Trump’s Surprising New Assault on Obamacare

Plus, Kamala Harris's plan to give teachers a big raise

Trump’s Surprising New Assault on Obamacare

A new fight over the future of the Affordable Care Act has erupted in the nation’s capital — and is likely to ensure that health care remains in the spotlight through the 2020 elections.

In a dramatic shift, the Trump administration has asked a federal appeals court to invalidate the Affordable Care Act in its entirety, according to a legal filing made Monday night.

The administration had previously said that the ACA’s protections for people with pre-existing conditions should be struck down, but that the rest of the law could remain in place. But in a Justice Department letter sent Monday night to the United States Court of Appeals for the Fifth Circuit, the Justice Department said the court should affirm an earlier ruling by a federal judge declaring the entire law invalid.

In December, Judge Reed O'Connor had ruled that the ACA’s individual mandate had become unconstitutional after Republicans eliminated its penalties as part of their 2017 tax overhaul. O’Connor further said that the change rendered the entire ACA invalid.

What’s at stake: If O’Connor’s ruling stands, more than 20 million people who currently receive health insurance through the federal exchanges and Medicaid expansion stand to lose coverage. The law touches on many parts of the health care system that would be affected as well, such as FDA approval of biologic medicines and rules on nutritional labeling.

Nicholas Bagley, a professor at the University of Michigan Law School who served in the Justice Department during the Obama administration, says that “the sheer reckless irresponsibility is hard to overstate. The notion that you could gut the entire ACA and not wreak havoc on the lives of millions of people is insane. The Act is now part of the plumbing of the health-care system. Which means the Trump administration has now committed itself to a legal position that would inflict untold damage on the American public.”

A political boomerang? President Trump tweeted Tuesday that “The Republican Party will become ‘The Party of Healthcare!’” But given how the issue helped Democrats in the 2018 election — and how Republicans have struggled to come up with a replacement for Obamacare — this move left many political analysts scratching their heads. Fresh off a huge political victory in the Russia investigation, the White House shifted the conversation back to far less favorable grounds. “Politically, this makes no sense,” Axios’ Sam Baker says. “Chuck Schumer and Nancy Pelosi must be dancing in the streets.”

CNN’s Chris Cillizza says that the decision to go after Obamacare in full ensures that health care will be a deciding factor in the 2020 election, in ways that could hurt Republicans:

“Switching the spotlight of the national debate from Russia to health care so quickly would be risky under any circumstances but is particularly problematic given that a) the past five elections have shown that people care deeply about and vote on the issue of health care and b) getting rid of Obamacare is not a broadly popular view with the American public.”

What’s next: The Justice Department said it would file a brief providing more details on its change in position on the law. The case is likely headed for the Supreme Court, where Chief Justice John Roberts could once again play a deciding role in the fate of the health care law.

Democrats Move to Bolster Obamacare

A day after the Trump administration announced that it now wants the Affordable Care Act to be completely overturned, House Democrats introduced new legislation to shore up the 2010 health care law.

Assembled by House Speaker Nancy Pelosi and several committee chairs, the legislative package focuses on incremental changes to strengthen the existing health care law. Here are some of the things it would do:

  • Effectively cancel the Trump administration’s expansion of cheaper, short-term health care plans by requiring them to comply with the comprehensive standards of the Affordable Care Act.

     
  • Expand coverage to include families who are now ineligible because one family member has access to affordable employer-based health care, even though family coverage is unaffordable.

     
  • Expand tax credits for lower-income families.

     
  • Expand eligibility to more middle-class households.

     
  • Create a national reinsurance program designed to limit premium increases.

One thing the legislative package doesn’t do is move toward Medicare for All, which is still an unsettled issue among Democrats. “House Speaker Nancy Pelosi has sounded skeptical notes about single-payer and urged Democrats to focus on strengthening Obamacare, their winning message in the midterms, so this new bill doesn’t come as a surprise,” Vox’s Dylan Scott says.

The incremental approach may offer political advantages, and Democrats plan to vote on the package in pieces to force Republicans to vote repeatedly on what could be popular proposals to improve the health care system.

Nevertheless, more liberal lawmakers will continue to press for the creation of a single-payer system. House Democrats plan to hold hearings this year on various options, and the Congressional Budget Office is expected to weigh in on how such a system might be designed and how much it would cost.

White House and Pelosi Discussing Drug Pricing Legislation: Report

Even as the battle over the Affordable Care Act reemerges, the Trump administration and Democrats are reportedly also in talks over legislation to lower prescription drug prices.

Politico’s Sarah Karlin-Smith and Adam Cancryn report:

“The Trump administration has held early-stage conversations with Speaker Nancy Pelosi's staff about drug-pricing legislation that could provide each side with a domestic policy victory, according to White House and congressional sources.

“Democrats and the Trump administration have made reducing drug costs a priority, but accomplishing anything could be difficult, especially since the administration has taken an aggressive stance to overturn Obamacare in federal court.”

Majority of Tax Cuts Going to Filers Earning More Than $100K: JCT

Ahead of a House Ways and Means Committee hearing scheduled for Wednesday, the Joint Committee on Taxation prepared an analysis of the distributional effects of the 2017 Republican tax bill. The New York Times’ Jim Tankersley highlighted the fact that according to the JCT analysis, about 75 percent of the individual and business benefits of the tax cuts will go to filers earning more than $100,000 in 2019. And nearly half of the benefits will flow to filers earning over $200,000.

Kamala Harris Wants to Give Teachers a Big Raise

Democratic presidential candidate Sen. Kamala Harris is calling for what she describes as “the largest federal investment in teacher pay in U.S. history,” proposing to spend $315 billion over 10 years to boost teacher pay by an average of $13,500 over four years.

Harris’ proposal comes as walkouts and teacher strikes protesting low pay and education funding have brought attention to the issue across the country, from West Virginia to Oklahoma to Oakland.

Harris says that U.S. teachers earn about 11 percent a year less in salary and benefits than other college graduates, citing a 2018 study by the left-leaning Economic Policy Institute. “The ‘pay gap’ between what teachers earn and what people with similar educations earn is creating disastrous consequences,” she writes in a Washington Post op-ed. “Teachers are leaving their dream jobs because they can’t make ends meet. Bright college graduates are not choosing this path of service because they need to pay their student loans. Rural schools are unable to fill teaching vacancies while urban schools struggle with high rates of turnover.”

Some key details of her proposal:

  • The Department of Education would work with states to set a base salary goal for new teachers in every state, factoring in average salaries for similarly educated professionals in each state. That starting pay level would rise for other teachers based on experience and qualifications.

     
  • The federal government would cover the first 10 percent of the total pay increase for teachers for the first year.

     
  • The federal government would then contribute $3 for every $1 a state invests in teacher pay. To get the funding, states would be required to maintain their investment over time and increase pay to cover inflation.

     
  • Additional money would go to high-need schools to prevent teacher turnover.

     
  • The plan also calls for a “multibillion-dollar investment” in teacher recruitment, training and development, with half of that funding dedicated to programs at historically black colleges and universities and other institutions that serve minorities.

     
  • The plan would be paid for by unspecified changes to the estate tax — “increasing the estate tax for the top 1 percent of taxpayers and cracking down on loopholes that let the very wealthiest, with estates worth multiple millions or billions of dollars, avoid paying their fair share,” Harris says.

Why it matters: The Harris campaign says that eliminating the teacher pay gap and closing the achievement gaps between the U.S. educational system and those in other countries could add $2.3 trillion to the U.S. economy, citing a report from management consultants McKinsey & Company.

As for the politics of the plan, The Washington Post’s Jennifer Rubin notes that “more than 50 million Americans live in a household with a public school student and/or teacher. That’s a very big pool of voters who would stand to benefit from Harris’s proposal, whatever you think of the merits.”

Can it work? While the plan would contrast sharply with the GOP education agenda, both at the federal and state levels, Vox’s Dylan Scott notes that, “it would also require the states themselves to buy in for the plan to succeed — and states aren’t always willing to sign up for an initiative that requires them to spend money, even with a generous match from the federal government.”

The bottom line: Vox’s Scott adds that Harris’s plan suggests a new path for Democrats moving away from charter schools and the idea of linking teacher pay to standardized test scores — one that “aligns with the party’s leftward drift on health care, climate change, and other issues: investing substantially more public money to fix problems.”

Chart of the Day: A New Stock Buyback Record

S&P Dow Jones Indices said Monday that companies in the S&P 500 index bought back a record $806.4 billion worth of their own stock in 2018, up 55.6 percent compared to 2017 — and about 37 percent higher than the previous record of $589.1 billion in 2007. (Apple alone spent $74.2 billion on buybacks for the year, by far the most of any company.)

Over the last three months of the year, companies bought back $223 billion in shares, or roughly the market size of AT&T, setting a fourth consecutive quarterly record.

“Companies continued to spend more of their tax savings on these share repurchases as they boosted earnings through significantly reduced share counts,” Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said. The Axios chart below shows how buybacks have surged since the tax law was enacted.

Pentagon Shifts $1 Billion for Border Construction

Acting Defense Secretary Patrick Shanahan has approved the transfer of up to $1 billion from military personnel funds to the Army Corp of Engineers for use on the border. The transfer nearly doubles the $1.3 billion Congress authorized for border construction projects this year, though it still falls short of the $5.7 billion requested by the Trump administration.

In a press release, the Defense Department said the money “will be used to support [Department of Homeland Security’s] request to build 57 miles of 18-foot-high pedestrian fencing, constructing and improving roads, and installing lighting within the Yuma and El Paso Sectors of the border in support of the February 15 national emergency declaration on the southern border of the United States.”

The transfer of funds occurs under authority of federal statute 10 U.S.C. § 284(b)(7), the press release said, which gives the Pentagon the authority to take steps to aid federal law enforcement agencies engaged in counter-narcotic activities.

House Armed Services Chairman Adam Smith (D-WA) rejected the move Tuesday. “The committee denies this request,” Smith said in a letter to Undersecretary of Defense David Norquist. “The committee does not approve the proposed use of Department of Defense funds to construct additional physical barriers and road or install lighting in the vicinity of the United States border.”

It’s not clear, however, that Congress has the authority to intervene in the matter, since the Pentagon is acting on a presidential order, and The Hill’s Ellen Mitchell said Smith’s pronouncement was “largely symbolic.” But the Pentagon could face repercussions in the future, Smith warned, saying at a hearing on the Pentagon’s 2020 budget Tuesday that “the result of that likely is that the Appropriations Committee in particular would no longer give the Pentagon reprogramming authority and I think that’s unfortunate because they need it.”

Speaking at the hearing, Shanahan acknowledged that the transfer could harm his agency in the long run. “It was a very difficult discussion, and we understand the significant downsides of losing what amounts to a privilege,” Shanahan said.

He added: “We said, ‘Here are the risks longer term to the department,’ and those risks were weighed. And then given a legal order from the commander in chief, we are executing on that order.”

News

Views and Analysis