Republicans Throw the Gauntlet on Health Care Reform
Policy + Politics

Republicans Throw the Gauntlet on Health Care Reform

Alex Rader/The Fiscal Times

The election-emboldened Republican leadership may soon discover that undermining President Obama’s signature health care reform law won’t be easy. It may also entail significant political risks.

Republicans claim the $940 billion, 10-year health care bill is too expensive, would unnecessarily cut Medicare Advantage, would raise taxes on individuals and businesses and would be tantamount to a government takeover of the health care industry. Many Republicans also believe that a provision of the law mandating individuals to purchase insurance is unconstitutional and that some of the government subsidies could end up paying for abortion services. The law passed Congress without a single Republican vote, and many GOP lawmakers ran against the law during the midterm campaign and won handily.

After taking symbolic votes to repeal the entire measure, they hope to use their new grasp on the government’s purse strings in the House to hamstring the administration’s ability to carry out the law. "We can't expect the president to sign" a repeal bill, said Senate minority leader Mitch McConnell (R-KY) in a saber-rattling speech at the conservative and anti-health reform Heritage Foundation two days after the election. "So we'll also have to work in the House, on denying funds for implementation, and in the Senate, on votes against its most egregious provisions."

McConnell isn’t the only one who wants to reverse course. The House Republican whip, Representative Eric Cantor of Virginia, described the strategy to The New York Times this way: "If all of Obamacare cannot be immediately repealed, then it is my intention to begin repealing it piece by piece, blocking funding for its implementation and blocking the issuance of the regulations necessary to implement it." "In short," Mr. Cantor said, "it is my intention to use every tool at our disposal to achieve full repeal of Obamacare."

But there will be major pitfalls in attempting to carry out this confrontational strategy, not the least of which are political. Many of the bill’s provisions are popular, at least the ones that have already gone into effect, including allowing children to be covered by their parents’ insurance until age 26. On the campaign trail many Republicans supported the end of insurance industry discrimination against people with pre-existing medical conditions and removing lifetime caps on coverage.

In addition, exit polling revealed that the older and more conservative electorate that showed up to vote was evenly divided on the health care issue, which ranked well behind the overall economy as a major concern. Polls have also consistently shown popular support for helping lower-income people buy health insurance when their employers fail to provide coverage.

When seniors, always a high turn-out group, did express concern about the law, it was typically in response to Republican ad campaigns opposing Medicare "cuts." Repealing the $500 billion in savings in Medicare that are in the bill, which reformers insist are the nation’s best hope for making the program more cost-effective while providing better care, would leave a gaping hole in the budget that would have to be filled with either alternative cost efficiencies or the total elimination of the expansion of coverage.

That leaves House Republicans with the option of engaging in trench warfare over specific provisions, where success or failure could be determined by their willingness to engage in the kind of budgetary brinkmanship that led to a government shutdown in 1995-1996. "The consensus is that the Republicans ended up looking bad from that," said Paul Van de Water," an analyst at the Center for Budget and Policy Priorities, which backs reform. "How it would play out this time, no one knows."

There aren’t very many big ticket items that are crucial to reform. The Health and Human Services Department and the Internal Revenue Service both need $5 to $10 billion to prepare for the expansion in insurance coverage contained in the law. Between now and 2014, HHS needs to write rules that will govern the 50 states exchanges set up under the law, while the IRS must get ready to administer a program that delivers cash subsidies to lower-income individuals and families.

While the amounts are minor in terms of their overall budgets, Republicans in the House could attach riders to the annual appropriations bills that would forbid the agencies from spending any money on those specific tasks. "We don’t want it to work just barely, we want it to work well," fretted Van de Water. "We want to make sure that people are able to enroll smoothly in a choice of plans through the exchanges and the subsidies get paid to the insurance companies smoothly on behalf of people who are supposed to get them."

Republicans could also use appropriations riders to undermine controversial side elements in the reform law that few in the general public would recognize, but are a major concern to lobbyists for various health care interests. For instance, the bill contains $500 million a year to staff and carry out comparative effectiveness research through the Patient-Centered Outcomes Research Institute, which insurers and consumers support but is seen by drug and device companies as a threat to sales and by physician groups as a threat to practice medicine the way they see fit.

There’s $10 billion over ten years earmarked for the Center for Medicare and Medicaid Services to carry out innovative demonstration projects aimed at improving quality and lowering costs. Given the track record of previous experiments, skeptics question whether these would have much impact on bending the cost curve in any case.

There’s also a minuscule $15 million to begin operations of an Independent Payments Advisory Board (IPAB), which is empowered under the statute to send a slate of Medicare cost reductions to Congress for an up or down vote in any year when Medicare costs rise one percentage point faster than the overall rate of medical inflation.

Some observers have called the IPAB the sleeper reform that holds the greatest promise of controlling costs. Yet the provision was so watered down during the legislative process that it is virtually worthless, according to Dan Mendelson, who ran the health division of the Office of Management and Budget during the Clinton administration and now runs Avalere Health, a major health care consulting group.

"Right now, it excludes all hospital care so it’s a recipe for failure," he said. But "there is danger for the Republicans defunding programs that are designed to reduce government costs. Comparative effectiveness research has the potential to save money down the line. The IPAB was put in place to promote fiscal discipline. The House majority will want to put their stamp on these structures. They will be modified. But I believe these evidence-based medicine structures will be preserved. When you talk with moderate Republican members, they get it."

There are some big ticket items in the bill that aren’t crucial to reform, but the Republicans may target them to help pay for other items. For instance, there’s $9 billion for a National Health Service Corps, which the Obama administration hopes will encourage more young physicians to enter primary care by serving in under-served areas around the country; and $34 billion for community health centers, which serve low-income areas with few medical providers and high numbers of the uninsured.

The Republicans could gut or reduce these programs in the very near future to avoid a slated 20 percent cut in Medicare physician payments, which requires $17 billion to restore. This could even peel off some Senate Democrats who have consistently voted against going through with physician pay cuts, which were mandated nearly a decade ago but have never gone into effect.

Congress could refuse to fund most public health and demonstration programs in the law without having "much impact on reform," said Timothy S. Jost, a law professor at Washington & Lee University. The core elements of coverage expansion — the tax credits for small business, the individual premium subsidies, and the expansion of Medicaid — "will actually require a repeal of the law," he said. "They don’t need further appropriation. The law simply creates an entitlement."

There is one element that will definitely come under Republican attack in the new bill — the individual mandate, which requires that everyone buy coverage. Tea Party activists made the issue a centerpiece of their claim that the president’s reform bill was a "government takeover of health care." Eleven state attorney generals are challenging this aspect of the law — Florida, Virginia, Alabama, Nebraska, Texas, Pennsylvania, Washington, Utah, North Dakota, and South Dakota have so far moved to block the law.

However, the biggest losers if the mandate is repealed would be the insurance and hospital industries, both of which insisted on its inclusion in the bill and both of which have strong ties to the mainstream of the GOP. Insurers fear people will simply wait until they get sick or have a serious accident before buying coverage under the new rules that prohibit discrimination against people with pre-existing medical conditions. And the hospitals want reimbursement for the coverage they must provide when the uninsured show up in emergency rooms.

The Republicans could try to assuage some of the opposition to repealing the mandate by offering insurance companies relief on the medical loss ratio rules in the law, which limit overhead and profits to 80 percent of premiums for individual and small group plans and 85 percent of premiums on large group plans. "I think the core [Republican] strategy will be around repealing the mandate and those regulations," predicted Mendelson.