The American Health Care Act is in trouble, with House Speaker Paul D. Ryan (R-Wis.) admitting Wednesday that the bill must change to make it through Congress. The reason? The Republican right and the Republican center want different things, and the rules under which the proposed Obamacare replacement can pass the Senate by a simple majority make it extremely hard to satisfy both sides. But the apparently difficult problems of policy reforms are just that: “apparent.” With some outside-the-box thinking, some dealmaking and a little humility, the AHCA can be saved.
The right wants to gut “essential benefits” rules that increase the cost of health care and to encourage interstate sale of insurance policies and tort reform to drive down the medical costs. The center is concerned with how the subsidies for health insurance are structured. In addition, various senators are worried that their states will be hurt by the bill’s Medicaid revisions. Some Republican governors bet on Medicaid expansion, and others didn’t; the House bill rewards those who did.
Let’s take these in reverse order. The Medicaid problem is a money problem, and here the Congressional Budget Office score helps. A portion of the billions in projected savings should be used to even out the states’ shares of Medicaid dollars. That’s just arithmetic, and with his dealmaking experience, President Trump can find an agreement. A relatively minor problem cannot be allowed to block the biggest entitlement reform in 30 years.
Next, the tax credits can be fixed by changing how they are calculated. Think of a square divided into four boxes: People are either poor or not poor, old or not old. Under the current bill, the credits are weighted too much toward the “young and not poor.” Instead, the tax credits should be disproportionately aimed at the “poor and old” box and after that the “poor and young” box. Then perhaps some small slice of the credits can be for “the old and not poor” with none for “the young and not poor.”
The toughest puzzle concerns the three policy problems upsetting Republican conservatives. The GOP leadership says their demands cannot be addressed under “budget reconciliation,” the special process that allows bills to pass the Senate with a simple majority. To use this process, everything in the bill must affect the federal budget. Republican leaders say that because tort reform, essential-benefits rules and interstate sales of insurance policies have nothing to do with taxes or spending, they cannot be included in the bill.
But if policy objectives must affect the budget to be passed via reconciliation, then use the taxing power to achieve them. Beltway sharpies often lose sight of the fact that if they simply made something more expensive via a tax on it — penalizing its existence with the tax — the market would respond quickly. So would the states.
Want tort reform? Add an amendment imposing a mandatory monthly federal tax surcharge to every health insurance policy in every state that does not cap “pain and suffering” damages in medical-malpractice cases. (Even deep-blue states such as California have the caps.) Want to slice and dice essential-benefit madness? Spell out the new baseline for essential benefits in an amendment and include a tax on every policy in every state that is deemed by the Health and Human Services Department to mandate an overly costly set of essential benefits. Want to encourage selling across state lines? Amend the health-care bill to include a tax surcharge on every health insurance policy of every company that does not offer at least one basic plan with the same coverage parameters in five states (while giving the HHS secretary the power to exempt genuine one-state companies). Incentivize companies to make a basic policy available broadly, and they will appear.
These proposals would use the taxing power to incentivize good policy, and they would generate revenue, which means the Senate parliamentarian would be hard-pressed to rule them out of order during the reconciliation process. With these provisions added to the bill, all sides’ major concerns are satisfied. Anything that’s left out could be addressed through regulations.
Republicans don’t have a lot of time to fix this bill, but the good news is that the president has done a lot of deals with many moving parts. Unlike President Barack Obama, he enjoys this process. By all accounts, Trump is going “full LBJ” on the AHCA. Great. Keep it up. Convene the top three Republican leaders from both chambers and three of the most vocal critics from each chamber, as well. Put the vice president, Office of Management and Budget Director Mick Mulvaney, HHS Secretary Tom Price, White House Chief of Staff Reince Priebus and chief strategist Stephen K. Bannon in the room. The House Rules Committee can delay work on the bill while fixes are made, and the president can twist arms to ensure the changes make it through the House and to the Senate parliamentarian.
“No deal” is not an option. Failure now means a collapse, not of Obamacare — though that will follow — but of the GOP majorities in Congress, even with the Senate Republicans’ lopsided 2018 advantage. I remember listening to then-Majority Leader John A. Boehner in the summer of 2006 assure me that the House could not lose its GOP majority — just before he left to play golf. There’s no need to say what happened next. The GOP base will not take “Sorry, we tried, but the other chamber screwed up” for an answer. And Trump should think about what a House in Democratic hands would mean for him in terms of investigations, hearings and even articles of impeachment.
No golf for the president or the GOP congressional leadership now. No Easter recess either. They must deliver. All that is required is a little humility from GOP lawmakers. That’s asking a lot, but they probably prefer a few moments of modesty to losing their jobs.