The GOP’s Wish List for Fixing Obamacare

If the Supreme Court rules against the administration, Republicans will attempt to use their leverage to make some big changes.

Sen. John Barrasso (R-WY) talks to reporters following the weekly Senate Republican policy luncheon at the U.S. Captiol, March 17, 2015.
National Journal
June 16, 2015, 4 p.m.

If the Su­preme Court in­val­id­ates Obama­care’s sub­sidies in 30-plus states, any solu­tion will come down to what each side is will­ing to give up to get the fin­an­cial aid flow­ing again and avert dis­aster for more than 6 mil­lion Amer­ic­ans.

Pres­id­ent Obama thinks the an­swer is easy: Au­thor­ize the tax cred­its in every state — quick and clean. “Con­gress could fix this whole thing with a one-sen­tence pro­vi­sion,” he said re­cently.

But that isn’t go­ing to hap­pen.

“Re­pub­lic­ans aren’t in­ter­ested in a one-sen­tence fix un­less that sen­tence is, ‘Obama­care is re­pealed,’ ” Sen. John Bar­rasso, the No. 4 Re­pub­lic­an, said on the floor the next day. But that isn’t hap­pen­ing either.

Re­pub­lic­ans hold a lot of the cards. They con­trol Con­gress, and they don’t sup­port the law any­way. But they’re also wary of tak­ing the blame for mil­lions of people los­ing health cov­er­age be­cause of a law­suit they sup­port. So they’ll likely agree to fix it, but they’ll want to ex­tract some con­ces­sions, too.

Which means the big ques­tion is: What can they ac­tu­ally get?

Prob­ably

Med­ic­al-device-tax re­peal

The low­est-hanging of low-hanging fruit, the device tax might well get re­pealed on its own, or as part of some oth­er com­prom­ise, even if the ad­min­is­tra­tion wins in the King v. Bur­well case. All things con­sidered, it’s not that much money. It’s not in­ter­twined with any oth­er part of the Af­ford­able Care Act. And, des­pite or be­cause of those factors, it has be­come the top re­peal tar­get for con­gres­sion­al Re­pub­lic­ans.

Em­ploy­er-man­date re­peal

If the goal is to ac­tu­ally pass a fix, each pos­sible bar­gain­ing chip needs to check three boxes: It needs to be sig­ni­fic­ant enough to count as a real con­ces­sion for Re­pub­lic­ans; it shouldn’t di­vide Re­pub­lic­ans any more than they already are; and it can’t be a deal-break­er for Demo­crats.

The em­ploy­er man­date hits the tri­fecta.

Every Re­pub­lic­an could sup­port re­peal­ing the em­ploy­er man­date, or at least weak­en­ing it sub­stan­tially. Real­ist­ic­ally, Obama and Obama­care can live without it (some lib­er­al policy wonks would hon­estly prefer to live without it). But its out­sized polit­ic­al weight would give Re­pub­lic­ans a lot to claim cred­it for. Un­like the med­ic­al-device tax, the em­ploy­er man­date is big enough that Obama wouldn’t agree to a stand-alone re­peal bill, and pop­u­list Demo­crats would likely put up a fight in Con­gress — just enough res­ist­ance to make Re­pub­lic­ans’ vic­tory count (and, by ex­ten­sion, to help build sup­port among re­luct­ant con­ser­vat­ives).

Maybe

IPAB re­peal

The In­de­pend­ent Pay­ment Ad­vis­ory Board has been an out­sized part of the ACA de­bate, even though it hasn’t had to do any­thing yet. Con­ceived as a way to keep Medi­care costs from spiral­ing out of con­trol, it was quickly labeled a “death pan­el” by its op­pon­ents — des­pite all fact-check­ing to the con­trary — and Re­pub­lic­an lead­ers were still de­rid­ing it as a “de facto ra­tion­ing body” as re­cently as this week. The House is already set to vote on re­peal­ing it be­fore the Court rul­ing comes down, and it’s easy to ima­gine them pack­aging it in­to a sub­sidy-restor­ing plan.

The board is sup­posed to sug­gest Medi­care re­forms if costs are grow­ing too quickly. But thus far, it hasn’t been ne­ces­sary. The Con­gres­sion­al Budget Of­fice has said re­peal­ing IPAB would add to the de­fi­cit, but that hasn’t stopped con­ser­vat­ives from pur­su­ing its de­mise.

Lib­er­als think the board will be use­ful and is bet­ter than the al­tern­at­ives for pur­su­ing Medi­care sav­ings — and it might even­tu­ally have a lot of work to do if Medi­care spend­ing in­creases as ex­pec­ted over the next few dec­ades. But it’s pos­sible, if far from cer­tain, that Obama would be will­ing to let it go to se­cure the sub­sidies.

A dif­fer­ent kind of sub­sidy

If the Court strikes down Obama­care’s tax sub­sidies, con­gres­sion­al Re­pub­lic­ans wouldn’t simply face a bin­ary choice between fully restor­ing those pay­ments or let­ting chaos reign in states’ in­sur­ance mar­kets. Sev­er­al law­makers have already floated one middle-ground op­tion: fully restor­ing the sub­sidies, but only tem­por­ar­ily. There are plenty more. And some of them could bend Obama­care in a much more con­ser­vat­ive dir­ec­tion, without re­peal­ing it — if con­ser­vat­ives are will­ing to ad­mit such a thing is pos­sible.

Con­sider the plan from Sens. Richard Burr and Or­rin Hatch. It would roll back the num­ber of people eli­gible for fin­an­cial as­sist­ance. Un­der Obama­care, it’s any­one mak­ing up to four times the fed­er­al poverty lim­it; Burr and Hatch’s plan would cap it at three times the poverty line. Poorer people also wouldn’t get big­ger sub­sidies; the size of your tax cred­it would be based on age, not in­come. And the fin­an­cial help would come in a fixed dol­lar amount, where­as Obama­care’s sub­sidies are tied to the cost of in­sur­ance.

All those changes to­geth­er might be too much for Demo­crats to swal­low, but there’s a lot for Re­pub­lic­ans to work with in there — if they can agree to ac­cept Obama­care as the frame­work with­in which they have to work. And that’s a big “if.” Modi­fy­ing the law’s sub­sidy struc­ture could be a big policy win for Re­pub­lic­ans, but some con­ser­vat­ives would surely com­plain that such an ap­proach as­sumes Obama­care is here to stay.

Fugged­aboutit

In­di­vidu­al-man­date re­peal

Again, for all the em­phas­is on Re­pub­lic­ans’ in­tern­al dis­agree­ments, Obama would not be en­ter­ing this ne­go­ti­ation in a po­s­i­tion of strength. If he wants his sig­na­ture do­mest­ic achieve­ment to live on, he’d have re­mark­ably little power to draw red lines with the Re­pub­lic­an Con­gress. But the in­di­vidu­al man­date would prob­ably be one. The con­ces­sion Re­pub­lic­ans most want Obama to make is one he just can’t give them.

The in­di­vidu­al man­date, the sub­sidies in ques­tion be­fore the Su­preme Court, and the re­quire­ment that in­surers cov­er preex­ist­ing con­di­tions form a “three-legged stool.” If the Su­preme Court destabil­izes one of those legs, don’t ex­pect the White House to re­spond by agree­ing to knock out an­oth­er one.

The GOP cer­tainly could vote on man­date re­peal, and there would be an ob­vi­ous polit­ic­al up­side to do­ing so. But if the ul­ti­mate goal is to get a fix through Con­gress and across the pres­id­ent’s desk, the in­di­vidu­al man­date prob­ably can’t be part of it.

Full re­peal

For ob­vi­ous reas­ons, Obama­care at the very worst con­tinu­ing un­altered in a dozen or so states, in­clud­ing big ones like Cali­for­nia and New York, is bet­ter for Obama’s leg­acy than un­do­ing the law al­to­geth­er. Re­peal is nev­er go­ing to hap­pen while he’s in the White House.

The opt-out plans pro­posed in the House and Sen­ate — let­ting states choose to do away with al­most all of Obama­care’s cent­ral in­sur­ance pro­vi­sions — are likely out for the same reas­ons. They would amount to re­peal­ing the law in more than half the states.

But some of the most con­ser­vat­ive mem­bers are still go­ing to ad­voc­ate for an ab­so­lut­ist po­s­i­tion. Part of the chal­lenge for Re­pub­lic­an lead­ers will be con­vin­cing some of their caucus to ac­cept any­thing less.

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