Mar 27, 2017

Axios Vitals

By Caitlin Owens
Caitlin Owens

Good morning ... How's your Trumpcare hangover? Everyone I've talked to this weekend is still in disbelief that a seven-year repeal effort just fell apart. But we haven't seen the end of calls for Congress to do something, like take a vote, any vote. Meantime, watch how the Trump administration and Congress actually handle Obamacare from here.

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The new Obamacare agenda: From repeal to neglect?

Trumpcare may be dead, but that doesn't mean Obamacare is safe. The next thing to watch is whether the law actually does fall apart, not because of the design flaws, but because the Trump administration has no incentive to prevent a collapse.

When President Trump tweets that "Obamacare will explode," and House Speaker Paul Ryan says it can't be fixed, they're not sending signals that they're looking for success. The reality is that insurers will need incentives to stay in the market and not impose another round of rate hikes. Instead, we could get a meltdown followed by an endless round of finger-pointing: Trump and Ryan would blame the Democrats for a poorly designed law, and Democrats would blame them for rooting for failure.

You can read more about the decisions ahead via the New York Times' Margot Sanger-Katz and Politico's Dan Diamond, but here are the main ones:

  • Cost-sharing subsidies: The Trump administration and Congress have to decide whether to settle a GOP lawsuit over the subsidies, which help low-income Obamacare customers, and just pay them to insurers. The problem is, it's no longer clear whether Congress would be able to approve the money. It would need the Freedom Caucus for that too, and chairman Mark Meadows has said he could support the payments only as part of a plan to replace Obamacare.
  • Stabilization: Health and Human Services secretary Tom Price has told Republicans the department is considering another rule to stabilize the markets next month — but that was based on the assumption that Congress would pass a repeal and replacement plan. HHS hasn't said whether it will stick with its plans.
  • Outreach: Right after the Trump was sworn in, the administration dialed back all of the efforts to encourage people to sign up for 2017, and total enrollment dropped from last year. Now HHS will have to decide whether to promote the law in the next open enrollment, at the end of this year, or keep saying the law has failed.
  • Recruiting insurers: The administration has noted all of the insurers that dropped out of Obamacare in the last enrollment season, but it does have the power to try to recruit more into the marketplaces — if it wants to.

Why the incentives have changed: The Trump administration had wanted to keep insurers in the market to guarantee a smooth transition to a new system, but that incentive "will wane" now that there isn't going to be a new system, because "they're going to be viewed as improving the law that they hate," said Chris Condeluci, a former Senate Republican aide and a member of the Axios board of experts.

Peace talks? But White House chief of staff Reince Priebus did suggest on Fox News Sunday that Trump doesn't really want a collapse: "He wants to make sure that people don't get left behind. He wants to make sure that there's competition in the marketplace so that rates are lower and people can choose their doctor."

Americans for Prosperity: Time for a straight repeal vote

Republican leaders are already coming under pressure not to let Obamacare repeal drop. Americans for Prosperity, one of the most powerful outside conservative groups, says the House should allow a vote on a straight repeal bill — even if it fails. Why? Because even a failed vote is better than just walking away from the repeal effort that Republicans have been promising for seven years.

"Let every member be on the record where it really matters. Then you're keeping your promise that you made to the American people for four consecutive elections," AFP president Tim Phillips told me this weekend. The voters who called for Obamacare repeal, he said, won't have any patience with arguments over what can and can't be done through budget reconciliation: "That's exactly what people hate about Washington, D.C. They expect you to do what you said you would do."

Why it matters: AFP was one of the Koch brothers groups that opposed the GOP replacement bill, and set up a seven-figure fund to support House members who voted against it. But that doesn't mean it wanted the repeal effort to end — it just wanted to go back to the original idea of a clean repeal. "We respect Speaker Ryan," Phillips said. "This is just one issue where we disagree, not on the final goal, but on the execution."

What the moderate Democrats want

Priebus said Sunday that the Trump administration might reach out to moderate Democrats on health care — a self-described "warning shot" to the conservative Republicans that wouldn't work with them. But they'll find that those Democrats want narrower fixes than Republicans want. And they may not like the Democrats' conditions — because they'd have to drop all repeal talk.

Sen. Mark Warner, one of the purple-state Democrats most likely to get the call, might be willing to work with Republicans on some of the fixes he has already proposed, spokeswoman Rachel Cohen tells me — but only if Republicans promise not to undermine the law. The main fixes he'd support:

  • Add a new category of low-cost health plans for young adults, called "copper plans"
  • Make employer reporting requirements easier
  • Allow health insurance to be sold across state lines, but only with "appropriate protections"

Reality check: There's so much bad blood between Republicans and Democrats on Obamacare that it's hard to see them talking seriously any time soon. Plus, even moderate Democrats would have to be convinced why it's in their interests to bail Trump out. But if you want to know which Democrats would be most likely to talk under the right conditions, it's worth rereading this letter from January. It's by Sen. Tim Kaine, Warner's Virginia colleague (and the guy who could have been vice president).

What's next for health care

You mean there are other issues besides Obamacare? Here are the next things to watch:

  • The next big health care fight will be over defunding Planned Parenthood, an issue that's likely to bog down the government funding bill that has to be approved by April 28, Jonathan Swan reports.
  • House Energy and Commerce Committee chairman Greg Walden told reporters his committee will turn to the reauthorization of the Children's Health Insurance Program, which has to be done by the end of September, and policies to fight the opioid epidemic.
  • His committee is also working on reauthorizing the Food and Drug Administration user fee programs, as is the Senate HELP Committee. That also has to be done by the end of September.
  • Energy and Commerce is also likely to work on drug pricing legislation, including a bipartisan bill by Reps. Gus Bilirakis and Kurt Schrader to speed the approval of generic drugs.
  • The appropriations committees will have to start working on funding for federal health programs for next year. They've signaled that they have no interest in the 19 percent budget cut Trump proposed for the National Institutes of Health, but they'll have to find the money to avoid it.
  • House Ways and Means Committee chairman Kevin Brady said on Fox News' Sunday Morning Futures that he's moving on to tax reform. He made no mention of any piecemeal attempt to get rid of Obamacare's taxes — he said they'll stay in place.
If Trump is looking for a path forward ...

Bob Kocher, a partner at Venrock and a member of the Axios board of experts, gave us this smart piece about what Trump could do to stabilize Obamacare if he really wants to avoid a collapse. He should get Congress to pay for the cost-sharing subsidies, Kocher writes, and tell the IRS to enforce the individual mandate so insurers don't have to worry about not getting enough healthy customers. He also suggests making it easier for private web brokers to help sign people up.

Other views from our board of experts:

  • Stanford's Lanhee Chen expects the action to shift almost entirely to HHS, where Price can show a lot of flexibility on Medicaid, waivers to allow states to achieve the law's goals in different ways, and the "essential benefit" requirements.
  • Condeluci doesn't see a lot of incentives for the Trump administration to fix up the law. But he doesn't see a realistic path forward on repeal and replacement, either — Republicans are basically "stuck."
  • And don't expect Congress to make piecemeal improvements to help bring down premiums, like getting rid of the tax on health insurers. It would only have a tiny impact on costs, Condeluci said — and Republicans would ask themselves, "I voted for something to improve this law? Why would I want to do that?"
While you were weekending ...
  • Freedom Caucus chairman Mark Meadows on ABC's This Week, insisting he's not done with Obamacare repeal: "it's incumbent upon those two groups, the conservatives and the moderates to come together, hopefully in the coming days, to find consensus."
  • Sen. Tom Cotton on CBS's Face the Nation, suggesting Congress should revisit Obamacare when it's time to reauthorize CHIP: "It is very important to a lot of Democrats. By that point, I hope that we can reach some kind of consensus."
  • Ohio Gov. John Kasich on CNN's State of the Union: "If Republicans quietly over time will reach out to Democrats, find the constructive ones, you will begin to marginalize the extremes."
  • In a USA Today op-ed, former Centers for Medicare and Medicaid Services chief Andy Slavitt says Trump and Congress can take some relatively simple steps to stabilize the Obamacare markets.
Caitlin Owens

What we're watching this week: House Energy and Commerce health subcommittee hearing on the FDA's medical device user fee program, Tuesday; House Appropriations Committee hearing on the HHS budget, featuring testimony from Price, Wednesday.

Thanks, and let me know what other non-Obamacare news we should be covering: david@axios.com.