The Republicans' Anti-Obamacare Tax Cut Bill Is a Huge Gamble
The Senate wants to get rid of the Affordable Care Act's mandate, but it's going to spark yet another complicated legislative showdown.
Senate Republican leaders. Photo by Mark Wilson/Getty
A new bid to cripple Barack Obama’s Affordable Care Act apparently has legs. It took shape in late October, when conservative members of Congress started pushing the idea of using the big tax bill as a vehicle to eliminate the ACA’s “individual mandate,” which puts a tax penalty on people who don’t purchase healthcare. Early this month, President Donald Trump started stumping for the idea as well. Far-right groups in the House even tried to muscle a mandate repeal provision into their version of the bill this Tuesday, before a Thursday vote. The bill that passed the House on Thursday didn’t end up touch the individual mandate. But the Senate’s latest version, released on Tuesday, included language that would wipe it out starting in 2019.
Congressional Republicans have repeatedly tried to slash the ACA, and failed—thanks, more often than not, to opposition from moderate GOP senators. Fear of another such failure in the Senate was reportedly a big part of why the House held back on axing the mandate in its own bill. It seems odd, then, that the Senate decided to include anti-ACA language the House shied away from. So why did they decide to go for it?
The most obvious answer is that they need the money. Republicans have been struggling to make their tax cuts seem friendlier to poor and middle-class Americans without having to scrap big breaks for the wealthy and corporations. But they’re bumping up against a self-imposed limit of adding $1.5 trillion to the national debt over the next decade. The Congressional Budget Office (CBO) estimates that killing the mandate would save $338 billion over ten years. So conservatives sold the provision as a means of freeing up resources to use to bolster tax cuts for the middle class.
However those savings are a direct result of the fact that millions would drop out of the ACA marketplace without the incentive of the mandate’s fine. (The CBO estimates 13 million more people would not have health insurance by 2027 as a result of the mandate being wiped out). These dropouts would mostly be the young and healthy, who often don’t feel the impulse to buy insurance on their own. But losing them would presumably boost the costs for older and sicker people remaining in the ACA market’s pool, resulting in an estimated average 10 percent premium hike for people with individual marketplace plans.
Killing the mandate also psyches up some on the right who could have opposed the bill for other reasons, Joe Antos, a health policy wonk at the right-leaning American Enterprise Institute, told me. That’s the kid of chit-trading that usually moves big, divisive bills forward.
But “there are a whole bunch of other things you could change,” Antos pointed out, to make the tax legislation appealing to the right number of legislators. And many of them would have been less risky. As long as this provision is intact, it kills what was a very real hope that Republicans could attract red-state Democrat supporters. So why, of all the tweaks they could have made for cash or appeal, did they target the mandate?
“This whole issue is driven largely by the failure of the Senate this last year to do anything on repealing and replacing Obamacare,” said William Hoagland, a former Senate Budget Committee staff director and current analyst at the Bipartisan Policy Center. “They’re looking at this not so much from the policy perspective as to being able to hold onto the majority in next year’s elections.”
Senators may not fear as much backlash or internal division about axing the mandate alone as it’s always been the least popular part of the ACA. Republicans also doubt, and have been working to discredit, the CBO’s numbers. So, Hoagland said, “the majority of them probably don’t see that it really will cause 13 million people to lose coverage.” They’ll likely try to sell America on that doubt, too.
Discrediting that 13 million figure could pose an issue for them, though, Hoagland pointed out, because “if they didn’t lose 13 million, they wouldn’t have $338 billion to spend on tax reform.” It remains to be seen whether the public will accept the GOP’s cognitive dissonance on this.
The choice to add the provision was, reportedly, not unanimous among Senate Republicans. But there’s been no real outcry against it, not even from folks who balked at coverage-dropping attacks on the ACA earlier this year. In fact, earlier this week Republican Senator John Thune claimed they’d done a whip count on the new version of the legislation and it was looking good.
This may stem from the fact that Senate Republican leaders reportedly struck a deal to final allowing compromise legislation that would stabilize the ACA’s individual markets temporarily to get a floor vote in exchange for putting the mandate provision in the tax bill. The reconciliation process that allows Republicans to pass this bill with a simple majority vote in the Senate also contained language mandating that it include provisions opening arctic preserves to oil drilling, something Alaska Senator Lisa Murkowski, one of the Republican no votes on previous ACA attacks this year, backs. Hoagland suggests this may blunt some of her expected outcry. And Senator John McCain, another previous ACA repeal no vote, may be pacified by the fact that the bill is moving through regular order, his big ask.
Knowing the likely wouldn't face as much friction on this provision as on past ACA-related votes, Senate Republican leadership faced no major restrictions to at least testing this language out before they had to lock in the legislation's text.
Liberals are gearing up to bash the GOP for trying to nix the mandate. Senate Minority Leader Chuck Schumer has said Democrats won’t vote for the Alexander-Murray compromise legislation if it’s put on the table in exchange for cutting the mandate. But Republicans don’t seem to be afraid of that. As Hoagland pointed out, they can vote on this version of the tax bill before Schumer would have time to tank the Alexander-Murray compromise legislation. This might put pressure on Schumer to cave and take some vote protecting the ACA’s marketplaces, even if it plays right into Republican hands. “It’s all timing,” said Hoagland.
It remains to be seen whether the mandate repeal will remain in the bill. It may get taken out as negotiations advance in the Senate, or when the two chambers of Congress their bills in the reconciliation process. At any point it could be sacrificed to secure a vote or two endangered by a tweak to another priority.
“This is all very fluid,” said Antos. He doubts anything that’s in the bill now will definitely be in the final Senate bill, much less the bill that comes out of a compromise between the final House and Senate versions. “I’ll believe it more when the Senate takes it up seriously,” he added, “which is not going to be until after Thanksgiving.”
So the Senate’s decision to jam an attack on the mandate into its latest tax bill is a test balloon, floated in light of a new balance of wants and accommodations. There’s a good chance that it could actually pass delivering a win to the GOP and Trump at last.
But that balance is fragile. It could fall apart as any of the thousands of moving pieces in or surrounding the tax bill shift slightly. If the Senate does just drop this provision again, after reviving mass attention on the Republican healthcare agenda, that could read as another, if minor, failure for them. Floating this provision is a gamble. And, as Hoagland told me, “it’s terribly risky.”
Follow Mark Hay Twitter.