Feb 14, 2017

The conservative tax and health care strategy that might blow up Obamacare repeal

AP Photo/Lauren Victoria Burke

The House Freedom Caucus voted Monday night to oppose anything less than the aggressive 2015 Obamacare repeal bill, formalizing the deep division among Republicans about what to do with the health care law. Earlier Monday, Chairman Mark Meadows sat down with me to talk about what he does want, for both health care and tax reform. While he wants Obamacare repeal to happen fast, he eventually wants to combine its replacement with tax reform in the same package.

What's next: Figuring out whether moderates can stomach a straight repeal for now, with the assurance of a replacement to come in tax reform later this year, or whether this is just an opening bid from conservatives and they'll eventually submit to leadership's plan. If it's the former, Obamacare repeal might die.

Meadows wants as much of Obamacare as possible repealed in the next 30 days. When that's over, the House can get to work on passing the replacement and its tax reform agenda. That likely means combining the two efforts.

This is not exactly what leadership has in mind. It's trying to add as much of an Obamacare replacement as possible to the repeal bill, a strategy first advocated by moderates afraid of repealing the law without immediately replacing it. Meadows also has different ideas about tax reform, preferring to leave out a border adjustment tax — a key part of House leadership's plan.

He admits the danger in lumping the two huge policy efforts together. "When you put two very difficult concepts together, tax reform and Affordable Care Act, it lowers your thresholds in terms of the number of votes that you can or cannot get in terms of the Senate, whether it's 50 or 51," he told me.

"I think it would be very difficult" to combine the two efforts, Senate Finance Chairman Orrin Hatch told reporters Monday.

But some of the moderates pushing for passing a repeal and replacement at the same time might be open to the idea. "I think you could probably all do it in the second," Sen. Bill Cassidy told me in a hallway interview Monday.

The situation: Republicans have two different opportunities to pass major legislation without Democrats through a process called budget reconciliation. The plan has been to use the first reconciliation bill on Obamacare repeal and replace and the second on tax reform. But while leadership has been exploring how much of a replacement it can fit into the repeal bill, Meadows — along with a growing number of conservatives — are saying they want repeal and replacement done in separate bills voted on at the same time. He then wants to use the second reconciliation to replace Obamacare, along with tax reform.

Here's what he wants:

  1. Within the next 30 days, a vote on full repeal of Obamacare. This includes the individual mandate, the employer mandate and the law's insurance regulations. While these laws weren't included in a 2015 repeal bill because of reconciliation rules, Meadows thinks there are ways around that.
  2. Immediately vote on a replacement plan, also within the next 30 days. The replacement must include a way of dealing with pre-existing conditions. Assume it doesn't pass the Senate filibuster.
  3. Potentially vote on a tax reform package under normal procedure, without the border adjustment tax. Meadows thinks this would have a chance of passing with some Democratic support in the Senate.
  4. Include Obamacare replacement in the second reconciliation bill "that is, quote, being used for tax reform, but it doesn't have to be just used for tax reform."

House conservatives are generally united in their Obamacare strategy.

Ok, but: Putting an Obamacare replacement and tax cuts in the second reconciliation bill — without a border adjustment tax — will cost a ton of money. It's unclear where that money will come from, but it could very well require the bill to need 60 votes in the Senate if it's not paid for. Democrats are very unlikely to help pass anything Republicans put forward after an Obamacare repeal, especially if they also don't like the tax components. Republicans know this and could be very unwilling to jeopardize tax reform in this way.

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