Once it became clear on the morning of November 9 that Republicans would have control of the White House, the Senate, and the House of Representatives come 2017, another shocking realization dawned: Obamacare could be repealed. Republicans had explicitly run on a promise to do just that in four successive national elections and had been rewarded for it by the voters in 2010 (when they secured a majority in the House), 2014 (when they secured the majority in the Senate), and 2016 (when they secured the presidency). Throughout the six years following the passage of the Affordable Care Act, the GOP voiced its opposition by passing multiple repeal bills. Given the inevitability of President Obama's veto, Republicans were much derided by Democrats and the media for these seemingly futile gestures. But these efforts had a strategic purpose: They were intended to demonstrate to America's voters that Republicans had a legislative path to get a repeal bill to the president's desk—a bill that a Republican president would actually sign. A mere five months later came another political shocker: The initial Republican effort to repeal Obamacare ran off the rails. On the eve of a planned March vote, House leaders pulled their bill, the generically named American Health Care Act, because they knew it would fail due to Republican resistance from conservatives and moderates alike. In the immediate aftermath, President Donald Trump pledged to walk away from health-care reform efforts and "let Obamacare explode." House Speaker Paul Ryan grimly noted that the problematic 2010 legislation was "the law of the land" and that "we're going to be living with Obamacare for the foreseeable future."
What on earth happened? Since it became law in 2010, Obamacare has been unpopular: A plurality, and sometimes a majority, of Americans have expressed their disapproval of the legislation and its ramifications. An unending series of deservedly negative stories highlighted the rising and hidden costs it imposed, the shrinking choices for consumers under its yoke, its botched implementation, and its unmet promises. Despite its name, the Affordable Care Act was hardly affordable; it left millions uncovered, and though it was an act of Congress 2,000 pages long, the administration kept rewriting it and delaying it through questionable executive-branch fiat.
And yet the Republicans could not get their caucus in the House to vote for the bill they wrote to begin the process of repealing and replacing it. The failed process that led to this embarrassing defeat highlighted the three major challenges that the GOP faces if it wants to be successful in repealing Obamacare and building a workable health system going forward.
First, there is the policy challenge. The bill failed because too many Republicans found its provisions discomfiting or dismaying. It was indeed flawed, but there was no way around the fact that the bill could not be what everyone who wishes to see an end to Obamacare wanted it to be.
Let me explain. For a bill to reach the president's desk, it must (of course) pass both the House and the Senate. The only way a bill can even come up for passage is for senators to vote explicitly beforehand to end their formal debate on the measure. This is called "cloture." Senate rules require a supermajority of 60 votes to achieve cloture. Republicans hold the Senate majority with 52 votes. What this means in practice is that while they can likely secure passage for any bill that reaches the floor, Republican efforts will be stymied because Democrats can refuse to end debate and leave the bill hanging forever in endless-debate limbo.
There is, however, one type of legislation that can be passed with a simple majority: a budget reconciliation bill. The budget-reconciliation process was designed (in 1974) to allow simple majorities to pass budget resolutions. Clever and able parliamentarians have seized on the reconciliation process to usher through bills unable to reach the 60-vote cloture threshold. Most notoriously, Obamacare itself passed using reconciliation, a trick that became necessary in early 2010 after the Republican Scott Brown won the Massachusetts Senate seat following Ted Kennedy's death and brought the Democratic majority down to 59.
Given current Democratic resistance to any changes in Obamacare and to any Republican action in the age of Trump generally, Republicans had no choice but to pursue reconciliation to get a health-care bill through. (The primary oddity here was that it was the House leadership that drafted the bill to conform to the demands of the Senate process. This stems from a constitutional requirement: Spending packages must be initiated by the House.) The maneuver was clever. But the limitations of the reconciliation approach put Republicans in a straightjacket both in terms of time and policy.
First, the bill had to be attached to a budget resolution. Republicans decided to write two budget resolutions in 2017—one involving health care and the other involving tax reform. They decided to go with health care first—and under the arcane rules of the resolution process, they had to file "budget instructions" formally declaring that their first budget move would center on health care. Once they did this, they could not alter the sequence.
GOP leaders have been criticized for this, including by President Trump, who said as the health-care bill plunged into chaos that he was sorry they hadn't gone with tax reform first. The thing is, the approach made sense. First, Ryan knew that Republicans were united in their desire to repeal Obamacare, whereas there are heated disagreements within the Republican caucus on the kinds of tax cuts and reforms the GOP should pursue. More important, the repeal of Obamacare would have generated significant budgetary savings (initially calculated around $350 billion) that would have been immensely helpful in offsetting the cost of a later tax-reform bill.
Now, to confuse matters, some more arcana—this time to explain the haste with which the bill was introduced and was to be voted on. Under the budget-resolution process, Republicans were aiming to finish their first package before mid-May. Why? Because the instructions governing a health-care reconciliation package would "expire" once the House initiated the second budget process on tax reform. (Don't ask.) In other words, the bill had to get through the House and then the Senate and be harmonized between them before going to the president's desk—all in a matter of two months.
It was this need for speed that led Ryan to introduce the bill hurriedly and insist on a House vote within 17 days. Almost no one aside from procedural experts understood the necessity of this haste, and Ryan's action led to breathless accusations by Republicans who didn't like its provisions that he was "rushing things through" and moving forward "in the dead of night."
Why didn't they like it? Again, the rules governing reconciliation tell the tale: The bill simply couldn't do what Republicans seeking Obamacare's full repeal and replacement needed it to do. Every provision in a reconciliation bill must be "germane" to the federal government's budget. Thus, the Ryan bill could only change taxes and spending. It could not address central concerns of health-care policy. All the larger goals that go along with an anti-Obamacare approach—regulatory relief, purchasing insurance across state lines, association health plans, tort reform and the like—could not be included in the bill the leadership was pressuring GOP members to support.
Now, the bill could and did do many things—admirable things, like reducing taxes, reforming Medicaid, cutting spending, and shrinking the deficit. But it could not do everything. Ryan acknowledged this fact when he and other advocates announced that the American Health Care Act would be the first of three phases. After reconciliation would come phase two: regulatory reform, mostly at the direction of the Secretary of Health and Human Services, who is given enormous power over the implementation of the existing legislation. Then would come phase three: final steps requiring legislation that could be passed only after 60 senators had agreed to cloture on a bill. Only after phrase three was completed would Obamacare finally and fully be repealed and replaced.
In other words, the American Health Care Act was intended to be the first act in a three-act political play that would take several years to stage—since presumably it would take a result favorable to Republicans in the 2018 midterm elections to reach the 60-vote threshold in the Senate. Ryan sought unsuccessfully to make this clear. The illusory goal established by Trump during his campaign—the immediate repeal and replacement of Obamacare—had come to overshadow all other considerations. In the public imagination, this AHCA bill became the Obamacare replacement bill, the only bill, rather than the opening salvo in a long campaign. As a result, it was found wanting by almost everyone.
A week after the AHCA was introduced, the Congressional Budget Office "scored" it and announced that it would cause 24 million people to lose health-care coverage. The CBO report had positive aspects, like significant tax and budget savings and the very real prospect that it would bring down health premiums over time. Moreover, the majority of those "24 million" were people who would voluntarily opt out of the system rather than pay excessive premiums. Nonetheless, once the number was announced, those advocating for the bill had pretty much lost the argument and the momentum. This horrific CBO score, relentless opposition from Democrats and the media, and divided-to-lukewarm reviews from conservative health-care mavens meant that the bill could not gain enough support among Republicans to proceed.
The fight over the bill made clear the political challenge that faces Ryan, Trump, and the Republican Party as a whole. The 2016 election did little to unify the fractious elements of the intra-Republican coalition. When it comes to health care, it is at times unclear what Republicans do agree on other than an aversion to Obamacare. Multiple fissures have appeared. Some echo previous struggles over spending; others portend future battles.
The biggest gap is between the three dozen or so members of the Freedom Caucus—formed in 2015 to serve as a conservative wedge—and the rest of the House GOP. The Freedom Caucus operates under the premise that the Republican compromises of the past have brought forth ever larger government. Therefore, compromise is to be avoided if it continues to lead to government growth. Any argument that half a loaf is better than none has little appeal to its members, and they appear to be happy to settle on none if the alternative is a deal in which both sides make concessions that do not limit the size of government. To demonstrate their determination, the Freedom Caucus members did not budge when Ryan and the Trump administration offered the Freedom Caucus multiple concessions in the days preceding the scheduled vote. (One did resign from the Caucus afterward.)
Ryan will now have to decide if there is any way he can work with the Freedom Caucus on health care. Without them, he lacks a voting majority. If they are not willing to work with him, Ryan would need to look to the Democrats, which seems a laughable proposition. House Democrats have no reason to reach out to Republicans to work together on dismantling a key Democratic achievement, even if the program is significantly flawed and causes Democrats some political problems of their own. And if Republicans were to reach out to Democrats for their support, the preemptive concessions that the Republicans would have to offer even to get Democrats to the table would be so large they would likely defeat the purpose of the effort.
The final challenge for the GOP in the wake of the bill's failure is philosophical. The GOP needs to decide where it stands on this central question: Is it, or should it be, the role of government to ensure that every American have health insurance? The Democrats have clearly determined that this is their goal. Republicans do not have that clarity. Though most do not want to surrender to the idea that health insurance is tantamount to a constitutional right, Republicans are terrified of CBO scores showing that Americans "lose" coverage under their proposals.
Republicans face an unpleasant choice here. They can make the philosophical concession and back universal coverage, and seem nice. Or they can acknowledge the reality that some people will continue to be uncovered, and appear sensible but callous. If they agree to universal coverage, they will never be able to match the willingness of Democrats to spend ever more to make it happen, up to and including a single-payer system that effectively nationalizes health-care. Republican and conservative approaches, in contrast, try to provide incentives for people to purchase health care by reducing regulations and increasing choice, thereby reducing price. This is a more indirect way to handle the problem than the Democratic "mandate and subsidize" approach we saw in Obamacare—order everyone to get health insurance and have the government help some of them pay for it.
In my view, Republicans can and should make universal coverage their goal—but declare that they will achieve it through incentives rather than top-down commands. In this way, they would not cede to Democrats the moral high ground of aiming for universal coverage but would instead give the laboratory of the real world the opportunity to demonstrate the effectiveness of their ideas.
Republicans may yet succeed in overcoming these obstacles and pass a reconciliation package that will move the country away from Obamacare and toward a system of new tax credits and a reformed Medicaid system. Even if that doesn't happen, they are certain to make some progress on phase two, rewriting and reforming heavy-handed Obama-era regulations. This phase does not require congressional input and so the Trump administration will have more latitude to maneuver. It will not have carte blanche, however. Regulatory efforts are governed by the Administrative Procedures Act, and abiding by the act's provisions takes time—and every change in procedure will be subject to court challenges. This means it will take years before we know how close Republicans can get to accomplishing their deregulatory goals in the health-care arena.
But without a revolution in Washington attitudes—either owing to the election of several more Republican senators in 2018 or as the result of some magical event that convinces Democrats in the upper House to participate in reform—the phase-three changes that will finally and truly bring about an improved post-Obamacare system seem very, very far away.