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.

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