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The Alternative to Obamacare is Tax Cuts for the Wealthy

The Alternative to Obamacare is Tax Cuts for the Wealthy

Last week, I laid out the case over at Political Wire for why Republicans hold all the cards in the coming repeal of Obamacare—and why that makes any kind of serious replacement very unlikely.  

In response, several readers forwarded me this article from Vox, where Robert Laszewski—president of Health Policy and Strategy Associates—lays out just how little Congressional Republicans have thought about what would happen if repeal were delayed for years:

“…the Republicans are being awfully naive. They seem to be ignoring the risks in the transition period, particularly because they need insurance companies to provide insurance during the transition.

Unless we have some miracle, and the exchanges become profitable, why would they stay around for two years? I think Republicans are overlooking this. Medicaid would be fine in the transition; states will continue taking that funding. But for the exchanges, having the subsidies in place isn’t enough. It helps the customer, but why should the insurance company stick around?”

Basically, the argument Laszewski makes is that Congressional Republicans don’t understand just how devastating even a time-delayed repeal will be on insurance markets. Laszewski lays out clearly that the Republicans would need to pass a massive government subsidy (a bailout, some might say) for insurance companies so they can still afford to offer plans in the marketplaces.

What’s odd is that the people who forwarded me this article seemed to think it was evidence that Republicans wouldn’t dare repeal Obamacare without doing the major lifts necessary to prevent these markets from collapsing. In fact, it’s just the opposite: it shows precisely how unlikely those kinds of major lifts are.

Even if you assume Congressional Republicans chicken out to some degree and only do a partial repeal, there are going to be massive unintended consequences. Indeed, once you understand that repeal comes first before any real replacement is developed, the politics are largely baked-in. Congressional Republicans won’t face pressure from their own people to make the system work…they’ll face pressure to not do the even more unpopular things necessary to keep the system from collapsing—such as bailing out insurance companies.

This bears repeating: it’s unpopular to throw people off their healthcare plans, but it’s even more unpopular among Republican primary voters to spend taxpayer money on anything related to healthcare that isn’t Medicare.

And let’s not forget where all the money from repealing Obamacare is going—to fund tax cuts for the wealthy. So any replacement to Obamacare will have to come up with new revenues or cuts elsewhere. What odds do you place on Congress being able to agree on a comprehensive healthcare law after what we saw in 2009 and 2010?

That’s why once repeal happens, the dice are largely cast. Republicans aren’t going to open up the nation’s purse to subsidize the very thing they say is destroying the American economy. And the more they leave Obamacare in place, the more their base is going to go nuts. Lord knows if I were an ambitious Republican officer seeker, I would challenge anyone who didn’t have the courage to repeal all of Obamacare.

And this is why Republicans have so much leverage. They’ll have spent all the money from the outset. Commentators who think Democrats can just stonewall this problem away are probably being overly optimistic. As Brian Beutler at the New Republic notes, Democrats in theory could just decide not to play ball and leave Republicans holding the bag of a collapsing healthcare market: 

But that very desire to avoid responsibility for bad outcomes is the source of Democratic leverage. Republicans will have taken millions of insured Americans hostage, hoping Democrats would help them pick off the victims. By doing nothing, Democrats will turn the gun back on Republicans themselves.

During the fight over Social Security privatization in the Bush years, Nancy Pelosi understood the strategic logic behind refusing to collaborate on an unpopular project. According to her biographer Marc Sandalow, she told her members, “Our plan is to save Social Security, stop privatization, and stop raiding the trust fund. It’s going to be his privatization versus Social Security.”

That logic holds just as well for Obamacare repeal. So long as Republicans need Democratic votes to “replace” it, the alternative to Obamacare is Obamacare—or perhaps something so indistinguishable from Obamacare that Democrats pass it as the cost of saving health care reform from partisan brickbats.

I think Beutler misreads the politics here. The alternative to Obamacare is a massive tax cut for the wealthy and simply winging it from there. Maybe Senate Democrats play ball, maybe not. But you’ve locked yourself into a world where the money’s already been spent. It’s a perverse but effective way to claim poverty when it’s time to legislate an actual “replacement.” Congressional Republicans are planning on taking the shot of tequila before anyone can ask them be the designated driver.

This is a very unpredictable period we’re entering, but don’t lose sight of where actual legislative pathways exist. There are plenty of votes for repealing Obamacare to fund tax cuts for the wealthy. We have no idea if the votes are there for a stingier, less comprehensive, deficit-financed healthcare law that—if there’s any justice in the universe—would ultimately be called Trumpcare.

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