Cornyn: We may have ObamaCare repeal ready for President Trump on Day One

Remember “reconciliation”? Democrats used that budgetary device to pass a shell bill in the Senate to head off a filibuster of ObamaCare in early 2010, and then passed the full bill in the House to hand it to Barack Obama for his signature in March of that year. Republicans warned at the time that any legislation passed by reconciliation could be undone by the same method — and they used it to force Obama to veto repeal earlier this year.

Republicans plan to utilize it again at the beginning of the new session. John Cornyn told reporters yesterday that the plan is to have repeal ready as soon as possible for President Donald Trump’s signature — possibly on Day One of his presidency, although a staffer later walked that back a bit (via Instapundit):

Congressional Republicans may be mulling a plan to repeal Obamacare before President-elect Trump takes office, a top GOP leader said Wednesday.

“Nothing has been decided but that is certainly one of the options,” Senate Majority Whip John Cornyn, R-Texas, told reporters after a closed-door GOP meeting on Wednesday.

The plan could entail using a budgetary tool known as reconciliation, which allows legislation to pass the Senate with just 51 votes instead of the typical 60 votes. Senate Republicans earlier this year voted to repeal most of the healthcare law using reconciliation, but it was vetoed by President Obama.

“We can go ahead and repeal Obamacare as we’ve done before … but with the likelihood that this time President Trump would actually sign it into law.” Cornyn said.

This could create an early test of the Trump administration. Depending on how a repeal is crafted, this could result in a short-term mess in the individual insurance markets, so Trump might be inclined to wait for a more orderly exit when a replacement is ready to roll out. Republicans have a plan for the replacement but not the legislative language for it, and it will take months for that to roll through the committee process in both chambers. The logical option would be to make repeal effective at the end of the year, allowing current insurance and subsidies to remain in place and aim for a replacement to be ready for open enrollment for 2018.

Another test will be whether Trump will sign a repeal bill at all. After his meeting with Barack Obama last week, Trump began talking about “amending” ObamaCare to fix it as a potential alternative to “repeal and replace.” Trump likes a couple of provisions of ObamaCare and wants to try to keep them, he subsequently said in his first interviews as president-elect.

As I explain in my column for The Fiscal Times, the Republican plan actually does keep those — and amending ObamaCare simply isn’t possible. Either Trump has to buy the whole thing, or dump it all and start over:

Obamacare includes three mandates which form the heart of the program: an individual mandate for comprehensive policies (including specific coverage mandates), a mandate on insurers to sell policies to those with pre-existing conditions (guaranteed issue), and a community rating mandate which prevents insurers from putting the risk burden on those with pre-existing conditions. The latter only allows deviations from normal pricing on age, location, family size, and tobacco use, and places strict limits on price changes even on those factors.

This results in a severe distortion of the risk pool, one that forces everyone within it to bear the costs of that risk regardless of whether they contribute to the risk of excess utilization or not. Obamacare forces younger and healthier consumers to buy comprehensive insurance policies, which they will almost certainly never use, to fund that risk – essentially creating a wealth transfer from younger, healthier, and less wealthy consumers to those older, less healthy, and more wealthy. The failure to convince healthier consumers to absorb that risk has resulted in risk-pool distortions that necessitated massive increases in premiums and deductibles.

Those mechanisms can’t be “amended” out of Obamacare; they are Obamacare. The mandate for guaranteed issue and the way in which the federal government forces insurers to handle that risk cannot exist without the other mandates. Eliminate the individual mandate, and especially the limitation requiring comprehensive policies, and you eliminate the wealth transfer necessary to subsidize older and less healthy consumers.

The only way out of that is to shift the burden of excess risk back to those who present the risk, and allow for younger and healthier consumers to opt for health insurance better tailored to their situations. That generally would mean low-cost catastrophic coverage along with the use of HSAs to cover retail clinic visits for routine care. Without the forced wealth transfer to fund excess risk, those with pre-existing conditions would need to enter a state-based high-risk pool for the first year (if presently uninsured) and then transfer into a private health-insurance plan properly priced for the risk presented.

None of this is allowed under ObamaCare; there is no way to “reconcile” it with a market-based approach to health insurance. To “amend” the ACA to allow for it would be to repeal it in its entirety in all but name. Better to rip the Band-Aid off now and work on a rational, market-based replacement than to rearrange deck chairs on Barack Obama’s Titanic failure to make this centrally planned command economy work.