As the White House and Republicans in Congress desperately try to craft a Obamacare repeal bill, even as it becomes clear that anything they come up with will go either too far for members of Congress who fear their constituents losing insurance or not far enough for hard-right Freedom Caucus members, let me offer a simple suggestion: Just repeal the taxes and go home.
You can split Obamacare into three parts. There are the insurance regulations, like the requirements that all plans cover essential treatments such as birth control and mental health, or the ban on lifetime limits, or the ban on discriminating against preexisting conditions, or the extension of parental insurance to people under 26. Many of those, like the under-26 rule, are popular enough that Republicans want to keep them, and most of the others couldn’t pass under the budget reconciliation process Republicans are using.
Then there are the coverage provisions: the Medicaid expansion and the tax credits for private insurance through the health exchanges. Giving people health care is, it turns out, very popular, and the Medicaid expansion is a fiscal godsend to a number of Republican governors, like Ohio’s John Kasich or Arkansas’s Asa Hutchinson. Limiting or getting rid of these is very politically tough, and sure to incur the wrath of the Republican “Coverage Caucus,” or members of Congress and the Senate who want to minimize the number of people who lose insurance due to Obamacare repeal. Even getting rid of the most unpopular coverage provision — the individual mandate — is dicey, since the Coverage Caucus is sophisticated enough to know that junking it would increase the ranks of the uninsured significantly.
And then there are the taxes. If there’s one thing basically every Republican agrees on, it’s that the Obamacare taxes are bad. After all, the primary objective of the Republican Party since at least 1980 has been to reduce tax rates on high earners, and the Affordable Care Act paid for coverage expansion largely through sizable tax hikes on investment income and wages for the rich. It also hiked taxes on specific industries such as medical devices and tanning, which naturally enrages representatives whose districts employ a lot of people in those industries.
So why not just give up on trying to repeal the popular regulations and subsidies? Why not just cut the part that vocal wealthy constituents and businesses complain about? Why not just eliminate the taxes?
Repealing the taxes is bad but the alternative is much worse
To be clear, repealing the taxes and leaving the rest the same is not good. It’s important to heavily tax the wealthy to raise revenue, cut after-tax inequality, and prevent pre-tax inequality by giving rich people less reason to bargain for higher and higher wages. The other revenue raisers included in the Affordable Care Act are perfectly sensible. And while the deficit is hardly the biggest problem facing the country right now, all else being equal, it’s better to pay for stuff the government does.
But you have to weigh the harm done by increasing inequality and the deficit against the harm done by denying 24 million or more people health insurance. And the harm done by raising premiums for low-income older people by more than 750 percent. And the harm done by enabling Medicaid cuts in states that make benefits stingier and kick yet more people off the rolls. And the harm caused by an increase in mortality. My colleague Julia Belluz looked at the best evidence on health insurance and mortality and concluded that a 20 million person reduction in insurance will likely cost 24,000 lives a year. These are the stakes.
And outside of Paul Ryan, who once said that he has dreamed of gutting Medicaid since he was “drinking out of kegs,” and the more hardcore Freedom Caucus members who find the idea of the government doing anything to expand health coverage offensive, I doubt giving up on coverage elimination but still cutting taxes would upset many Republicans in Congress. When push comes to shove, protecting your constituents from coverage loss tends to trump ideological purity. Even Ryan might be exhausted enough to want to just get it all over with. This strategy certainly wouldn’t offend President Trump, who sounds desperate to get this health care business over with and move on to cutting taxes for corporations.
There’s one procedural hurdle this plan would have to pass. Budget reconciliation legislation needs to balance after 10 years; a tax cut not offset by cuts to Medicaid and insurance subsidies wouldn’t. But there are ways around that. The cuts could expire after 10 years, whereupon there’d be huge pressure to keep at least some of them; this is what happened to the Bush tax cuts. Or the legislation could include a new, cartoonishly unpopular tax (like a $1 million penalty that only applies to war veterans) that phases in after 10 years but that everyone assumes would just be repealed then. Or Senate Republicans could suck it up and eliminate the filibuster already. If 51 senators really want these taxes gone, they can make it happen.
And then they can return to their home states and explain to constituents that they kept their promise to repeal Obamacare’s onerous tax increases, and did it in a way that ensured nobody lost health care. And they rest easy themselves knowing that when there’s pressure for deficit reduction later on, Democrats will be forced to raise taxes again and pay the political price.
This is a ridiculous process, and the sooner it ends, the better
On the night of Wednesday, March 23, with less than 24 hours to go before the House was scheduled to vote, the White House started working out a deal with the House Freedom Caucus to add a whole new provision to the American Health Care Act stripping requirements that individual and small-business plans cover prescription drugs, hospital stays, emergency services, pregnancy care, childbirth, mental health, birth control — basically anything.
This is a truly massive change. It would saddle millions with inferior health care coverage. It could backfire and wind up costing billions of dollars more because the skimpy tax credits in the bill, which aren’t enough to help people buy a real insurance package, would be enough to buy new, crummier insurance plans. The implications are enormous, and the White House and House conservatives tried to smuggle this in at the last minute. It’s like if Democrats had tried to sneak a rider creating a universal basic income onto Dodd-Frank 24 hours before a vote.
It’s an appalling way to govern a country. It’s clear the White House and Congress are desperately rushing, trying to get something done that they can say is repealing Obamacare before anyone notices what the legislation they’re drafting would actually do.
If they must rush, it would be easier for them, and less harmful to the country, to rush through a repeal of the taxes. It would be worse than the status quo, but people wouldn’t lose health insurance. People wouldn’t be bankrupted due to Medicaid cuts and premium hikes. People wouldn’t die due to lost coverage. The country would be able to move on from this bizarre episode, and the people whose health and livelihoods have been in Congress’s crosshairs could breath a sigh of relief.