Sunday, February 13, 2011

Using Reconciliation to Repeal ObamaCare

Karl Rove has suggested in a WSJ article that large parts of Obama Care could be repealed through reconciliation, meaning that Republicans could repeal with just a majority of the Senate and not need to worry about a filibuster.  So, in essence the idea is to (i) maintain control of the House, (ii) gain control of a majority of the Senate in 2012 (which at this point seems somewhat likely), and (iii) win the presidency in 2012 (which at this point unfortunately appears somewhat unlikely).

The point of Rove's argument here is that we're closer than we think we are to repeal.  Everyone knows its unlikely at this point that the Republicans will have 60 seats in the Senate after teh 2010 elections, but its likely they will have a majority. 

But if we did all that, are we saying we could repeal the entire thing in 2012 as long as we kept every Republican senator in line?  Not exactly.  Here's what Keith Hennessey, a Bush administration economist and as I understand it the inspiration for Rove's article, says:

 "A few minor odds and ends could not be repealed in reconciliation.  That is strategically unimportant".  Rove clarifies that the things that could not be repealed through reconciliation are not the "big-cost drivers".  He also says specifically that the insurance provisions might not be able to be removed through reconciliation.

My understanding is that the test of whether something can or cannot be changed through reconciliation is whether the item affects the federal government's taxes (or other revenues) or its spending.  So what are some provisions that might not be repealable through reconciliation?

My biggest worry is that the provisions regulating the insurance industry, particularly those preventing insurance companies from denying coverage based on pre-existing conditions, would not be repealable through reconciliation.  This is worrisome because it is hard to understand in theory how a private insurance company can operate without being able to decide not to write insurance for someone who has an existing illness.  (I might feel a little schadenfreude at this whole state of affairs given the cynical role of the insurance companies in structuring the health care law as basically a statute that mandates that every single person in the country buy their product, but notwithstanding that I don't think its in anyone's interests to regulate the industry out of business.)

No sane business person would do that - it doesn't have anything to do with the business of insurance.  Its really just old-fashioned redistribution and is what I would call an off the books entitlement program.  The spending part of the program is providing "insurance" to people with pre-existing conditions, and the tax part of the program is the individual mandate.  The democrats could have set up an economically identical scheme with a traditional government spending program but they didn't because they understand that this is off the books (meaning it doesn't look like it massively increases the size of government, even though it does in fact) and they know how popular the pre-existing conditions provision is.

So my worry is that if you pass repeal through reconciliation, you might have to leave unrepealed for another day incredibly horrible policies like the pre-existing conditions provisions of the law (and I haven't even touched on all of the other stupid stuff that you might not be able to get through reconcilation, like the requirement that fast food restaurants post calorie information on their menus).

This is why I would say that defunding is a dangerous option.  Politically, it would be very difficult for even a Republican Congress to repeal the pre-existing conditions provision.  To me its just as bad as the individual mandate, but its nonetheless extremely popular.

If I thought it were the case that either (i) I'm wrong and these provisions could get through reconciliation or (ii) the repeal of the individual mandate would lead the insurance companies into such a lobbying frenzy that even Democrats would agree to repeal the insurance provisions, then I'd so go for it.  But if neither of those things are the case, I'd worry that we'd be left with a lot of bad policy that would be very hard to repeal on its own.  At the end of the day, Policy Priority # 1 needs to be repealing this entire monstrosity and returning the health insurance industry back to the pre-Obama status quo.  I think the jury's out on whether repeal through reconciliation would move us further towards that goal or put us in a position where its politically impossible.

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