The repeal and replacement of the Patient Protection and Affordable Care Act (ACA), or Obamacare, has begun.  On January 3, 2017, the day the 115th Congress was sworn in, Senate Budget Chairman Mike Enzi (R-Wyo.) introduced S. Con. Res 3, a budget resolution for fiscal year 2017.  This was not an ordinary budget bill, since its only purpose was to serve as a framework to repeal Obamacare.  The most important part of the resolution is reconciliation instructions for the Senate Finance and Health, Education, Labor, and Pension (HELP) Committees, and the House Ways and Means (W&M) and Energy and Commerce (E&C) Committees to write repeal legislation.

It usually takes three-fifths of Senators voting and present (most often 60 votes) to consider legislation.  But budget reconciliation only requires a simple majority of 51 senators.  The Democrats used the reconciliation process to pass a portion of Obamacare in 2010.  Now, the Republicans are using it to begin the process to repeal large swaths of the healthcare law.

The Congressional Research Service explains reconciliation, which was established by the 1974 Congressional Budget Act, as a bill “to facilitate the consideration and enactment of legislation that implements, in whole or in part, the budget policies reflected in the budget resolution.”  The reconciliation process can only be used to consider spending, taxes, and the debt limit.

The repeal of Obamacare will be a two-step process and will closely follow the procedure the Republican majority in the House and Senate took in the 114^th Congress.  That repeal legislation, H.R. 3762 was a test case to discover what parts of Obamacare could be repealed via the reconciliation process, but it was vetoed by President Obama.  The House and Senate committees could use that same legislation as the starting point this year, but the difference is President Trump will sign the repeal legislation into law.

The Obamacare repeal began with the debate of S. Con. Res. 3 in the Senate on January 4.  Five days later, a “vote-a-rama” occurred, during which senators spent most of the day and night considering almost 200 amendments.  On January 12, the Senate passed the resolution by a vote of 51 to 48, with one senator not voting, and sent the bill to the House of Representatives.  The House passed the bill the next day by a vote of 227 to 198, with 10 representatives not voting.  Since the legislation is a resolution rather than a bill, it does not require the president’s signature.

The second step is now under way as the Finance, HELP, W&M, and E&C Committees are writing their respective bills to change, or “reconcile,” spending and tax laws contained in Obamacare.

Since reconciliation instructions only deal with spending and tax measures, the committees cannot write legislation that simply states certain sections of the law are repealed.  Instead, the language must be crafted so that it focuses on a spending or taxing provision of the ACA.  For example, to repeal the individual mandate, legislators would amend the law so that the tax (or fine) for not purchasing health insurance is reduced to zero from the current requirement of $695 per individual, up to a maximum of three times that amount per family ($2,085), or 2.5 percent of household income, whichever is greater.

There are parts of Obamacare the Republicans have stated they do not want to repeal, such as allowing children up to the age of 26 to stay on their parent’s health insurance.  Nor would they want to repeal other sections of ACA, such as the one that created the abbreviated pathway for the Food and Drug Administration to approve biosimilars, or the “generic” versions of biologic drugs.

The Senate and House committees writing the repeal bills were instructed to send them to their respective Budget Committees on January 27.  This is not a hard deadline, merely desired, and will likely slip.  The House will go first and will hopefully pass legislation that resembles last year’s bill, which repealed a vast majority of Obamacare.  When the House passes their repeal reconciliation bill, it will go to the Senate, who will conduct due diligence of the House language to ensure that the bill will retain its privileged (51 vote) status.  The Senate is where roadblocks usually develop, particularly if certain measures do not pass parliamentary muster under reconciliation rules.  If a provision or provisions received from the House are interpreted by the Senate parliamentarian to be extraneous, the bill would lose its privilege and then require 60 votes to pass.  The Senate would like to pass the House bill without major changes and eliminate the need to go back to the House for a vote.  Once both the Senate and House have passed the bill, the repeal reconciliation bill will be sent to President Trump to be signed into law.

There’s a myth being propagated by Obamacare proponents that the Republicans do not know how they want to reform healthcare delivery.  Bills have been introduced and contain the same theme:  take power away from Washington bureaucrats and give it back to the states and individuals; allow market forces to provide more choices so people can buy the insurance plan they want, which will drive down healthcare costs without using government price controls or overregulation; protect and help those with pre-existing conditions so they remain insured; and modernize and improve Medicaid, while providing regulatory relief to encourage more physician participation so beneficiaries can get better care.

There is some consternation that repeal and a full replacement for Obamacare will not occur at the exact same time.  Many reform measures would need 60 votes to pass in the Senate, so they cannot be implemented through the reconciliation process.

For example, ACA requires health plans to provide 10 essential benefits, such as forcing single men to carry coverage for maternity and pediatric care.  These mandates have reduced choice and driven up costs for millions of Americans and unfortunately, can probably only be repealed with 60 votes in the Senate.

One good idea to fix the mandated benefits problem was discussed in a January 4, 2017, USA Today op-ed by American Commitment President Phil Kerpen and Independent Women’s Voice President and CEO Heather Higgins.  Their plan would offer a patch until these mandates are permanently removed.  Their idea is to reduce the fine, currently $100 a day for each day a non-compliant ACA plan is in effect, to zero or some trivial amount that may be needed for budget scoring purposes.  This would create a parallel track to Obamacare, provide a quicker transition away from federal regulation, and return governing control of health plans to the states.  In addition, federal grants to create robust, high risk pools in the states would help those with pre-existing conditions get access to affordable insurance.

Legislation that would implement this concept, along with executive orders and regulations, would work together to encourage states and insurers to sell non-compliant ACA plans.  Consumers would once again be able to purchase the health insurance that fit their needs.  With an alternative to Obamacare readily available, momentum could be created to encourage Democratic support to fully repeal and replace the failing law.

The Kerpen-Higgins plan also suggests that President Trump issue an executive order to remove the special carve-out that President Obama’s Office of Personnel Management (OPM) created for members of Congress and their staff in 2013.  The OPM rule, as CAGW discussed in its July 2015 Waste Watcher, deemed Congress to be a small business.  This enabled members of Congress, their staff, and families to gain access to taxpayer-funded subsidies for health insurance under ACA, a benefit many participants in Obamacare do not receive.  Kerpen and Higgins rightly argue there is “nothing as motivating as skin in the game, and without the protection of the illegal OPM rule, Congress’s members and staffers paying their own way in the Obamacare exchanges would be miraculously motivated to rapidly solve the problems crippling these markets.”

In a January 12, Washington Times column, House Speaker Paul Ryan (R-Wisc.) was quoted as saying that the Republicans in Congress intend to advance legislation both to repeal and to replace Obamacare at the same time, and that “it will take time to put all that into place.”  He also said that there will be a transition period so people will not lose their health insurance and once the Department of Health and Human Services Secretary-designate Tom Price is confirmed, the process would start.

These next few weeks will be exciting to watch.  After six long, expensive, and disheartening years, Obamacare repeal is finally on the horizon, which will be good for taxpayers and patients.