Senate Republicans have a huge problem with an extremely simple solution. The problem is that the American Health Care Act increases the number of uninsured by 23 million, mainly because it cuts a trillion dollars out of financing for Medicaid and tax credits for individual insurance in order to finance a big tax cut. They have a very simple solution: Don’t use the health-care bill to finance a huge tax cut. Oddly enough, this solution does not seem to have occurred to any of the Republicans working on their party’s plan.
A somewhat surreal Politico story from last week reports that Senate Republicans feel intense gloom over their inability to produce a bill that substantially improves upon the negative-23 million insured in the House version. “Senate Republicans also aren’t sure how much they can improve on a score that, in their view, fell far short of an acceptable outcome,” the story reports. A very easy step would be to eliminate the tax cuts, thus eliminating the need to reduce spending for insurance for people who can’t afford it on their own.
The report also suggests that Senate Republicans are hampered by special rules that force them to match or exceed the deficit reduction in the House bill:
There are limits to how much the Senate can really juke the numbers of the CBO score to make a bill more palatable to the public. Senators cannot write a bill that saves fewer than the $119 billion in savings from the House bill, which could restrict just how much room Republicans have to produce better coverage numbers or lower premiums.
You know what would be an easy way for the Senate bill to find a lot of budget savings? Take out the huge tax cut!
The 24th paragraph of the 26-paragraph-long story floats the possibility of delaying the tax cut. (“One option under consideration: Delaying repeal of Obamacare’s taxes to produce more money to shore up Medicaid coffers and reduce premiums in the short term.”) But of course a delay merely puts the problem off rather than resolving it.
The irony here is that Republicans appear to be hampered by a legislative strategy that no longer applies. The original Republican plan called for repealing Obamacare, including the taxes that pay for it, early in 2017. Then Republicans would pass a revenue-neutral tax cut, which offset tax cuts for high-income earners by imposing a border-adjustment tax.
Why didn’t Republicans want to just combine both tax cuts into one extremely large tax cut for the rich? Because their plan required that the cost of the tax cuts be offset. The first tax cut for the rich would be offset with cuts to insurance subsidies, and the second offset with tax increases on the middle class. Doing all the tax cuts in one tax bill would require finding even more painful tax increases to offset their cost.
But now, Republicans are starting to realize “tax reform” — that is, tax cuts that are offset by revenue increases elsewhere — is a pipe dream. The border-adjustment tax has implacable enemies within the GOP. They’re not going to find enough new revenue to cover the costs of the taxes they want to cut. Their plausible Plan B is just to pass a big tax cut without paying for its cost. That means they can just repeal the Obamacare taxes in the tax cut bill. They don’t need to do it in a separate health-care bill.
Given the parameters Senate Republicans are working within, it is literally impossible for them to write a non-horrific health-care law. Their commitment to eliminating Obamacare’s taxes in the health-care bill deprives them of the funding they need to provide even bare-bones minimal coverage. And their longstanding party-wide opposition to any new taxes means they can’t replace the lost revenue with something else. If they realize they can leave the Obamacare taxes in place, and repeal them in a separate tax-cut bill, they can get a health-care law that isn’t a humanitarian disaster and a tax-cut bill that gives rich people some really big tax cuts. They have to realize this eventually, don’t they?