Apr 20, 2017

Obamacare payments: Can't we just skip to the end?

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It's not that hard to figure out how the standoff over Obamacare payments to insurers is going to end: with a compromise. The betting in DC right now is something like this: Republicans agree to fund the payments for the Obamacare cost-sharing subsidies in the upcoming spending bill, but only for a year at a time, not permanently as Democrats want.

So why can't we just fast forward to that part now? Here are the reasons we'll have to go through yet another government shutdown drama to get there.

  • The pressure is mounting on Republicans to fund the payments so the Obamacare insurance markets don't collapse, an event that would most likely be blamed on them.
  • Democratic leaders are pushing for the payments to be funded in the spending bill. And they want to be absolutely sure the payments go out. So they want them to be included as "mandatory" funding — meaning the spending happens automatically, and doesn't have to be approved each year.
  • Politically, there is no way Republican leaders will agree to that. Conservatives would accuse them of increasing entitlement spending, since that's also done through mandatory funding.
  • It will also be hard to convince conservative Republicans to vote for the payments under any circumstances, since the GOP just sued over them. It would still sound like "insurer bailouts."
  • But Republicans will need Democrats' help to pass the spending bill. House Speaker Paul Ryan will need Minority Leader Nancy Pelosi to deliver Democratic votes, because he can't count on the conservative Freedom Caucus. And Senate Majority Leader Mitch McConnell will need Minority Leader Chuck Schumer's help to get to 60 votes.
  • Democrats know this, which is why a senior leadership aide tells me they're sticking to the demand for insurer payments — as mandatory spending. They have no incentive to give that up now. They believe that if Republicans don't agree, and the government shuts down, the public will blame the GOP because they're in charge.
  • Insurance officials have been pushing for a quick resolution. They were joined yesterday by the National Association of Insurance Commissioners, which warned in a letter to House leaders that quick action is "critical to the viability and stability of the individual health insurance markets."
  • Republicans may not be able to add it as mandatory spending without a complete revolt from their members. But they might face less resistance if they do it as discretionary spending — meaning it's only good for a year, and then they'll have to fight the same battle with Democrats next year.

So far, the staff-level negotiations have been going well — Schumer told reporters earlier this week that he was "very hopeful we can come to an agreement that everyone can be proud of." But there's always the danger that Office of Management and Budget director Mick Mulvaney will try to blow it up with hard-line demands.

If that happens, look for GOP leaders to ignore him — because they want to move on to other issues, and they can't do it if the government is shut down.

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