Health care is going to play a key role in Republicans’ budget reconciliation efforts, but they risk failure by repeating the mistakes of 2017.
During the first Trump administration, Republicans famously pursued a longstanding campaign promise to repeal and replace Obamacare. However, the effort went down in flames after it became clear that there were policy, political and process concerns that prevented Republicans from coalescing around a single proposal.
As the lead staffer for one of the leading proposals, I experienced firsthand the missteps of our efforts and remain haunted eight years later by that failure. Since that time, federal health care spending has continued to climb, patient costs keep rising, access to care has gotten worse, coverage has delivered decreasing value and health care stakeholders continue to make billions of dollars from misaligned incentives.
I fear that Republicans are repeating the same mistakes of the past that could doom President Trump’s entire domestic agenda. However, it’s not too late to recalibrate the effort and successfully pass a bill that overhauls federal health care spending in a way that is both effective and politically palatable. To do this, they should follow these four recommendations.
1. Create as many policy dials as possible
Go big in terms of the number of reforms. You only get the opportunity to transform a broken system at most once a decade. Once passed, policy reforms mostly remain intact. The alternative to going big in this bill is cutting a deal with Senate Minority Leader Chuck Schumer (D-N.Y.), an impossible task on most health care issues.
Republicans shouldn’t be afraid to include targeted changes to Medicare, Medicaid, commercial insurance, HSAs, etc. that correctly align financial incentives to the benefit of patients and taxpayers. More policy dials than what is currently being publicly discussed would be a huge win for conservatives seeking big reforms.
2. Don’t turn the dials all the way up
Change needs to be politically palatable, otherwise it won’t pass. During repeal and replace, Republicans wanted to not only create policy dials, but also wanted to turn them all the way up to dramatically reduce Medicaid spending. The result — images of individuals in wheelchairs being arrested in committee rooms, a failed bill, and a political rout in the 2018 midterms. In contrast, Democrats passed the Inflation Reduction Act and only applied the drug negotiation provision to a limited number of pharmaceuticals. The result — successful passage, a better-than-expected midterm, and a policy dial that they will come back to in future years to further ratchet up for savings.
It is much harder for Democrats and stakeholders to criticize Medicaid per capita caps (a Bill Clinton-Ted Kennedy supported policy) with growth rates close to current projections versus a proposal that turns up the dial so much that we’re talking about “hundreds of billions of dollars being cut.” A more limited dial turn would be a win for moderate Republicans concerned about the political ramifications of program changes. It would also be a win for conservatives if it allows more big reforms to ultimately be included.
Finally, it also would be in line with Trump’s promise not to cut Medicare and Medicaid, except to address waste, fraud and abuse.
3. Don’t chase arbitrary spending and coverage numbers
The Congressional Budget Office has a tough job — design complicated models that explain the effects of behavioral economics on federal spending and enrollment in health plan coverage. For years, Republicans have criticized CBO estimates around coverage (the impact of repealing the individual mandate), spending (Medicaid expansion and ACA tax credits) and government cost containment efforts.
Knowing this history, it would be a mistake for conservatives to base their vote for a reconciliation bill on an arbitrary savings target as determined by CBO. Instead, they should learn the lesson of Ronald Reagan and Medicare in the 1980s. During that time, Congress passed a “budget neutral” Medicare reform, as determined by CBO, that incentivized delivering care in a cost-effective manner compared to the previous cost-based system.
Ultimately, this “budget neutral” reform saved billions of dollars by changing the economics for stakeholders. If congressional Republicans correctly align financial incentives, real savings will follow, even if CBO says savings are limited.
4. Have a simple and unifying message
Repeal and replace failed in large part because Republicans weren’t in agreement about what we were trying to accomplish: repeal Obamacare, replace Obamacare, reduce government spending, reform entitlements, lower the baseline for tax reform, reduce health care costs, etc.
Health care is deeply personal and touches everyone. You cannot respond to “they’re gutting benefits and throwing people onto the streets” with a message of “we’re reducing spending.” Instead, congressional leaders need a simple message that can unite all Republicans and resonate with voters. I’m not a messaging expert, but something like “Democrats are giving money to health care conglomerates, lobbyists and consultants and we’re instead giving that money to patients” is a good starting point.
If Republicans can take these lessons to heart, they’ll be in a better position to successfully advance a reconciliation bill that reforms health care spending, lowers costs for patients, and isn’t politically toxic. The country can’t afford Republicans having to wait another eight years to make changes to the system.
Matt Gallivan is the CEO of Genesis Health Strategies, a federal health policy consulting firm. He previously was health policy director for Sen. Bill Cassidy (R-La.) from 2017-2018 during health care reconciliation efforts.
