GOP Sees Political Peril as Party Scrambles for Health-Care Plan

(Bloomberg) -- President Donald Trump’s surprise escalation of his legal attack on Obamacare dropped a political grenade in the laps of congressional Republicans, who are now stuck with devising a viable alternative if the courts invalidate the 2010 health-care law.

The problem for GOP lawmakers is the paucity of free-market policy ideas for health care that are politically popular. Obamacare’s expanded protections are now baked into voters’ expectations for insurance and patient care, and any Republican replacement would likely draw from the same proposals that ultimately led to a walloping in the 2018 midterm elections.

A definitive court ruling that throws out the Affordable Care Act would cause a “thermonuclear meltdown on the health policy front” and “throw the political and policy world into chaos,” according to Doug Holtz-Eakin, president of the American Action Forum, a right-leaning think tank with close ties to House Republicans.

“I hope there is a beautiful, well-crafted plan and I just happen to be in the socially out-group,” Holtz-Eakin said. “But I don’t think so.”

On Thursday, Trump enlisted a trio of Republican senators — Wyoming’s John Barrasso, Louisiana’s Bill Cassidy and Florida’s Rick Scott — to come up with a “spectacular” health care solution if he wins in court. Policy staffers are reviving health care ideas the party considered previously, such as reducing federal regulations, empowering states and using high-risk pools to cover sick people.

The challenge for Republicans has been to fit these policies into a politically palatable law. Americans now expect people with pre-existing conditions to be protected from lifetime limits and higher insurance premiums. Even with the ACA in place, differences over Medicaid and waivers sought by Republican-led states have led to disparities in coverage across states.

Changing Position

The lawsuit, led by Texas and pending before the 5th U.S. Circuit Court of Appeals, could come before the Supreme Court next year in the heat of the 2020 election season. It argues that Obamacare is unconstitutional and should be struck down. The Justice Department, after initially saying the law should be partially overturned, changed its position and said it should be fully invalidated.

“They will have to generate some sort of action” in Congress, Holtz-Eakin said. “I don’t think they’re ready. I don’t think there’s any evidence the White House has a plan.”

Underpinning the Texas-led challenger is a Republican attack on a key Obamacare provision -- the fee for noncompliance with the individual insurance mandate. The lawsuit alleges that because the GOP’s 2017 tax law zeroed out that penalty, the provision is invalid, and due to its importance to the overall law, the entire ACA should be struck.

Numerous legal experts say Texas’s legal challenge is far-fetched and unlikely to succeed. Five Supreme Court justices who upheld the law against challenges in 2012 and 2015 remain on the court.

“If we win on the termination of Obamacare, we will have a plan that’s far better than Obamacare, including, very importantly, pre-existing conditions, which I’ve always been in favor of,” Trump told reporters.

Driving Up Costs

That’s easier said than done. In 2017, the House-passed Republican health care bill rolled back some pre-existing condition regulations after conservatives complained that they were driving up costs for healthier people. It maintained the ACA’s ban on insurers denying coverage to a person over a prior illness, but included state waivers from the rule that they cannot charge sick people more money.

Democrats exploited that issue to great effect in the 2018 elections by arguing that the Republican plan would allow insurers to spike costs for sick people and potentially price them out of the market. They’re eager to exploit it again ahead of the 2020 election.

"The Trump administration radically expanded its war on America’s health care this week,” House Speaker Nancy Pelosi told reporters Thursday. "Striking down protections against pre-existing conditions. Striking down bans on lifetime limits and annual limits. Striking down the Medicaid expansion. Striking down tax subsidies that make health care affordable for more. And all would be ended if the president gets his way. We will fight back.”

Health care was the No. 1 concern for voters in the 2018 midterm, and those who cited it preferred Democratic candidates by a margin of 75 to 23 percent, according to exit polls published by CNN.

“On that issue right now Democrats poll far better,” said former Republican congressman Tom Davis, who ran the party’s election arm from 1999 to 2003. “We litigated this in the midterms. And health care was an issue that worked for Democrats, didn’t work for the Republicans.”

‘Not the Best Fight’

As a result of the health care backlash, swing voters “swung heavily against” Republicans in the last election, said Davis, who added that the administration’s decision “potentially complicates” the president’s hopes of winning those voters back in his 2020 re-election bid.

The former congressman warned that even if Republicans come up with a plan, they won’t be able to pass it through a Democratic House and would likely fail to get 60 votes needed in the Senate, meaning they’re more likely to be blamed for the resulting havoc.

“My gut reaction is this is probably not the best fight to pick,” Davis said.

There are some concrete proposals from congressional Republicans to amend the health care system, including a new bill from Florida’s Scott to limit drug prices. Legislation by Arkansas Representative Bruce Westerman would lift ACA regulations and spend $200 billion over a decade to cover high-risk patients.

But there’s no consensus plan that matches the policy and political imperative of filling the massive void in the system if ACA is struck. Insurers, drug companies and hospitals have now had nearly a decade to adapt to the structural changes mandated by the 2010 law, and invalidating it would be disruptive for companies and patients.

“Is there a consensus plan to sweep in if the ACA is overturned? The answer is no, there’s not that consensus today,” said Avik Roy, a conservative policy adviser who has worked with top Republicans on health care.

Direct Subsidies

Roy said the policy discussion is “quite active” on the right and is moving toward ideas like reinsurance and direct subsidies as opposed to regulations and mandates to broaden access. “Conceptually speaking, there’s support for doing it through spending rather than regulation,” he said.

A spokesman for Republicans on the House Energy & Commerce Committee that oversees health policy said the party remains focused on reducing health care and drug prices and protecting pre-existing conditions, but didn’t specify how.

Senate Finance Chairman Chuck Grassley, an Iowa Republican, sought to play down the prospects of major health care action in 2020.

“We won’t know for months or it could go well into next year,” he said Wednesday, referring to a court resolution on the lawsuit. “If they did do it, we would have to act accordingly. But I doubt we are going to find that happening in an election year. We’re already involved very much with health care, we are going to continue to be involved with health care.”

Republicans were salivating at the prospect of running against single-payer health insurance, a contentious idea that’s gaining traction in the Democratic presidential primary. Some GOP strategists are baffled by the Trump administration move, as it steers the political fight back to Obamacare and pre-existing conditions.

"With the Medicare for all debate, Democrats decided to lay down on top of a grenade and pull the pin," said Josh Holmes, a confidant and former chief of staff to Senate Majority Leader Mitch McConnell. "Why anyone would ask them to move over is beyond me."

--With assistance from Laura Davison.

To contact the reporter on this story: Sahil Kapur in Washington at skapur39@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Anna Edgerton, Laurie Asséo

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