Why the GOP the GOP should not agree to fund cost-sharing reduction payments beyond 2018
The GOP Can Do Better Than Alexander-Murray
By James C. Capretta
When President Trump and House Speaker Paul Ryan announced their opposition to the bipartisan health-care deal negotiated by Republican Senator Lamar Alexander with Democratic Senator Patty Murray, it doomed the effort for now. The issue won’t go away for good, though. Democrats in Congress are likely to demand inclusion of some features of the Alexander-Murray plan in an end-of-year deal to fund the government for 2018. And Republicans will need some Democratic support to pass a full-year appropriation bill in the Senate.
Sen. Alexander deserves credit for trying to steer the GOP out of the health-care wilderness. He has been attempting for weeks to find a bipartisan compromise on health-care policy that can make it through Congress, which is exactly what the GOP should be doing in the aftermath of the party’s failure to pass a repeal and replacement of the Affordable Care Act (ACA) in the Senate.
But the deal Sen. Alexander negotiated with Sen. Murray has a major flaw: It would fund the cost-sharing reduction payments authorized by the ACA for two years, through 2019.
The GOP should not agree to fund cost-sharing reduction payments beyond 2018 absent a much more comprehensive deal on health care. An agreement to fund the cost-sharing subsidies through 2019 would all but ensure that Democrats in Congress will stonewall further negotiations on health care until after the mid-term elections in November 2018. Democrats are likely to pick up seats in the House in 2018, and it is possible the party could recapture control of the lower chamber. If Democrats retake the House next November, there would be no prospect for major changes in health-care policy during the third and fourth years of the Trump presidency.
The GOP’s overall objective on health care should be to put important aspects of the entire system on a more bipartisan — and therefore more stable and lasting — foundation. The ACA was passed with only Democratic votes in Congress, and the law made sweeping changes to Medicaid, health-insurance subsidization and regulation, tax policy, and Medicare. At this point, it may not be possible for the GOP to pass something that would be viewed as a “repeal and replacement of the ACA.” But the GOP should continue pushing for changes to the U.S. health-care system, including the ACA, both to bring about a more market-based approach and to lower the government’s long-term budgetary obligations.
Sen. Alexander should not be blamed for failing to secure a far-reaching deal on health care with Sen. Murray. That wasn’t his goal, and it wouldn’t have been possible to reach such an agreement even if he had tried. His task was to negotiate, in a compressed time frame, a short-term deal that would help stabilize the ACA’s insurance markets next year.
In that context, it was perfectly appropriate for the Alexander-Murray agreement to include funding of the cost-sharing reduction payments. President Trump’s decision to terminate these payments is correct on legal grounds. Congress did not provide a proper appropriation for these funds, and so it was not appropriate for the Obama administration or the Trump administration to keep drawing funds for this purpose out of the treasury. Nonetheless, the decision to terminate the payment of the subsidies to insurance plans has added a level of uncertainty and disruption to a market that is already suffering from a high level of adverse selection. Congress should do what it should have done long ago: make a proper appropriation for these funds.
However, if Republicans want to have any hope of securing more fundamental changes to health care, such as reforms to the Medicaid program, they should appropriate funds for such cost-sharing reductions for 2018 only. This would require another appropriation sometime next year to provide funding for the cost-sharing subsidies in 2019 and beyond. Democrats in Congress will have a strong interest in ensuring the cost-sharing reduction payments are fully funded, giving the GOP some leverage to discuss other aspects of the health system.
Republicans also need to set in motion a plausible political process for a serious negotiation with Democrats. Despite calls for “regular order” on health care from Sen. John McCain and others, it is very unlikely that the traditional committee process has the capacity (or trust of rank-and-file members) to produce legislation that will settle matters in health care.
Special commissions and ad hoc working groups have been tried often and have failed. But they can succeed under the right circumstances. Hence Republicans should seek agreement from Democrats to establish a one-time, bipartisan ad hoc working group of key House and Senate members tasked with striking a comprehensive compromise on health care. The group should be given a broad mandate and about six months to come up with a deal. It will also need adequate analytic support to work through the many complex options that would need to be considered. The bipartisan group’s recommendations could then be attached to legislation to be considered next year for funding cost-sharing reduction payments beyond 2018.
Sen. Alexander is right to believe that the GOP should be seeking bipartisan solutions on health care. Republicans do not have enough internal consensus at this point to tackle this issue on a partisan basis. Sen. Alexander’s effort with Sen. Murray is an important first step in this direction.
But Republicans need to be smart about how they go about engaging with Democrats on health care. A deal that funds the ACA’s cost-sharing reduction payments for two years would remove all incentive for Democrats in Congress to negotiate in good faith again until 2019. And at that point Republicans could find themselves in a much weaker position. By contrast, providing funding now for just one year would require more legislation again next year to keep the funds flowing in 2019, thus providing another opportunity for the parties to come together around a larger bipartisan compromise. That’s an opportunity that should not be squandered.
James C. Capretta is a RealClearPolicy Contributor and holds the Milton Friedman chair at the American Enterprise Institute.
