Wednesday, March 29, 2017

What The Heck Just Happened Last Week With The Republican AHCA?

'Welcome to First Grade..of Budget Reconciliation!'
We had a good friend who called to get an explanation of what happened last week when the Republicans abruptly pulled their AHCA health care reform bill of Obamacare which was supposed to be a reform of our previously extant health care system and 'save every American household $2500!' and 'allow you to keep your doctor if you like your doctor!'

Remember those golden oldies?

After a few sentences trying to outline the rules of budget reconciliation and federal budget policy in general, he just stopped me and said:

"Just talk to me like I am a first-grader!"

That is easier said than done but here goes:
  1. 'Health care is very complicated, Junior. So pay close attention to me'
  2. 'You can't always get what you want. But if you try sometimes, well, you just might find, you get what you need'
  3. 'You need to learn to play with your friends. Or else they become your enemies'
  4. 'Getting 70% of a loaf of bread is better than getting none of a loaf of bread. Or anything'
  5. 'The US Senate is different from the US House of Representatives. Or anywhere else on earth'
  6. 'This bill had $1 trillion of tax savings in it. That would help me pay for your college education one day'
  7. 'Now run along and go play outside. That is all I can tell you right now' 
There is no earthly way explaining health care reform can get 'easy' or simple' as many people would like it. The US Senate was set up to protect the rights of the minority party at any time and the parliamentary rules and procedures of the Senate were established to allow full and free debate and an extended amendment process unlike any other legislative body in the world.

Finding ways around and through the parliamentary minefields of the Senate require men and women of extraordinary intelligence and ability. People such as Thomas Jefferson and James Madison crafted them to be as such from our Founding so they hoped there would be others like them who would follow in their stead.

You can determine whether that has happened or not.

Here's some more 'adult' information about the AHCA and why those who say that it was a 'crushing' blow to the Trump White House and Republicans in charge are wrong to assume that we have seen the last of health care reform in this, the 115th Congress;
  1. There was close to $1 trillion in tax savings that were embedded in the AHCA (over 10 years) (see bottom of post)***
  2. There is not just one but two budget resolutions in 2017, primarily due to the fact that no budget resolution was passed in 2016 for the FY 2017 fiscal year that we are about halfway through already here on March 29, 2017. (I know, I know...confusing but life is confusing)
  3. The 1st budget resolution passed the House and the Senate (no Presidential signature needed or veto allowed since it is a 'resolution' of both bodies of Congress, not a US law passed each year) in early January.
  4. This budget resolution was the vehicle by which Republican leadership sought to pass AHCA with simply majority vote +1.
  5. As long as the tax cuts fell below the level of spending cuts under the AHCA repeal of Obamacare, (stay with me here for a little while longer), the bill could be passed by simple majority under budget reconciliation rules and language. (Don't act like a 1st grader and ask: 'Why?' all the time unless you want to read the Budget Control and Impoundment Act of 1974 in its entirety which was one of the 'Watergate Babies' reforms intended to clean up the process post-Nixon Administration days)
  6. If the tax cuts in AHCA didn't fall below the spending cuts, it would increase budget deficits and add to our collective national debt, now at about $21 trillion, and therefore, would not be honored as a special provision of Senate rules and would be open to the 60-vote cloture requirements to get any debate going on any bill there.
  7. The hope was that once the bill got over to the Senate, there would be a surplus of spending savings that would later possibly be applied to the tax cuts that President Trump and the Republicans want to enact during their tax reform act to follow later this summer.
  8. That tax reform effort would be covered under another budget resolution to be passed perhaps by the end of May for FY2018 which would require perhaps ANOTHER $1 trillion of spending cuts in other parts of the federal budget and/or removal of tax exemptions and deductions currently in the tax code in order to 'pay for' the tax rate cuts in a budget-neutral manner so THAT tax reform bill could be passed with a 50%+1 vote instead of being subject to the 60-vote cloture requirement.
So, to boil this all down into some digestible gruel even a first-grader might understand (probably not):
The failure of the House to pass the AHCA and start the process to 'repeal' Obamacare not only puts the 'replace' effort of Obamacare in jeopardy but also makes it more difficult to pass and enact a more simple tax code for everyone later this year.
'Show them what they have won, Johnny!' 

(click through title link if you can't see video)

We don't believe for a minute that this is the last we have seen of the AHCA or efforts to repeal and ultimately replace Obamacare. It does delay it, though and the clock is ticking on the legislative calendar. 

Nothing big ever gets done in an election year. So by December 2017, President Trump and the Republicans in charge of the House and Senate better have some significant success stories to trumpet and run on or else they may feel the heat of the very people who elected them to 'drain the swamp!'; 'clean up this mess!' and 'do their jobs and go home!' (our addition based on our view we should have citizen-politicians who serve perhaps 3 terms in any elective office at any level...and then go back home and do what they were doing prior to elective service)

Stay tuned. Should be an interesting roller-coaster of a legislative year in Washington DC.

***Tax cuts in AHCA (per Americans for Tax Reform)***
-Abolishes the Obamacare Individual Mandate Tax which hits 8 million Americans each year.
This is part of a $270 billion tax cut.
-Abolishes the Obamacare Employer Mandate Tax. This is part of a $270 billion tax cut.
-Abolishes Obamacare’s Medicine Cabinet Tax which hits 20 million Americans with Health Savings Accounts and 30 million Americans with Flexible Spending Accounts. This is a $6 billion tax cut.
-Abolishes Obamacare’s Flexible Spending Account tax on 30 million Americans. This is a $20 billion tax cut.
-Abolishes Obamacare’s Chronic Care Tax on 10 million Americans with high out of pocket medical expenses. This is a $126 billion tax cut.
-Abolishes Obamacare’s HSA withdrawal tax. This is a $100 million tax cut.
-Abolishes Obamacare’s 10% excise tax on small businesses with indoor tanning services. This is a $600 million tax cut.
-Abolishes the Obamacare health insurance tax. This is a $145 billion tax cut.
-Abolishes the Obamacare 3.8% surtax on investment income. This is a $172 billion tax cut.
-Abolishes the Obamacare medical device tax. This is a $20 billion tax cut.
-Abolishes the Obamacare tax on prescription medicine. This is a $28 billion tax cut.
-Abolishes the Obamacare tax on retiree prescription drug coverage. This is a $2 billion tax cut.

Do You Want Better People to Run for Public Office?
Support the Institute for the Public Trust Today

Visit The Institute for the Public Trust to contribute today

Sunday, March 26, 2017

The Trojan Horse's Nose Under The Tent--Opportunity Lost

'Are they aiming me at the Senate, or against themselves?'
The bottom line of this post is:

The Freedom Caucus better have 188 more votes up their sleeve to pass their version of Republican health care reform of President Obama's health care reform that is now the law of the land.

And will stay that way until something passes the House with 218 votes and 51 votes in the US Senate and President Trump signs it into law to supersede what President Obama and the Democrat Congress passed into law in 2010.

Those are the rules of the game whether anyone likes them or not. It is like the Rules of Golf; you move the ball in the rough while clearing some leaves or twigs around it and you incur a penalty whether you think it is fair or not.

Get used to it.

The best way we can describe what happened this week on the health care vote is to use two ancient examples in tandem:

The Republican strategy was to drag a Trojan Horse into the US Senate tent under the budget reconciliation and Byrd Rule hurdles where it could pass by simple majority vote of 51 and THEN be used as a vehicle for further reform and amendment.

If Republicans had 60 US Senators in the Senate, and they were all in agreement, the details of the Republican bill really would not have mattered very much. They could have put together a peanut butter-and-blackberry jelly sandwich and called it the 'American Health Care Reform' (AHCA) and it would have been accepted as a bill apart from the budget reconciliation and Byrd Rule restrictions and passed into law.

But they don't. Not yet anyway. With 24 Democrat Senators up for re-election in 2018, and 10-12 in states where President Trump won by double-digits, there conceivably is the chance Republicans could pick up the 8 US Senate seats to get to the magical number of 60.

The press is proclaiming this as a 'spectacular' defeat as if this was the final defeat at Waterloo for Napoleon.

This is the first major setback 2 months into a US Presidency that lasts 48 months at least. There are plenty of battles left to fight on tax reform, immigration reform, reducing the size of government bureaucracy just to name 3 that will happen after Judge Neil Gorsuch is confirmed as the next Justice on the US Supreme Court.

(Our advice to the Senate Majority Leader, Mitch McConnell, not that he needs our advice, is to tell Minority Leader Chuck Schumer: 'Go ahead; Make My Day!' and let him start a filibuster against the Gorsuch nomination on the floor of the US Senate. Based on the laws of human anatomy and physics, we anticipate the filibuster will last about as long as the youngest Democrat Senator with the largest bladder can stand up and yammer, which might be about 24 hours probably, 36 hours at best)

The reason why the Freedom Caucus needs to come up with another 188 votes is that they seemed to be the largest organized group in the Republican Caucus directing traffic at the end of last week. They secured some concessions according to news reports but with each concession, they lost more moderate members of the Republican Caucus such that no ground was gained to get to 50%+1. (216 in this case since 5 seats are now vacant in the US House)

Unless they are waiting for 2018 elections to come around and deliver 8 more Republican Senators to get to 60 in the US Senate, that is. Which will be problematic if Republican House Members and Senators have to go back home to face an angry primary and general election electorate who thought they were going to 'repeal and replace' Obamacare this year, not in 2019 or beyond.

President Trump has proven his willingness to negotiate and compromise and cut deals with anyone during his business career and now in his first 65 days as President. He has signaled his willingness to work with more moderate and/or conservative Members of the Democratic Party in the House of which there might be about 30 or so left in order to get some sort of health care reform passed this session of Congress. Not the next one.

It is a basic matter of arithmetic. Get to 218 votes and you can pass a bill in the House. With or without the Freedom Caucus or the Tuesday Group or any other subsection of the Republican Caucus.

There was over $1 trillion of tax cuts and over $1 trillion in reduced spending from the future baseline of federal budgets in the AHCA according to Americans for Tax Freedom. For most fiscal conservatives, that alone would have been enough to start the process of unraveling the ACA instead of stonewalling it.

Anyone who says that 'fixing' our health care system is easy and simple really doesn't not have much credibility in our book. It is one of the most vexing and complicated public policy issues of our time and for the past 40 years at least.

As long as the process helps produce a system where everyone can have access to catastrophic health care insurance coverage (in order to protect them and their families against the truly catastrophic costs of adverse health conditions such as cancer, stroke, accidents, etc); preventive health care; dental care and wellness training at a very minimum, we think that would take us back towards a rational and workable health care system in America.

But the process has to get started first. 218 votes in the House of Representatives is where it has to start.

Failure to get to 218 means failure to get anything done on health care reform any time soon.

Do You Want Better People to Run for Public Office?
Support the Institute for the Public Trust Today

Visit The Institute for the Public Trust to contribute today

Wednesday, March 22, 2017

Will 24 Million People 'Lose' Their Health Care Coverage If The Republican Health Care Plan Passes?

It all depends on what you want to believe.

If you love the ACA and President Obama, you want to believe 30 million people 'will lose their health care coverage if the mean old Republicans pass their bill!'

If you hate the ACA and want the Republicans to overturn Obamacare in its entirety, you want to believe that 'hardly anyone is going to lose their health coverage if the Republicans pass their bill'

When it comes to political statistics, where you stand depends not only on where you sit on the political philosophy spectrum but how your amygdala gets triggered: either for the liberal side of things or things conservative. (The amygdala is where the animal response lies in the human brain).

Let's face it: we all get hard-wired one way or the other over time after listening to political debates and trained like Pavlov's dogs to respond viscerally and emotionally primarily with anger towards 'the other side'.

The first casualty is ALWAYS 'the facts'. If we can all learn to control our emotions and look at the facts first before opening our mouths and launching a fusillade of attack against 'the other side', we might all be better off in the long-run.

Doug Badger wrote a pretty good article explaining the wide range of estimates concerning the number of future enrollees in private plans and Medicaid in the Republican American Health Plan due to be voted on tomorrow if the legislative schedule, and the votes are there to pass it, hold.

Here's one conclusion he came to:

'For all the hoopla about the ACA exchanges, it appears that Medicaid accounts for the lion's share of coverage gains and that many new Medicaid enrollees would have been eligible for that program even if the ACA had never passed'

Here's another:

'Since the release of the HHS study, the government has published two additional surveys of health-insurance coverage - the Current Population Survey (CPS) and the American Community Survey (ACS). Both offer data through the end of 2015, allowing for comparison with the NHIS estimate.

The three surveys use different methodologies to produce estimates of the number of non-elderly adults who gained coverage. These estimates vary by 20 percent - ranging from the CPS estimate of 13.7 million to the NHIS estimate of 16.5 million.'

Here's another report in Real Clear Policy, 'CBO: You Can't "Lose" Medicaid You Don't Have' you need to read to get a bead on how the CBO estimates of '24 million people will lose coverage' if the Republican plan is passed in total by the end of this year after it wends its way through the gauntlet of legislative process.
'The Congressional Budget Office (CBO) had to deal with two separate worlds when it analyzed the American Health Care Act (AHCA), the version of “repeal and replace” put forward by two House committees. While the CBO exists to provide numbers that relate to spending, deficits, and the economy, a different number got the most attention: the assessment that by 2026, 24 million fewer people would have health insurance.
That is not the same thing as saying '24 million people will lose health insurance'. Rather, it is a statement that, compared to how many people CBO expects to have health insurance in 2026 under current law (the Affordable Care Act, also known as the ACA or Obamacare), 24 million fewer people will have health insurance. The largest contribution to that projection is 14 million fewer people enrolled in Medicaid, the federal-state program that pays for health care for low-income people.'
There is a very long way to go before any final version of any Republican plan to reform health care coverage in America is complete. It could be late October for all we know right now. Or it could be November or right before the Christmas holidays.

We remember several sessions lasting right up to about midnight on December 23.  No one liked it but it sure made people make decisions and compromises on passing a large piece of legislation so they could get home and enjoy the holidays with their families and friends.

Be prepared with the facts before you get too heated one way or another about this bill. Calm cooler heads need to prevail if we are ever going to find some long-term solutions to health care in America.

Living more healthy lifestyles would help. Raise your hand if you think Americans are ready to give up their cigarettes, soda, chips and Twinkies and exercise 30-60 minutes every day and curtail their beer, wine and alcohol consumption.

But that would require far more than any congressional legislation could ever achieve.

Do You Want Better People to Run for Public Office?
Support the Institute for the Public Trust Today

Visit The Institute for the Public Trust to contribute today

Friday, March 10, 2017

The 3-Step Plan to Repealing and Replacing Obamacare

'Good thing a rocket launch doesn't need to
go through Budget Reconciliation and Byrd Rule!'
If you had never heard of the differences between the US House and the US Senate in Washington, you are about to learn a lot about them in a very short time frame.

Based on initial news reports, a 'normal' (as in 'I have better things to do than hang onto every word uttered on MSNBC, FOX News or from the National Review every second of every day!') person would conclude that the Republican alternative to repeal and replace the ACA, aka 'Obamacare' was a 'total disaster of biblical proportions!'

Mainstream news folks were apoplectic. Democrats were scathing. Even members of the Republican Party were pronouncing the bill 'dead on arrival' just after being introduced early this week.

What the heck is going on here?

As we just said, the US House and the US Senate are about as different of two legislative bodies as you could imagine. At least as they can be in two western democratic republican forms of government, that is.

There are 3 stages to this roll-out (outlined below) by Speaker Paul Ryan and backed up by HHS Secretary Tom Price, who most recently was Chairman of the House Budget Committee which was the same committee a younger congressman named Paul Ryan chaired before becoming the Vice-Presidential nominee in 2012 and then becoming Speaker of the House.

It is fair to say 'they speak the same language'. And an archaic and byzantine language it is. If it was simple and could be conveyed in first-grade English, they would do that. But they are dealing with the rules of the US Senate which is anything but first-grade elementary school.

We had the benefit of serving 4 years on the House Budget Committee from 1991-1994 where a lot of this same language was explained enough times to start making sense after hearing it a couple of thousand times.  We also had the benefit of serving in the US Senate as chief of staff to US Senator Elizabeth Dole where we learned the intricacies of parliamentary rules from former Senate parliamentarian Bob Dove who left us with this one axiom to always remember:

'In the US Senate, the only rule to remember is....there are no rules in the US Senate!'

Once you get that into your head, the proposed Republican health care alternative introduction and plan starts to make (some) sense.

Here's what that rollout plan appears to be based on public comments by Speaker Ryan and Secretary Price yesterday:
'Budget Reconciliation?' 'Byrd Rule?' Riiiiiight....
  1. Phase I was the core bill introduced this week designed primarily to repeal major provisions of Obamacare with an eye to getting through Senate rules to avoid an extended filibuster by using their budget reconciliation process and avoiding the 'Byrd Rule'. (eyes start to glaze over but pay attention cause it is important to understand)
  2. Phase II will be the bills that will be introduced once HHS Secretary Price has had a chance to review the over-1400 new federal regulations put in place by the Obama Administration for Obamacare to determine which will be kept (not many) and which will be jettisoned (most of them).

    Expect this bill later this spring.
  3. Phase III will be the broader, non-budget policies most Republicans want to see passed as part of this repeal and replacement effort such as selling health insurance across state lines; returning funds and flexibility in Medicaid to the states and enhanced medical legal reforms.

    Expect this bill perhaps during the summer.
Just for educational and edification purposes, here are somewhat pedestrian translations of what the budget reconciliation process and the 'Byrd Rule' are, taken from some very good reports from the Congressional Research Service (CRS) (click through links to read more for yourself):

I. Budget Reconciliation
'The budget reconciliation process is part of the fiscal framework established by the Congressional Budget Act of 1974 (Titles I-IX of P.L. 93-344, 2 U.S.C. 601-688), as amended. The principal aim of this framework is to enhance Congress’s coordination of spending, revenue, and debt limit legislation through the adoption and enforcement of a concurrent resolution on the budget (commonly referred to as the budget resolution). The budget reconciliation process, in particular, is intended to facilitate the consideration and enactment of legislation that implements, in whole or in part, the budget policies reflected in the budget resolution. Perhaps most significantly, the process establishes special procedures that have allowed the Senate to get to a vote on passage on budget reconciliation legislation without first having to demonstrate super-majority support (i.e., without invoking cloture with a three-fifths vote).

Translation into English: 'This is a way to get around the painful filibuster rules of the Senate so the majority party (Republicans now) can pass spending and tax law by simple majority vote of 50+1, not having to get to 60 to close debate'

Note: Republicans have 52 US Senators. Democrats have 46 plus 2 Independents who caucus with them. You do the math.

II. The Byrd Rule
'Senator Robert C. Byrd (D-WVa) explained that the basic purposes of the amendment were to protect the effectiveness of the reconciliation process (by excluding extraneous matter that often provoked controversy without aiding deficit reduction efforts) and to preserve the deliberative character of the Senate (by excluding from consideration under expedited procedures legislative matters not central to deficit reduction that should be debated under regular procedures). He opened his remarks by stating:
'... we are in the process now of seeing ... the Pandora’s box which has been opened to the abuse of the reconciliation process. That process was never meant to be used as it is being used. There are 122 items in the reconciliation bill that are extraneous.
Henceforth, if the majority on a committee should wish to include in reconciliation recommendations to the Budget Committee any measure, no matter how controversial, it can be brought to the Senate under an ironclad built-in time agreement that limits debate, plus time on amendments and motions, to no more than 20 hours.
It was never foreseen that the Budget Reform Act would be used in that way. So if the budget reform process is going to be preserved, and more importantly if we are going to preserve the deliberative process in this U.S. Senate—which is the outstanding, unique element with respect to the U.S. Senate, action must be taken now to stop this abuse of the budget process.'
Translation into English: 'We just don't want to deal with a bunch of garbage every time we consider a tax and spending package! And, on top of that, anything that adds to the deficit without being paid for by offsetting spending cuts or tax increases elsewhere will be ruled out of order!'

So far, every US Senator, including even former Majority Leader Harry Reid (D-NV, now retired) has honored this unique Senate rule of procedure.

Our take on this after reading more detailed explanation of the House Republican strategy is that Speaker Ryan and Secretary Price know what they are doing. Both have been House Budget Committee chairs and know the process of budget reconciliation far better than the average Congressmen or Senator.

The knee-jerk reactions of Senators Rand Paul and other Freedom Caucus members flies right in the face of the fact that former fellow Freedom Caucus member, Mick Mulvaney of South Carolina, IS NOW BUDGET DIRECTOR UNDER PRESIDENT TRUMP!

If Mick Mulvaney is on-board with this strategy, perhaps his former colleagues should listen to him.

Here's some observations early in the process:

  1. Advocating HSAs (Health Savings Accounts) as a panacea for providing health insurance is not a practical solution for everyone. For one thing, 50% of all taxpayers in America don't have enough income to pay federal income tax to begin with, in which case receiving a tax credit or tax deduction to buy a HSA is virtually worthless unless converted into a direct payment along the lines of an Earned Income Tax Credit (EITC) where people who don't earn enough for that tax credit receive a direct check from Washington for the amount owed.

    In other words, that 'tax credit' becomes a 'direct subsidy' just like the ACA subsidies that now exist under Obamacare for non-Medicaid-eligible citizens.
  2. The end result of this effort should be a flattening of the tax code with regard to treatment of health care insurance between business and individuals. There should be a basic fundamental level of tax deductibility for a basic catastrophic health care insurance plan offered by whatever source with wellness care, preventive health care and dental care included.

    Beyond that, a company or individual could purchase any level of health insurance they want. They just wouldn't be able to deduct those costs as a cost of 'doing business'.

    Company-provided health care is a vestige of the wage-and-price controls instituted by FDR in World War II where companies started providing health care as a way to entice good workers to come work for them. It is time for that part of employment history to be repealed.
  3. Managed care has taken over virtually all of the Medicaid market across the country. Trained professionals are employed to help people learn how to take basic care of their own selves BEFORE they develop complications such as diabetes and heart disease that become so expensive in later years.

    If we really want to get at the cost-drivers of high health care insurance premiums, we need to encourage more managed care across all forms of health insurance programs in America.

    Close to 50% of all health care costs are related to heart disease, stroke, cancer and diabetes.

    Americans can eat less unhealthy food; stop smoking; stop excessive over-drinking of alcoholic products and exercise at least 30 minutes every day and experts will tell you this will significantly reduce the incidence of those four health conditions listed above.

    Want to see health care premiums drop precipitously? Get out of the chair, walk around the block a couple of times; eat kale, stop smoking and drink maybe just 1 glass of red wine at night with dinner instead of a bottle of Scotch or case of beer and get all of your family, neighbors and colleagues at work and church to join you on a daily crusade to restore America's health.

    We would never have to worry about 'Obamacare', 'Trumpcare' or health care reform ever again.

    And save trillions of dollars over coming decades in health care costs. At least $1.5 trillion this year alone.

Do You Want Better People to Run for Public Office?
Support the Institute for the Public Trust Today

Visit The Institute for the Public Trust to contribute today

Tuesday, March 7, 2017

Repealing and Replacing Obamacare

'Keep your eye on the little white ball'

Below are direct links to the legislative language as introduced by House Republican leadership last night in the House Ways and Means and the Commerce Committees:
From Ways and Means:
CLICK HERE to read the legislative recommendations from the Ways and Means Committee.
CLICK HERE to read a two-page summary of the American Health Care Act.
CLICK HERE to read a section-by-section of the Ways and Means legislation.
From Energy and Commerce:

CLICK HERE to read the entire bill, which includes legislative recommendations from the Energy and Commerce and Ways and Means Committees.
CLICK HERE to read a section-by-section of the Energy and Commerce legislation.
Here's something you might want to consider doing and ask your friends and colleagues to do as well during consideration of this bill:

'Turn off cable news and radio talk shows UNTIL and UNLESS you have read the legislation for yourself!'

We don't say that to encourage you to be close-minded and tunnel-visioned and shut off debate or not hear from other sides of the issue.

We say that to encourage each of you to use your own common sense and brains to read the bills and the amendments as they come up and make your own evaluations and conclusions before you start to bank on the opinions of columnists or talk show hosts or the basic news media whom we have pretty damning evidence by now that they really are not interested in presenting news in a fair and balanced basis through whatever political lens they choose to use.

The main things to remember is that any health care legislation should seek to allow the following:

  • Universal access to health care insurance
  • Tax equity fairness and treatment for all consumers of health care insurance
  • Basic catastrophic health insurance coverage for everyone
  • Means and incentives for driving overall health care costs down, not up

Once we have had a chance to plow through this legislation and probably some analytical reports from unbiased sources, we will post some thoughts and insights in coming weeks.

It is the greatest and most complicated public policy issue of our time and has been for the past 30 years now. It is in our own collective best interest to find a compromise to replace the ACA which has failed to cover everyone with insurance and has caused premiums to skyrocket across-the-board in the meantime.