Seven years ago, the Democratic Party found itself at a crossroads. Its sweeping health care bill was increasingly unpopular – the subject of angry town hall protests, the cause of a shocking special-election defeat in Massachusetts. Some people in the Obama White House, notably Rahm Emanuel, wanted to scale back the bill, to drop the idea of reinventing the individual insurance market and simply expand Medicaid.
Instead, the Democrats chose to stick with Obamacare in full, which earned them a historic achievement, Joe Biden’s big bleeping deal – and then a cataclysmic midterm defeat from which their fortunes as a national party have never quite recovered.
Now it is the Republican Party’s turn to face a health care choice. They can forge ahead with the “repeal” (really just the reform) of Obamacare, notwithstanding the massive unpopularity of the legislation being negotiated in the Senate, on the theory that they’re more insulated than the Democrats were in 2010 (after all, they won their recent special-election squeaker) and that the policy achievement is worth the political pain. Or they take the road the Democrats did not, and retreat to a much smaller bill instead.
The case for retreat is stronger than it was for Barack Obama’s party. The Democrats in 2010 were on the cusp of achieving their decades-old health care policy dream; the Republicans in 2017 can’t agree on what their health care policy goal should be. The Democratic bill in 2010 delivered significantly to the party’s base; the Republican bill in 2017 delivers significantly only to the party’s donors. In order to mitigate its unpopularity, Senate Republicans keep making their bill more like, well, Obamacare, which raises the question of why they’re attempting something so complex for such a modest end.
But what would retreat look like? What form would a smaller bill take? Don’t worry, I have the answer.
First, the smaller bill would repeal the individual mandate requiring the purchase of health insurance. It would replace it, as the Senate bill does, with a continuous-coverage requirement – a waiting period to purchase insurance if you go without it for more than two months.
Second, the bill would repeal some of the taxes on health care spending, saving and services imposed by Obamacare – including the taxes on medical devices and prescription medications, the higher threshold for deducting spending on chronic care, and the limits on contributions to health spending accounts.
Third, the bill would maintain the stabilization funds that the Senate legislation pays to states and insurers to help cover the sickest Americans and keep exchange prices from spiraling upward.
According to the Congressional Budget Office, repealing the individual mandate and its penalties would cost $38 billion over 10 years. The stabilization funds would cost $107 billion. The various health care tax cuts I just outlined would cost (roughly) $100 billion. So that’s approximately $250 billion that the small-ball bill would need to find in spending cuts.
It would find those savings by imposing, like the House and Senate bills, a per-capita cap on future Medicaid spending, but a less draconian one than the current legislation envisions. Instead of wringing almost $800 billion out of Medicaid over 10 years, it would try to reduce the program’s spending by $250 billion – just enough for deficit neutrality.
That’s it. That’s the whole thing. Eliminate the hated mandate, keep the exchanges stable, cut a few health care taxes and pull Medicaid spending downward. Pass the package, declare victory, and pivot to tax reform.
And it would be a victory, however modest, for several Republican constituencies. Eliminating the mandate would satisfy principled libertarians and save money for middle-class consumers for whom Obamacare seems like an unjustifiably bad deal. Cutting medical taxes would please key industries and reduce prices for consumers. The Medicaid per-capita cap would be an experiment in entitlement reform, but on a scale and a timeline that swing-state senators could live with, and that might eventually attract bipartisan support.
True, eliminating the mandate would lead to less coverage. But if the subsidies didn’t change and the Medicaid cuts were limited, much of any drop-off would be genuinely voluntary, and the CBO’s own analysis projects that the exchanges will be stable even if the mandate is repealed. So Republicans could campaign in 2018 on the credible claim that they had maintained Obamacare’s coverage for most people who wanted it, while reducing its burdens on those who didn’t.
All of this would be tepid and incrementalist, a failure compared to the dreams of full-repeal advocates and the best-laid plans of right-wing wonks.
But the Republican Party is too divided on health care, too incompetently “led” by its president, and too confused about the details of health policy to do something that’s big and sweeping and also smart and decent and defensible.
So if the party insists on doing something, it should do something appropriately timid. The alternative is a big gamble on a bad bill – not just a crime, but a mistake.