Healthcare – A Senate Nightmare?

by on May 25, 2017 in Economics, Politics

Well, the Congressional Budget Office has spoken. It issued its report on the House healthcare plan that passed a few weeks ago. The picture it paints isn’t pretty, and it creates a nightmare for the Senate.

First, let’s all remember that the Senate was going to construct its own healthcare reform plan. This is the American way. Everyone involved gets to write a plan, and then they all sit around and ‘reconcile’ their differences in order to end up with one that can then be voted and signed into law by all involved.

In this case the House passed its plan without waiting for the CBO ‘score’ to arrive, and before many legislators had time to read and absorb its impact. The reason for this was obvious: Paul Ryan needed to create the illusion of progress, waiting for the CBO would have risked losing the support of the more moderate wing of his party and thus failing, for a second time, to carry through on an eight year Republican pledge. It was highly unusual to go to a vote before hearing from the CBO on such a large and complex subject, but the political risks necessitated haste.

The problem is, of course, that all Ryan accomplished was to punt the big issues and dump them into the Senate’s lap.

Here are the key points that will bog the Senate down:

  1. The CBO lambastes the fix put in place to deal with pre-existing conditions. This was the very ‘fix’ that Ryan used to woo the moderates in the House. Had the CBO report been available before the House vote it is clear those moderates would have voted against. So Ryan was right to rush. The Senate, however, does not have that luxury. It will have to plug the hole the CBO has identified — there are Republican moderates in the Senate who have said they cannot support reform unless the ‘fix’ is fixed! This, naturally, then raises the ;prospect that a┬áSenate plan which includes a patch for the pre-existing condition hole in the House plan would fail to get right wing support in the House when they vote on it after reconciliation. At which point Ryan’s entire project is revealed to be a flop.
  2. The original Ryan plan that failed to get out of the House was scored by the CBO as cutting off coverage for 24 million people. All the patchwork on the second plan has reduced that only to 23 million. The Senate is now on the hook: does it really want to eliminate healthcare coverage for that many voters?
  3. The House plan includes a massive $800+ billion reduction in Medicaid, which is the program through which poor people access healthcare. The reason for this is to pay for the elimination of the Obamacare tax on wealthy people. The Senate is thus facing the political conundrum of clearly taking away healthcare for the poor in order to cut taxes for the rich. That’s poor optics under any circumstance. It is particularly poor in view of the contentious elections in 2018. This is complicated further by the fact that some states with Republican Senators took up the expansion of Medicaid under Obamacare — anyone receiving care under the expansion would lose it. This is hardly a vote winner.
  4. The House plan hammers the elderly and the poor. The CBO estimate is that a typical elderly person could face an increase in premium costs of 800%. The Senate will want to avoid the ire of older voters. That has to be fixed.
  5. Lastly: although premiums might well come down for healthy people two countervailing problems are noted by the CBO. One is that the lower cost plans will be ‘barebones’ and may not be adequate, which was a recurring problem that Obamacare tried to fix; second, lower premiums are not assured across the entire country. Because of local market conditions some parts of the country may well see premium increases despite the House plan. Since these areas are largely rural and Republican supporting, the political risk is very high.

So the Senate is not in a happy place. That’s putting it mildly. Such is the division within the Republican ranks over some of these key issues that Mitch McConnell, the Republican leader, was already doubtful of getting sufficient votes to pass reform under any circumstance. The CBO just made his task more difficult.

So it could be that Obamacare survives, and that the Republicans move on defeated on one of their cast iron pledges.

Tax reform is no easy task either. So the question is emerging: can the republicans actually govern? Or was all that anti-Obama rhetoric just vapor?

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