Republicans Should Reform Obamacare, Not Repeal It

Instead of attempting to undo the Affordable Care Act, the GOP should try to fix the legislation’s flaws.

Doctor Andy Chiou, left, speaks to patient Carl Dolson in a hyperbaric chamber in Peoria, Illinois, November 26, 2013. (Jim Young / Reuters)

“No illusions please: This bill will not be repealed.”

I wrote those words five years ago, on the very day that the final text of the Affordable Care Act was approved by the House and sent to President Obama for his signature. The prediction has been corroborated again and again. Since 2010, the ACA has survived dozens of repeal votes in Congress, three national elections, and two Supreme Court challenges, the most recent of them only last week.

Six of nine justices of the Supreme Court rebuffed an invitation to wrench healthcare subsidies from as many as 6.5 million people enrolled in federal exchanges. While many Republican members of Congress are privately relieved that the court avoided a political crisis, conservatives outside Congress stand aghast and enraged.

The Republican presidential candidates have reacted to the latest court case by recommitting themselves to Obamacare repeal after a Republican victory in 2016. They are thereby transforming the coming election from a debate over the Obama record—and over the Hillary Clinton agenda—into a stark referendum on universal health coverage. They are inviting every voter to wonder:  “If I vote Republican, will I lose my health insurance?” For millions of people, the answer to that question will be: “Yes.”

There’s a great deal wrong with Obamacare. As Jed Graham details in his important, recently released e-book, Obamacare Is a Great Mess, the Affordable Care Act is riddled with clunky irrationalities. The law taxes and subsidizes in ways that don’t always make a lot of sense. It encourages businesses to employ low-wage workers less than 30 hours a week to avoid employer mandates. Subsidies fade in and out in ways that push economically marginal people into high-deductible bronze plans that leave them worse off than they were before. The tax penalty for individuals who don’t buy insurance is big enough to impose hardship, but not big enough to change behavior. And so on and on.

Yet it’s simultaneously true that the Affordable Care Act meets some real national needs. It did provide insurance to millions who lacked it. It did put an end to some outrageous practices by health insurers. It does seem to be slowing the growth of per-person healthcare costs. If it vanished tomorrow, potentially as many as 23 million people would lose their coverage: the 11.2 million added to the Medicaid program since 2010, the 10 million in the state and federal exchanges, and the 5.7 million young adults under age 26 enrolled in parental healthcare plans.

Aware of the power of the status quo, Republicans have promised not merely to repeal Obamacare but to “repeal and replace” it. But the party has never managed to coalesce around any replacement plan. The various ideas on offer remain stuck in the conceptual stage, vague about such important details as “how much would this cost,” “how many would be covered,” and “how will coverage be paid for.” What is clear, however, is that the Republican alternatives, such as they are, would remove coverage from many who have it now. In my opinion, that one fact is likely to cost Republicans the White House in 2016, no matter who they nominate.

Republicans draw comfort from polls that show Obamacare supported by less than 50 percent of the population. Those polls did not rescue them in 2012, when very few people yet benefited from the ACA, and they will do the GOP even less good in 2016. Polls asking people their views of complicated and poorly understood laws don’t tell us much about how people will behave when confronted with the stark calculus of what repeal will mean for them personally. People who disapprove of President Obama are highly likely to disapprove of a thing called “Obamacare”  even as they jealously protect their personal gains from that same law.

More than 80 percent of those who have gained coverage under the ACA were pleased with the coverage they got. Everything we know about voters tells us that they are much more motivated to protect something they already have than to vote to gain something new. In 2016, unlike 2012, their benefits under the ACA will be something that many voters now have.

Riling those voters is especially unwise for a party that does best when voter turnout is low. In off-year elections, when participation drops below 40 percent, Republicans dominate. As voter numbers rise, Republicans find it harder to compete. In 2004, when 122 million voted, George W. Bush squeaked through with 50.73 percent of the vote. But in 2008, with 131.5 million coming out, Republicans were smoked, and they were beaten only a little less badly in 2012, with 129 million votes cast.

The best Republican hope for 2016 is that Hillary Clinton will prove another John Kerry: A dull, uninspiring candidate who won’t summon the disaffected younger, poorer, minority voters who queued to cast a ballot for Barack Obama. But if there is any one thing most likely to mobilize those voters, it is a direct attack on their healthcare coverage. Those Republicans who urge the party to define 2016 as another “time for choosing” forget that when Ronald Reagan issued that call in 1964, the voters chose Lyndon Johnson and Medicare. Those who insist that Obamacare is “all or nothing” overlook the high likelihood that the outcome in that case will be “nothing."

What should Republicans do instead?


Republicans should accept the Affordable Care Act as a permanent new fact of American society. They should accept universal healthcare coverage as a welcome aspect of any advanced democracy. Instead of fruitlessly seeking to repeal a law now that will in 2016 enter into its fourth year of operation, they should specify the law’s most obnoxious flaws and seek a mandate to reform them.

My list would start here:

1) Fix the funding mechanism. The ACA purports to finance itself with two highly redistributive taxes, one on upper incomes, another on dividend income. These eye-catching taxes distract attention from the real working engine of the law, the internal redistribution within the insurance pools from young and healthy to middle-aged and less healthy. That internal redistribution renders ACA plans an unattractive proposition for the young and healthy. Meanwhile the people receiving the most benefit are 55-65 year olds who may or may not need it—those older cohorts after all are considerably more affluent than the young.

ACA funding should be visible and broadly based. Universal health coverage benefits everybody; all should contribute toward its costs. I’ve long been attracted to directing the proceeds of a carbon tax to health coverage. The taxes on upper-income earners in the ACA was a political maneuver to round up Democratic votes in Congress after hopes of bipartisan agreement faded. One-party backing for a major social program is not sustainable over the long haul.

2) Let states run their Medicaid programs their way. About half the people who gained coverage under the ACA did so through Medicaid expansion. Yet 19 states have refused to expand their programs, under the leeway allowed by the Supreme Court in the first challenge to Obamacare, back in 2012.  Under the ACA, the federal government covers all the costs of Medicaid expansion through the end of 2016. The federal share of the extra costs then declines to 90 percent by 2020. Thereafter, the states face a very real likelihood of an ever-rising share of the added costs. Yet even as the federal contribution shrinks, the ACA’s burdensome new Medicaid rules would remain in place. You can see why states would protest.

The ACA allows the president to grant waivers to states to innovate and experiment. Those waivers should be extended broadly. As states pay for more of the Medicaid expansion, they should be allowed scope to make their own decisions.

3) End the employer mandate. Along with the famous individual mandate, the ACA imposes a mandate on employers of more than 50 people to purchase insurance for all employees who work more than 30 hours a week. The Obama administration has delayed full effect of this rule until 2016. Yet even delayed, the mandate has become a major disincentive to the employment of less-skilled workers. Though some commentators have contended that these cutbacks may only effect a relatively small percentage of the total workforce, the loss of paid hours for hundreds of thousands of U.S. workers is still not a trivial issue.

Percent Change in Workweek Hours Since December 2007
Bureau of Labor Statistics/Jed Graham

The employer mandate functions to preserve one of the least rational elements of the U.S. healthcare system, employer-provided insurance. The authors of the ACA have no more fondness for the employer mandate than any other economist—but seem to have hoped that they could use the mandate to extract some additional revenue. Employers (the authors seem to have hoped) would end their coverage, pay a tax instead, and send their workers into the exchanges. Instead, employers have cut hours to escape the mandate. Where they can’t escape, many have shopped for ultra-barebones insurance instead.

The mandate has simply failed. End it. If an employer contribution to the ACA is desired, impose it through a broadband payroll tax, rather than a tax disguised as a counter-productive regulation.

James Thurber opens one of his essays with a disarming admission. “If this has been said before, all I can reply is … I’m saying it again.”

I’ll plead guilty to the same offense. I’ve been saying the same thing over and over since 2010. The ACA is here to stay. Its core principle of universal coverage is welcome. Its working mechanisms—regulated private markets plus Medicaid expansion—are consistent with conservative thinking. Its details, however, are troublesome and cry out for tough-minded reform to control costs, emancipate local governments, and end the fiction that the top 1 percent can pay the medical bills of all of American society. Reform and rethink, not revise and repeal, should be the Republican healthcare slogan in 2016, for the country’s sake and for their own.