How repeal happens

Patrick Appel quoted Ezra Klein,

In a world where President Rick Perry is joined by Majority Leader Mitch McConnell and Speaker John Boehner — a world that Nate Silver, for one, thinks is possible — this conversation is moot: The law’s regulations and mandates could be waived and its Medicaid expansion and insurance subsidies could be repealed through the budget reconciliation process.

Recognize what is not at play here: the insurance regulations, those that require insurers to take all comers, independent of pre-existing conditions. To repeal those would require 60 GOP votes in the Senate, which is an even unlikelier scenario. So, we’re talking about a partial repeal, not a full one.

Klein is right that the GOP could pull off the partial repeal he describes. However, practically speaking, one other thing (or set of things) must be in place for them to actually do it. It requires that powerful, interested groups back it. Oh sure, technically, Perry, McConnell, and Boehner don’t require the approval of hospitals and insurers, among others. But, realistically, if those three leaders are controlling the government and if they want their party to remain in power, they can’t cross these interest groups.

Let’s remember why we got the reform we did. It’s because a broader coalition of stakeholders lined up behind it than have ever supported comprehensive reform in the past. They didn’t back the reform that passed for the fun of it. They backed it because they preferred it to the alternatives. Yesterday, I quoted a key passage from John McDonough’s book that makes this point. Earlier today I stressed consideration of the politically feasible, not just the possible or the desired. Just because the GOP could repeal reform, or a part of it, if it controlled the government doesn’t mean it would be politically feasible for them to do so. They may want it, but they may not be able to attain it. Why?

Though groups other than insurers and hospitals were and will be relevant to health reform and changes to it, I’ll just focus on those two.

First, insurers. Will they welcome the removal of the mandate and subsidies without the removal of other insurance reforms like repeal of pre-existing condition exclusions? No, they will not. That’s a recipe for a broken insurance market. It takes away two of the three legs of the stool that make it work. Those two legs were put there for a reason.

There may be some debate over the desirability of the mandate to consumers, but there is no question that it benefits insurance companies. There may be some who bristle at the idea that taxpayer dollars will be spent on coverage subsidies, but it is clear insurance companies welcome it. A world without the mandate or subsidies, but with the other regulations, is one in which those companies have to work harder, are able to entice fewer enrollees, and will earn less. They won’t like that.

Thus, insurers will have to decide whether they prefer the current law or a world in which the insurance reforms remain but the mechanisms that make them work–the mandates and subsidies–are stricken. I think that’s an easy choice for them. They’ll follow the money.

Next, hospitals. Here the situation is not so clear cut. On the one hand, hospitals welcome a reduction in the number of uninsured individuals since many of them are unable to pay the full price of hospital care they use. Reducing uncompensated care is one of the attractive features of reform, from their perspective. On the other hand, Medicare payments to hospitals will be going down under reform. In fact, hospitals will be squeezed even harder than they expected due to additional Medicare cuts likely to occur in the name of deficit reduction. (For a thorough review of the implications of budget austerity for health care, see Jonathan Oberlander’s latest piece in NEJM.)

Now, if the insurance market unravels due to the partial repeal described above, hospitals will be worse off. However, if in exchange, Medicare cuts they consider unduly burdensome are able to be delayed or killed, they might be willing to go along.* So, deficit cutting dynamics over the next year or two may influence how hospitals would respond to a GOP effort to repeal parts of health reform. Cutting too deeply may sow the seeds of a backlash.

Of course all this presupposes the GOP retains the House, takes the White House and grabs the Senate. That may be possible, but it is by no means certain.

* Since this would be budget-relevant it is my understanding that it could be done through the budget reconciliation process, requiring only 51 votes in the Senate. Changes in Medicare payments were implemented that way in the past.

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