Thursday, March 26, 2015

"Obamacare, Obamacare! stay a little. Ha!*

As Greg Sargent never tires of reminding us, Republicans have been promising an ACA replacement plan for 50 months now and haven't been able to deliver. Ergo, Sargent asserts, claims by Republican legislators that they are developing a plan to replace the ACA and keep premium subsidies flowing should the Supreme Court rule for the plaintiffs in King are a ruse, designed to convince swing justices that chaos won't erupt if the court invalidates subsidies credited through the federal exchange.

That is probably at least partially true, as Republicans have long proven themselves unable to unite behind a plan that would replace a large portion of ACA benefits while creating different winners and losers. But there are plans and plans (and motives and motives), and elected officials don't yank away existing benefits lightly. While Republicans may well be paralyzed by a Supreme Court decision that gives them what they say they want, there are elements in the plans they're floating that could find their way, sooner or later, into a post-King settlement.  Republicans' lack of unity could lead them to punt, perhaps declaring victory with relatively modest gains while restoring most of the status quo.

Most interesting in this regard are Republican proposals to freeze or patch the the current system while they devise a fix. Here's how one very sympathetically worded account describes such a measure:

Their first step will be to propose freezing enrollment exactly where it is. No one would be forced to drop an ACA health plan even if they can't get subsidies to pay their premiums. Congress will provide, Republicans say. At least for 18 months or so.
On its face this makes no sense, or rather cloaks unmade decisions. If Congress does nothing, no one will be forced to drop an ACA plan -- the problem is that almost no one will be able to afford one without subsidy (87% of plans sold on, the federal exchange, are subsidized). But..."Congress will provide" -- that is, presumably, authorize the least for 18 months? On the other hand, there will be no new enrollment.  Where does that leave those renewing coverage? How will insurers price plans that are only subsidized for existing customers? If they jack up prices, will their subsidized customers be stuck with them, as those with pre-existing conditions used to be stuck in plans that stopped accepting new customers and were subject to enormous price hikes?

In fact the only kind of freeze that makes any sense is to leave the current system as it is for a fixed period of time. In the perhaps unlikely event that Republicans do thus kick the can down the road, the mythical nature of their "repeal and replace" legislation becomes Democrats' friend (and friend of all those who want to allow the law to work as designed, as it has more or less been doing).

Republican "repeal and replace" proposals range from the lightly-sketched "Obamacare light" outline first proposed by Senators Coburn, Burr and Hatch in early 2014 and then slightly updated by Burr, Hatch and Upton early this year to vague noises about providing premium subsidies while opening up state markets to "innovation" -- i.e. authorizing plans under looser coverage rules and actuarial standards, perhaps allowing subsidies in any sales venue, perhaps also reintroducing medical underwriting while covering (or pretending to cover) those with pre-existing conditions in high risk pools.

Post-King, with the clock ticking on 7-8 million current subsidized plan holders, with a GOP divided between a hard-core "let it burn" contingent and those looking for conservative reforms, the drive to "replace" the ACA might devolve into a bid to reform it in a conservative direction, perhaps with a "replace" fig leaf somehow slapped on. The ACA already provides a path to such reform in the form of state  innovation waivers that, if approved by HHS, authorize a state to meet the ACA's coverage and affordability goals by alternate means. Recently Hoover Institute's Lanhee Chen, floated a post-King compromise that would essentially allow "innovation waivers" without the waiver -- i.e., free states to redesign their insurance markets without asking HHS for permission (I suggested something similar myself in January).  Call it state-based 'repeal and replace' if you like. A relatively sane GOP -- of the sort envisioned by Michael Leavitt (Bush Jr.'s HHS Secretary) --  could use such a settlement to declare victory and get out. ACA - FTFY!

An 18-month stay, passed under pressure of looming healthcare industry chaos, might make such a result likely. If the subsidy structure has another 18 months (at least) to harden, it will be all the harder to uproot. Congress might find itself in a "doc fix" pattern, passing yearly or biannual extensions, perhaps with a conservative bauble (copper plans! mental health opt-out!) attached to each.  Eventually, Democrats might buy permanent acceptance by authorizing states to allow subsidies to any qualifying plan bought anywhere, as long as it conforms to (looser) coverage rules. A state could probably do that today, via waiver. But whatever.

No ACA supporter is counting on such a relatively rosy scenario if the Supreme Court rules for the King plaintiffs. It depends on House Speaker Boehner turning to Democrats willing to compromise, once again violating the self-imposed "Hastert Rule," which holds that the Speaker will only bring to the floor legislation supported by "a majority of the majority." Would the specter of subsidies denied have an effect comparable to a debt ceiling default? Could voting a temporary patch allowing the subsidies to live another year eventually lead to a deal that both sides can live with?

* King Lear, V. iii.  3452

LearA plague upon you, murderers, traitors all! 3450
I might have sav'd her; now she's gone for ever! 
Cordelia, Cordelia! stay a little. Ha! 
What is't thou say'st, Her voice was ever soft, 
Gentle, and low- an excellent thing in woman. 
I kill'd the slave that was a-hanging thee

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