Posted by on March 7, 2017 2:36 pm
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Categories: 111th United States Congress barack obama Congress Congressional Budget Office Economy Efforts to repeal the Patient Protection and Affordable Care Act Internal Revenue Code Internal Revenue Service obamacare Omnibus legislation Patient Protection and Affordable Care Act Politics Presidency of Barack Obama Proposed Legislation reconciliation republican party Republican Study Committee Senate Statutory law Supreme Court United States United States federal budget West Virginia

Overnight, House republicans released their long-awaited proposed legislation to repeal and replace Obamacare, which many have already dubbed Trumpcare. We laid out some of the key changes and proposed provisions as part of the new law which will now be debated, first in committee as soon as Wednesday, and then will seek the approval of the House and Senate. It is here that things may turn more complicated.

In terms of next steps, there are five immediate action items that politicians and pundits will focus on, courtesy of Axios:

  • How will the conservative Republicans react? They’re the ones who threatened to vote against anything less aggressive than the 2015 repeal bill, which this definitely is. Freedom Caucus chairman Mark Meadows said on Hannity last night that “we’re making progress,” but other early signs aren’t good: Rep. Jim Jordan reportedly doesn’t like it, a Republican Study Committee memo calls it a “Republican welfare entitlement,” and Rep. Justin Amash tweeted that it was “Obamacare 2.0.”
  • Will there be a Medicaid backlash? That looked like a serious danger after four GOP senators from states that expanded Medicaid said they wouldn’t support the changes they saw in an early draft. But they softened their tone after a meeting with Senate Majority Leader Mitch McConnell Monday night, Caitlin Owens reports. “It’s moving in the right direction,” said West Virginia’s Shelley Moore Capito, one of the worried senators.
  • How many people would be covered? Normally, the Congressional Budget Office would tell them that. But not this time — because the committees are plowing ahead without waiting for the cost and coverage estimates.
  • No Congressional Budget Office score? Really? They’re going to take a lot of heat from Democrats for that decision — Democrats are already accusing them of trying to hide the likely losses of coverage. The key, though, is how many Republicans are uncomfortable with it too. “That seems problematic.” Sen. Bill Cassidy told Caitlin, adding: “I’m trying to be diplomatic.”
  • Do they actually know how to pay for it? Here’s what House Republicans answer the “how will you pay for it” question in their FAQs: “We are still discussing details, but we are committed to repealing Obamacare and replacing it with fiscally responsible policies that restore the free market and protect taxpayers.”

A bigger picture question is how long will the entire process of repeal and replace take. Conveniently, over the weekend Goldman’s Alec Phillips address this issue. Here are this thoughts:

We think there is a good chance that Congress will resolve the ACA debate in Q2. Activity on the issue will intensify over the next few weeks; House committees may begin to vote on legislation as soon as the week of March 6. This could allow for passage by the full House by late March or early April, if plans remain on track. However, even on that timetable, the Senate is likely to take longer, and the odds that the Senate sends the President a bill prior to the congressional spring recess (April 10-21) seems fairly low. If so, final resolution could be pushed until May, in light of the upcoming debate on the confirmation of Supreme Court Justice nominee Neil Gorsuch and the April 28 expiration of federal spending authority, which will require new spending legislation to avoid a temporary government shutdown.

That’s the best case scenario. Here is the worst-case:

If Republican leaders cannot send the President an ACA bill by April or May, they will face two politically unpalatable options. First, they could continue to press for a solution, delaying consideration of tax reform for an indefinite period. This delay would occur because both proposals are expected to be considered under the “budget reconciliation” process. However, since only one tax bill and one spending bill can be considered under that process in each budget cycle—and ACA repeal legislation is expected to have tax and spending provisions—Republican leaders plan to consider the ACA bill in the FY2017 budget cycle, and to begin the FY2018 budget cycle, including instructions to pass tax reform, once the ACA bill has passed. A second option would be to postpone ACA legislation and move to tax reform, essentially reneging on a campaign commitment. 

Goldman also notes that beyond the timetable, the ACA debate is a reminder that enacting ambitious structural reforms on a partisan basis is difficult, for two reasons. First, shared accountability allows lawmakers to take greater political risks. Over the last few decades, most of the major fiscal reforms were enacted under divided government, as this allows for shared responsibility: the Social Security amendments in 1983, the Tax Reform Act of 1986, and the various deficit reduction measures of the late 1980s and 1990s all come to mind. Of course, this is not always the case; the ACA passed along party lines in 2010.

Second, relying on only Republican votes results in a very thin vote margin, particularly in the Senate. Republicans in that chamber have 52 seats, and will need 51 votes (potentially including Vice President Pence’s tie-breaking vote) to pass ACA or tax legislation through the budget reconciliation process. Although this is often sufficient on issues where there are clearly defined differences between the parties, it makes it quite difficult to pass legislation where lawmakers have more idiosyncratic concerns, as is often the case in tax reform.

As to why a potential Trumpcare slowdown is relevant, the answer is simple: delays would likely lead to substantial delays for the bulk of Trump’s proposed economic agenda, putting prompt implementation of his tax reform in jeopardy, as Phillips explains:

the slow process on ACA repeal signals that tax reform is likely to take longer than initially expected and that the final tax legislation that Congress enacts is likely to be less radical than the early proposals from House Republicans and the Trump campaign. That said, while tax legislation looks likely to be delayed we expect it to move forward eventually.”

Finally, putting it all together, here is Goldman’s chart showing “the long year ahead

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