on until reaching a state’s regular match rate. This gradual phase-down would require less spending than extending the 90 percent match to 2023 (or 2027) and creating a one-year cliff as the rate drops to the regular match level.

But if the federal match only begins to slow down in 2020—and slows down gradually at that—states that adopted the Medicaid expansion would have little incentive to start phasing people off the rolls, instead waiting to see the results of that fall’s presidential election. States would only have to pay a slightly higher match rate, and only for a portion of their Medicaid expansion, because the House-passed bill allowed states to continue receiving the 90 percent match for enrollees in Medicaid as of December 31, 2019 who remain continuously enrolled.

Under this scenario, the cost to states to retain their expansion in 2020 would rise, but not appreciably—by tens or hundreds of millions, depending upon the state’s size, but certainly not by billions. Many states, particularly “blue states,” would pay this added cost, at least for one year, as the price to see what happens on November 3, 2020.

Accelerate the Transition

For all these reasons, it seems dangerous to wait two-and-a-half years, until the brink of the presidential election cycle, to start the transition away from the enhanced Medicaid match. Granted, some states do have triggers ending the Medicaid match immediately if said match rate ever falls below 90 percent. But it would be perfectly reasonable to give state legislatures several months to adjust their laws to the new policy environment, while beginning the transition at some point in 2018.

Moderates wishing to keep the Medicaid expansion should keep in mind that all but two members now serving voted for repeal legislation in 2015 that ended the expansion completely—not just the enhanced federal match rate, but also categorical eligibility for low-income adults—after a two-year transition. Conservatives have already made major concessions, first by including “replace” provisions on the “repeal” bill, and second by allowing the expansion to continue, albeit at the traditional Medicaid match rate.

Having promised voters for more than seven years they would dismantle Obamacare, Congress shouldn’t kick the can down the road and hope that some future Congress will keep an earlier Congress’s word and actually let provisions undoing the law go into effect. In stating that a further postponement of the Medicaid transition beyond 2020 would jeopardize passage of the legislation, the Republican Study Committee points at an important truth.

Conservatives should stand fast to the promises of repeal—and members’ own voting records—by insisting that Congress complete the transition away from the enhanced Medicaid no later than the end of this presidential term.

This post was originally published at The Federalist.

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.

Gov. Jindal Op-Ed: The GOP Mustn’t Offer Obamacare Lite

There is a secret that people outside of Washington, D.C., aren’t aware of right now: Some Republicans in Congress are on the verge of proposing an alternative to Obamacare that imposes new tax hikes on the American people.

On March 4, the Supreme Court will hear arguments in a case that could upend Obamacare completely. In King v. Burwell, the court — if it follows the plain text of the law, which says that only individuals purchasing coverage on an “exchange established by the state” are eligible for federal insurance subsidies — could cause disruption to individuals in the 36 states that did not establish a state exchange, and instead rely on the federally run healthcare.gov exchange. For this reason, many observers have argued that conservatives need to present an alternative vision of health reform before the court rules.

Take one major issue related to Obamacare: taxes. The law is chock full of them — no fewer than 18 revenue raisers totaling over $1 trillion through 2022.Yet several alternative proposals being discussed by Republicans don’t actually repeal the law’s tax increases. Instead, they repeal the law’s tax increases, only to replace them with new revenue hikes. So, rather than raise taxes by more than $1 trillion, as Obamacare did, these plans raise taxes by perhaps, say, “only” $500 billion.

This puts Republicans in the positions of being “cheap” Democrats, or Democrat-lite. We’ll raise taxes — but just … less than Obamacare. We’ll spend hundreds of billions on new entitlement programs — but just … less than Obamacare.

But the problem with programs that look like Obamacare is that they bring with them many of Obamacare’s problems. Remember when the Congressional Budget Office concluded that Obamacare will result in more than 2 million Americans working fewer hours, or leaving the labor force altogether? That’s because the law’s insurance subsidies are structured in ways that will cause individuals to work fewer hours, keeping their income low to maintain eligibility for subsidized insurance. Some so-called conservative health plans also have characteristics that will discourage work — even if perhaps less than Obamacare does.

So why talk about “conservative” health care reform if our vision turns us into cheap liberals? Why complain that Obamacare is expanding welfare and dependency, only to propose a similar — albeit smaller — program that could well have the same effects? If conservatives oppose Obamacare’s tax increases on the middle class, then why did one “conservative” health adviser propose accelerating the law’s tax on health plans by phasing it in sooner?

The reality is that while Beltway insiders in the elite salons of Washington can do and say whatever they want, the American people know better. A majority of voters — and even larger majorities of conservative and Republican voters — believe that “any replacement of Obamacare must repeal all of the Obamacare taxes and not just replace them with other taxes.” In other words, the voters won’t be fooled by quasi-liberal health plans masquerading in conservative clothing.

The other good news is that truly conservative health plans exist. Last year, I outlined a plan with America Next, the conservative policy group I founded. The plan focuses like a laser beam on controlling the health care issue that matters most to Americans — skyrocketing health costs. The plan empowers the states to enact reforms that can bring down costs, while also guaranteeing access for individuals with pre-existing conditions. Rather than stifling states with additional regulations from Washington, the America Next plan offers them incentives to improve their insurance markets in ways that offer more choices and lower costs. As a result, Americans should benefit from new avenues to buy portable health insurance they can own themselves — through their church, alumni group or trade association — and lower premiums, too. In fact, the Congressional Budget Office previously analyzed reforms similar to those in the America Next plan and found that they could reduce individual health insurance premiums by thousands of dollars per family.

I recognize there are other good conservative plans out there — and that’s great. For instance, the Republican Study Committee proposed reforming the tax treatment of health insurance without repealing and replacing the tax increases in Obamacare. We should have a robust debate and show both the Supreme Court and the American people that there are better ways to enact true reforms. But I don’t believe that any plan that repeals and replaces Obamacare’s trillions in taxes and spending is a conservative alternative — and the American people agree.

Recently, the left gave us an instructive lesson on why this debate about a conservative alternative is so important. The advocacy group Families USA released a report calling for a veritable orgy of new Obamacare-related spending — new subsidies, insurance mandates, even a proposal to extend subsidized insurance to illegal immigrants. It’s an important reminder, first that the left will always want more government intrusion in health care, and second that conservatives can never hope to outspend the left by acting as cheap liberals. That’s why it’s so important for our party to outline a conservative — repeat, conservative — vision for health care.

This post was originally published at Politico.

Medicare Trustees’ Report

Summary:  The report issued by the Medicare trustees notes several funding challenges for the program in both the short and long term.  The Hospital Insurance Trust Fund, which is funded primarily by payroll taxes and finances Medicare Part A, is “not adequately financed over the next ten years” according to the trustees’ assumptions.  The report projects that the Hospital Insurance Trust Fund will be exhausted by 2019—the same year of exhaustion as in last year’s report, but at an earlier point within the year, due to lower payroll tax receipts and higher-than-expected expenditures.

While Medicare Parts B and D, financed by the Supplemental Medical Insurance Trust Fund, are considered adequately financed by the trustees, this determination stems largely from the fact that these portions of Medicare can—and do—claim a large and growing share of federal general revenues.  The report notes that Part B costs have risen by an average 9.6% annually over the past five years, and is likely to grow by about 8% annually over the next decade, presuming Congress continues to override scheduled reductions in Medicare physician payment reimbursements.

In the longer term, the trustees project Medicare spending to rise sharply over the next 75 years.  The report projects that by 2082, overall spending on Medicare will more than triple, from 3.2% of national gross domestic product (GDP) to 10.8%—nearly twice the projected size of Social Security, and more than one in every ten dollars spent in the private and public sectors.

Medicare “Trigger”:  For the third consecutive year, the trustees report includes a finding that general revenue Medicare spending—that is, Medicare spending not financed by payroll taxes, or by beneficiary premiums and co-payments—will exceed 45% of total Medicare outlays within the next seven fiscal years.  This “trigger” language was included in Title VIII of the Medicare Modernization Act of 2003 at the behest of the Republican Study Committee, to provide a mechanism for policy-makers to measure the fiscal soundness of the Medicare program, and for Congress to consider ways to reform its operations should entitlement spending continue to rise.

The trustees’ warning means that, absent a change in current law, the next President will be required to submit legislation to Congress providing a remedy to bring general revenue Medicare spending within 45% of total Medicare outlays.  In addition, the 111th Congress would be required to consider legislation addressing the funding warning by the summer of 2009, with special discharge opportunities available in both the House and Senate should leadership not bring legislation to the floor of each chamber.  However, the “trigger” provision will not apply should Congress enact legislation remedying the trustees’ latest funding warning this year.

Additional Background:  Because of the uncertainties associated with budgetary projections spanning many decades, there are some suggestions that the significant unfunded liabilities included in the trustees’ report may actually underestimate the losses Medicare faces.  A November 2007 report by the Congressional Budget Office released 75-year projections materially divergent from the analysis released by the Medicare trustees.  The trustees’ report projects Medicare spending to consume nearly 11% of total GDP by the end of the 75-year period, while CBO estimates that Medicare will consume more than one in six dollars spent in the United States (17% of GDP).  The disparity in the two projections stems from the trustees’ assumption that excess cost growth—that is, the annual growth in health spending above the growth in GDP—would decline much more rapidly than both current and past levels of health care spending.[1]

Using data from the CBO report, as well as the trustees’ 2007 update, former Medicare public trustee Tom Saving analyzed the size of Medicare’s unfunded obligations.  If the CBO projections are accurate, Medicare faces 75-year obligations of $38.4 trillion and infinite horizon obligations of $84.2 trillion, as opposed to $34 trillion and $74 trillion respectively under the assumptions in last year’s official trustees’ report.[2]

While the specific amounts of Medicare’s future unfunded obligations by definition have yet to be determined, the trustees’ long-range model may make it more likely that the trustees would underestimate rather than overestimate the size of the shortfall which Medicare faces.  Fiscal prudence may therefore dictate that given that uncertainty, Congress should make every effort to restore Medicare’s fiscal solvency now, so that future policy-makers will have a margin for error should further reforms be needed some decades from now.  As the CBO report concludes, “the main message [from both reports] is that health care spending is projected to rise significantly and that changes in federal law will be necessary to avoid or mitigate a substantial increase in federal spending on Medicare.”[3]

Comparison with Prior Year Data:  In addition to the updated projections regarding the date of the Medicare trust funds’ exhaustion, the trustees’ report also includes totals for Medicare’s unfunded obligations for a 75-year budget window and an “infinite horizon” projection.  Comparison charts for those projections follow:

 

Unfunded Obligation Projections for 75-Year Budget Window (2008-2082)

  2007 Trustees’ Report

(in trillions of dollars)

2008 Trustees’ Report

(in trillions of dollars)

Part A (Hospital Insurance) $11.6 (1.6% of GDP) $12.4 (1.6% of GDP)
Part B (Obligations less beneficiary premiums) $13.9 (1.9% of GDP) $15.7 (2.0% of GDP)
Part D (Obligations less beneficiary premiums and state “clawback” payments) $8.4 (1.2% of GDP) $7.9 (1.0% of GDP)
TOTAL $33.9 (4.7% of GDP) $36.0 (4.6% of GDP)

 

Unfunded Obligation Projections for Infinite Horizon

  2007 Trustees’ Report

(in trillions of dollars)

2008 Trustees’ Report

(in trillions of dollars)

Part A (Hospital Insurance) $29.5 (2.6% of GDP) $34.4 (2.6% of GDP)
Part B (Obligations less beneficiary premiums) $27.7 (2.4% of GDP) $34.0 (2.6% of GDP)
Part D (Obligations less beneficiary premiums and state “clawback” payments) $17.1 (1.5% of GDP) $17.2 (1.3% of GDP)
TOTAL $74.3 (6.5% of GDP) $85.6 (6.5% of GDP)

In general, the overall size of the unfunded obligations has remained nearly constant as a percentage of GDP, while growing in absolute dollar terms.  Of particular note is the fact that while Part A obligations remained constant in GDP terms, and Part B obligations rose as a percentage of GDP, the obligations associated with the privately-administered Part D prescription drug benefit remained constant in dollar terms and decreased as a percentage of GDP.  Although introduction of a prescription drug benefit has significantly increased Medicare’s unfunded obligations in absolute terms, the fact that competition among Part D participants has slowed the growth of its costs suggests that similar efforts to inject competition into Medicare Parts A and B could comprise one element of comprehensive Medicare reform.

Revenue-Based “Reform” and Its Impact:  Several studies have examined ways in which the Medicare program could be made fiscally solvent by increasing revenues, and these options appear neither economically viable nor politically palatable.  In 2005, the Heritage Foundation published a report using that year’s trustee data to determine the level of payroll taxes needed to close Medicare’s funding gap.  The report noted that, in order to achieve a 75-year balance, Medicare payroll taxes would need nearly to quintuple—from the current 2.9% up to 13.4%, where they would remain until 2079.  The study also found that this tax increase would sharply affect economic growth, lowering real GDP levels by nearly $200 billion annually (resulting in lower corporate and income tax receipts), and reducing private sector employment levels by more than 2.2 million jobs over the course of a decade.[4]  In other words, by decreasing personal income levels, a significant tax increase to ensure Medicare’s solvency would reduce personal consumption at rates that could have a long-term stagnating effect on the American economy.

Former Medicare public trustee Tom Saving has also published some unofficial projections about the level of beneficiary contributions required for Medicare to achieve fiscal balance, presuming that the share of general revenues used to finance the Medicare program remains constant.  In the case of such a scenario whereby only seniors pay for the increase in Medicare spending, premiums would rise exponentially, such that by 2081, retirees would be paying premiums in a range of $3,000 to $4,900 per month in year 2006 dollars.[5]  Although some additional cost-sharing for beneficiaries may be necessary in the context of overall Medicare reform, the idea that seniors could pay the future equivalent of $30,000-$50,000 annually in premiums alone is unrealistic.

Reform Options:  In light of the difficulties discussed above with revenue-based options to solve Medicare’s fiscal woes, a more feasible alternative might couple targeted opportunities for increased beneficiary cost-sharing with reforms designed to empower beneficiaries with the information and incentives needed to direct and control their health spending.  Comprehensive proposals to reform Medicare in this vein could include:

Premium Support:  This model would convert Medicare into a system similar to the Federal Employees Benefit Health Plan (FEHBP), in which beneficiaries would receive a defined contribution from Medicare to purchase a health plan of their choosing.  Previously incorporated into alternative RSC budget proposals, a premium support plan would provide a level playing field between traditional Medicare and private insurance plans, providing comprehensive reform, while confining the growth of Medicare spending to the annual statutory raise in the defined contribution limit, thus ensuring long-term fiscal stability.

Consumer-Driven Health Options:  These reforms would build on the success of the Health Savings Account (HSA) model in reducing health care cost growth for the under-65 population.  Reforms in this area would alter the existing prohibition forbidding holders of HSAs from contributing additional funds to their accounts once they become Medicare-eligible.  A new payment mechanism could allow these beneficiaries to keep their HSA-compatible insurance policy into retirement, with Medicare financing a portion of the premium.  In addition, reforms to Medicare Medical Savings Accounts (MSAs) could make them more attractive to beneficiaries who do not have an existing HSA, providing additional incentives for seniors to become more cost-conscious when considering health care treatment options.

Restructure Cost-Sharing Requirements:  This concept would restructure the existing system of deductibles, co-payments, and shared costs, which can vary based on the service provided.  Additionally, Medicare currently lacks a catastrophic cap on beneficiary cost-sharing, leading some seniors to purchase Medigap policies that insulate beneficiaries from out-of-pocket costs and provide little incentive to contain health spending.  Reforms in this area would rationalize the current system, generating budgetary savings and reducing the growth of health spending.

Means Testing:  This idea would establish an income-related Part D premium consistent with the Part B “means testing” included in Title VIII of the Medicare Modernization Act.  The proposal—which was included in the President’s Fiscal Year 2009 budget proposal—would achieve savings of $3.2 billion over five years.  The RSC has previously included similar proposals in its budget documents as one way to constrain costs and ensure consistency between a Part B benefit that is currently means-tested and a Part D benefit that is not.

Increase Medicare Part B Premium:  The RSC has previously proposed increasing the Part B premium from 25% to 50% of total Medicare Part B costs, consistent with the original goal of the program.  This concept would not impact low-income seniors, as Medicaid pays Medicare premiums for individuals with incomes under 120% of the federal poverty level.

Conclusion: The Medicare funding warning issued by the trustees last year, and again this year, provides an opportunity to re-assess the program’s structure and finance.  These two consecutive warnings—coupled with the trustees’ estimate that the Medicare trust fund will be exhausted in just over a decade’s time—should prompt Congress to consider ways to reduce the growth of overall Medicare costs, particularly those which utilize competition and consumer empowerment to create a more efficient and cost-effective Medicare program.

The Administration has put forward two separate proposals—the first in its Fiscal Year 2009 budget submission to Congress, the second as part of its formal submission of legislation (H.R. 5480) required under the MMA “trigger”—to address Medicare’s long-term solvency issues and begin a process of comprehensive reform.  Many conservatives are likely to view the trustees’ warning as providing another impetus for action on proposals that curb soaring entitlement spending, using the measures described above to advance the discussion beyond annual funding warnings and toward actions that ensure Medicare’s long-term fiscal stability.

 

[1] Congressional Budget Office, “The Long-Term Outlook for Health Care Spending,” (Washington, DC, November 2007), available online at http://www.cbo.gov/ftpdocs/87xx/doc8758/11-13-LT-Health.pdf (accessed March 24, 2008), p. 16.

[2] Andrew Rettenmaier and Tom Saving, “Medicare’s Future Burden: Trustees versus CBO Estimates,” (College Station, TX, Private Enterprise Research Center, Texas A&M University, March 2008), available online at http://www.heritage.org/research/HealthCare/upload/Medicares_Future_Burden.pdf (accessed March 25, 2008), pp. 16-19.

[3] CBO, “Long-Term Outlook,” p. 16.

[4] Tracy Foertsch and Joe Antos, “The Economic and Fiscal Effects of Financing Medicare’s Unfunded Liabilities,” (Washington, DC, Heritage Foundation Center for Data Analysis Paper CDA05-06, October 11, 2005), available online at http://www.heritage.org/Research/HealthCare/upload/83702_1.pdf (accessed March 24, 2008), pp. 7-9.

[5] Rettenmaier and Saving, “Medicare’s Future Burden,” p. 8.

President’s Medicare “Trigger” Proposals

Background:  Title VIII of the Medicare Modernization Act (MMA) includes provisions requiring the President to submit legislation within 15 calendar days of his annual budget submission in the event of a funding warning being issued by the Medicare trustees.  Because the trustees last April submitted their second consecutive warning that Medicare is projected to claim a growing share of general revenues within the next seven years, the President put forward his proposals to address the pending funding shortfall.  Under provisions established in statute, the legislative proposals will be introduced by the House Majority and Minority Leaders on the President’s behalf within three legislative days.

During the conference committee’s consideration of MMA, the funding warning mechanism was included at the behest of the Republican Study Committee as one device to help alleviate conservatives’ concerns about Medicare’s long-term solvency and ensure that Medicare’s claims on general budgetary revenues would not overwhelm either other federal budgetary priorities or the national debt.  By providing “fast-track” procedures for considering bills to improve the program’s solvency, the Medicare trigger also provides conservatives with another opportunity to examine more fundamental reforms to the way seniors’ health care is financed and delivered.

Summary of Proposal:  The Administration’s legislative proposal to address the “trigger” contains two titles.  The first title puts forward suggestions to make the Medicare purchasing system more cost-effective from a budgetary standpoint.  The second incorporates liability reforms that will reduce Medicare expenditures, as well as additional means-testing proposals that will increase Medicare revenues by raising premiums on wealthy seniors.  A preliminary summary of the legislation follows:

Value-based Purchasing:  This concept, also known as “pay-for-performance,” would vastly expand the federal government’s role in health care by adjusting physician and provider reimbursement levels to reflect successful patient outcomes on a risk-adjusted basis.  The proposed legislative package would provide for greater transparency of price and quality measures, and would further authorize the Secretary to take steps to adjust reimbursement levels in order to purchase care from those providers which provide the greatest value to beneficiaries and the Medicare program.  The legislation also requires the Secretary to make high-deductible health plans available in the Medicare program, and provide a transition for individuals not yet enrolled in Medicare who own Health Savings Accounts (HSAs).

While policy-makers of all political stripes believe in providing consumers with additional price and quality transparency information, the further step of tying Medicare reimbursement levels crafted by federal bureaucrats to either process or outcome measures could prove much more problematic.  Although its advocates believe pay-for-performance can achieve significant budgetary savings, existing Congressional Budget Office (CBO) models have failed to realize any measurable impact on future Medicare expenditures.  Additionally, some conservatives may be concerned that this methodology would deepen the government’s role in health care by altering the fundamental doctor-patient relationship, leading to a more intrusive federal bureaucracy dictating the terms of patient care.

Medical Liability Reform: This proposal would help bring down health spending both within and outside Medicare by helping to eliminate frivolous lawsuits and providing reasonable levels of compensation to victims of medical malpractice.  Provisions of the bill include a three-year statute of limitations, a cap on non-economic damages of $250,000, and reasonable limits on attorney contingency fees charged to successful claimants.

In 2003, the Congressional Budget Office scored a similar liability reform bill passed by the House (H.R. 5) as lowering Medicare spending by $11.2 billion over a ten-year period.  While CBO staff have indicated that state liability reforms in the intervening time have reduced the savings level below the baseline for federal liability reform, savings from passage of the President’s proposal would likely still generate several billion dollars in savings to Medicare.

Means Testing:  The legislation proposes to establish an income-related Part D premium consistent with the Part B “means testing” included in Title VIII of the Medicare Modernization Act.  The proposal—which was included in the Fiscal Year 2009 budget—would achieve savings of $3.2 billion over five years.  The RSC has previously included similar proposals in its budget documents as one way to constrain costs and ensure consistency between a Part B benefit that is currently means-tested and a Part D benefit that is not.

Other Reform Options:  The legislative package advanced by the Administration comes on the heels of a Fiscal Year 2009 budget that proposed $178 billion in Medicare savings over the next five years, largely through adjustments to provider reimbursements.  In addition to the various proposals put forward by the Administration and described above, the opportunity afforded by the trigger could be used to advance other comprehensive proposals to reform Medicare, which could include:

Premium Support:  This model would convert Medicare into a system similar to the Federal Employees Benefit Health Plan (FEHBP), in which beneficiaries would receive a defined contribution from Medicare to purchase a health plan of their choosing.  Previously incorporated into alternative RSC budget proposals, a premium support plan would provide a level playing field between traditional Medicare and private insurance plans, providing comprehensive reform, while confining the growth of Medicare spending to the annual statutory raise in the defined contribution limit, thus ensuring long-term fiscal stability.

Restructure Cost-Sharing Requirements:  This concept would restructure the existing system of deductibles, co-payments, and shared costs, which currently can vary based on the type of service provided.  Additionally, Medicare currently lacks a catastrophic cap on beneficiary cost-sharing, leading some seniors to purchase Medigap policies that insulate beneficiaries from deductibles and co-payments and therefore provide little incentive to contain health spending.  Reforms in this area would rationalize the current system, generating budgetary savings and reducing the growth of health spending.

Increase Medicare Part B Premium:  The RSC has previously proposed increasing the Part B premium from 25% to 50% of total Medicare Part B costs, consistent with the original goal of the program.  This concept would not impact low-income seniors, as Medicaid pays Medicare premiums for individuals with incomes under 120% of the federal poverty level.

Bipartisan Commission:  This proposal would provide an expedited mechanism requiring Congress to hold an up-or-down vote on the recommendations of a bipartisan commission examining ways to reform Medicare and other federal entitlements.

Sequestration Mechanism: This proposal would cap the growth of overall Medicare spending levels, and provide adjustments in benefit structures in the event that spending exceeded statutory levels.  The budget submission to Congress did include the proposal that physician payments be reduced 0.4% for every year in which general tax revenues cover more than 45% of Medicare costs—the level at which the Medicare Modernization Act required that a funding warning be issued, and action taken by Congress.  The Administration proposal is designed to provide Congress with an impetus to embrace comprehensive entitlement reform by requiring across-the-board cuts absent pre-emptive legislative action.

Conclusion: The Medicare funding warning issued by the trustees last year provides an opportunity to re-assess the program’s structure and finance.  While competition among drug companies has ensured that expenditures for the MMA’s prescription drug benefit remain below the bill’s original estimates, introduction of pharmaceutical coverage has dramatically increased the overall growth of health care costs within the Medicare program, leading to the trustees’ funding warning.  The confluence of these two events should prompt Congress to consider the ways in which competition could be used to reduce the growth of overall Medicare costs, similar to the way in which the market for pharmaceutical coverage reduced the estimated cost of the Part D prescription drug benefit.

The Administration has put forward two separate proposals—the first in its budget submission to Congress last week, the second as part of its formal “trigger” submission this week—to address Medicare’s long-term solvency issues and begin a process of comprehensive reform.  Many conservatives are likely to view the President’s proposals as a positive first step in the discussions about ways to curb soaring entitlements, while considering additional proposals described above to advance the discussion further and to ensure Medicare’s long-term fiscal stability.

Rep. Hensarling Op-Ed: Medicare and Entitlements

It’s become an annual ritual — almost as much a herald of springtime in Washington as the cherry blossoms along the Potomac: President Bush advances a plan for entitlement reform, and Democrats in Congress proclaim it “dead on arrival.” It happened with Social Security reform three years ago, it happened with the president’s proposed savings from Medicare last year, and now it’s about to happen again with the new and enhanced Medicare proposals that the White House has delivered to Capitol Hill. But things are a bit different this time — for better and for worse.

The worsening news comes from the Medicare trustees themselves, whose latest report details the precarious financial situation of the trust funds that finance Medicare expenditures. The trustees warn that Medicare faces collective unfunded obligations of more than $74 trillion — more than six times the current size of the American economy. And those obligations are not getting smaller; they keep increasing. The Government Accountability Office estimates that for each year that Medicare and Social Security entitlements go unreformed, their projected shortfall grows by an additional $2 trillion.

The implications of these warnings from the trustees could not be more stark to the 200 million Americans under age 54 — who, according to the latest trustees’ report, will not be able to retire with full Medicare benefits. The Medicare Part A trust fund is scheduled to be “exhausted” — in plain English, flat broke — in 2019. This means that tens of millions of Baby Boomers face an uncertain retirement rife with questions about the future of health care.

If there is a silver lining to be found amid the darkening fiscal clouds, it lies in statutory provisions that ensure that proposals to curb Medicare spending will live to see the light of a fair vote in Congress. Fortunately, my Republican Study Committee colleagues and I added a little-known provision into the Medicare Modernization Act of 2003 — the overarching law that added prescription drug benefits to Medicare — that requires the independent Medicare trustees to issue a funding warning if Medicare expenditures are projected to grow to levels that will take away from other important national priorities. The president has now responded to that warning by submitting proposals that will help save the Medicare system by slowing its growth and empowering concerned Americans to demand comprehensive entitlement reform.

The president’s budget constituted a good first step toward Medicare reform, proposing to slow the growth of Medicare by nearly $178 billion over the next five years. Contrary to the mythical rhetoric of congressional Democratic leaders, the president’s budget proposal would not “cut” Medicare. Instead, his proposal allows Medicare to grow by 5 percent, instead of the 7.2 percent currently projected. Since most providers would continue to receive increased reimbursements from the federal government, the level, number and intensity of services provided would still continue to grow. And therein lies one of the keys to true Medicare reform: ensuring that budgetary savings derive from wise choices by patients and doctors about the most cost-effective treatment options.

In addition to the White House budget proposals, there are additional, more comprehensive solutions that have the potential to yield greater savings and slow the growth of the health costs that threaten to cripple our future. Solutions that would restructure Medicare cost-sharing and increase means-testing for wealthy beneficiaries would ensure the program’s sustainability by making beneficiaries more cost-conscious. Solutions like medical liability reform that would reduce providers’ costs associated with legal claims, saving money for Medicare and the general public. Solutions that would transform Medicare into a health care system similar to that which members of Congress have so that all seniors receive better care at a lower cost.

The president’s proposals have advanced the discussion of Medicare reform, and the trigger mechanism which we instituted five years ago provides Congress with a golden opportunity to conduct a thorough, stem-to-stern review of the way seniors receive health care and ensure that we can maintain our promises to baby boomers and future retirees alike.

The current race for the White House is teaching us many things about the American people. They are clamoring for change and yearn for leaders who will not only speak the truth about the problems facing our nation but work to provide solutions to them. Congress has an opportunity to do just that without waiting for a new president.

We have 2 trillion — that’s 2,000,000,000,000 — reasons to act on comprehensive entitlement reform, and to act this year. The American people expect no less.

This post was originally published in The Washington Times.