Repeal and Transition

Excuse the extra-long blog today, but with new congress and administration about to take over the nation’s business, understanding our healthcare conundrum seems to be important for us all. Bear with me. And enjoy the little trip through history later in the blog that you probably didn’t know.

Despite President-elect Trump’s pledge for a simultaneous repeal of the Affordable Car Act (“Obamacare”) with a “terrific” replacement program that would be “so much better, so much better, so much better… I am going to take care of everybody. I don’t care if it costs me votes or not. Everybody’s going to be taken care of much better than they’re taken care of now,” reality may provide a very different result.

The down and dirty mainstream GOP is much more focused on getting rid of the Act in its entirety than in taking care of those Americans who really need direct access to affordable healthcare and do not have employers to furnish it. They may be independent contractors (especially in the “gig” economy), employees in small companies that do not provide this benefit or fall between the healthcare cracks in other ways.

In fact there is a Republican groundswell to change the “repeal and replace” mantra with a less demanding “repeal and transition” slogan. Transition to what? Nothing? With almost 20 million Americans covered through Obamacare, there are lots of eggshells to walk on, but blowing up this statute has been priority one for too many conservatives on Capitol Hill. They don’t give a rat’s tail about Trump campaign promises, and they are working on his transition team to make sure the Donald gets the point: anything he wants to do has to pass through them.

If it’s not “repeal and transition,” there is another tact: “Republicans in Congress plan to move almost immediately next month to repeal the Affordable Care Act, as President-elect Donald J. Trump promised. But they also are likely to delay the effective date so that they have several years to phase out President Obama’s signature achievement.

“This emerging ‘repeal and delay’ strategy, which Speaker Paul D. Ryan discussed this week with Vice President-elect Mike Pence, underscores a growing recognition that replacing the health care law will be technically complicated and could be politically explosive…

“‘The idea that you can repeal the Affordable Care Act with a two- or three-year transition period and not create market chaos is a total fantasy,’ said Sabrina Corlette, a professor at the Health Policy Institute of Georgetown University. ‘Insurers need to know the rules of the road in order to develop plans and set premiums.’

“Details of the strategy are in flux, and there are disagreements among Republicans about how to proceed. In the House, the emerging plan, tightly coordinated between Mr. Ryan and Mr. Pence, is meant to give Mr. Trump’s supporters the repeal of the health law that he repeatedly promised at rallies. It would also give Republicans time to try to assure consumers and the health industry that they will not instantly upend the health insurance market, and to pressure some Democrats to support a Republican alternative.

“‘I don’t think you have to wait,’ Representative Kevin McCarthy of California, the majority leader, told reporters this week. ‘I would move through and repeal and then go to work on replacing. I think once it’s repealed, you will have hopefully fewer people playing politics, and everybody coming to the table to find the best policy.’

“Under the plan discussed [in early December], Republicans said, repeal will be on a fast track. They hope to move forward in January or February with a budget blueprint using so-called reconciliation instructions, which would allow parts of the health care law to be dismembered with a simple majority vote, denying Senate Democrats the chance to filibuster. They would follow up with legislation similar to a bill vetoed in January, which would have repealed the tax penalties for people who go without insurance and the penalties for larger employers who fail to offer coverage… That bill would also have eliminated federal insurance subsidies, ended federal spending for the expansion of Medicaid, and barred federal payments to Planned Parenthood clinics.” New York Times, December 2^nd.

Want a bit more about the actual process… “reconciliation”? One of my favorite journalists, James Hohmann (The Daily 202, Washington Post, November 30^th), explains the details: “Here’s the rub: Republicans actually can repeal Obamacare somewhat easily using the procedure known as reconciliation. It’s the same maneuver that Democrats used to jam through the law in 2010 after Scott Brown unexpectedly won a special election to replace the late Ted Kennedy. Only 51 votes are required. But, under the rules of reconciliation, a replacement of the law cannot be moved through this same process. Sixty votes will be required in the Senate for that, and Republicans only have 52 seats.

“‘Repealing is easier and faster because that is getting to 51 votes. Replacing is going to take 60 votes,’ House Majority Leader Kevin McCarthy explained yesterday during a live interview with The Daily 202. ‘We’ll repeal Obamacare. It’s replacing Obamacare that you have to make sure you get right. You want to make sure you replace it properly.’

“The emerging Republican stratagem is to create some ‘transition period,’ as McCarthy calls it, setting a firm date on which the law would expire. That would then create a metaphorical cliff that the country would go over unless Congress acts. With the prospect of 20 million Americans losing health insurance coverage, the R’s bet that the D’s will cave and accept something they don’t like rather than nothing at all. As McCarthy put it, ‘Once it’s repealed, why wouldn’t they be willing to vote for a replacement? Right? You have no other options.’…

“This might be a brilliant stroke. Or, if history is a guide, it could fail spectacularly. Chuck Schumer, the incoming Senate Minority Leader, says his caucus won’t budge and pledges resistance. Democrats feel like Republicans never worked with them during the past eight years, and there is heavy pressure from the left flank of Schumer’s caucus to replicate Mitch McConnell’s strategy of obstruction now that they’re going into the wilderness. It’s a dangerous cycle that could set up an epic game of chicken.

“Remember, sequestration was never supposed to actually happen. The idea in 2011 was that the threat of painful cuts to both defense and social programs would be a big enough stick to incentivize Republicans and Democrats on the so-called ‘supercommittee’ to work together on a grand bargain. It was a strategic blunder by both sides…

“Something to ponder: Which eight Democratic senators would actually vote for a replacement to Obamacare? McCarthy thinks incumbents up for reelection in 2018 in red states like Indiana, North Dakota, West Virginia and Missouri will play ball and push their colleagues to do the same. He also thinks Schumer will be temperamentally more willing to cut a deal than Harry Reid would have been, despite whatever he is saying in public.” But wait, there’s more.

Georgia Republican Congressman, ultra-conservative Tom Price, is Mr. Trump’s choice to run The Department of Health and Human Services. While in Congress, Price had drafted a new healthcare bill (never accepted even by his own party) that “would take health care in a fundamentally different direction, away from mandated coverage and care and toward a free-market approach, with fewer consumer protections and more freedoms for doctors.” New York Times, November 29^th. His proposed legislation would have made it easier for carriers deny coverage to previously uninsured applicants for preexisting conditions and would, among other elements, let Medicare doctors step above Medicare limits to charge patients significantly more.

The Congressman, a wealthy former orthopedic surgeon, is well known for his very close ties with the healthcare industry: “Mr. Price, who is chairman of the House Budget Committee and a member of the powerful Ways and Means Committee, has received generous campaign contributions from health care and related industries. In the latest cycle, he received $396,000 from health professionals, $181,900 from people who work for drug and other health-product companies, and more than $157,000 from people in the insurance business, according to the Center for Responsive Politics, an independent group that tracks money in politics.” NY Times. He’s the man that Trump will look to in his going-forward healthcare policies, and if you are a consumer, that’s not very good news.

The United States has struggled with passing universal healthcare for well over a century. Here are some historical excerpts from a 1999 presentation before a gathering of Physicians for a National Health Program (noting this is just a partial list of past efforts):

During the Progressive Era, President Theodore Roosevelt [1901-1909] was in power and although he supported health insurance because he believed that no country could be strong whose people were sick and poor, most of the initiative for reform took place outside of government. Roosevelt’s successors were mostly conservative leaders, who postponed for about twenty years the kind of presidential leadership that might have involved the national government more extensively in the management of social welfare…

In 1906, the American Association of Labor Legislation (AALL) finally led the campaign for health insurance. They were a typical progressive group whose mandate was not to abolish capitalism but rather to reform it. In 1912, they created a committee on social welfare which held its first national conference in 1913. Despite its broad mandate, the committee decided to concentrate on health insurance, drafting a model bill in 1915. In a nutshell, the bill limited coverage to the working class and all others that earned less than $1200 a year, including dependents…

In 1917, the AMA House of Delegates favored compulsory health insurance as proposed by the AALL, but many state medical societies opposed it. There was disagreement on the method of paying physicians and it was not long before the AMA leadership denied it had ever favored the measure… Meanwhile the president of the American Federation of Labor repeatedly denounced compulsory health insurance as an unnecessary paternalistic reform that would create a system of state supervision over people’s health. They apparently worried that a government-based insurance system would weaken unions by usurping their role in providing social benefits…

FDR’s first attempt — failure to include in the Social Security Bill of 1935…  Next came Franklin D. Roosevelt (FDR), whose tenure (1933-1945) can be characterized by WWI, the Great Depression, and the New Deal, including the Social Security Bill. We might have thought the Great Depression would create the perfect conditions for passing compulsory health insurance in the US, but with millions out of work, unemployment insurance took priority followed by old age benefits. FDR’s Committee on Economic Security, the CES, feared that inclusion of health insurance in its bill, which was opposed by the AMA, would threaten the passage of the entire Social Security legislation. It was therefore excluded.

FDR’s second attempt — Wagner Bill, National Health Act of 1939… But there was one more push for national health insurance during FDR’s administration: The Wagner National Health Act of 1939. Though it never received FDR’s full support, the proposal grew out of his Tactical Committee on Medical Care, established in 1937… However, the 1938 election brought a conservative resurgence and any further innovations in social policy were extremely difficult. Most of the social policy legislation precedes 1938. Just as the AALL campaign ran into the declining forces of progressivism and then WWI, the movement for national health insurance in the 1930’s ran into the declining fortunes of the New Deal and then WWII…

The Wagner Bill evolved and shifted from a proposal for federal grants-in- aid to a proposal for national health insurance. First introduced in 1943, it became the very famous Wagner-Murray- Dingell Bill. The bill called for compulsory national health insurance and a payroll tax. In 1944, the Committee for the Nation’s Health, (which grew out of the earlier Social Security Charter Committee), was a group of representatives of organized labor, progressive farmers, and liberal physicians who were the foremost lobbying group for the Wagner-Murray-Dingell Bill… Although the Wagner-Murray-Dingell Bill generated extensive national debates, with the intensified opposition, the bill never passed by Congress despite its reintroduction every session for 14 years! Had it passed, the Act would have established compulsory national health insurance funded by payroll taxes…

 Truman fully supported national health insurance. But the opposition had acquired new strength. Compulsory health insurance became entangled in the Cold War and its opponents were able to make ‘socialized medicine’ a symbolic issue in the growing crusade against Communist influence in America…

[Beginning in the late 1950s] The AMA countered by introducing an “eldercare plan,” which was voluntary insurance with broader benefits and physician services. In response, the government expanded its proposed legislation to cover physician services, and what came of it were Medicare and Medicaid. The necessary political compromises and private concessions to the doctors (reimbursements of their customary, reasonable, and prevailing fees), to the hospitals (cost plus reimbursement), and to the Republicans created a 3-part plan, including the Democratic proposal for comprehensive health insurance (“Part A”), the revised Republican program of government subsidized voluntary physician insurance (“Part B”), and Medicaid. Finally, in 1965, Johnson signed it into law as part of his Great Society Legislation, capping 20 years of congressional debate.

Even conservative Republican President, Richard Nixon, advocated for national healthcare. In a speech on February 6, 1974, he said, “Without adequate health care, no one can make full use of his or her talents and opportunities. It is thus just as important that economic, racial and social barriers not stand in the way of good health care as it is to eliminate those barriers to a good education and a good job.

“Three years ago, I proposed a major health insurance program to the Congress, seeking to guarantee adequate financing of health care on a nationwide basis. That proposal generated widespread discussion and useful debate. But no legislation reached my desk.

“Today the need is even more pressing because of the higher costs of medical care. Efforts to control medical costs under the New Economic Policy have been inept with encouraging success, sharply reducing the rate of inflation for health care. Nevertheless, the overall cost of health care has still risen by more than 20 percent in the last two and one-half years, so that more and more Americans face staggering bills when they receive medical help today.” As was the case of those before him, nothing came of his proposal. Efforts of subsequent presidents to implement national healthcare met with the same result.

The big fly in the ointment, what clearly separates the United States from those developed nations that actually have successful universal healthcare, comes down to costs. After World War II, while most of those countries were rebuilding from the destruction from the War, the United States, with virtually no war damage to speak of, was an exploding economy. Prices did not go up significantly in those other nations, but the U.S. became a world of high wages and comparably-escalating medical costs, supported by powerful collective bargaining agreements and a generous civil service benefits package.

With 20% of our economy based on healthcare today, any significant cuts in costs would result in a comparable downward pressure on jobs in this sector. Ouch! But without a downward result on costs, allowing healthcare exchanges to bargain freely with pharmaceutical companies (prohibited under Obamacare… the result of heavy lobbying) and other mandates on insurance carriers, government is stymied under this economic reality. It’s just too expensive. Obamacare was phase one of the move towards universal healthcare, but phase two, rewriting those provisions to reduce costs, was extinguished in a Congress that wouldn’t budge on reforming the Act as needed. You see the battle lines today, and the results speak for themselves. Stand-by for some major unpleasantness on Capitol Hill.

I’m Peter Dekom, and as you formulate your opinion on healthcare reform, think about writing your congressional representatives, perhaps this expanded blog will help you with that understanding and those efforts.