Why the GOP Is Headed for an Obamacare Crack-Up

More and more, I think Republicans are in for a health care crack-up. After four years of promising to “repeal and replace” Obamacare, without specifying what they would replace it with, GOP leaders find themselves under increasing pressure to put up or shut up. And yet their own internal policy divisions will result either in a failure to unite around a plan, which could diminish their chances of taking the Senate in November, or in a plan that not all Republicans like, which could have the same effect.

And no matter how the GOP fares in November — even if it should somehow wipe the floor with the Democrats — President Obama’s veto pen will still be there, waiting to stop any plan they can manage to put on his desk. This will make the fainter-hearted among their ranks skittish about the whole “repeal” project. Why not work with the president to “get something done”? Why not — yes — “fix” Obamacare?

In short, Republicans appear to be damned if they do and damned if they don’t.

New polling by McLaughlin & Associates confirms that, if GOP candidates want to make health care resonate with voters, they need more than a slogan, they need a specific alternative. These new numbers show that, “By a three-to-one margin, 48 percent to 17 percent, voters were more likely to vote for Republicans who would repeal and replace Obamacare if they also proposed a new plan of their own to improve health care.” A hypothetical Republican candidate running on “repeal and replace” beats a Democratic candidate running on “retain but fix,” 47 percent to 43 percent, if he also offers a “replace” plan that voters find appealing and credible.

Individually, a few Republicans have tried to do this; collectively, the GOP has not. Do you know what the Republican health care plan is? Me neither.

Up till now, Republicans have had the luxury of not having to be very specific on the “replace” side, because Obamacare had little to show for itself in terms of actual benefits for real people. But that’s starting to change. Democrats are finally getting some good news on the health care front. Over the past seven months, some 8 million Americans have signed up for coverage at healthcare.gov or a state-based exchange. Even if only two-thirds of those actually pay their premiums, that’s still more than 5 million. A not-unrespectable 28 percent of exchange enrollees are estimated to be younger adults, ages 18 to 34, whose participation is needed to hold down future premium hikes.

Together, these figures pretty well dash Republican hopes that the government exchanges will fail due to enrollment that’s low or too heavily skewed to older folks.

Meanwhile, new Gallup polling suggests a dramatic 13.4 percent decline in the number of uninsured. If true, it’s amazing. And a study of Romneycare in the Annals of Internal Medicine has progressive tongues wagging about how Obamacare could end up saving 10,000 lives a year.

Of course, Republicans still have reasons to believe the issue favors them. Fresh polls suggest Obamacare remains as unpopular as ever with a majority of the public. And the woes of some of the state-based exchanges — Oregon’s is being scrapped as unworkable, while D.C.’s has come in way over budget, prompting the city council to pass a tax hike — provide helpful reminders that even in this age of high technology, government bureaucracies are still prone to trip over their own shoelaces. 

Speaking of shoes, a few additional ones have yet to drop. We still don’t know, for example, how much higher next year’s premiums will be than this year’s in the exchanges. Nor do we know how many Americans will lose their job-based health coverage and find themselves dumped into their local exchange, as thousands of employer-sponsored health plans across the country lose their temporary “grandfathered” status. Nor do we know whether the administration will be able to build the “back end” of its website, the part that’s needed to ensure the insurers actually get paid.

All of these important unknowns may be much better known by this fall, in time for the election. And if the news on even one of them is bad, it could translate into bad news for Obamacare, and Democrats, generally.

And yet. No matter how many policy devils inhabit the Unaffordable Care Act — and they are legion — this troubled law has always had one great strength: the public’s belief that it is, at bottom, inspired by noble intentions. And politically, that counts for a lot. It also has tremendous inertia. No matter what happens, it’s likely to remain on the books through the end of President Obama’s second term, nearly its sixth birthday.

But the biggest reason not to rule Obamacare out is the Republicans.

They’re in a bind. It’s not that they lack ideas for reforming health care. They have lots of them, actually. I count at least seven major GOP “replace” plans so far, all of them serious and comprehensive. The problem is that they’re reluctant to unite around just one.

House Majority Leader Eric Cantor, R-Va., has promised a GOP “replace” package sometime this year. He has been intentionally unclear, however, about whether that means before or after the election. He knows Republicans are pretty divided on a host of important issues. And he knows that, even if they do bridge their differences, the minute they put out a bill, it will be a target on their backs, not just for Democrats, but also for those Republicans who don’t care for it.

Consider the dilemmas poor Cantor faces:

1. Pre-existing conditions: Do Republicans keep Obamacare’s (very popular) ban on denying insurance to people with pre-existing medical conditions? That mandate drives up prices for healthy people. If they keep it, they will be tempted to also keep the (equally popular) rule that prohibits insurers from charging sick people more than three times what they charge healthy ones. That drives up healthy folks’ costs even more. Which is why, of course, Obamacare contains an individual mandate, and why it has all those government subsidies and bureaucratic exchanges — to keep the two basic mandates from blowing everything else up. Retain them, even in a limited form (as some GOP plans would do), and you have no choice but to retain the individual mandate in some form, along with the rest of Obamacare’s basic infrastructure.

Which, needless to say, would occasion a GOP crack-up.

2. The Constitution: Some Republicans want to create new funding streams for so-called “high-risk pools,” to help people with pre-existing conditions afford private health insurance. This isn’t a bad idea, on its face. But GOP constitutionalists (a growing faction within the party) will oppose federal funding streams on constitutional grounds. Chances of a crack-up: pretty high. 

3. Make tax vouchers universal or targeted?: The current tax code heavily favors health benefits obtained at work, and discriminates against health insurance purchased individually. Republicans rightly want to rationalize this, so folks get the same tax subsidy regardless of where they obtain it. But in so doing, they risk unraveling the employer-based system from which half the U.S. population currently gets its health benefits. (Imagine 160 million Americans losing their health insurance under a Republican plan, compared to the 6 million who have lost it under Obamacare.)

The likely compromise will be to add new subsidies for individual insurance, without touching workplace health benefits. Prudent. But then the question arises: How do you pay for these new subsidies? And that leads some Republicans, like Senator Tom Coburn, R-Okla., to propose taxing “excessive” workplace health benefits. Alternatively, Republicans could tax somebody else. Or they could cut spending (for example, Medicare, the same place Democrats went hunting for cash). Prognosis: crack-up.

4. Credits or deductions?: Even if Republicans can agree on how to pay for new health care tax breaks, they still have to overcome their ancient divisions over credits versus deductions. Some conservatives absolutely hate credits because they’re redistributive, shipping money down the income ladder from richer to poorer folks. Other Republicans strongly prefer credits for the same reason. Prediction: crack-up. 

6. What about the exchange enrollees?: Will Republicans throw the 8 million (and counting) exchange enrollees off the rolls? Brace yourself: crack-up.

7. Process?: Will they try to pass one massive bill, or a series of smaller ones? If they go for one bill, will they allow amendments? If some of the amendments pass, will the big bill be able to pass? In short, will they try to ram their ideas through high-handedly, like the Democrats did? Or will they risk some of their weaker ideas being voted down by their own members? Forecast: turbulence, with a chance of crack-ups.

And then there’s the fact that a lot of Republicans aren’t really all that hot for repeal, when it comes right down to it. Oh yes, they claim to be, now. But some “realists” secretly think it will never be repealed, for the same reason Social Security and Medicare won’t be. Others, of a more technocratic bent (such as Avik Roy and Douglas Holtz-Eakin), have never really objected in principle to the basic Obamacare infrastructure of mandates, exchanges and subsidies. (To be fair, Roy does oppose the individual mandate.) They just want to make it cheaper, more efficient and more “customer-oriented,” like in Switzerland. These less-than-fully-committed Republicans have been waiting for the right moment to come out of the closet. And when they do?

Crack-up!

Maybe Republicans can navigate these treacherous waters. I hope they do. (I’ve even offered them some public advice about how they might.)

But the smart money is on a crack-up.