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Avik Roy RE: the Need For Senate Action on Health Care Repeal/Replace Now

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HH: Joined now by Avik Roy, who is probably the leading authority on the center-right when it comes to health care reform. Avik, good morning, thank you for joining me.

AR: Hey, Hugh, it’s always a pleasure to be with you.

HH: Health care’s on life support this morning, because Susan Collins, Dean Heller on the left in the Republican caucus and Ron Johnson and Rand Paul on the right are refusing to move the bill forward to debate. If in fact that turns out to be the case, what will be the consequences for American health care of staying in place with what we have?

AR: Well, look, if Republicans fail to pass health reform, I don’t see why frankly they deserve to have a majority. They certainly are likely to lose it. And I am still hopeful, however, that that’s not where we are. I think that the bill can still be improved, but if the goal of Republican health reform is to please the Congressional Budget Office, we should just give up now, because the only way you’re going to get a good score from the Congressional Budget Office is to keep the individual mandate in place. That’s what this is all about. I’ll give you an example of the history here, Hugh. About 16 months ago, Republicans, as you may remember, passed a bill that would completely defund Obamacare without a replacement. And it was vetoed by President Obama, then-President Obama. That bill, according to the CBO, would cover 22 million fewer people. Well, now we have a Senate health care bill that does exactly what you and I talked about a few months ago. It directs a lot of tax credits for the low income population to buy health insurance, $616 billion dollars is the value of the replacement of Obamacare in this bill. And what does the CBO say? The CBO says that 22 million fewer people will have health insurance because of this bill. So in other words, they’re spending $616 billion dollars over ten years to help low income people afford health insurance, and the CBO believes this will have zero effect, zero effect on coverage, because according to the CBO, basically most of that 22 million number is driven by people being forced to buy health insurance through the individual mandate. So you know, what I think they should do, Hugh, is they should sent two versions of this bill to the CBO – one with an individual mandate, and one without one, just to show how much that’s what’s driving what the CBO is doing.

HH: Avik, I understand and agree with everything you said, but I don’t believe it’s the CBO score that is keeping Republicans on the sidelines. I believe that there are individual political reasons driving the four on the right, that’s Ted Cruz, Mike Lee, Ron Johnson and Rand Paul, and the four on the left, which are Lisa Murkowski, Shelley Moore Capito, Susan Collins and Dean Heller, and that these eight are paralyzing the 52. And the consequences of this not proceeding to debate are disastrous. And that’s what I want people to understand. These eight senators, for whatever reason, are putting in, are leaving in place Obamacare. And what does that look like, Avik? Explain to people. I think I have a pretty good picture of what’s coming in in the next nine months, and it’s a disaster.

AR: Well, I think one of the real canary in the coalmine, Hugh, is that there are fewer people enrolling in Obamacare for this coming year than have in the past, that the plans are going to be more expensive, there are obviously going to be fewer of them. Everyone’s read the headlines on that. And fewer people are going to get coverage through these Obamacare exchanges than they’d have in the year before and the year before that. So the exchanges are going to continue decline, but because of the fact that Republicans control the government now, they are going to have their share of the blame. And so you’re going to have them getting blamed for the problems of Obamacare, because they’re the stewards of the government, and you’re also going to have their own base sitting at home, because they’re like well, why did we elect you if you’re not going to actually get anything done? And so that’s a huge problem. And look, I mean, Mitch McConnell, if there’s anyone you want to be running this process, it’s Mitch McConnell. I think he will do everything possible to get these guys to yes, and gals. And look, I think a lot of them do want to get to yes. I don’t think that you know, this was some sort of Kabuki Theater thing where they’re all just pretending to be nice and then decide to say no. I think most of them, Rand Paul excepted, most of them want to get to yes. And the question is are they going to defer to the CBO and say well, because the CBO thinks that you know, there’s going to be disaster on the Republican vote, we’re just going to just kind of defer to what the CBO thinks? Or are we going to do what we actually think is going to make the health care system better for everybody? And that’s what everyone has to sort of, it’s gut check time for the U.S. Senate.

HH: It is. It’s incremental improvement. Yesterday, the White House circulated, and I wanted to fact check this with you, Avik, that the Obamacare CBO prediction was that 24 million people would be covered. Only 11 million were actually covered, that the CBO predicted 30 million fewer uninsured under Obamacare. In fact, there were 22 million fewer uninsured, that they predicted 4 million would be covered in the Obamacare small business insurance program. Only 223,000 people, not 4 million, were covered. They predicted that the Obamacare risk corridor program would have $8 billion dollars in revenue. In fact, it got $6 billion dollars in deficits. Is that true? Has the CBO been that wrong that often?

AR: All those statistics are factually correct, absolutely. And so this is why I keep saying, like if we’re just going to be like oh, gosh, well the CBO is like the Oracle of Delphi, and everything they say is right, and we have to adjust all of our policies to please the CBO, well, that’s what Obamacare was. The only way you’re going to get a result that pleases the CBO is to do exactly what Obamacare did, particularly when it comes to the individual mandate. On the other hand, if you want a market-based health care system, if you want to reform the health care system in a market-based way that reduces premiums and expands choice, and brings insurers back into the market to compete with each other, then you’re going to have to do something the CBO disagrees with. And that’s why I say it’s gut check time. Are people willing to do that and know that the CBO is going to disagree with them about what will be the outcome? Or are they just going to trust the CBO?

HH: I think they also have to be willing to make a moral argument about Medicaid.

AR: Yeah.

HH: And I’ve been making this, Avik, because for 18 years, I served on a local board that spent cigarette tax money on the delivery of health benefits to poor people. And we did so by building dental clinics, by opening an autism center, by providing an asthma program. We actually provided care like the neighborhood Christian clinic in Phoenix. I have a lot of examples in my book. Subsidiarity is what is necessary. Devolution of Medicaid to the state and local governments is what is necessary. But it seems to me that the Republicans are frozen in making their argument that they are pro-poor people, not anti.

AR: Well, you know, that’s why it was so, the Senate bill, again, is so much better. The House bill didn’t do that, right? The House bill, by offering people the same amount of assistance, whether they were poor or high earners, created, or helped create that impression, I think. And the Senate bill, again, they solved that problem. They moved the subsidies in a means-tested direction. The tax revenue is in a means-tested direction, which is a substantial improvement. It’s the right way to go. But again, without an individual mandate, none of it matters. So and there is one thing I will say that just leaving aside, you know, the CBO score from yesterday and the way the bill is designed, I think there is one thing they could do to improve the bill on a substantive basis, one important thing they could do. There’s always lots of things they could do. There’s one important thing they could do to improve the substance of this bill, and that is to provide more assistance to people to afford, who are at the low end of the income scale, to afford the deductibles in this bill. So under Obamacare, there were these cost sharing subsidies that you could draw from if your income was below 2.5 times the federal poverty level, which is about, let’s call it $30,000 dollars or below for a child with adult. What Republicans should do is provide a bloc grant to states to offer either health savings accounts or deductible funds to those individuals, because I think that’s going to be, that’s going to, if you’re at the poverty line, if you’re making $10,000, $12,000 bucks a year, yes, if your premium is covered, that’s great. But you know, if your deductible is $6,000 bucks, you know, you’re not, you don’t have $6,000 bucks lying around to pay for that. So that’s going to be an important thing to, in my view, to help those individuals get a little bit better coverage.

HH: Avik, I agree. I agree, and I think that if Susan Collins were to step forward and say in a debate I need this, or Lisa Murkowski…

AR: Right.

HH: They would get it.

AR: Right.

HH: But because, I can’t guess motives. I can’t read people’s minds. I don’t know what Rand Paul is up to, other than hoping for a collapse of the system and the destruction of all things government in the course of the cratering out of American health care. That’s not morally acceptable to me. But and there’s no way to make changes absent and amending period. There just isn’t any way to go forward. And doing it in the dark doesn’t make any sense. So what, assume right now, because I know it to be true, senators and their staffs are listening.

AR: Yeah.

HH: What should they do right now?

AR: Well, you know, I actually think that this point about the deductibles is a very important one to think about. And to your point, I think every senator has to be like what do I need to get to yes, right? And I think they’ve already done that. I think they all have their ideas of what do we need to get to yes. If it’s Susan Collins’ view, or Dean Heller’s view is the only way I get to yes is get a CBO in which more people have health insurance, that’s never going to happen. And so what they’re basically saying is they’re against this bill. If you’re going to defer to the CBO to dictate your policy decisions, they’re going to be noes. However, if there are things that they need to get to yes that are short of that, like actually making the bill better, then great. And I think the thing that people should center on personally is getting these deductibles. So I have this op-ed in the New York Times today, Hugh, that you can point your readers to that makes this point, that the one thing I’d improve about the bill is giving states more ability and more resources to fund the deductibles either through health savings accounts or through cost sharing reductions.

HH: Now I also want to underscore, I had Lanhee Chen on yesterday, you today. The big guns in American center-right conservative thought on health care policy are in favor of the Senate bill, and they can take more modifications as you suggest, as Lanhee suggested. There isn’t any intellectual opposition like there was to the House bill, except from purists who want us out. And the Republican caucus doesn’t want us out.

AR: Yeah.

HH: It’s impossible to get out.

AR: Yeah.

HH: And so we are at the maximum, with a couple of tweaks, we are at as good as we can get. We are right there right now. If we fail, it’s a Republican Party failure. Is there any avoiding that, because there might be Republicans out there who think oh, the political fallout from the collapse of health care in American will help us. I don’t think that’s true, Avik. Do you?

AR: No, no, absolutely not. So you know, look. I think that your point, I think there are things that if the so-called moderates, if the Dean Heller’s and the Susan Collins’ and what not want to support this bill, and I believe they do want to support this bill, they have to come forward with what are the substantive changes they want at this time. And I think the kind of, the sort of conservative caucus, the Lee’s and the Cruz’, etc. who are skeptical, they’ve come forward with what they want to, how they want to push the bill in a conservative direction. I think some of the things that they’ve advocated for are just not possible through the reconciliation process. So I’d love for them to come up with things that they think can actually work that are possible under the reconciliation process. But you know, the way I’d put it to them is look, when in your career as a member of Congress are you going to have another opportunity to reduce spending by hundreds of billions of dollars and reform two entitlements in a way that actually makes the health care system better and benefits millions of people? You’re going to have very few opportunities in your career to do that, maybe no other opportunities in your career to do that. So you’ve got to take this opportunity.

HH: That is elegantly and fully put. I want to leave it there, Avik. That is perfectly put. It is a Waterloo moment. And if they lose it, they lose the battle, they lose the Senate, they lose the House, and by extension, they will lose the Supreme Court, the Defense sequestration. Everything is on the line, and you have put it succinctly, and I thank you for it. Follow Avik, @Avik, on Twitter, and go read his New York Times piece. We will post the audio and transcript of that conversation. Send it to Susan Collins and Lisa Murkowski. Send it to everyone.

End of interview.


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