On Friday afternoon, minutes before the House of Representatives was set to vote on the AHCA (Obamacare replacement), Speaker Paul Ryan yanked the bill. He didn’t have the votes, and the last minute negotiations between the House leadership, President Trump, and the Freedom Caucus stalled. It turns out that it takes more than 7 years, dozens of repeal votes in the House, multiple national elections, and full control of the White House and Congress to scale back one of the largest improvements to our social safety net since arguably the 1960s.
The bill failed because Paul Ryan never had the votes to begin with. There are 237 Republicans and 195 Democrats in the House. From the onset, it was clear that 0 Democrats would vote for the bill, including those in conservative districts that Trump handily won. After the CBO released their estimates (24 million to lose coverage within 10 years), moderate Republicans began to walk back their support. Don’t even get started on the Senate. The original (and amended versions) of the AHCA were non-starters. The bill was rushed through committee before the CBO analysis (nonpartisan economic scorekeeper) even came out, and the original vote was set for Thursday, March 23rd.
Despite rolling back the mandate, cutting taxes for those making significantly more than even the San Francisco poverty line, Ryan lacked the support of the House Freedom Caucus (HFC), the eternal nemesis of the GOP leadership. The House Freedom Caucus is comprised of 25-33 GOP lawmakers from some of the most conservative districts in the country. They contended that the replacement bill did not go far enough in rolling back Obamacare, as it provided tax credits to help buy insurance, required insurers to comply with pernicious regulations like not being able to deny people with pre-existing conditions as well as continue providing essential health benefits (doctors visits, pregnancy, prescription drug coverage, etc.). The HFC prefers a three-pronged approach – repeal, replace, and improve. Any effort to replace the ACA must start with a repeal.
Speaker Ryan needed the HFC’s block of votes to pass the AHCA, and was forced to start providing concessions. To start, Ryan and Trump removed the requirement for insurers to provide a baseline of essential health benefits. Conservatives frequently use the talking point that a 65-year-old male should not have to pay for a plan that covers pregnancy or mammograms. Essential health benefits, they claim, keeps the minimum cost of insurance prohibitively high. Without these benefits, insurance companies would be free to create cheaper plans that would have fewer benefits. The thinking goes that cheaper plans draw in younger people to insurance pools, diversify risk, and lower the cost of premiums for the rest of the population. But there’s one problem — insurance companies have to cover those with pre-existing conditions, like addition. Aetna or Humana might find it more profitable to simply not offer any plans that cover addition at all. If they did, only people with addition would buy and that would create a very risky pool. This wasn’t a problem pre-Obamacare because Aetna or Humana could simply refuse those people. Put differently, if insurance companies are allowed to pick and choose which essential health benefits they have to provide (if any at all), they might choose to offer none. Only people that need a particular benefit would pay more for a plan that covers it.
Essential health benefits are quite popular, though — moderate Republicans were wary of their ill, pregnant, and aging constituents that might lose coverage or be forced to pay more under the AHCA. The more concessions Ryan and Trump provided to the House Freedom Caucus, the more moderate votes they lost. The HFC, emboldened, continued to extract further concessions but never got everything they were asking for. By Friday afternoon, Ryan had to pull the bill. After 7 years, he still did not have a piece of legislation that satisfied the various factions in the Republican party to pass the chamber he allegedly has control over.
The finger-pointing has already begun, with Trump blaming the Freedom Caucus, Paul Ryan, and Reince Priebus. While there is talk of another attempt, it is very unlikely that Republicans have the political willpower to stomach another healthcare related defeat. It’s more likely that they shift their focus to tax reform next. Lowering taxes on wealthy individuals and corporations is an argument that the House Freedom Caucus, moderate Republicans, the Cato Institute, the Koch brothers can all get behind, and Paul Ryan can all get behind.