On tax bill, Josh Gottheimer's Problem Solving is a problem

Josh Gottheimer, the member of Congress from New Jersey's 5th District (rural west and suburban north Jersey), beat a Tea Party incumbent in 2016 and so has to be cut some centrist slack. He has made bipartisanship his brand and co-leads the self-named Problem Solvers, a caucus of about 40 reps, half Republican and half Democrat. In the summer, after ACA repeal bills failed in the Senate, the Problem Solvers put forth an ACA marketplace stabilization proposal that looked rather like the Alexander-Murray bill that later took shape in the Senate (discussed in this post). It got no traction but did no harm.

In tax bill season, though, Gottheimer's bipartisan shtick is turning dangerous, IMO.  He has said he wants to "get to yes" on a tax cut bill; he's put out a proposal, in concert with NJ Republican Leonard Lance, that avoids the most direct harm to New Jersey (restoring SALT and mortgage deductions) while ignoring the bill's overall devastation of the federal budget and disfiguration of the tax code. This too will probably do no harm...but if the bill that comes out of House-Senate conference does mostly restore the SALT and mortgage deductions, a few Democratic votes in support would be a very bad thing.

That's my working assumption, anyway - and I have a letter in NorthJersey.com arguing as much. Gottheimer's claims that his plan provides "deficit reduction" particularly stick in the craw:

If bipartisan ACA legislation comes back to the House, remember the Problem Solvers

As hope goes stronger that the Senate will reject the ruinous Graham-Cassidy ACA repeal bill, the back-burnered Senate HELP Committee hearings in pursuit of bipartisan legislation to stabilize the individual insurance market may become relevant again. On Sept. 20, HELP chair Lamar Alexander pulled out of the talks to get on team Scorched Earth.  After John McCain came out against Graham-Cassidy yesterday, Patty Murray, ranking Democrat on the HELP Committee, put out this statement:

I  agree with Senator McCain that the right way to get things done in the Senate—especially on an issue as important to families as their health care—is through regular order and working together to find common ground. I’m still at the table ready to keep working, and I remain confident that we can reach a bipartisan agreement as soon as this latest partisan approach by Republican leaders is finally set aside.

That raises the possibility too that at some point the Problem Solvers, the House caucus formed to seek bipartisan solutions on multiple fronts, could also become relevant. On July 31, the Problem Solvers released a five-point outline for bipartisan market stabilization legislation. As in the HELP Committee, "state flexibility" -- i.e. some easing of the process for states seeking ACA Section 1332 innovation waivers -- was a plank.

On September 5, the day before the first HELP Committee hearing, I participated in a call between BlueWaveNJ and Rep. Josh Gottheimer, Democratic co-chair of the Problem Solvers. It seems another lifetime, as the Graham-Cassidy cancer was still in watchful waiting phase, but we were concerned as to what Democratic Problems Solvers might be prepared to yield on the waiver front. Here's what we learned, as reported on the BlueWaveNJ blog:

Can Democrats afford to stand pat on the ACA?

A while back, I anticipated that Republicans would demand a steep price for passing legislation that would guarantee federal funding for the ACA marketplace's Cost Sharing Reduction (CSR) subsidies and possibly for a reinsurance program. I asked what Democrats should be willing to give up to secure those obviously necessary measures -- the first simply an end to sabotage, the second an individual market essential that Republicans bestowed liberally in their ACA replacement plans.

David Anderson counters that "this model of leverage is wrong" and that Democrats should be willing to give up...nothing.  The rationale is not "if you break it you own it" (i.e., Republicans will be blamed for market collapse),  but rather that forcing insurers to fund (and price for) the CSR subsidies as of 2018 would hand Democrats "an incredible policy victory."

Compromise maybe a little? Urban Institute's Blumberg and Holahan on what's next for the ACA

In August 2015, Urban Institute healthcare scholars Linda Blumberg and John Holahan acknowledged that ACA marketplace subsidies were too skimpy to do all they were intended to and came up with a comprehensive proposal to enrich them.  In January 2016, staring down the barrel of Republican repeal vows, they remixed those improvements in a compromise package that included several concessions to conservative priorities. These included:

• Repeal the employer mandate (requiring employers with more than 50 employees to offer insurance or pay a penalty)
• Repeal and replace the individual mandate  (with a premium penalty for those who did not maintain continuous coverage)
• Examine the Essential Health Benefits and look for responsible ways to lighten them
• Allow states to drop the income threshold for Medicaid eligibility to 100% of the Federal Poverty Level (FPL). At present, the threshold is 138% FPL in states that have accepted the ACA Medicaid expansion. 

As I noted recently, these concessions were embedded with offsets: reinsurance to mitigate the premium hikes likely to be triggered by individual mandate replacement, and lower out-of-pocket costs to cushion the substitution for enrollees in the 100-138% FPL range of private insurance for Medicaid (richer subsidies across all income levels would also offset the ill effects of a weaker mandate substitute).

What price will Republicans extract for CSR funding and reinsurance?

If the current glimmers of bipartisanship in healthcare legislation take on any sustained shine, the primary agenda for Democrats is obvious: appropriate funding for Cost Sharing Reduction payments and for some kind of reinsurance program to replace the program that expired in 2017.

The first is simply a matter of ending sabotage: CSR is integral to the structure of the ACA marketplace and incorporated in its budget baseline. Republicans have simply exploited a drafting error to destabilize the individual market. As for reinsurance, Republicans made its necessity manifest by including generous "stability funding" in the main House and Senate "healthcare" bills -- in fact, overly generous funding designed to compensate for their various disfigurements of the market (e.g., repeal of the individual mandate and measures to reintroduce medical underwriting and non-comprehensive insurance).

To have any real hope of getting these measures passed in a Republican Congress, however, Democrats are going to have to face up to the question: What pound of flesh will they let Republicans extract as payment for these essential, common-sense fixes? It's a foregone conclusion from a progressive point of view that changes Republicans will demand will not improve the market. What concessions might actually win passage and do less harm than the fixes will do good?