Wednesday, March 29, 2017

What comes after "catastrophic success"? Larry Jacobs on Democrats' healthcare choices

Now that the Republicans' main thrust to repeal the ACA's core benefits has failed for the present, what should Democrats do next?

I asked Lawrence Jacobs, a professor of politics and policy at the University of Minnesota who has closely studied the dynamics and incentives of legislative and presidential politics.

Here were the core questions:

Given unrelenting Republican hostility toward the ACA, and given that Republicans control the administration of its core programs as well as both houses of Congress, can Democrats do anything to shore up a stressed marketplace that needs a) competent administration committed to making it work and b) legislative fixes to improve the risk pool and keep insurers from bolting?

Should Democrats pursue legislative compromise that would alter marketplace structure more to conservatives' liking in exchange for, say, federal funding for reinsurance or other state programs designed to foster stability? (for more about possible components of such a deal, see my prior post.) Or should they step back and declare, in effect: the marketplace was more or less stable before the Trump administration began sabotaging it. Republicans now own it. We are going to look forward and propose bold measures to make insurance affordable for all that can be implemented when the American people return us to power.

Bipartisan legislation a long shot

I asked Jacobs whether there was any prospect that bipartisan legislation could emerge from negotiations.  He replied that while Democrats would face some criticism for engaging, and entertaining conservative changes, the bigger problem was on the Republican side. Ryan, he said, would suffer "the same kind of whiplash trying to work between moderates and Tea Party libertarians" that brought down his ACA repeal bill, American Health Care Act.

The only possibility for passage, Jacobs said,  is if Ryan -- or another House speaker --   were to breach the Republicans' self-imposed "Hastert Rule," which commits them to bringing no bill to a vote  unless it can pass with Republican votes alone. The rule was instituted to maximize the leverage of the hard right. "That rule could be breached," Jacobs said, "But it probably would signal the last stage of the Ryan speakership."

In the Senate, Jacobs said, the odds are somewhat better that majority leader Mitch McConnell would cut a deal -- for example, one that provided stabilization funds to states, but changed marketplace rules so that insurers could offer subsidized plans on private exchanges, outside the ACA marketplace.

In short, legislation could conceivably pass, but it would be a long shot, requiring a revolt by House leadership against their self-imposed commitment not to act with support from the most extreme faction in their coalition.

Will Team Trump work for marketplace failure?

What if Democrats refrain from this long shot, or try and fail? President Trump has repeatedly expressed absolute confidence that the ACA marketplace, left untouched, will implode -- and an eagerness to let it do so. While his language is more incontinent than that of other Republican leaders, Ryan has asserted for months that the marketplace is in a death spiral -- falsely, according to analysis by the Congressional Budget Office, as well as assessments by the vast majority of informed objective observers.

So will the Trump administration push the marketplace off a cliff and try to blame Democrats for its crash? They can do so quickly and obviously, by declining to fund Cost Sharing Reduction subsidies for which a Republican Congress has so far refused to allocate funds, and which the Obama administration had been paying for with funds diverted from elsewhere in the federal budget. More than half of marketplace enrollees rely on these secondary subsidies to make actual medical care (as opposed to insurance premiums) affordable.

The administration could also scuttle the marketplace somewhat more slowly and subtly, by declining to enforce the individual mandate, or to advertise to prospective enrollees and provide effective enrollment assistance, or by not going all-out to recruit insurers to offer plans in regions in danger of going unserved.

According to Jacobs, Trump's "cavalier comments about letting Obamacare fall on its own" betray ignorance about the way political accountability works in the U.S. "The marketplace has hundreds of thousands of beneficiaries in red states There are many small business owners, farmers and others who rely on those marketplaces.  If the marketplaces collapse, this is not an isolated incident. The repercussions in the rest of the nongroup market would be devastating. So if Donald Trump thinks letting the marketplace collapse is hurting Democrats, he has no idea what he's talking about -- it would hurt him."

There are currently about 10 million subsidized marketplace enrollees, and about 8-10 million who are either unsubsidized in the marketplace or enrolled in ACA-compliant plans purchased in the broader individual market.

I noted that there's already a blame war going on, with Republicans asserting constantly that the marketplace is in a death spiral, and Democrats countering that it was reasonably stable and Republicans are putting it at risk.

"That's beside the point," Jacobs said. "Republicans are now in control. What happens under their watch is their responsibility. And the people who are going to be hurt, and the businesses that are going to be hurt, are those who support the Republican party."

In fact, with regard to constituencies, "The part that's most sacred to Democrats is of course Medicaid. And with the failure of the repeal, this most liberal bulwark of the ACA will remain, and probably will now grow."

In sum, "Donald Trump's idea that it's a clever marketing strategy to threaten the marketplace is yet another self-destructive move."

If Trump doesn't understand the consequences of letting the marketplace fail, who does? Tom Price -- and the rank-and-file in the Department off Health and Human Services.  "You've got civil servants there who understand and have been wrestling with these issues. They're fully aware of the consequences of just letting the marketplace collapse."

Preparing for power: Where are Democrats headed?

With the immediate fate of the marketplace pretty much up to Republicans (and other parts of the ACA, such as the Medicaid expansion, more or less left in place), Jacobs sees Democrats beginning a process of new policymaking. "We know from the history of health reform that periods of opposition are periods in which reformers have started to think about the next stage. The medium term question is, what are going to be the Democratic policy responses to where they are right now? I don't think they're going to be similar to what Hillary Clinton put out there" -- mainly, a set of sweeteners to ACA marketplace subsidies.

He continued: "I think the radicalism of the Freedom Caucus and the receptivity of the House leadership to it, combined with some of the real problems of the exchange and the fact that it was planned to be a public-private partnership" would trigger some progressive reassessment. "There are plenty of insurers who have refused to participate or who have pulled out, and I think that's raising questions about how viable the public-private partnership is, That's a pretty big question and represents a significant departure from previous thinking in the mainstream of the Democratic party."

Departure toward what destination, exactly? "Single payer is one possibility, but it can come in different forms. Is it Medicare for all? Is it a public option -- state run or national, which was the original idea?"

I asked if a proposal in this direction would be a focal point for Democrats in a drive to take back the House.

"I'm not sure yet, but I think that's now in play. And I think the fact that Republicans were so demonstrable in saying let's demolish this whole thing sent a signal. The public-private plan was seen as a way to build broad-based support,  That's clearly not happened. And the operation of the marketplaces has clearly had its own flaws but then lacked the kind of robust private sector participation that was initially projected."

The main argument for standing up a marketplace of plans offered by private insurers was political. But, Jacobs asked, "What did Democrats get in terms of building long-term support for what was intended to be a more moderate approach as compared to single payer or the public option? They didn't win any Republican support for it, and it proved quite difficult to administer."

For the public option to have a major impact, I suggested, it would have to be a "strong" one -- by which I meant probably paying Medicare rates to providers.

"That's what I'm hearing," Jacobs responded. "I don't think it's formed yet, obviously people are focused on the immediate situation. But when I'm involved in conversations about what's next, it's not about going back to Hillary Clinton's agenda. I think the last three months -- plus the last seven years -- are really leading to some new redirection and new examination."


  1. If the most sacred constituency for the Democrats, as Jacobs says, I find that discouraging in the long run. Medicaid recipients do not vote regularly, and in the South they even vote Republican due to God/guns/gays posturing by the Right.

    Democrats need a way to stand for the working and middle class. As Hothschild's book made clear, the presence of Medicaid offering free health insurance to the poor just makes the working class mad.

  2. The opening sentence should read, "If Medicaid is the most sacred constituency,"