Thursday, August 15, 2013

There Is A Better Way To Defund Obamacare

There is a lot of debate on how the Republicans should try to limit the damage of Obamacare to our country and the economy as the critical date of January 1, 2014 looms.  This is the date that most of the key provisions take effect (unless President Obama unilaterally finds more provisions to simply ignore).

There is a large contingent of Republicans that want to defund Obamacare in the coming budget battle and debt ceiling debate that must be addressed in September.  Their thinking is that they will pass a budget and debt ceiling increase that will keep the government running but exclude funding for Obamacare in the process.  Therefore, if President Obama wants to avoid a government shutdown, he will need to sacrifice Obamacare in the bargain.  They also believe that he will take the blame for the shutdown with the voting public if it comes to that because it was his choice.  This school of thought is driven by principles.

While I also want Obamacare repealed and I understand where they are coming from, I think this strategy is risky.  There is a better than even chance that the Republicans, not President Obama, would be blamed for a government shutdown.  The President still has the media in his pocket and that is a powerful advantage to begin with.  Unfortunately, that is the current political reality we have been living the last five years.

In addition, I believe that the attempt to defund Obamacare in this way is going to look to many voters as simply sour grapes at this point.  There have been numerous votes for repeal that have failed.  The Supreme Court ruled (no matter the circumstances) that the basic thrust of the law was constitutional.  President Obama won re-election despite the unpopularity of the law in individual polls.  These all work against the defunding strategy.  This is the public relations challenge.

I am of the opinion that there is a good chance that Obamacare will fall and fail under its own weight.  The Republicans don't have to kill it.  It may well die on its own as the public further questions the law and the fundamental flaws that plague the statute become more and more apparent.

The Obama administration fully understands this and that is why they are unilaterally delaying and waiving parts of the law that they have no authority to do.  They know they are taking legal and political risks in ignoring the law.  However, they understand that the far bigger risk is that Obamacare is at very real risk of losing all credibility with the public if they move forward right now with these serious flaws.  This would either drag down the entire Democratic party or (more likely) you would start to see substantial defections from the ranks of Democrats in defending the law. This could lead to a repeal vote that would get substantial bi-partisan support that could prove devastating to the legacy of Barack Obama.

Due to the fact that I think Obamacare is very weak in the first place, I see no need for the Republicans to risk a frontal assault on the law that has little chance of succeeding anyway.  They would be better served in staking out the high ground in the budget debate by using an  approach that would be viewed as more reasonable, less extreme and tougher for Obama and the Democrats to defend against with the voting public.  This approach would use the budget numbers that the Democrats used to pass the law asa weapon against them in the budget debate.

What am I talking about?

Remember when Obamacare was passed we heard how they were going to do all these miraculous things in health care and it was going to cost us very little?  In fact, the CBO estimated on March 20, 2010 that the law would actually reduce the budget deficit by $143 billion in the 2010-2019 period when taking account of changes in Medicare spending and revenues.

Anyone that understood the numbers knew it was all smoke and mirrors but the official CBO estimate was that the law was going to cost $898 billion over 10 years for Medicaid expansion and subsidies in the exchanges.

The reality today is far different.  The most recent CBO estimate is that the law is going to increase spending in these areas by $1.6 trillion over the next 10 years.

This chart from shows how the 10-year cost estimates have changed.

Let's look specifically at the 2014 fiscal year.  In CBO's 2010 budget projection of the bill, Obamacare was actually projected to reduce the budget deficit by $51 billion in 2014.  I kid you not!

The CBO provided an estimate to House Speaker John Boehner in July, 2012 on the budget impact of H.R. 6079, the Repeal of Obamacare Act. In that estimate the CBO estimated that repeal of Obamcare would increase the deficit by $24 billion in 2014.  Based on these CBO numbers, at a minimum, Obamacare is projected to put us $27 billion worse off today compared to the original projections.

This provides an opportunity for the Republicans to exploit in the coming budget discussions.

My thinking is that the Republicans should not go for the jugular here and cut all funding to Obamacare.  Obamacare is already in life support.  It merely needs to be deprived of a little oxygen in order to hasten its death. Their demand should be merely that the funding in 2014 should be no greater than in the original projections when the law was passed.  Accordingly, Obamacare would be funded to the full extent of the original projections but not a penny more. This would cut $27 billion out of this year's number for subsidies, Medicaid outlays etc.

The Republicans would merely be asking that Obamacare live within the original cost projections.  What could be more reasonable that that?  If Obama did not want to live within the original budget he would be the budget buster.  If he refused, he would be the one that was being unreasonable for not living within the original budget.  This is a much stronger position for the Republicans to play their hand in the upcoming Obamcare/Budget debate.

Lest you think that $27 billion is a trivial number, consider the fact that the February, 2013 CBO report on the budget effects of Obamacare estimated that the total cost of all of the exchange subsidies would cost $28 billion in 2014.  In effect, this strategy could deprive Obamacare of all of money needed to fund the subsidies for the exchanges.

There is a better way to undo Obamacare.  I think this may be a strategy that could appeal across all of dimensions that are in play-principles, politics and public relations.

We can only hope that someone, somewhere in Washington is paying attention to the game they are playing.  It is time to play chess, not checkers when it comes to Obamacare.

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