Two Senators Want a Bipartisan Deal to Prop Up Obamacare

After President Trump announced last week that he would be cutting off payment of a set of insurer subsidies under Obamacare, potentially disrupting the health law’s government-run insurance exchanges, at least in the short term, there was some discussion about whether the move would prompt Congress to finally act.

After all, the Trump administration, in announcing the end of the payments, cited a court decision that the payments had not been appropriated by Congress and thus were illegal. Perhaps this would be the cue for the legislative branch to step in.

Yesterday evening, Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), announced that they had reached a bipartisan agreement to officially appropriate the insurer subsidy payments that Trump cut off, while also providing money to advertise the law that the administration slashed, and some additional flexibility for states to seek implementation waivers.

Technically, it’s a temporary deal, lasting just two years. But if passed, it would almost certainly become quasi-permanent. For all intents and purposes, it is a deal that would prop up Obamacare for the foreseeable future.

The deal has already encountered resistance, and it may never become law. Yet regardless of the outcome, it shows the limits of Republican thinking when it comes to Obamacare, and the hurdles created by a president who does not understand the policy ideas he is tasked with ushering into law.

The deal is structured as a bipartisan trade. Democrats would get two years of funding for the health law’s cost-sharing reduction (CSR) subsidies—about $7 billion a year in payments to insurers in order to offset the cost of providing expanded benefits to individuals with lower incomes who buy insurance on the exchanges—plus the restoration of an additional $106 million in promotional funding for the health law that Trump also cut off recently.

Republicans, in turn, have negotiated a little more wiggle room for states that want to try novel implementations of Obamacare, as well an agreement to encourage the sale of health insurance across state lines. Individuals over the age of 30 would also be allowed to buy less expensive catastrophic plans on the exchanges without claiming financial hardship.

In theory, then, the deal provides more funding and certainty in exchange for more flexibility. But while the funding would be real, the flexibility would mostly be meaningless.

The changes to Obamacare’s state waiver process would make almost no difference in practice. The catastrophic plans would make cheaper plans that provide less coverage available for some people, but all of those plans would still be subject to Obamacare’s insurance regulations. The provision allowing for the sale of health insurance across state lines merely asks the administration to issue rules regarding a provision for state compacts that already exists in Obamacare. The restored outreach funding might make the spending essentially mandatory by removing administrative discretion.

The two-year window, meanwhile, would merely set up a legislative cliff, at which point Congress would be pressured to further extend payment of the insurer subsidies. Once appropriated, it is hard to imagine to imagine that any future Congress would decide to end the payments.

The deal, then, is best understood as a bipartisan agreement to prop up Obamacare’s exchanges while attempting to provide Republicans with some amount of political cover. That this sort of deal is being proposed at all shows the smallness of Republican thinking on Obamacare. This is the corner that the party has backed itself into. If passed, it would effectively represent a total capitulation.

Granted, even though there are reportedly multiple co-sponsors on both sides of the aisle, it is not at all clear that GOP leadership is interested in pursuing the deal. “We haven’t had a chance to think about the way forward yet,” Senate Majority Leader Mitch McConnell said yesterday when asked about the proposal. Speaker of the House Paul Ryan said today that he opposes it.

If the deal does go through, it will be with the backing of President Trump. But the signals from the Oval Office so far have been contradictory. Trump initially said yesterday that he viewed the agreement as a “short-term solution” that will “get us over this immediate hump,” which sounds like support.

This morning, however, Trump muddled his position, tweeting that although he supported Sen. Alexander and the “process” he “can never support bailing out” insurance companies who have participated in Obamacare.

I am supportive of Lamar as a person & also of the process, but I can never support bailing out ins co’s who have made a fortune w/ O’Care.

— Donald J. Trump (@realDonaldTrump) October 18, 2017

It’s hard to tell exactly what this means.

On the one hand, it suggests that Trump, who would have the opportunity to veto any such legislation that came to his desk, would oppose any bill that funded Obamacare’s CSR payments. On the other hand, it’s hard to see how Trump can support the Murray-Alexander “process” while opposing CSR funding, because that process has largely been an effort to secure some level of bipartisan support for funding Obamacare’s CSRs in an effort to stabilize the exchanges. If Trump supports the process, then he implicitly supports appropriating money to pay the CSRs. Which is it?

All of this is further complicated by Trump’s statement earlier this week declaring that, “Obamacare is finished, it’s dead, it’s gone. . .You shouldn’t even mention it. It’s gone. There is no such thing as Obamacare anymore.” But Obamacare is neither gone nor finished. Most of its spending and regulatory architecture remain in place. And cutting off the CSR funding is likely to cause short-term turbulence in the exchanges, but could end up increasing the number of people insured and subsidized under the law over the next decade.

Republican lawmakers don’t seem clear on Trump’s position either. Asked today about Trump’s views on the CSR bill, Sen. Lindsey Graham (R-S.C.) said only that the president is “evolving.”

Trump’s conflicting signals mean that it is simply not clear what policy outcome the president actually wants from this process. In all likelihood, he does not have a meaningful preference for anything beyond a deal that he can call a political win, which is part of the reason that Republicans ended up in this awkward position to begin with. It’s yet another instance in which Trump’s aversion to understanding basic policy mechanics has gummed up the already difficult process of crafting and passing legislation.

The president may think Obamacare is already dead, but it isn’t. And if Trump eventually signs onto legislation that looks what Sens. Murray and Alexander have outlined, he will be delivering Democrats a deal that puts the law on firmer ground. He will be helping to ensure that Obamacare has a better chance of living forever.