Sunday, June 25, 2017

This is not the health care bill you were looking for. Move along.

David Super

     After weeks of suspense, built up with teases and process controversies, there is an understandable temptation to seize upon the newly released Senate Republican health care bill like a piece of next-generation consumer electronics.  One set of writers reviews its features and bugs.  Another prognosticates on the market’s receptivity to this new product.  Eventually, when these reviews and predictions are starkly negative and key market participants announce that they will have no part of it, a new line of commentary arises about how the designer could have so badly miscalculated.

     Yet this is not the final McConnell substitute.  It is not McConnell 1.0.  It is not even a particularly serious McConnell beta.  It is just the first step in an extended dance whose basic moves are quite well-known.  Like Swan Lake, however, when entrusted to a skilled choreographer – and Sen. McConnell certainly is that – this dance surprises and delights audiences each time it is performed, as though they had never seen it before. 

     All of this must be understood in the context of the fundamental task congressional Republicans have set for themselves.  Because their vow to eliminate all the taxes that financed much of the Affordable Care Act is sacrosanct, they must deliver a health care system with dramatically fewer resources.  (The money available to them to do something more than return to the pre-ACA state is the proceeds from ACA’s Medicare savings, which Republicans also blasted at the time but have since found convenient to accept.)  With no substantial inefficiencies or extravagancies in the ACA to eliminate (at least not without moving to a single-payor system, which is an obvious non-starter among Republicans), this means that their health care legislation must dramatically reduce the number of people insured, the amount of care provided, or both. 

     The House bill sought to minimize the total number of people losing coverage by concentrating its coverage losses on those most expensive to insure:  older and sicker people.  Ironically, the headline metric that has come to define this debate – the number of people losing coverage – would judge a bill more harshly if it did not concentrate the losses on those most expensive to cover. 

     With no substantively good alternative, and with no appetite for making the case that eliminating the “tanning tax” is important enough to justify these coverage reductions, the question for Republican leaders is how to give their Members the best possible cover to vote for a deeply unpopular bill.  And here process and perceptions are key.  If you cannot plausibly argue that your bill is “good”, put your Members in position to argue that it is “better”.  (More broadly, policy analysts typically focus on proposals’ cardinal value, but the political process tends to work more in ordinal terms – which makes setting an advantageous point of reference crucial.) 

     Initial reactions to the McConnell substitute are scorching, from both left and right.  Many have called it harsher than the House bill, which it probably is.  Sen. McConnell is likely delighted with those reviews.  Careful observers over the years recognize that Sen. McConnell thinks more moves in advance than Gary Kasparov ever did.

     Sen. McConnell is repeating the same three-step that allowed Speaker Ryan to pass a dreadful and thoroughly unpopular bill through the House.  Start with a basic bad bill, one you know pretty much everyone will hate.  Deliberately follow an objectionable, secretive process.  Allow Members from across your caucus to denounce it on both substantive and process grounds.  Then you start appeasing your Members, group by group.  First you move the bill much farther to the right, picking up the Tea Party factions.  This, in turn, causes even more furious denunciations by self-styled moderates.  Have one or two of them declare solemnly that they will refuse to support the bill, with a day or two of congratulatory media stories about how those moderates stood on principle.  This role was played by Rep. Fred Upton in the House and now seems to have gone to Sen. Dean Heller and perhaps Sens. Rob Portman and Shelley Moore Capito.  Then leadership gives the moderates token concessions that are easy for reporters to describe but that do not alter the fundamentals of the bill (and hence do not cost you the ultra-conservative support that you just picked up).  Having sung the praises of the principled moderates much of the media will be loath to admit that they gave in for cosmetic changes – especially if the final substitute is introduced only just before the decisive vote.  Throughout all of this, the process objections, which had been central to the critique of the initial bill, largely melt away as the legislation is repeatedly rewritten in response to Members’ complaints.  Here, too – in procedural terms – the Members can claim credit for making the legislation “better”. 

     The process of sequentially placating Right and Left works because the two sets of Members are trying to appease fundamentally different kinds of people.  The right-most Members are responding to cohesive, well-funded advocacy groups with the policy expertise to analyze any legislation’s practical effects.  The moderates are appealing to swing voters dependent on media accounts and with no real capacity to see how all the pieces fit together.  By moving the initially released bill to the right, the Tea Party Members show their value to their funders, producing a “better” bill.  By adding high-profile but wildly inadequate funding to the legislation – subsidies for high-risk pools, opioid treatment, slowing the elimination of the Medicaid expansion, or whatever – the moderates produce a “better” bill for their constituents.

     Because no Republican bill that repeals the ACA’s revenue provisions will be better than current law, the object of these initial leadership drafts is to provide an alternative point of comparison for the bill that Members will actually vote to pass.  The plethora of seeming oversights and blunders in the initial McConnell substitute therefore are not indications that the Majority Leader does not know what he is doing – they are signs that he very much does. 

     Those appraising the initial McConnell substitute also ought to bear in mind the lack of a meaningful political difference between a bad bill and a very bad bill, especially in a highly technical area like health care.  Media accounts typically limit themselves to no more than three alleged defects in any bill; even advocacy groups rarely include more than five or six top-level complaints in their point papers.  The difference in public reception between a bill with five defects and one with twenty-five defects therefore is not that great.  But by starting with a very bad bill, the leadership gives Members many more opportunities to fight for, and win, improvements. 

     Commentators also should not assume that the initial McConnell substitute accurately reflects the results of his staff’s private consultations with the parliamentarian about which provisions Senate rules will permit on a “reconciliation” bill shielded from Democratic filibustering.  He has strong incentives both to overstate and to understate what the parliamentarian is willing to allow him to do.  He can blame the parliamentarian for blocking some politically hazardous provisions that some senators desire, dissuading them from demanding those provisions as the price of their votes.  In addition, if senators think he cannot add this or that provision to the bill, they may be tempted to justify their “no” votes on that basis.  If Sen. McConnell can pull those provisions out of his hat at the last minute, the senators may feel trapped because they have abandoned other possible grounds for voting against the bill.  On the other hand, including some provisions that he knows will be subject to lethal points of order on the floor may give him more material to trade away with senators that do not realize the provisions are doomed anyway.

     Finally, one should not necessarily assume that all provisions are designed to work in straightforward ways.  The McConnell substitute would eliminate the individual and employer mandates to purchase health insurance without any semblance of a substitute.  When combined with requirements to cover essential benefits and prohibitions on discrimination against people with pre-existing conditions, this would seem to open the door to opportunistic enrollment in insurance just when someone needs expensive care.  If so, it would risk destabilizing the individual insurance market. 

     This instability could, however, give states strong incentives to seek the broad waivers that ACA allows and that Sen. McConnell’s proposal would expand.  If the ACA’s standards for these waivers were diluted or ignored, they could become de facto block grants.  Republican strategists have long favored converting anti-poverty programs into block grants, which become difficult to defend politically as states’ practices diverge.  (President Trump’s budget proposes to eliminate or dramatically reduce several block grants created by his Republican predecessors on the grounds that insufficient evidence demonstrates their value.)  If the “regular” health care system becomes increasingly non-functional, states across the political spectrum may opt for waivers (which receive less federal funding than would otherwise flow to states). 

     Alternatively, if the lack of protections against opportunistic timing in purchases of health insurance are combined with the right for insurance companies to sell across state lines (another frequent feature in Republican health care proposals) and the ability for states to waive protections for people with pre-existing conditions of the kind in the House bill, the result would be that virtually all individual health insurance policies would be written from states eliminating those protections/  The Koch brothers and other groups pushing to deregulate health insurers surely can put that together, but many media accounts likely will not. 

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