What’s Next for Health Care as Obamacare Repeal Fails Again?

Plus: The GOP’s $5 trillion tax squeeze By Yuval Rosenberg and Michael Rainey What’s Next for Health Care? Game of Thrones fans know that what is dead may never die. The saying may hold true for Obamacare repeal as well. The [collapse]( of the Senate’s latest health care bill means that Republicans will miss the deadline for repealing the Affordable Care Act this year using a process that would require only 50 votes. The budget rules that enable that process expire on September 30, the end of fiscal year 2017. Senate Republicans had to decide Tuesday whether to bother with a vote on the doomed bill. Was it better to try to show the conservative grassroots that they tried or to avoid the spectacle of failure on the Senate floor? They opted to pull the bill. But Republicans aren’t giving up entirely on the goal of Obamacare repeal. “We haven’t given up on changing the American health care system,” Senate Majority Leader Mitch McConnell (R-KY) said. “We are not going to be able to do that this week, but it still lies ahead of us, and we haven’t given up on that.” Here’s where the health care debate goes next: The Final Margin Still Matters: Even without a vote, the margin of defeat matters for the future, writes [David Leonhardt of The New York Times](. “The more senators who oppose Graham-Cassidy, the less likely that yet another version of Trumpcare will emerge. … If Republicans come to terms with their total lack of a reasonable repeal plan, more of them will be open to a bipartisan compromise to fix Obamacare’s flaws.” Sen. Lisa Murkowski (R-AK) issued a [statement]( Tuesday decrying the “lousy process” for the Graham-Cassidy bill, but she did not indicate how she would have voted. Another Repeal Attempt Could Happen: Senate Majority Leader Mitch McConnell said Republicans are moving on to tax reform, but some GOP lawmakers reportedly [hope]( to start over by having health care included in the budget blueprint for 2018 — the same blueprint that’s supposed to include instructions for tax reform so that it can pass with a simple GOP majority. Squeezing in health care could threaten the chances that a budget vehicle passes, potentially torpedoing tax reform in the process, and prominent lawmakers in both the House and Senate have already [come out against]( the idea. Still, Graham predicted that his bill could return. “There are 50 votes for the substance,” he [said](. “There are not 50 votes for the process.” Even if Obamacare repeal is left out of the 2018 budget, Congress could still come back to it soon: One other option is to use the fiscal 2019 budget. “It’s not a question of if, but when,” Graham [said](. A Bipartisan Fix Seems Unlikely Right Now: About [70 percent]( of Americans want Congress to work on stabilizing the ACA marketplaces. Senate Minority Leader Chuck Schumer (D-NY) said again Monday that once Obamacare repeal is off the table, Democrats are willing to work with Republicans on that. And Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) had made some progress on a plan to guarantee federal subsidies for low-income Americans in exchange for additional flexibility for states on how that money could be spent. But the bipartisan effort stopped when the last-ditch Obamacare repeal appeared to be gaining momentum, and it now looks stalled. "We stopped the bipartisan talks last week because my goal wasn't just to get a bipartisan agreement — it was to get a bipartisan result,” Alexander [said]( Monday. “I didn't see any way to get one in the current political environment." On Tuesday, he said he would consult with Murray to try to find consensus on steps that would help in 2018 and 2019. But other Republican leaders “indicated they have little interest in shoring up the existing insurance market,” The Washington Post [reported]( Tuesday. “Instead, they suggested, the ongoing instability would backfire on Democrats and build momentum for the ACA’s eventual repeal.” So the 2018 Insurance Market Will See Steep Rate Hikes: Insurers have until Wednesday to finalize contracts with the federal government to sell health plans through the Obamacare marketplace next year. Premiums are set to climb by double digits in many places, and insurers have placed at least part of the blame on the ongoing [uncertainty]( about whether the Trump administration will continue to make cost-sharing reduction payments. The Trump administration has made the payments so far, but has not committed to continuing them. Any Obamacare stabilization efforts at this point are far more likely to affect 2019 rates. A safe bet for the next year: We’ll hear a lot more criticism of the health care law from Republicans, lots of complaints from Obamacare supporters about the administration’s sabotaging the exchanges, and plenty of complaints from Americans about rising health care costs. [Share]( [Tweet]( [Forward]( Chart of the Day Via the [Kaiser Family Foundation]( [Share]( [Tweet]( [Forward]( What Republicans Got with the Graham-Cassidy Push Axios’s Sam Baker [sums it up]( nicely in four lines. - A couple of days of Jimmy Kimmel calling them liars on national television. - Footage and photos of [people in wheelchairs being arrested and dragged out]( of a hearing room. - Another chance to disappoint their donors. - The same policy result they had before. Or to put it in one word: Ouch. [Share]( [Tweet]( [Forward]( Fiscal Flashes GOP Tax Plan Could Raise the Bottom Rate – and Leave the Top Rate Undefined: The plan due Wednesday could contain at least one nominal tax hike: Reports indicate that Republicans have agreed to raise the bottom personal rate from 10 percent to 12 percent. They will also double the standard deduction, and the net effect of the two moves together could be a tax cut for low-income filers — or at least Republicans could portray it that way. The final effect depends on other elements of the tax plan (Vox has a good review [here](. At the same time, the plan won’t provide a top tax rate, leaving that politically difficult question for a later date and opening up the possibility of a tax hike for high-income households. ([Wall Street Journal]( [Axios]( McCain Wants Bipartisan Tax Reform: Ordinarily, a plea for more bipartisanship in Washington wouldn’t get much notice, but Sen. John McCain’s call for a return to “regular order” on tax reform is worth noting. McCain told reporters Tuesday: “I am committed, as I’ve said before, to a bipartisan approach, such as we’ve been doing in the Armed Services Committee for the last 53 years.” Emphasizing the point, he [tweeted]( “Now let's return to regular order - hearings, open debate and amendments.” Those remarks suggest that he could resist Republican efforts to pass tax legislation with just 50 votes in the Senate, much as he resisted efforts to pass Obamacare repeal bills on a similarly narrow basis. ([Bloomberg]( Jared Bernstein Shoots Down the GOP’s Fiscal Chicken Hawks: Republicans want a tax cut, but they don’t want to fully pay for it and may be willing to increase the deficit by $1.5 trillion over 10 years. This would continue a troubling cycle, economist Jared Bernstein writes, in which supposed fiscal conservatives “use the deficit argument to block spending, promote fiscal austerity, and small government, conveniently tossing deficit concerns aside when it comes to tax cuts.” You’ll hear arguments about how increased economic growth will make up for the budgetary effects of the tax cuts, but don’t believe them. “Our fiscal history on this point is clear: Cutting taxes loses revenues, which, unless offset by higher taxes elsewhere or spending cuts, increases the budget deficit, which in turn raises the debt.” When this happens again, and the promised growth effects don’t materialize, the tax cutters will go back to pushing for spending cuts. The country faces a number of serious challenges, including an aging population that by itself will require increased government spending, and we need a tax policy that does more than drive up the deficit. “The problem with structural deficits — ones that go up even in good times — is that they reveal that we’re unwilling to raise the necessary revenues to support the government we want and need. This enables those who whose goal is to shrink government to point to deficits and debt as their proof that we can’t afford it, whatever ‘it’ is, except when ‘it’ is tax cuts.” ([New York Times]( [Share]( [Tweet]( [Forward]( The GOP’s $5 Trillion Tax Squeeze Republicans are expected to release an outline of their tax plan on Wednesday, but some of the basic elements of the plan are reportedly still in flux. One problem is the sheer size of the tax cuts being considered – by one account, the current GOP wish list is worth more than $5 trillion over ten years. That lofty estimate comes from [Kyle Pomerleau]( of the Tax Foundation, who looked at the cost of doing all the things Republicans have said they want to do, including reducing rates for individuals and businesses, doubling the standard deduction, repealing the alternative minimum tax and cutting taxes on overseas corporate profits. The problem is that the Senate Finance Committee made a deal last week that could essentially cap the cost of tax cuts at $1.5 trillion over 10 years. This leaves Republicans with a serious geometrical puzzle to solve: How do you fit a $5 trillion peg into a $1.5 trillion-sized hole? A former Republican congressional aide gave [The Wall Street Journal]( a metaphor that will make sense to anyone who has shopped for a new car lately: “To fit every policy you want, you need a full-size SUV, but at best you have a midsize crossover … Some stuff just isn’t going to fit, no matter how much cramming you do.” Given the constraints, it’s a safe bet that we’ll see some serious deal-making within the tax-writing committees over the next few months. And while Republicans have some room to maneuver, it’s not unlimited. On Tuesday, Rep. Mark Meadows, the leader of the House Freedom Caucus, warned that he would [vote against]( the tax package if the corporate rate is above 20 percent. And Meadows is not the only member of Congress who will have red lines on tax reform. All of that means that tax reform has a long way to go, and that success is not assured, even with Republicans controlling the White House and Congress. As Conservative economist [Douglas Holtz-Eakin]( said in Bloomberg: “Until I see it, I have nothing but worries … If you do tax policy in Washington, D.C., you live a life of disappointment.” [Share]( [Tweet]( [Forward]( What We're Reading - [Americans Split on Business Tax, Oppose Cut for People with High Incomes]( – Washington Post - [White House Weeks Away from Formal Funding Request for Puerto Rico Aid]( – Politico - [Sen. Bob Corker Retiring in 2018]( – The Hill - [Tax Question GOP Won't Ask: How Much Should We Raise Taxes on the Rich?]( – USA Today - [A Tax Break on Repatriated Earnings Will Not Trickle Down to US Workers]( – Tax Policy Center - [Tax Reform Should Not Make Other Problems Worse]( – Jason Furman, The Hill - [The States Spending the Most Out-of-Pocket on Health Care]( – Axios - [Michael Bloomberg: Republicans, Start Over on Health Care]( – Bloomberg - [Want More Americans to Work? Give Them Medicaid]( – Talk Poverty - [Millions in the Middle Class Will Feel It if GOP Kills This Tax Break]( – CNN - [Why It Looks Like the Senate’s Debating the Defense Bill Again]( – Roll Call - [Rahm Emanuel Wants to Make Chicago the Center for a Multi-Billion Tech Industry]( – Business Insider - [Time for a Conservative Anti-Monopoly Movement]( – American Conservative - [When the Government Invests in Low-Income Students, It Recoups the Money]( – MarketWatch Copyright © 2017 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book]( Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](