Republicans Are Still Talking About Obamacare Repeal. They Could Be Talking About Obamacare Reform.

In the summer of 2013, Sen. Ted
Cruz (R-Tx.) called repeatedly for Republicans to defund Obamacare
through the budget process and an upcoming continuing resolution.
Cruz insisted that the health law had to be defunded through the
continuing resolution because, otherwise, it would be impossible to
repeal. All President Obama had to do, Cruz argued, was wait it
out; on January 1, 2014, the law’s health insurance subsidies would
kick in, and the millions of Americans would become dependent on
the law for health coverage.

Obama “knows that in modern times, no major entitlement has ever
been implemented and then unwound,” Cruz
told
The Daily Caller in August of 2013, later noting
that “no Republican has effectively refuted that premise.” This was
what gave Cruz his urgency: On January 1, 2014, Obamacare would
become essentially impossible to repeal.

Cruz’s call resulted in an extended budget showdown and a
three-week government shutdown. It was politically ill-advised,
and, as critics predicted, it did nothing to stop Obamacare (the
botched rollout of the exchanges did far more political damage to
the law than the shutdown).

But his underlying idea that January 2014 represented a
point-of-no-return for the health law, after which it would be
largely cemented in place, wasn’t crazy. And yet, more than a year
later, Cruz is still promising to repeal Obamacare—”every blessed
word” of it, as he sometimes
says
—something he admitted would become all but impossible
barely more than a year ago.

Cruz isn’t the only Republican legislator who continues to
aggressively advocate repeal despite understanding its diminished
prospects. Sen. Mitch McConnell (Ky.), the Republican Senate
Minority Leader, often says that Obamacare should be repealed “root
and branch.” But McConnell has also undercut that message by saying
that Kentucky residents covered by Medicaid under the health law
are
unlikely to lose their coverage
. In a debate last night, he

said
that the state could keep its self-administered Obamacare
insurance exchange, Kynect, which McConnell has previously
described as “unconnected” to the larger issue of Obamacare
repeal.

The most charitable way to describe McConnell’s remarks is as
evasive; at minimum, he is heavily downplaying the ways in which
Kentucky’s exchange, which, far from being “unconnected,” was built
using federal grants provided under Obamacare, and which offers
subsidized coverage funded federally through the health law, would
function differently without Obamacare in place. McConnell surely
knows this, which is why his remarks are better characterized as
intentionally misleading.

But the inherent contradiction in those statements is telling
anyway. What’s tripping up McConnell (and, to a lesser degree,
several other Republican candidates) is the problem described by
Cruz last year: With Obamacare’s coverage expansion in place, and
so many people relying on it for insurance, it has become nearly
impossible to repeal. McConnell seems to want to have it both ways,
repealing the law, but not his constituents’ access or
coverage.

Yet as a
report by Politico’s David Nather suggests
, despite
continuing public calls for repeal, many Republicans now
acknowledge privately that prospects for repeal are slim. “There is
a disconnect between the private dialogue and the public dialogue,”
on GOP health policy expert tells Politico.

But party politicians are still struggling to settle on a
strategy about what to do next. There are several conservative
replacement plans on offer, should the party choose to rally behind
them, but all assume Obamacare is repealed first, and most focus on
tax credit systems that would significantly alter the shape of the
American health insurance market. The problem, though, is that the
GOP has long criticized Obamacare for being too disruptive; with
any of these plans, Republicans would be opening themselves up to a
similar charge. 

As it happens, these are exactly the problems that The Manhattan
Institute’s Avik Roy has attempted to solve with his recently
released health care plan
, which he pitches as a way of
“transcending Obamacare.” It’s meant to overcome the law’s flaws in
a way that does not require wholesale repeal. 

“Disruption is extremely important to the average American,” Roy
said at a private dinner last week. He urges a cautious approach.
“What we have to do is be very gradual” in transforming the
system. 

Roy’s plan is designed to be “maximally plausible,” both in its
policy reforms and its politics. The basic idea is to keep
Obamacare’s exchanges, as well as some of its popular insurance
reforms, but deregulate those exchanges to allow for greater
insurance plan flexibility, end the individual mandate, and—in the
plan’s boldest move—slowly transition Medicare and Medicaid into
the exchanges as well.

In some sense it is a trade: accepting Obamacare, in its broad
strokes, but using it as a vehicle to reform the nation’s two big
health entitlements, which, Roy notes, are responsible for the
biggest portion of the nation’s long-term fiscal problems.

Roy argues that the plan would mean better coverage for poor
Medicaid beneficiaries, who would have access to privately
subsidized coverage, as well as more options for seniors, who would
no longer be forced to shift to Medicare at 65 or risk losing
Social Security benefits. 

In the long term, the transition would produce enormous
budgetary savings—an estimated $8 trillion in deficit reduction
over 30 years—by transforming Medicare, which now covers seniors
regardless of their income, into a means-tested system for the
middle class.

With fewer rules governing their products and no mandate
forcing people to buy, insurers would have more incentive and more
opportunity to compete and innovate. And the nation’s overall
coverage levels would actually
increase by
12.1 million relative to Obamacare, according to estimates produced
by University of Minnesota health economist Stephen T.
Parente.

The political argument, meanwhile, could give Republicans the
advantage. Yes, Democrats might object to shifting seniors onto the
exchanges. But that would mean criticizing an updated version of
Obamacare, and explaining why exchange-based coverage was great for
64 year-olds but not for 65 or 68 year-olds. Republicans could say
that “this is the program that you all”—Democrats—”installed,” Roy
says. Part of the idea is that it “puts Democrats on the
defensive.” 

The plan is not without its own potential challenges. Even
though today’s seniors could keep their existing coverage, it might
be described as gutting the program, which is quite popular. Roy
responds that the same charge was leveled at Mitt Romney and Paul
Ryan during the 2012 presidential election, and yet seniors were
the one group that voted decisively in favor of the GOP ticket.
Some higher-income seniors would see their premiums rise, but Roy
says these hikes could be mitigated by a transitional fund.

More generally, it would require Republicans to level with
voters about the likelihood of repeal, and take an affirmative
reform position on health care, an issue the party has long been
content to ignore. “Who benefits from the status quo?
Employed and retired people,” Roy says, noting that these are the
same people who tend to vote Republican. Thanks to Medicare and the
tax break for employer insurance, two massive budget items that
subsidize health coverage, “it’s actually Republican voters who are
on the dole,” he says.
 

One possible advantage for GOP legislators is that it would help
smooth out some of the contradictions from politicians like
McConnell. Under Roy’s plan, Kentucky could keep its exchange, and
residents could keep their coverage. And while the health law would
not be repealed root and branch, it would be significantly
reformed, which is something that even many Democrats say they
want. Like many Democratic candidates this year, McConnell’s
opponent, Alison Grimes, has promised to fix the law but provided
almost no specifics of how she would do so. Keeping the law in
place but working to improve it polls well, and Roy’s plan could
plausibly provide specific fixes. 

Essentially, Roy’s plan would take Ted Cruz at his word when the
Senator argued last year that unwinding a major entitlement after
its benefits kicked in was practically impossible. But rather than
continue to call for Obamacare’s end, as Cruz has done, Roy would
attempt to craft a new beginning, one that, yes, leaves some of
Obamacare’s words in place, but that on the whole, he says,
“expands people’s choices rather than takes them away.” No, it
wouldn’t be repeal, but with its overhaul of Medicaid and Medicare,
it might be something better: the system-wide, root-and-branch
reform we’ve needed since long before Obamacare became
law. 

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