Republicans Are Still Talking About Obamacare Repeal. They Could Be Talking About Obamacare Reform.


In the summer of 2013, Sen. Ted Cruz (R-Tx.) called repeatedly for Republicans to defund Obamacare through the budget process and an upcoming continuing resolution. Cruz insisted that the health law had to be defunded through the continuing resolution because, otherwise, it would be impossible to repeal. All President Obama had to do, Cruz argued, was wait it out; on January 1, 2014, the law's health insurance subsidies would kick in, and the millions of Americans would become dependent on the law for health coverage.

Obama "knows that in modern times, no major entitlement has ever been implemented and then unwound," Cruz told The Daily Caller in August of 2013, later noting that "no Republican has effectively refuted that premise." This was what gave Cruz his urgency: On January 1, 2014, Obamacare would become essentially impossible to repeal.

Cruz's call resulted in an extended budget showdown and a three-week government shutdown. It was politically ill-advised, and, as critics predicted, it did nothing to stop Obamacare (the botched rollout of the exchanges did far more political damage to the law than the shutdown).

But his underlying idea that January 2014 represented a point-of-no-return for the health law, after which it would be largely cemented in place, wasn't crazy. And yet, more than a year later, Cruz is still promising to repeal Obamacare—"every blessed word" of it, as he sometimes says—something he admitted would become all but impossible barely more than a year ago.

Cruz isn't the only Republican legislator who continues to aggressively advocate repeal despite understanding its diminished prospects. Sen. Mitch McConnell (Ky.), the Republican Senate Minority Leader, often says that Obamacare should be repealed "root and branch." But McConnell has also undercut that message by saying that Kentucky residents covered by Medicaid under the health law are unlikely to lose their coverage. In a debate last night, he said that the state could keep its self-administered Obamacare insurance exchange, Kynect, which McConnell has previously described as "unconnected" to the larger issue of Obamacare repeal.

The most charitable way to describe McConnell's remarks is as evasive; at minimum, he is heavily downplaying the ways in which Kentucky's exchange, which, far from being "unconnected," was built using federal grants provided under Obamacare, and which offers subsidized coverage funded federally through the health law, would function differently without Obamacare in place. McConnell surely knows this, which is why his remarks are better characterized as intentionally misleading.

But the inherent contradiction in those statements is telling anyway. What's tripping up McConnell (and, to a lesser degree, several other Republican candidates) is the problem described by Cruz last year: With Obamacare's coverage expansion in place, and so many people relying on it for insurance, it has become nearly impossible to repeal. McConnell seems to want to have it both ways, repealing the law, but not his constituents' access or coverage.

Yet as a report by Politico's David Nather suggests, despite continuing public calls for repeal, many Republicans now acknowledge privately that prospects for repeal are slim. "There is a disconnect between the private dialogue and the public dialogue," on GOP health policy expert tells Politico.

But party politicians are still struggling to settle on a strategy about what to do next. There are several conservative replacement plans on offer, should the party choose to rally behind them, but all assume Obamacare is repealed first, and most focus on tax credit systems that would significantly alter the shape of the American health insurance market. The problem, though, is that the GOP has long criticized Obamacare for being too disruptive; with any of these plans, Republicans would be opening themselves up to a similar charge. 

As it happens, these are exactly the problems that The Manhattan Institute's Avik Roy has attempted to solve with his recently released health care plan, which he pitches as a way of "transcending Obamacare." It's meant to overcome the law's flaws in a way that does not require wholesale repeal. 

"Disruption is extremely important to the average American," Roy said at a private dinner last week. He urges a cautious approach. "What we have to do is be very gradual" in transforming the system. 

Roy's plan is designed to be "maximally plausible," both in its policy reforms and its politics. The basic idea is to keep Obamacare's exchanges, as well as some of its popular insurance reforms, but deregulate those exchanges to allow for greater insurance plan flexibility, end the individual mandate, and—in the plan's boldest move—slowly transition Medicare and Medicaid into the exchanges as well.

In some sense it is a trade: accepting Obamacare, in its broad strokes, but using it as a vehicle to reform the nation's two big health entitlements, which, Roy notes, are responsible for the biggest portion of the nation's long-term fiscal problems.

Roy argues that the plan would mean better coverage for poor Medicaid beneficiaries, who would have access to privately subsidized coverage, as well as more options for seniors, who would no longer be forced to shift to Medicare at 65 or risk losing Social Security benefits. 


In the long term, the transition would produce enormous budgetary savings—an estimated $8 trillion in deficit reduction over 30 years—by transforming Medicare, which now covers seniors regardless of their income, into a means-tested system for the middle class.

With fewer rules governing their products and no mandate forcing people to buy, insurers would have more incentive and more opportunity to compete and innovate. And the nation's overall coverage levels would actually increase by 12.1 million relative to Obamacare, according to estimates produced by University of Minnesota health economist Stephen T. Parente.

The political argument, meanwhile, could give Republicans the advantage. Yes, Democrats might object to shifting seniors onto the exchanges. But that would mean criticizing an updated version of Obamacare, and explaining why exchange-based coverage was great for 64 year-olds but not for 65 or 68 year-olds. Republicans could say that "this is the program that you all"—Democrats—"installed," Roy says. Part of the idea is that it "puts Democrats on the defensive." 

The plan is not without its own potential challenges. Inevitably, there would be fights over exactly how strictly to regulate the exchanges. And even though today's seniors could keep their existing coverage, it might be described as gutting the program, which is quite popular. Roy responds that the same charge was leveled at Mitt Romney and Paul Ryan during the 2012 presidential election, and yet seniors were the one group that voted decisively in favor of the GOP ticket. Some higher-income seniors would see their premiums rise, but Roy says these hikes could be mitigated by a transitional fund. 

More generally, it would require Republicans to level with voters about the likelihood of repeal, and take an affirmative reform position on health care, an issue the party has long been content to ignore. "Who benefits from the status quo? Employed and retired people," Roy says, noting that these are the same people who tend to vote Republican. Thanks to Medicare and the tax break for employer insurance, two massive budget items that subsidize health coverage, "it's actually Republican voters who are on the dole," he says. 

One possible advantage for GOP legislators is that it would help smooth out some of the contradictions from politicians like McConnell. Under Roy's plan, Kentucky could keep its exchange, and residents could keep their coverage. And while the health law would not be repealed root and branch, it would be significantly reformed, which is something that even many Democrats say they want. Like many Democratic candidates this year, McConnell's opponent, Alison Grimes, has promised to fix the law but provided almost no specifics of how she would do so. Keeping the law in place but working to improve it polls well, and Roy's plan could plausibly provide specific fixes. 

Essentially, Roy's plan would take Ted Cruz at his word when the Senator argued last year that unwinding a major entitlement after its benefits kicked in was practically impossible. But rather than continue to call for Obamacare's end, as Cruz has done, Roy would attempt to craft a new beginning, one that, yes, leaves some of Obamacare's words in place, but that on the whole, he says, "expands people's choices rather than takes them away." No, it wouldn't be repeal, but with its overhaul of Medicaid and Medicare, it might be something better: the system-wide, root-and-branch reform we've needed since long before Obamacare became law.