After months of internal debate, the House passed a budget-reconciliation bill last Friday taking aim at Obamacare, but it is far from assured that the bill, or even an amended version of it, will ever emerge from the Senate.
Budget-reconciliation bills are powerful legislative vehicles because they cannot be filibustered in the Senate (it takes 60 votes to invoke cloture and close off debate on most bills). That means, in theory at least, that the Republican majority in the Senate should be able to pass a reconciliation bill and send it to the president for signature or veto without needing any Democratic support.
Successful passage of the House reconciliation bill, or something similar to it, might not be possible in the Senate, though, because, while there are 54 Republicans in the upper chamber, three of them — Senators Ted Cruz, Marco Rubio, and Mike Lee — already have announced that they oppose the House bill. The three dissenters argue that it does not go far enough toward repealing all of Obamacare’s provisions. Their position matches that of Heritage Action, which opposed passage of the bill in the House.
Other Republican senators might also oppose the House bill because, in addition to repealing some Obamacare provisions, it eliminates federal funding of Planned Parenthood for one year (Senators Susan Collins and Mark Kirk voted against defunding Planned Parenthood in September). If Cruz, Rubio, and Lee all vote no on reconciliation, the remaining 51 Republicans will have to vote yes to get the bill passed (unless there is a defection from the Democrats, which is unlikely).
The House-passed bill is flawed, but it is motivated by a tactical approach to Obamacare that makes sense in the current political environment. The same cannot be said for the preferred course of the three senators who have already announced their opposition to the House bill. They believe that Republicans in Congress should vote on a reconciliation bill that fully repeals Obamacare (or something that comes very close to full repeal), or they should do nothing. Their plan would lead either to a legislative and political dead end or, worse, a minor political fiasco.
The House-passed bill targets for repeal Obamacare’s individual and employer mandates, as well as other Obamacare elements: the medical-device tax, the 40 percent excise tax on “high-cost” employer-sponsored insurance (the so-called Cadillac tax), the open-ended $10 billion fund for “public health” efforts, and a provision allowing automatic enrollment of workers in job-based coverage. It’s not hard to see the strategy here. Republican leaders put together a bill targeting for repeal some of the law’s least popular, and therefore most vulnerable, provisions. Attacking the individual mandate is also a direct assault on the core of Obamacare; without it, many of the law’s other provisions become unstable and thus also vulnerable to repeal and replacement. The House bill sets up a fight over Obamacare in a way that is highly favorable to Republicans.
But the bill is not perfect. House leaders made a big mistake by including in it a proposal to repeal the Cadillac tax. The tax is poorly designed and was sold on false premises by the administration. But its effect is similar to what might come from an idea many Republicans have long favored: an upper limit on the tax preference for employer-paid insurance premiums. Today, employers can pay premiums on behalf of workers without limit. This has encouraged overly expansive insurance, at the expense of taxable cash compensation. Placing an upper limit on tax-preferred employer premiums would inject much-needed cost discipline into employer plans. An upper limit is an important feature of several replacement plans sponsored by Republicans — including plans introduced in Congress by Representative Tom Price and by Senators Burr and Hatch, and Representative Upton, and by Jeb Bush in the presidential campaign. It does not make sense for the GOP to target the Cadillac tax for repeal when the party will probably try to impose a cap on tax-preferred employer premiums in its replacement plan. It would be far better to take this issue on when the time is right to more comprehensively repeal and replace Obamacare.
Senators Cruz, Rubio, and Lee have a different complaint. They say the GOP has promised full repeal of Obamacare and is now delivering repeal of just a few provisions. This will supposedly outrage the base, because they will see it as the first step toward backing away from the goal of full repeal. The three senators also argue that Republicans in Congress could honor their repeal commitment by using reconciliation to pass a full-repeal bill, or something close to it, and send it to the president for a veto. That would supposedly set up the debate over the law in a way that is favorable to the GOP in the 2016 election.
There are some major flaws in this line of reasoning.
For starters, the GOP’s official position on Obamacare is “repeal and replace,” not “repeal.” Obamacare is unpopular because of its many flaws, but most Americans were not thrilled with the pre-Obamacare status quo, either. It is not possible now, and never will be possible in the future, to actually repeal Obamacare without replacing it at the same time. If Congress sent a full repeal to the president without attaching to it a sensible replacement plan, Obamacare’s defenders would easily attack the bill as a GOP effort to send everyone back to the old, flawed system that allowed discrimination against the sick. When push comes to shove, even the most conservative Republicans in Congress will not want to vote for repeal of Obamacare without putting in place a better approach to making insurance more secure and affordable.
Cruz, Rubio, and Lee would probably respond to this argument by noting that Republican House and Senate members have already voted several times for legislation that would repeal Obamacare without replacing it with something else. So what’s the problem with doing it once more?
First, it is one thing to vote, as an expression of general political sentiment, on a bill that everyone involved understands is going nowhere. It is another thing altogether to pass legislation that will make it to the president and become law if approved. The scrutiny will be higher, and the president’s ability to frame the argument also will be much enhanced because of press attention. In that context, a vote to repeal Obamacare while offering nothing by way of an alternative is going to be viewed by much of the electorate as an evasion of political responsibility. It will not play well.
But even if it were a good idea to send a repeal-only bill to the president, it is not possible, for practical and political reasons, to do so through the budget-reconciliation process without also including a replacement plan.
Full repeal could take one of two forms. The easiest route would be a one-sentence bill that simply repeals the entirety of Obamacare. Everything would get wiped away in one, all-inclusive repeal sentence. Even though much of Obamacare has budgetary effects, and thus could rightfully be targeted in a reconciliation measure, there are a lot of non-budgetary regulations in the law, too. For instance, there is the requirement that private insurance plans cover dependents up to age 26. Senate rules limit what can be included in a reconciliation bill to provisions that are primarily budgetary in nature; it is highly unlikely that a one-sentence bill repealing all of Obamacare would be seen as meeting that requirement. An attempt to bring it up is therefore likely to fail.
The other option for advancing full repeal in reconciliation is to write a longer repeal proposal with a large number of individual repeal provisions. Theoretically, lawmakers could write a bill that has a repeal provision for every section of Obamacare. Alternatively, a bill could target individual titles or subtitles. Either way, these more narrowly focused repeal provisions would probably be deemed appropriate for reconciliation because they would more precisely target the spending provisions of Obamacare.
The problem with this approach, however, is that it would leave Republicans in a vulnerable position politically. Republicans would be supporting repeal provisions that target Obamacare’s Medicaid expansion, expanded drug coverage for seniors under Medicare, and premium and cost-sharing subsidies in the exchanges for low-income families. Each of the provisions to target spending could themselves be targeted for removal from the reconciliation bill by Senate Democrats during floor debate.
Senate Republicans should stand firm in such a debate and oppose all this spending, especially if they also offer a credible alternative approach. But in a debate on a reconciliation bill that is all repeal and no replace, it would be impossible to hold the caucus together against a determined Democratic assault. The many Republican senators from states that have expanded Medicaid (Iowa, Indiana, Illinois, Ohio, and Pennsylvania, to name a few) would be in a very difficult position. In all likelihood, a Democratic amendment to save the Medicaid expansion would pass in the Senate, with a number of Republicans providing the margin of victory. That would be a political disaster. The same could also be true for some of the other major spending provisions in the law.
The more sensible tactical plan is the one the House settled on. Their intention was to pass something that put Obamacare’s advocates on the defensive. The bill they passed could be improved in the Senate by dropping the proposal to repeal the Cadillac tax and putting in its place other repeal provisions, such as terminating the $10 billion Center for Medicare and Medicaid Innovation or ending the restrictions on health savings accounts. This kind of repeal bill would have little chance of becoming law, but it would make it clear that the president and his supporters are so determined to protect what they passed in 2010 that they will defend even the parts of Obamacare that garner near-unanimous opposition among voters.
Republicans would be in a far better position today if they had agreed among themselves on a credible Obamacare-replacement plan. If they had done that, they could have advanced a very substantial repeal-and-replacement bill this year using the reconciliation process. That would certainly have put the Obama administration in a defensive posture, too. But it has been clear for years now that the GOP is not going to rally around a consensus replacement plan without strong presidential leadership. So the next best approach is the one the House set in motion. Instead of opposing it, Senate Republicans should improve it and pass it.
— James C. Capretta is a senior fellow at the Ethics and Public Policy Center and a visiting fellow at the American Enterprise Institute.