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What Next? — The Political Conundrum of Health Reform April 2017

What Next? — The Political Conundrum of Health Reform

Richard P. Nathan, Rockefeller Institute of Government




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Shortly after the 2010 Affordable Care Act (ACA) was enacted, the Rockefeller Institute of Government began setting up a network of state health policy experts to study what is happening under the law. Forty states are now represented in the network. Partnering with the Brookings Institution, we have issued a series of reports, effectively a running history of what has happened under the law. We studied decisions made to implement the law by the federal government and the states and within local health care markets and what the effects have been on local health systems and the people the law is intended to serve.

From the start, it was clear that the way forward for a new law backed only by Democrats would be uncertain. Now, with Republicans in control in all three branches, the situation is dramatically changed.

As it turned out, seven years ago someone — or some group deep in the planning process for health reform — got a bright idea about how to write a health reform law in 2010 that would be very hard to get rid of.

The basic theory of the bill the Democrats advanced is rooted in the competitive marketplace philosophy of health reform advanced by conservative think tanks.

Republicans face an epochal political conundrum: What to do next to carry out their repeated, strongly emphasized promise to repeal and replace a law that embodies many of their own ideas and, to top that off, helps millions of previously uninsured citizens?

Here’s an example of the Republican predicament. Now with the mid-term election fast-approaching, Republican members of the House of Representatives face a hard choice. Fourteen Republican members of three House committees agreed to a bill to repeal and replace the Affordable Care Act, and most of them are home now on recess. They are not holding town hall meetings because they know what would happen if they did. Other GOP House members face the same dilemma, in trying to explain how their constituents would have been harmed by the bill that some of them indicated they would support, but that Speaker Ryan decided to withhold from a vote by the full U.S. House of Representatives. House members of the Freedom Caucus, who opposed the speaker, also face hot protests. Who said a party divided cannot stand?


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Such a sword of Damocles “hanging by a thread” does not hang over the heads of House Democrats. Politically this is a piece of good fortune for them that could produce some surprises.

The Affordable Care Act is on the books. And it is likely to stay on the books for a long time. It could take the GOP another six months, even a year or so, to figure out what to do, maybe another year to get it through the House, the Senate and the president and no doubt a couple of years to set up the machinery to implement it. Republicans could go into the mid-terms and even the next presidential election with nothing to show for years of promises and votes to kill the law.

As the politics of “Repeal and Replace” play out, insurance companies are key players to watch. Insurers face a new ballgame and political calculus. Maybe some of them will decide to reinvent themselves for this individual/nongroup health-insurance market and devise new coverage plans that will enable them to obtain and retain customers for a period that now could be a long one.

Fortunately, there are right-sized/affordable/innovative insurance plans already out there that can serve as models. The United States has had five years of experience operating under the Affordable Care Act. In the local marketplaces called “rating areas” (there are nearly a thousand of them), qualified low- and moderate-income people can obtain policies, which are priced to reflect differences in individual and family income. The plans are good deals for lots of people. In many places, there are multiple plans consumers can choose from on these essentially private marketplaces.

At the same time, there are many ways in which Republicans can disrupt and undermine these marketplaces. Alternatively, they can try to stabilize the markets until the time comes when they can replace them. The first option presents Colin Powell's so-called Pottery Barn rule: "You break it, you own it."

If the administration and Congress do things interpreted as undercutting the law and preventing people with coverage (or eligible for it) from having insurance, they will be hurting a major constituency that supported President Trump — people having trouble making ends meet and finding and keeping jobs. If they have steady jobs, they are likely to be covered (as are more than 150 million people) by their employers. But if they are working part time or as independent contractors, like Uber drivers, or if their jobs are threatened by automation or outsourcing, they can be the big losers.

To many people’s surprise, the Trump administration recently promulgated new regulations (most of which were requested by insurance companies) to try to stabilize the ACA marketplaces. If the administration sticks to this basically “hands-off” (we won’t break it) approach, and if the markets nevertheless implode on their own, the administration can then claim, “We didn’t do it,” and then make a case for rallying their troops and going back to the drawing board.

The bottom line is that health reform is immensely uncertain and unpredictable. It involves intrinsically complicated and substantive issues. This would be so even if you took the politics out of it. But you can’t do that. The law is not only a historic policy challenge. It is a political conundrum. Particularly now, it presents tough political choices for the new people in charge in Washington, tough political choices that are here to stay.


ABOUT THE ROCKEFELLER INSTITUTE OF GOVERNMENT

The Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York, conducts fiscal and programmatic research on American state and local governments. It works closely with federal, state, and local government agencies nationally and in New York, and draws on the State University’s rich intellectual resources and on networks of public policy academic experts throughout the country.