Tag Archives: Donald Trump

A Status Update on the Senate Health Care Bill

The past week’s debate on health care has seen more twists and turns than a dime-store movie novel. “Repeal-and-replace” is dead—then alive again. President Trump calls for outright repeal, then letting the law fail, then “repeal-and-replace” again.

As Vince Lombardi might ask, “What the h— is going on out here???”

Never fear. Three simple facts will put the debate in context.

Leadership Is Buying Moderates for ‘Repeal-and-Replace’

Whether in the form of “candy,” “making it rain,” or old-fashioned carve-outs that help states with reluctant senators, Senate leaders are trying to figure out the amount and type of money and incentives that will win enough moderate votes to pass a “repeal-and-replace” bill. Details remain sketchy, but the broader outline is clear: senators don’t want to vote for provisions they approved 18 months ago—when they knew President Obama would veto a repeal measure. And Senate leadership hopes to “solve” this problem essentially by throwing money at it—through new funding for Medicaid expansion states, opioid funding, bailout funds for insurers, programmatic carve-outs for some states, or all of the above (likely all of the above).

Leadership Isn’t Serious about Repeal-Only

Some observers (not to mention some senators) are confused about whether the Senate will vote on a repeal-only measure, or a “repeal-and-replace” bill. But Senate Majority Whip John Cornyn (R-TX) explained leadership’s strategy to Bloomberg Wednesday: “There’s more optimism that we could vote on a repeal-and-replace bill, rather than just a repeal bill….But if there’s no agreement then we’ll still vote on the motion to proceed” to a repeal-only measure” (emphasis mine).

Translation: Senate leadership will only move to a vote on the 2015 repeal bill—which some conservative groups have argued for—if it knows it will fail. In fact, some observers have gone so far as to suggest Majority Leader Mitch McConnell’s Monday announcement that the Senate would vote on a repeal-only bill amounted to an attempt to bait-and-switch conservatives—convincing them to support starting debate on the bill by dangling repeal-only in front of them, only to pivot back to “repeal-and-replace” once the debate began.

Regardless of McConnell’s intentions earlier in the week, Cornyn’s comments make clear the extent to which Senate leaders take a repeal-only bill seriously: They don’t.

McCain May Make It Moot

It may sound impolitic or callous to translate a war hero’s struggle against cancer into crass political terms, but if the recent cancer diagnosis of Sen. John McCain (R-AZ) means the senator will be unable to travel to Washington, Republican leaders’ desperate attempts to cobble together a legislative compromise may ultimately prove moot. At least two conservative senators oppose the current bill from the Right; adding more money to appease moderates won’t reduce those numbers, and may increase them. And at least two moderate senators oppose the current bill from the Left, hence the effort to increase funding.

If McCain is unable to vote on the legislation, Republican leaders will be able to withstand only one defection before putting the bill’s passage in jeopardy—yet at least two senators on either side of the Republican Conference oppose the current bill. That math just doesn’t add up, which means that barring some unforeseen development, the hue and cry of the past several days may ultimately amount to very little.

This post was originally published in The Federalist.

Trump Administration Continues Obamacare’s Illegal Corporate Welfare

Just over a week ago, on a Friday before the Independence Day holiday, the Trump administration quietly released a report on Obamacare’s reinsurance program. The new administration could have used the opportunity to cut off insurers from billions of dollars in corporate welfare payments, upholding the text of the law and repaying funds to the Treasury in the process.

Except the administration did nothing of the sort, which raises obvious questions: With “friends” like these, do conservatives really need enemies? And did a Republican president who pledged to repeal Obamacare get elected to office in November—or not?

Spreading the Wealth Around

A primer on the issues at work: Section 1341 of Obamacare created a reinsurance pool designed to stabilize the insurance exchanges in their first three years. The law funded the reinsurance program through “assessments”—taxes—on employer-provided health plans. In other words, the federal government raised premiums on employer plans to subsidize health insurers offering exchange plans on the individual market. Or, as President Obama might say, they were “spreading the wealth around.”

In addition to paying insurers up to $20 billion—repeat, $20 billion—between 2014 and 2016, the law also required those assessments on employers to fund $5 billion in payments to the Treasury, offsetting the cost of another Obamacare program. For whatever reason, the employer assessments the past three years have not yielded the $25 billion needed to fund $20 billion in payments to insurers, plus the $5 billion in payments to the Treasury. In the event of such a circumstance, the law states that the Treasury should be paid before health insurers.

So what did the Obama administration do? You guessed it. They paid health insurers first, and gave the Treasury—taxpayers like you and me—the shaft.

For all of President Obama’s talk about Obamacare being the “law of the land,” his administration had quite a habit of forgetting exactly what the law of the land was when that was convenient. Both the non-partisan Congressional Research Service and the Government Accountability Office last year ruled that the Obama administration violated the law in giving insurers preferential treatment over taxpayers. The administration promptly ignored these rulings.

So, it seems, has the new administration. The report on reinsurance included not a word about making payments to the Treasury Department, reimbursing taxpayers the billions they are owed under the law. Nor did the report mention potential actions to sue health insurers to reclaim funds they received that are rightly owed to the U.S. Treasury.

Taxpayers Get the ‘Trump Discount’

During his business days, many of Donald Trump’s contractors complained about a “Trump discount”—the real estate mogul failing to pay the full sums he owed. It appears that the new administration has given taxpayers the “Trump discount”—choosing to continue prioritizing corporate welfare payments to insurers over repaying the U.S. Treasury.

That “Trump discount” insults hard-working taxpayers across the country. Also, by propping up a failing law by throwing more money at health insurers, it just might lead some to discount how much the Trump administration really wants to repeal Obamacare.

This post was originally published at The Federalist.

Why Theresa May Flopped in Last Night’s UK Election

Last November 8, Hillary Clinton lost the U.S. presidential election in an amazing upset by Donald Trump. She endured her shock defeat on a date prescribed by federal law. What if Hillary Clinton didn’t have to run a campaign last autumn, but called one anyway—then came up short?

That’s essentially what happened last night across the Atlantic, where British Prime Minister Theresa May gambled big—and lost. She called a surprise “snap election” earlier this spring hoping to expand her parliamentary majority, and gain additional leverage in her “Brexit” negotiations with the European Union. Instead, when the votes came in, her Conservative Party lost both votes and seats in Parliament. While the Conservatives remain the largest party in Parliament—albeit short of an outright majority—the election result cannot be viewed as anything other than a defeat.

The result looks that much more stunning when considering May’s foremost opponent: a Labour Party led by Jeremy Corbyn, a leftist who makes Sen. Bernie Sanders look moderate. Corbyn has opposed both military force and the use of nuclear weapons; more than 80 percent of his party’s own members of Parliament supported ousting him as leader, but the grassroots party returned him anyway. A university professor called Corbyn’s election as Labour leader “an act of stupidity unparalleled since Caligula appointed his horse to the Roman Senate.”

Losing This Big Took Some Effort

How could May, thought a shoo-in to win a landslide only a month ago, flop so resoundingly against an opponent so weak?

As with Hillary Clinton’s loss to Trump, it took some effort. May, like Clinton, played a safe campaign, in which she didn’t seem comfortable, while Corbyn relished interactions with voters and constituents. Her campaign manifesto prompted a U-turn from the prime minister mere days after its launch, angering traditional Conservative supporters and giving the party a bumbling appearance, at a time when May had promised to provide strong and stable leadership.

There were other factors, too. In the wake of last year’s referendum to exit the European Union, the UK Independence Party vote collapsed. It appears some working-class voters who voted UKIP at the last election shifted back to Labour instead of voting Conservative.

Turnout rose in newly won Labour areas, suggesting Corbyn’s brand of hardcore socialism and “pork-barrel politics”—including pledges to abolish tuition fees—motivated young people to turn out. And as Harold Macmillan famously warned, “Events, dear boy, events” may have conspired against the prime minister. The terror attacks in Manchester and London Bridge, coupled with Trump’s tweets against London Mayor Sadiq Khan, may have played a role in the campaign’s final days.

What Happens Next?

Although voters may have punished her for going to the country early, another plebiscite could be in the cards. In her speech early Friday morning, the prime minister promised a “period of stability,” suggesting a possible transition, followed by a third general election. With the Conservatives operating a minority government, it seems unlikely that government could last for the full five-year lifetime of a Parliament.

That said, May may not remain long enough to make those decisions herself. Early reports suggest a high likelihood that the prime minister could step down as Conservative leader, triggering the second leadership election for the party in as many years. (It is a demonstration of the election’s shock result that Corbyn could well outlast May as party leader—an outcome few previously would have thought possible.)

However, one election seems unlikely to occur any time soon: A second referendum on Scottish independence. Scotland provided one of the election’s many ironies when a weakening of Scottish National Party support led to a gain of 11 Conservative MPs, propping up the party after losses elsewhere. With Labour also benefitting from the SNP weakness, and Scottish voters seemingly taken a dim view of a “never-endum” debate on independence, the union of England and Scotland apparently remains secure—for the time being.

As to Britain’s “other” union—its impending divorce from the European Union—the nature of that relationship seems less clear. With the Conservatives having less room for maneuver in the coming Parliament, the next prime minister—whether May or someone else—could end up playing a weakened hand in negotiations with Brussels. That’s the exact opposite scenario of the one May envisioned six weeks ago—another surprising outcome from Thursday’s surprising election.

This post was originally published at The Federalist.

Democrats’ Hypocrisy on the Trump Budget

As expected, the Left had a harsh reaction to President Trump’s first budget on its release Tuesday. Bernie Sanders called the proposed Medicaid reductions “just cruel,” the head of one liberal think-tank dubbed the budget as a whole “radical,” and on and on.

But if liberals object to these “draconian cuts,” there’s one potential solution: Look in the mirror.

Liberals’ supposed outrage over reductions to entitlements largely serving poor people would look slightly less disingenuous if they hadn’t made the same hyperbolic comments about reducing entitlement spending on middle-class and wealthy retirees. If the Left believes the budget reduces spending from anti-poverty programs too deeply, that in part stems from the president’s (flawed) conclusion that Social Security and Medicare reforms are too politically toxic to propose.

And exactly who might be to blame for creating that toxic environment?

Democrats Are Using The ‘Mediscare’ Playbook

Democrats have spent the past several political cycles running election campaigns straight out of the “Mediscare” playbook. In case anyone has forgotten, political ads have portrayed Republicans as literally throwing granny off a cliff.

This rhetoric about Republican attempts to “privatize” Medicare came despite several inconvenient truths:

  1. The “voucher” system Democrats attack for Medicare is based upon the same bidding system included in Obamacare;
  2. The Congressional Budget Office concluded one version of premium support would, by utilizing the forces of competition, actually save money for both seniors and the federal government; and
  3. Democrats—in Nancy Pelosi’s own words—“took half a trillion dollars out of Medicare” to pay for Obamacare.

Given the constant attacks from Democrats against entitlement reform, however, Donald Trump made the political decision during last year’s campaign to oppose any changes to Medicare or Social Security. He reiterated that decision in this week’s budget, by proposing no direct reductions either to Medicare or the Social Security retirement program. Office of Management and Budget Director Mick Mulvaney said the president told him, “I promised people on the campaign trail I would not touch their retirement and I would not touch Medicare.”

That’s an incorrect and faulty assumption, of course, as both programs rapidly spiral toward insolvency. The Medicare hospital insurance trust fund has incurred a collective $132.2 billion in deficits the past eight years. Only the double-counting created by Obamacare continues to keep the Medicare trust fund afloat. The idea that President Trump should not “touch” seniors’ retirement or health care is based on the fallacious premise that they exist beyond the coming decade; on the present trajectory, they do not, at least not in their current form.

Should Bill Gates Get Taxpayer-Funded Healthcare?

That said, the president’s reticence to “touch” Social Security and Medicare comes no doubt from Democrats’ reluctance to support any reductions in entitlement spending, even to the wealthiest Americans. When Republicans first proposed additional means testing for Medicare back in 2011, then-Rep. Henry Waxman (D-CA) opposed it, saying that “if [then-House Speaker John] Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.”

In other words, liberals like Henry Waxman, and others like him, wish to defend “benefits for billionaires”—the right of people like Bill Gates and Warren Buffett to receive taxpayer-funded health and retirement benefits. Admittedly, Congress passed some additional entitlement means testing as part of a Medicare bill two years ago. But the notion that taxpayers should spend any taxpayer funds on health or retirement payments to “one-percenters” would likely strike most as absurd—yet that’s exactly what current law does.

As the old saying goes, to govern is to choose. If Democrats are so violently opposed to the supposedly “cruel” savings proposals in the president’s budget, then why don’t they put alternative entitlement reforms on the table? From eliminating Medicare and Social Security payments to the highest earners, to a premium support proposal that would save seniors money, there are potential opportunities out there—if liberals can stand to tone down the “Mediscare” demagoguery. It just might yield the reforms that our country needs, to prevent future generations from drowning in a sea of debt.

This post was originally published at The Federalist.

The Constitution Takes Precedence over Obamacare

The April 17 editorial “The reckless threat against the ACA,” which accused President Trump of wanting to break health care, omitted two key words: the Constitution. As in: U.S. District Court Judge Rosemary Collyer ruled last May that the Obama administration violated the Constitution by spending money on Obamacare’s cost-sharing reductions without a valid congressional appropriation.

The lawsuit brought by the House — a lawsuit the editorial board said Mr. Trump “should continue fighting” — would provide an important constitutional check on executive authority by prohibiting a president from spending money absent explicit congressional approval.

The editorial said Mr. Trump “should be working to preserve the Affordable Care Act.” But Mr. Trump did not take an oath to preserve, protect and defend Obamacare. He took an oath to preserve, protect and defend the Constitution. And preserving the precedent set by Ms. Collyer’s ruling, and protecting Congress’s foremost power — the power of the purse — would do much to restore an important constitutional check and balance.

The editorial board’s blind defense of Obamacare without even acknowledging the important constitutional concerns surrounding the cost-sharing lawsuit did a disservice to the rule of law. Sacrificing legal principles to policy outcomes — Obamacare must be preserved, whether constitutional or not — is how democracy dies in darkness.

This post was originally published by The Washington Post.

How the Media Care More About Obamacare Than the Constitution

Fewer than 12 months ago, some people—aka, yours truly—raised a warning about Obamacare’s cost-sharing reductions. The text of the law nowhere provided an appropriation for them, meaning that, as I wrote last May, the next President could shut them off unilaterally. At the time, I contacted several reporters, pointing out that such a move could have major implications for the health care law. None showed any interest in writing on the topic, and to the best of my knowledge, few if any reporters did.

Having now under-reacted regarding the issue during most of 2016, the media are compensating by over-reacting now. Since the House failed to pass “repeal-and-replace” legislation, breathless articles in multiple publications have examined the issue, whether the Trump Administration will cut off the subsidies, and whether insurers will bail on the Exchanges en masse as a result.

There’s just one little detail about the issue that many of these articles are missing. You may have heard of it: it’s called the United States Constitution.

What Exactly Is Going On With Obamacare Subsidies?

For the uninitiated, the dispute involves one of two types of Obamacare subsidies: premium subsidies to lower monthly premium costs, and cost-sharing reductions that help with things like deductibles and co-payments. The law requires insurers to reduce cost-sharing for certain low-income individuals, and provides for a system of reimbursements to repay insurers for providing said reductions.

However, Obamacare itself failed to provide any appropriation for the reimbursement payers to insurers. The lack of an explicit appropriation violates Article I, Section 9 of the Constitution, which requires that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Congress has the “power of the purse,” and Members of Congress believe that the Obama Administration violated that power.

To remedy that violation, the House of Representatives authorized legal action in July 2014, and filed suit in November 2014 seeking to stop the subsidies. Last May, Judge Rosemary Collyer ruled that the Obama Administration had in fact violated the Constitution by spending money without an express appropriation. The case, House v. Price (formerly House v. Burwell), remains on hold; the Obama Administration appealed Judge Collyer’s ruling last year, and the Trump Administration and the House are attempting to resolve the status of that appeal.

Over Obamacare’s first four fiscal years, the disputed payments to insurers would total approximately $20.9 billion—$2.1 billion in fiscal year 2014, $5.1 billion in fiscal year 2015, $6.1 billion in fiscal year 2016, and an estimated $7.6 billion if they continue through fiscal year 2017 (which ends September 30). Over the next 10 years, the Congressional Budget Office estimates that the payments will total $135 billion.

What’s The Media Saying About All This?

Given that background, it’s worth examining press coverage on the issue since Republicans’ “repeal-and-replace” efforts collapsed, bringing questions about the lawsuit, and the subsidy payments, to the fore:

  • Politico noted that the House’s suit argued that the Obama Administration “had paid for [the subsidies] without congressional authority”—but also quoted an expert as saying failure to appropriate funds for the subsidies would “shoot [Obamacare] in the head.”
  • A separate Politico opinion piece said that “if the Republicans want to avoid a major mess, they need to make the suit go away and make sure the subsidies keep flowing.”
  • A Wall Street Journal article said that the House calls the payments “illegal.”

All three of these stories omitted one simple word: “Constitution.” As in, a federal judge said Barack Obama’s Administration violated the Constitution. As in, one analyst thinks the House needs to make a suit protecting its constitutional authority “go away.” As in, the payments weren’t ruled “illegal”—they were ruled unconstitutional.

Granted, other stories have at least mentioned the constitutional element of the dispute. But there haven’t been many stories focusing on the constitutionality of President Obama’s actions (which even Obamacare supporters have questioned), or even how the court ruling could rein in executive unilateralism. Instead of reading about how—by spending money without an appropriation—Barack Obama “sabotaged” the Constitution, or even “shot it in the head,” the public has seen all sorts of articles suggesting that President Trump may “sabotage” Obamacare—by upholding the Constitution.

Thanks For The Double Standard, American Media

Remember: The cost-sharing subsidies involve an issue where a federal judge has already ruled that the Obama Administration violated the Constitution by giving insurers tens of billions of dollars without an appropriation—yet the press seems more focused on whether or not those payments will continue.

That response merits a thought experiment in word substitution: If a federal court had ruled that the George W. Bush Administration violated the Constitution by giving tens of billions of dollars to—let’s pick a company at random here—Halliburton, do you think the press would be more focused on the violation of the rule of law and the unconstitutional payments, or on the chaos that would result if those payments to Halliburton suddenly ceased? If you think the latter, I’ve got some land I want to sell you.

If you’re still unconvinced that reporters are in the tank for Obamacare—or at minimum guilty of significant, and quite selective, double standards when it comes to their constitutional outrage—consider this recent Politico piece about a Donald Trump tweet threatening to change libel laws:

Trump’s comments on libel, coupled with his regular attacks on reporters and news organizations, have alarmed First Amendment advocates and his critics, who warned over the course of the campaign that his posture toward news organizations revealed a lack of respect for the role a free press plays in a democracy.

This high-minded rhetoric came one paragraph after Politico, citing various legal experts, pointed out “that there are virtually no steps within the President’s power to ‘open up libel laws,’ as Trump has suggested.”

When President Trump makes an empty threat against the press—one that he has no power to follow through on—the media piles on with all manner of self-righteous indignation about the integrity of the First Amendment and undermining democracy.

But when a federal judge rules that President Obama violated (not threatened to violate, mind you, but actually violated) the Constitution by paying insurers tens of billions of dollars, the media focuses largely on how remedying that violation will impact the health care law. They seem to care more about protecting Obamacare than protecting the Constitution. Is it any wonder why people boo the press?

Spare Me Your Self-Righteousness

Within that double standard lies the major problem: the presumption that Obamacare is “too big to fail,” irrespective of whether or not the Obama Administration’s payments to insurers violated the Constitution. Some could be forgiven for thinking that the press coverage provides a disturbing lesson to future Presidents: If you violate the Constitution long enough and badly enough, it will become a norm, such that people will expect future leaders to accommodate the violation.

To all those reporters worried about President Trump’s attacks on reporters, I’ll simply posit that the Constitution is a binary choice: You either support it—all of it, even or especially the portions you find inconvenient—or you don’t. If you want the public to care about the Trump Administration’s stance towards the First Amendment, then it might be wise to give a damn about the other portions of the Constitution too.

This post was originally published at The Federalist.

Five Questions About This Week’s “Repeal-and-Replace” Developments

At a Thursday morning press conference, Speaker Ryan and House leaders unveiled amendment language providing an additional $15 billion in funding for “invisible high risk pools,” which the House Rules Committee was scheduled to consider Thursday afternoon. That amendment was released following several days of conversations, but no bill text, surrounding state waivers for some (or all—reports have varied on this front) of Obamacare’s “Big Four” regulations—guaranteed issue, community rating, essential health benefits, and actuarial value. Theoretically, states could use the risk pool funds to subsidize the costs of individuals with pre-existing conditions, should they decide to waive existing Obamacare regulations regarding same.

Given these developments regarding risk pools and waivers and regulations (oh my!), it’s worth posing several key questions about the still-fluid discussions:

Do Republicans believe in limited executive authority, or not?

The text of the amendment regarding risk pool funding states that the Administrator of the Centers for Medicare and Medicaid Services (CMS) “shall establish…parameters for the operation of the program consistent with this section.”

That’s essentially all the guidance given to CMS to administer a $15 billion program. Following consultations with stakeholders—the text requires such discussions, but doesn’t necessarily require CMS to listen to stakeholder input—the Administration can define eligible individuals, the standards for qualification for the pools (both voluntary or automatic), the percentage of insurance premiums paid into the program, and the attachment points for insurers to receive payments from the program.

This extremely broad language raises several potential concerns:

  • Health and Human Services Secretary Tom Price has previously cited the number of references to “the Secretary shall” or “the Secretary may” in Obamacare as showing his ability to modify, change, or otherwise undermine the law. Republicans who give such a broad grant of authority to the executive would allow a future Democrat Administration to return the favor.
  • Nothing in the amendment text directs funding towards the states that actually utilize the waiver process being discussed. In other words, states that opt-out of the Obamacare regulations, and wish to utilize the funds to help individuals with pre-existing conditions affected by same, could lose out on funding to those states that retain all of the Obamacare regulations.
  • The wide executive authority does little to preclude arbitrary decisions by the executive. If the Administration wants to “come after” a state or an insurer, this broad grant of power may give the Administration the ability to do so, by limiting their ability to claim program funds.

As I have previously written, some conservatives may believe that the answer to Barack Obama’s executive unilateralism is not executive unilateralism from a Republican Administration. Such a broad grant of authority to the executive in the risk pool program undermines that principle, and ultimately Congress’ Article I constitutional power.

Do Republicans believe in federalism, or not?

Section (c)(3) of the amendment text allows states to operate risk pools in their respective states, beginning in 2020. However, the text also states that the parameters under which those state pools will operate will be set at the federal level by CMS. Some may find it slightly incongruous that, even as Congress debates allowing states to opt-out of some of Obamacare’s regulations, it wants to retain control of this new pot of money at the federal level, albeit while letting states implement the federally-defined standards.

How is the new funding for “invisible high risk pools” substantively different from Obamacare’s reinsurance program?

Section (d)(5) of the amendment text requires CMS to establish “the dollar amount of claims for eligible individuals after which the program will provide payments to health insurance issuers and the proportion of such claims above such dollar amount that the program will pay.”

The amendment language echoes Section 1341(b)(2) of Obamacare, which required the Administration to establish payments to insurers for Obamacare’s reinsurance program. That existing reinsurance mechanism, like the proposed amendment text, has attachment points (an amount at which reinsurance kicks in) and co-insurance (health insurers will pay a certain percentage of claims above the attachment point, while the program funding will pay a certain percentage).

Congressional leadership previously called the $20 billion in Obamacare reinsurance funding a “bailout” and “corporate welfare.” But the $15 billion in funding under the proposed amendment echoes the Obamacare mechanism—only with more details missing and less oversight. Why do Republicans now support a program suspiciously similar to one that they previously opposed?

Why do conservatives believe any states will actually apply for regulatory waivers?

The number of states that have repealed Obamacare’s Medicaid expansion thus far is a nice round figure: Zero. Given this experience, it’s worth asking whether any state would actually take Washington up on its offer to provide regulatory relief—particularly because Congress could decide to repeal all the regulations outright, but thus far has chosen not to do so.

Moreover, if Congress places additional conditions on these waivers, as some Members have discussed, even states that want to apply for them may not qualify. Obamacare already has a waiver process under which states can waive some of the law’s regulations—including the essential health benefits and actuarial value (but not guaranteed issue and community rating). However, those waiver requirements are so strict that no states have applied for these types of waivers—Health Savings Account and other consumer-directed health care options likely do not meet the law’s criteria. If the House plan includes similarly strict criteria, the waivers will have little meaning.

Will the Administration actively encourage states to apply for regulatory waivers?

President Trump has previously stated that he wants to keep Obamacare’s pre-existing conditions provisions in place. Those statements raise questions about how exactly the Administration would implement a program seeking to waive those very protections. Would the Administration actively encourage states to apply? If so, why won’t the Administration support repealing those provisions outright—rather than requiring states to come to the federal government to ask permission?

Conversely, if the Administration wishes to discourage states from using this waiver program, it has levers to do so. As noted above, the current amendment language gives the Administration very broad leeway regarding the $15 billion risk pool program—such that the Administration could potentially deny funds to states that move to waive portions of the Obamacare regulations.

The combination of the broad grant of authority to the executive, coupled with the President’s prior comments wanting to keep Obamacare’s pre-existing conditions provision, could lead some conservatives to question whether or not they are being led into a potential “bait-and-switch” scenario, whereby the regulatory flexibility promised prior to the bill’s passage suddenly disappears upon enactment.

This post was 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.

“What went wrong?” poses an erroneous query about this bill. The question is not why it failed, but why anyone thought it might succeed. Virtually all of the premises upon which the legislation was based proved faulty, and were easily proven faulty prior to its introduction. There’s little need for Monday-morning quarterbacking if only one can see the flaws in one’s strategy on the Sunday morning prior to the game.

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.

While many stories have focused on Speaker Paul Ryan, some minds might turn instead to one of his predecessors, and an axiom used by the longest-tenured House speaker, Sam Rayburn: “There is no education in the second kick of a mule.” That the outcome seems predictable—indeed, was predicted by many in private conversations—makes it no less painful politically, or personally.

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.

The House’s 2015 reconciliation bill contained so many procedural flaws that Senate Majority Leader Mitch McConnell had to introduce an entirely new substitute version of the legislation. Had he not, the Senate parliamentarian would have advised the Senate to strip the bill of its procedural protection as a reconciliation matter, forcing the House to start its process all over again.

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.

Due to both its procedural quirks and tighter vote margins, it made far more sense for the Senate to initiate legislative action. Yet this year, as in 2015, the House took the lead—and ran into the same procedural problems.

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.

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.

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.

The “Technical” Amendment That Could Affect Millions of Veterans’ Health Coverage

As the House of Representatives steamrolls toward a vote tomorrow on Republicans’ “repeal-and-replace” legislation, lawmakers weighing their vote may wish to consider a few key questions—such as:

  • How did an ostensibly “technical” amendment end up withdrawing refundable tax credits from up to seven million veterans?
  • Does Donald Trump—who released a specific plan early in his campaign to “ensure our veterans get the care they need wherever and whenever they need it”—realize the potentially broad-ranging effects of this “technical” amendment on veterans?
  • And what other supposedly “technical” language will turn out to have unintended consequences should House Republicans rush to put this legislation on the statute books without fully digesting its effects?

Conservatives have their own (justifiable) concerns with the underlying substance of the new tax credit entitlement, but this “technical” amendment provides a microcosm of the problems that result when legislators rush to judgment based on arbitrary deadlines. Just as with Obamacare itself, lawmakers may find they have to pass the bill to find out what’s in it.

The Issue

As I explained last week, the original House bill had a potentially fatal flaw in its tax credit “firewall.” Specifically, language designed to ensure individuals with other forms of health insurance—such as Medicare, Medicaid, Tricare, and VA coverage—did not receive the credit touched upon other committees of jurisdiction in the Senate, such as Armed Services and Veterans Affairs. Under budget reconciliation procedures, a committee—the Senate Finance Committee, in this instance—cannot include subject matter outside its own jurisdiction; doing so could cause the entire bill to lose its procedural privilege as a reconciliation measure.

Due to these procedural concerns, the House released a technical amendment late Monday evening that, according to a summary, “includes the technical restructuring of the new tax credit made as a result of Senate guidance to maintain the privilege of the bill.” However, in restructuring the credit, staff—whether by accident or design—ended up eliminating eligibility for an entire class of veterans.

Pages 97-98 of the original House bill included specific language stating that veterans eligible for, but not enrolled in, VA health benefits would qualify for the credit:

‘‘(2) SPECIAL RULE WITH RESPECT TO VETERANS HEALTH PROGRAMS.—In the case of other specified coverage described in paragraph (1)(F) [i.e., VA coverage], an individual shall not be treated as eligible for such coverage unless such individual is enrolled in such coverage.

However, the “technical” amendment released Monday evening strikes that language. The replacement language, on pages 9-10 of the amendment, states that individuals qualify for the credit only if they are “not eligible for” other types of coverage, including VA coverage:

‘‘(2) The individual is not eligible for—
‘‘(A) coverage under a group health plan (within the meaning of section 5000(b)(1)) other than coverage under a plan substantially all of the coverage of which is of excepted benefits described in section 9832(c), or
‘‘(B) coverage described in section 5000A(f)(1)(A) [which includes VA coverage]

The revised language therefore means that individuals eligible for, but not enrolled in, VA coverage cannot qualify for the new insurance subsidies created by the bill.

The Impact

The most recent estimates suggest about 9.1 million individuals are enrolled in VA health programs. However, a 2014 Congressional Budget Office score of veterans’ choice legislation concluded that “about 8 million [veterans] qualify to enroll in VA’s health system but have not enrolled.” Subtracting for VA enrollment gains since that CBO score leaves approximately seven million veterans eligible for, but not enrolled in, VA health programs, and thus potentially affected by the House’s “technical” change.

At least some of those seven million veterans eligible for but not enrolled in VA health programs may not qualify for the House’s new insurance subsidies for other reasons. For instance, some of those seven million veterans may have other forms of health coverage—from a current or former employer, Medicare, Tricare, etc.—that would render them ineligible for the credit regardless of their VA status.

However, given a universe of seven million veterans potentially affected by the changes, doubtless many veterans would be actually affected by the House language. And as a policy matter, it is unclear why the revised House language, by cutting off access to the credit for those eligible for but not enrolled in VA coverage, seeks to direct more people into a government-run VA health system still suffering from the effects of the wait time reporting scandal.

The Fallout

It is possible, and perhaps even probable, that this “technical” change—which in reality could affect millions of veterans—was entirely unintentional in nature, caused by harried, sleep-deprived congressional staff rushing to complete work on the bill. But it raises the obvious question: What other changes, tweaks, errors, or other unintended consequences might such rushed legislation contain?

We’ve seen this show before. In 2010, the text of Obamacare as passed failed to make clear that VA and Tricare coverage qualified as minimum benefits—making soldiers and veterans subject to taxes for violating the law’s individual mandate. Because of that drafting error, Republicans forced a vote on exempting soldiers and veterans from the mandate, before the issue was eventually resolved.

This week’s “technical” amendment, with potentially wide-reaching implications, reprises the errors of Obamacare, and demonstrates the dangers of House Republicans’ rushed strategy. With a highly compressed timetable seemingly dictating the entire process, unforced errors seem almost inevitable. President Trump has made clear his desire to move to tax reform as soon as possible—but how would he defend disqualifying up to seven million veterans from the bill’s tax credits?

Once finding out about the effects of this “technical” amendment, House leadership will quite probably move to change it—and fast. But what about the other “technical” problems lurking in the bill? Given the rushed process, doubtless more of these “bugs” and “glitches” exist. Who will find them—and when? What if they aren’t found until after the measure’s enactment, and then can’t be fixed legislatively? Lawmakers should think long and hard about these unintended consequences before they vote to assume responsibility for them for a long time to come.

This post was published at The Federalist.

Despite Trump Intervention, House GOP Still Not Repealing Obamacare

President Trump bragged that he won over many new converts to House Republicans’ “repeal-and-replace” legislation following a Friday meeting with Members of Congress at the White House. After the meeting, House leaders scheduled a vote for later this week on the measure, and introduced provisions implementing the agreement in a managers amendment package late last night.

So what tweaks did Trump promise to Congress members on Friday—and will they improve or detract from the legislation itself?

What Changes Were Announced After The Meeting?

The agreement in principle with the House Members includes several components:

  1. Abortion restrictions for Health Savings Accounts (HSAs): RSC Chairman Mark Walker (R-NC) and other pro-life Members asked for further restrictions on abortion funding. As a result, the agreement eliminates language allowing unspent tax credit dollars to get transferred into Health Savings Accounts, for fear those taxpayer dollars moved into HSAs could be used to cover abortions. However, as I noted recently, many of the other restrictions on taxpayer funding of abortion could well get stripped in the Senate, consistent with past precedent indicating that pro-life riders are incidental in their budgetary impact, and thus subject to the Senate’s “Byrd rule” preventing their inclusion on budget reconciliation.
  2. Prohibiting more states from expanding Medicaid: While this provision has been sold as ensuring no new states would expand Medicaid to able-bodied people, it does not do so—it only ensures that states that decide to expand after March 1 will receive the regular federal match levels for their able-bodied populations (i.e., not the 90-95 percent enhanced match). Neither the bill nor the managers package permanently ends the expansion to able-bodied adults—which the 2015/2016 reconciliation bill did—or ends the enhanced federal match for expansion states until January 2020, nearly three years from now.
  3. Medicaid work requirements: The agreement permits—but does not require—states to impose work requirements, a point of contention between some states and the Obama Administration. However, non-expansion states will have comparatively few beneficiaries on which to impose such requirements. Medicaid programs in non-expansion states consist largely of pregnant women, children, and elderly or disabled beneficiaries, very few of whom would qualify for the work requirements in the first place.

Medicaid: Block Grant vs. Per Capita Cap

The fourth component—allowing states to take their federal payments from a reformed Medicaid program as a block grant, instead of a per capita cap—warrants greater examination. In general, per capita caps have been viewed as a compromise between the current Medicaid program and a straight block grant fixed allotment. In the 1994-95 budget showdown with then-House Speaker Newt Gingrich, President Clinton proposed per capita caps for Medicaid as an alternative to the Republican House’s block grant plan.

A block grant and a per capita cap differ primarily in how the two handle fluctuations in enrollment: the latter adjusts federal matching funds to reflect changes in enrollment, whereas the former does not. Supporters of per capita caps often cite economic recessions as the rationale for considering their approach superior to block grants. Medicaid’s counter-cyclical nature—more people enroll during economic downturns, after losing employer-sponsored coverage—coupled with states’ balanced budget requirements, means that during recessions, states often contend with a “double whammy” of rising Medicaid rolls and declining tax revenues. Medicaid per capita caps would mitigate the effects of the first variable, giving states more latitude during tough economic times.

On the other hand, per capita caps give states a greater incentive to enroll more beneficiaries—and a greater disincentive to scrutinize potentially fraudulent applicants—because every new enrollee means greater revenue for the state (albeit capped per beneficiary).  Most notably, the per capita caps in the House bill grow at a faster rate than the block grant proposal in the managers package—per capita caps would grow at medical inflation, whereas block grants would grow with general inflation.

In general, while conservatives would support block grants to reduce the federal Medicaid commitment and encourage state economies, it remains unlikely that many states would embrace them—because it is not in their fiscal self-interest to do so,because it is not in their fiscal self-interest to do so, particularly given the disparity in the inflation measures in the House language. If true, this language may end up meaning very little.

Will This Be A Good Deal For Americans?

If Medicaid reforms comprised the entirety of the bill, they would likely be worth supporting, despite the complexities associated with the debate between expansion and non-expansion states. The move to per capita caps represents significant entitlement reform, and is consistent with the principles of federalism.

As a repeal bill, however, the measure as currently constituted falls short. The agreement on Friday made zero progress on repealing any other insurance benefit mandates in Obamacare—the primary drivers of higher premiums under the law. That’s one reason why CBO believes premiums will actually rise by 15-20 percent over the next two years. House leadership claims that the mandates must remain in place due to the procedural strictures of budget reconciliation in the Senate. But the inconsistencies in their bill—which repeals one of the mandates, modifies others, and leaves most others fully intact—contradict that rhetoric.

Moreover, by modifying rather than repealing some of the Obamacare mandates, the bill preserves the Washington-centered regulatory structure created by the law, undermining federalism and Tenth Amendment principles.

AHCA Leaves Much To Be Desired

From a fiscal standpoint generally, the bill also leaves much to be desired. It creates at least one new entitlement: refundable tax credits to purchase health insurance. It may create a second new entitlement, this one for insurance companies in the form of a “Patient and State Stability Fund,” totaling $100 billion over 10 years, which insurers will no doubt attempt to renew in a decade’s time. (The bill also does not repeal Obamacare’s risk corridor and reinsurance bailout provisions, allowing them to continue to disburse billions of dollars in claims owed to insurers.)

While CBO claimed the bill would reduce the deficit by $337 billion, the managers amendment goes to great lengths to spend all of that supposed savings—accelerating the repeal of Obamacare’s tax increases, and increasing the inflation measure for some of the per capita caps.

Moreover, it remains unclear whether the “transition” from Obamacare to the new tax credit regime will take place in January 2020 as scheduled. The CBO tables analyzing the bill’s fiscal impact clearly delineated how most of the measure’s spending reductions will hit in fiscal years 2020 and 2021—right in the middle of the presidential election cycle.

AHCA Doesn’t Fully ‘Repeal And Replace’

If President Trump or Republicans in Congress flinch on letting the transition take place as scheduled, the bill’s supposed deficit savings will disappear rapidly. Instead, conservatives could be left with “Obamacare Max”—the House bill actually expands and extends Obamacare insurance subsidies for 2018 and 2019—in perpetuity.

The bill’s lack of full repeal, the premium increases scheduled to take effect over the next two years, and the spending “cliff” hitting in 2020 leave the bill with little natural political constituency to support it. The way in which the bill falls short of repeal—by keeping Medicaid expansion, keeping Obamacare’s insurance regulations, and creating a new entitlement—makes it difficult to support from a policy perspective as well. Friday’s meeting may have brought new concessions at the margins, but it did not alter the bill’s fundamental structure, leaving it short of the repeal conservatives had been promised—and voted for mere months ago.

This post was originally published at The Federalist.