Health Care Policy After The Mid-Term Elections

Published November 7, 2014

Health Affairs Blog

As President Obama said in his post-election news conference, Republicans had a good night on November 4. They increased their majority in the House to a level not seen since the 1920s and may hold as many as 250 seats in the lower chamber. In the Senate, Republicans defeated at least three incumbent Democratic Senators, and are likely to defeat two more when all of the voting and counting is over.

The most likely scenario is that the GOP will hold 54 seats in the Senate come January — an increase of nine seats from the current Congress. It is noteworthy that half of the Democratic Senators who voted to pass the Affordable Care Act (ACA) nearly five years ago will no longer be in the Senate in 2015. Despite some commentary to the contrary, the ACA was a big issue in the election. To a person, the successful GOP Senate candidates ran strongly against the ACA. In the middle of October, anti-ACA ads were among the most frequently-aired political advertisements from Republican Senate candidates. By and large, these candidates won their races.

The conventional wisdom is that the ACA, now heading into its second year of full-scale implementation, cannot be rolled back in any substantial way at this point. That’s certainly the view of major corporate players and the health care industry. But it is decidedly not the view of the newly-elected Republican members of the House and Senate, or their constituents. They believe voters sent them to Washington to do their best to push back against the perceived excesses of the ACA and to begin replacing it with a reform plan that is less expensive, less damaging to the economy, and less reliant on federal regulation and control.

If nothing else, the mid-term election assured that the political debate over the ACA and possible alternative approaches is not over. At a minimum, the parties will continue to spar over this issue through the 2016 presidential election.

Although the GOP strengthened its position in the election, shifting direction in health care policy over the next two years will not be easy. For starters, President Obama has two more years left in his second term, and the GOP has nowhere near the numbers to override presidential vetoes. Moreover, in the Senate, Democrats (and the independent Senators who caucus with them) will hold no fewer than 46 seats. That’s more than enough votes to filibuster (and therefore kill) legislation before it ever reaches the president’s desk.

In The Short Term: A Targeted Approach To The ACA

Boehner and McConnell have pledged to move to a vote on repealing the ACA in Congress and to send the bill to the president for a certain veto at the earliest opportunity. But it seems unlikely that even a GOP-controlled Congress could deliver a straight repeal of the ACA. For starters, as just noted, Democrats in the Senate could filibuster the bill, thus forcing the GOP to find 60 votes to close off debate and move to a vote. There won’t be 60 votes in the Senate to repeal the ACA.

In addition, a straight repeal of the ACA implies there would be no immediate replacement plan. Consequently, ACA supporters could accurately accuse repeal proponents of pushing several million people out of Medicaid and exchange-based insurance plans. That argument will almost certainly derail the effort at some stage in the legislative process.

The GOP would be better off keeping in clear focus the larger goal, which is to move health care policy in a more patient-centered, market-based, and less regulatory direction, while also improving work incentives and the budget outlook. Putting in place a reform plan with these characteristics will only happen if a Republican wins the presidency in 2016, too. An important goal of the Congress in 2015 and 2016 should be to prepare the way for enacting this kind of an agenda in 2017.

The congressional budget process could help the GOP make some progress over the coming two years. Both a budget resolution and a budget reconciliation bill are protected from the Senate filibuster, meaning they can pass with a simple majority vote of 51 Senators. Instead of full repeal, the GOP could use this process to approve provisions making targeted changes to the ACA.

Some of these provisions might even draw bipartisan support. For instance, many Democrats have expressed support for eliminating the Independent Payment Advisory Board, the medical device tax, and the employer mandate. Repeal of these provisions, and many others in the ACA, could proceed in the budget reconciliation process.

Republicans might want to consider legislation that codified protections for consumers in non-ACA compliant insurance products. At the moment, the president has given permission to states to allow some of these plans to continue in force, but the protection is temporary and partial. A GOP bill could require the states to allow consumers to keep their old plans if they like them, and indefinitely.

In addition, it may be beneficial to the GOP to consider targeted changes to the ACA that the president or Democrats in Congress initially oppose. These bills would highlight important differences between the parties. For instance, Republicans might close off the administration’s plan to provide open-ended “risk corridor” support to insurers losing money on the exchanges. The administration’s legal authority for these payments is questionable, and, in any event, many Republicans believe that taxpayers should not be on the hook to cover losses for insurers that purposefully cut their premiums below what was responsible. They could attack these payments as one more corporate giveaway.

The GOP could also scale back the individual mandate tax by providing clear, statutory exemptions to many more households.

In The Longer Term: Developing An Alternative To The ACA

The most challenging task for the new GOP Congress, and for the GOP candidates lining up to run for president, will be to lay out a clear and compelling alternative vision for health reform. It is not necessary for the Congress to take up and pass such a plan over the next two years, but it is important for ACA opponents to begin coalescing around a unified proposal so that it can become part of the planned agenda for 2017.

In developing a replacement for the ACA, the GOP must be practical and realistic. Among other things, that means acknowledging that there are some 160 million people in employer-based health insurance today, and a reform plan cannot abruptly disrupt their coverage all at once and survive politically. In addition, a replacement plan for the ACA must provide access to affordable insurance for all households, and provide regulatory protections for persons with pre-existing conditions. A GOP replacement plan must meet these objectives at a fraction of the expense of the ACA, and with much less regulatory baggage.

Republican Senators Richard Burr, Tom Coburn, and Orrin Hatch have demonstrated that such a plan is possible. Their Patient CARE Act would cover approximately the same number of people with insurance as the ACA, at far less expense, and much less federal control, according to an evaluation of it by the Center for Health and the Economy.

The Burr-Coburn-Hatch plan is not a finished product; it can and should be refined, starting with a plan to allow those covered by the ACA’s Medicaid expansion and exchange-based insurance plans to remain where they are during a transition to the replacement program. Still, even without further modification, it is by far the most realistic and credible alternative to the ACA yet introduced by Republicans in Congress, and the GOP would be smart to begin elevating it in the public debate as the starting point for passing an appealing ACA alternative.

Republicans have been largely shut out of the health care policymaking business for the past six years. That will change modestly in 2015 as the party takes control of the Senate. But Republicans must be realistic about what they can do while President Obama remains in office. Some changes are possible, of course, but the ACA isn’t going to be repealed or replaced before 2017, or even altered to the satisfaction of ACA opponents. What the GOP can and should do is agree on where it wants to go, and begin to make progress toward that goal.

James C. Capretta is a senior fellow at the Ethics and Public Policy Center and a visiting fellow at the American Enterprise Institute.

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