“NO” on American Health Care Act (H.R. 1628)

UPDATE (4/26/17): Heritage Action will withdraw the current House key vote against the American Health Care Act (H.R. 1628) if the MacArthur-Meadows Amendment, as currently understood and drafted, is adopted.

At some point, the House is expected to vote on the American Health Care Act (H.R. 1628), which would partially repeal and replace various components of Obamacare. The proposed legislation repeals a number of Obamacare provisions and contains several notable policy reforms, but the most important part of the AHCA is what it fails to include: a repeal of the regulatory architecture of Obamacare that is responsible for the rising cost of health care.

Title I of the Patient Protection and Affordable Care Act (i.e., Obamacare) lays out a number of health insurance mandates and regulations that make up the regulatory architecture of Obamacare including guaranteed issue, community rating, essential health benefits, and actuarial value, among others. While the AHCA does repeal actuarial value and partially addresses community rating by moving the age rating ratio that Obamacare imposes from 3:1 to 5:1, the bill falls far short of comprehensively addressing the overall regulatory framework of Obamacare.

Obamacare’s creators designed this regulatory framework with the intent to take control of private health insurance plans and convert them into a highly regulated, quasi-public utility. As one of the law’s supporters explained back in 2010, Obamacare’s design “transforms health insurance into a public accommodation,” and turns private health insurance into “a regulated industry … that, in its restructured form, will therefore take on certain characteristics of a public utility.” It strains credibility to characterize this bill as repealing Obamacare when the mechanisms for the federal government’s takeover of health care remain firmly in place.   

Taken together, these mandates and regulations restrict consumer choice and drive up the cost of health care premiums by a national average of 44.5 to 68 percent.  As Heritage Foundation Senior Policy Analyst in Simulations Drew Gonshorowski writes:

“Overall, accounting for gender, age, and the relative proportions of all those groups, Americans are paying 44.5-68 percent more in premiums owing just to Title I regulations. That number is even higher when factoring all the other adverse effects of Obamacare. Obamacare’s Title I regulations bid up the price of premiums drastically for many Americans. While the current House bill begins to repeal Obamacare, it does not go far enough, as many of the most damaging regulations are left in place. Alleviating this pain should be strongly considered at every step of the process.”

The AHCA would also subsidize that regulatory framework through new refundable tax credits aimed to help individuals buy their own health care plans – plans that will remain highly regulated and overly expensive. There has already been political pressure to increase those credits, and that pressure will increase so long as premiums remain high.

As Heritage Foundation Senior Research Fellow in Health Policy Studies Edmund F. Haislmaier describes:

“The key problem with the draft House health care bill is that it fails to correct the features of Obamacare that drove up health insurance costs. Instead, it mainly tweaks Obamacare’s financing and subsidy structure. Basically, the bill focuses on protecting those who gained subsidized coverage through the law’s exchange subsidies and Medicaid expansion, while failing to correct Obamacare’s misguided insurance regulations that drove up premiums for Americans buying coverage without government subsidies.”

Yuval Levin, editor of National Affairs, explains that the AHCA is “fundamentally different” from previous Republican health care proposals, including the bill introduced by now-Secretary Tom Price, “because it functions within the core insurance rules established by Obamacare, which means it can’t really achieve most of the key aims of the conservative reforms it is modeled on.”

Lawmakers cannot preserve Obamacare’s regulatory structure and claim to have repealed the law. Without including the repeal of these regulations in the AHCA, congressional Republicans will have failed to keep their seven-year old promise to fully repeal Obamacare and health insurance costs will likely continue to increase leading up to the 2018 elections.

House Republican Leadership claims the AHCA is only phase one of a three-part plan to repeal and replace Obamacare. In phase two, Human Health and Services (HHS) Secretary Tom Price will take action to address the Obamacare insurance mandates and regulations. In phase three, Republicans will pass any additional reforms they failed to achieve in phase one and two. Unfortunately it isn’t that simple. All executive action in phase two is limited, temporary, and will likely face serious legal challenges. All legislative action in phase three will require 60 votes in the Senate, including eight Democrat votes, a nearly insurmountable obstacle for Republicans to overcome.

Thankfully, Republicans in Congress have the legislative tool necessary – budget reconciliation – to fully repeal Obamacare’s regulations and avoid the political and policy complications contained within phase two and three. Some Republicans have argued Congress cannot repeal Obamacare’s insurance mandates and regulations contained in Title I through budget reconciliation because it does not have a clear budgetary impact. This is somewhat surprising considering the AHCA includes some regulatory changes while leaving others out. Regardless, this argument ignores the reality that Obamacare’s regulatory architecture imposes significant costs on taxpayers and is inseparable from the rest of the law. A January 2017 Congressional Budget Office (CBO) report left little doubt that Obamacare’s regulatory regime has budget implications.

As one former Senate staffer wrote:

“To argue that their budgetary impact is merely incidental to the rest of the law is absurd on its face. Even the Obama administration made this very argument before the Supreme Court in King v. Burwell, arguing forcefully that the regulations are inseparable from the rest of the law. Predicated on that alone, Congress has a case that full repeal through budget reconciliation is viable.”

The Wall Street Journal editorial board describes the two managers’ amendments released  Monday night as “mostly modest,” which is true because they do nothing to repeal the regulatory architecture of Obamacare.     

Republicans promised to fully repeal Obamacare, campaigned on full repeal since 2010, and voted more than 60 times to repeal parts or all of the disastrous health care law. The American people rewarded Republicans for their promise to repeal Obamacare by giving them a united government for the first time in more than a decade. An unwillingness to pursue repeal of Obamacare’s Title I insurance regulations through reconciliation based on a narrow interpretation of budget rules is not acceptable.

Unless repeal of Obamacare’s regulatory regime is included in the AHCA, the bill deserves to be defeated because it would leave the architecture of Obamacare in place and ensure health insurance premiums remain far too high.

Then-Representative Mike Pence’s description of his 2003 vote against the Bush-era prescription drug program resonates still today: “House conservatives faced a difficult choice: oppose the president we love, or support the expansion of the big government we hate.” Voting against a leadership-crafted bill was “not a sign of disloyalty, but of true loyalty to principle,” Pence explained at the time. That same principle remains true today.

Heritage Action opposes H.R. 1628 and will include it as a key vote on our legislative scorecard.        

Related:
Heritage Action Statement Opposing the AHCA
Daily Signal: Misleading Rhetoric Can’t Mask Failings of GOP Health Care Bill
Daily Signal: Capitol Hill’s Misleading Claims on Tax Credits for Health Care
Full Repeal Means Regulatory Repeal: Why Obamacare’s Regulatory Mandates Must Be Undone Permanently
Daily Signal: House Republican Health Care Bill Misses the Mark by Heritage Health Care Expert Ed Haislmaier
Daily Signal: As Republicans Debate Health Bill, Let’s Remember Why Americans Want Obamacare Repeal by Heritage Health Care Expert Ed Haislmaier
Daily Signal: Pro-Life Groups Sound Caution on Obamacare Replacement Bill
The Hill Op-ed: Voters won’t forgive Republicans if they fail to repeal ObamaCare
Op-ed: Holding Obamacare Repeal Hostage for Replace Guarantees Its Defeat by James Wallner
Op-ed: Why Obamacare’s “20 Million” Number if Fake
Daily Signal: How Tom Price Can Begin to Unravel Obamacare From Inside the Agency That Implemented It