Republican Response to ObamaCare

Republicans have a great opportunity. With control of both the House and the Senate, Republicans are poised to make substantial changes in ObamaCare.

Democrats, however, still control the White House and President Obama will be loath to accept Republican attempts to repeal or even modify the law. Outright repeal is unrealistic as long as President Obama is in office since Republicans will have great difficulty obtaining sufficient Democratic support to nullify an Obama veto.

Therefore, Republicans should look to modify or repeal those parts of the law that already enjoy bipartisan support. Here are one analyst’s recommendations:

Avik Roy – Forbes

Avik Roy, Fellow at The Manhattan Institute and healthcare blogger for Forbes, proposes seven ObamaCare bills the GOP should pass in 2015. There is a budget impact of each of these changes and is estimated below each:

  • Give states more flexibility and authority – Return insurance regulation to the province of the states – where it has usually been in the past. Congress should restore as much of that state-based regulatory authority as possible. This should include giving states the flexibility to run their Medicaid programs in a way to fit their circumstances.

o   Fiscal surplus – Depends on specifics

  • Liberalize ObamaCare’s insurance exchanges – Republicans could pass laws giving insurers more flexibility to offer affordable products – like generic drugs whenever possible. Some Democrats have supported the idea of offering “copper” plans that would have higher deductibles – and lower premiums – than the costlier plans on ObamaCare’s exchanges. Such plans could significantly reduce the cost of ObamaCare-based health insurance.

o   Fiscal surplus – $1 billion a year

  • Repeal ObamaCare’s Employer Mandate – Even liberal writers like Jonathan Cohn of The New Republic and Timothy Jost of Health Affairs Blog support this idea. This mandate has caused economic chaos by encouraging businesses to limit employees to 29-hour workweeks and companies to 49 employees. Several independent analyses, most notably one form the CBO, have indicated that repealing the mandate would have a negligible effect on the number of Americans with health insurance.

o   Fiscal cost – $10 billion a year

  • Repeal ObamaCare’s medical device, pharmaceutical, and health insurance excise taxes– This is the “low hanging fruit” bill since they already have wide bipartisan support. The tax of 2.3% on all medical devices has had a huge negative impact on the medical device industry, and is stifling medical innovation. These companies are mostly located in blue states – those controlled by Democratic senators. These include the              largest medical device companies such as Johnson & Johnson (New Jersey), Medtronic (Minnesota), Baxter (Illinois), Stryker (Michigan), Boston Scientific (Massachusetts), and St. Jude (Minnesota). That explains why some of the most liberal Democratic senators, whose voting records support President Obama more than 90% of the time, are willing to repeal this tax. This group includes Senators Elizabeth Warren (Mass.), Amy Klobuchar (Minn.) and Al Franken (Minn.)

o   Fiscal cost – $10 billion a year

  • Accelerate or modify ObamaCare’s Cadillac tax – This tax is intended to roll back the tax exclusion for employer-sponsored health insurance. Republicans could use enhancements of the Cadillac tax, or wholesale modifications of it, to fund the repeal of ObamaCare’s employer mandate and/ or excise taxes. For example, Congress could move the Cadillac tax forward one year. They could eliminate some of the special-interest exemptions (unions) Democrats inserted into the bill. They could modify the way in which the Cadillac tax’s threshold increases over time.

o   Fiscal surplus – Depends on specifics

  • Repeal ObamaCare’s Individual Mandate and age-rating mandate – ObamaCare includes an Individual Mandate forcing most Americans to purchase government-approved health insurance. That mandate exists, in large part, because ObamaCare drives up the underlying cost of individually-purchased health insurance for young people. Roy recommends repealing the Individual Mandate and the age-based community rating provisions to allow the insurance market to continue to function. This may reduce the number of insured Americans but would have positive budgetary effects. The CBO has projected that repealing the mandate would reduce the deficit by approximately $30 billion a year, which would help to fund other ObamaCare changes.

o   Fiscal surplus – $30 billion a year

  • Force the CBO to post its fiscal models online – Some have called the CBO the Supreme Court of U.S. fiscal policy. But the CBO, and its companion organization the Joint Committee on Taxation, do not disclose the methods they use to come up with projections of the fiscal effects of proposed legislation. This is unacceptable in the 21st century. The CBO has admitted that it does not have the tools to properly model private-sector approaches to covering the uninsured. Roy believes this change is almost certainly the single most important thing that Republicans could do to improve the likelihood of future entitlement reform.

 

Republicans have a golden opportunity to make substantial improvements in ObamaCare – and pave the way for eventual repeal and replacement with an improved alternative.  They must take advantage of this opportunity to make those improvements that are possible with bipartisan support. Moreover, they must demonstrate what the American people can expect from them if they win the White House in 2016. The future healthcare of all Americans is at stake.

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