Are House Republicans Caving in on Repealing Obamacare? Doubtful.

Politico is reporting that House Republicans are preparing for the possibility that the Supreme Court upholds the law by drafting new legislation. “When the court rules, we’ll be ready,” House Speaker John Boehner (R., Ohio) told the House Republican Conference on Wednesday. But what’s surprising about alleged GOP plans is that they involve preserving significant—and damaging—aspects of the Affordable Care Act, for what appear to be political reasons. I’m not convinced that the story is accurate.

The House GOP plan, write Jake Sherman and Jennifer Haberkorn, “seeks to shelter [Republicans] from criticism from the left that they’re leaving uninsured Americans out to dry. Aides caution the plans could still be changed—but this outline, confirmed by several sources with direct knowledge of the planning, represents the broad sketch of what’s likely to come this summer.”

According to the Politico reporters, House Republicans seek to “protect some of the law’s most popular provisions, such as allowing people to stay on their parents’ insurance until 26 and forcing insurance companies to provide coverage to those with pre-existing conditions. They also want to keep the Medicare ‘donut hole’ closed—essentially they don’t want seniors paying sky-high costs for prescription drugs.”

Why would Republicans want to blow up the insurance market?

This would be very surprising, if true. Forcing insurance companies to provide coverage to those with pre-existing conditions—what insurance wonks call “guaranteed issue”—would destroy the private insurance market, by creating an adverse selection death spiral in which people only buy insurance after they’ve already fallen ill. It is for this reason that the Supreme Court is almost certain to overturn guaranteed issue if it finds the individual mandate to be unconstitutional. It would be remarkable if the Obama administration agrees that guaranteed issue should go if the mandate goes, but the House GOP does not.

It wouldn’t be surprising for some House Republicans to favor keeping Medicare’s prescription-drug ‘donut hole’ closed. After all, giving free stuff to seniors is a bipartisan pastime. But it’s highly unlikely that the House GOP caucus has coalesced around this idea. Last week, I spent three days on Capitol Hill meeting with staffers and members of Congress, and I got no indication that such a plan was afoot.

The donut hole was not some random piece of legislation pulled out from the ceiling and inserted into the Medicare Modernization Act. It was a carefully thought out actuarial provision that was designed to ensure that seniors didn’t engage in wasteful drug spending. Eliminating the donut hole, as the Washington Post has reported, is likely to result in higher drug prices and wasteful drug spending.

Obamacare’s mandate forcing insurers to provide coverage to adult children up to the age of 26 on existing family plans is the least harmful of the three provisions that Politico cites. But it will still drive up the cost of insurance, because it will be the sickest “adult children” who will be most motivated to take advantage of this provision, leading once again to adverse selection, and increased costs for those without adult children. Because young adults are generally more healthy than older adults, it’s a relatively small driver of overall premium growth, but it goes in the wrong direction.

Republicans are focused on transition issues if Obamacare is overturned

According to Politico, House Republicans aren’t favoring these provisions because of their policy logic, but rather because they “poll well with the public,” and because “they don’t want it to seem like they’re leaving millions of Americans out to dry.”

My understanding is somewhat different: that Republican policymakers are trying to pre-emptively address the legitimate policy issues that arise if Obamacare is overturned by the High Court. For example: those young adults who are currently on their parents’ insurance plans—if Obamacare is struck down, are those plans voided, or do they continue until the end of the contract year? The 50,000-or-so people who’ve enrolled in the law’s high-risk pools—what can be done to ensure that they maintain their coverage?

Here’s what one GOP aide told me: “When the Republicans gained control of the House in 2011, one of our first votes to was to fully repeal Obamacare. To date, the House has taken 29 floor votes to repeal, defund, or dismantle the Democrats health care law. Republicans share the same end goal of full repeal, regardless of how the Supreme Court rules. We have put forward numerous health reform proposals that unlike Obamacare, have found other creative ways to lower cost, strengthen the doctor-patient relationship and ensure access to affordable quality health care regardless of pre-existing conditions.”

It’s true: a Republican health-care agenda should seek to leave no one out to dry. And it’s precisely for that reason that they won’t preserve guaranteed issue, and other parts of the Affordable Care Act, that will massively disrupt the private insurance market.

Follow Avik on Twitter at @aviksaroy.

UPDATE 1: John Boehner today issued a statement, entitled "Anything Short of Full Obamacare Repeal is Unacceptable."

Our economy continues to struggle, and the president’s health care law is making things worse—raising health costs and making it harder for small businesses to hire workers. The only way to change this is by repealing ObamaCare in its entirety. We voted to fully repeal the president’s health care law as one of our first acts as a new House majority, and our plan remains to repeal the law in its entirety. Anything short of that is unacceptable.

UPDATE 2: Rep. Phil Gingrey (R., Ga.) is quoted in the Politico story in such a way as to imply that he favors the guaranteed-issue/donut-hole/adult-children plan. I spoke to a Gingrey staffer, who said, "The Congressman supports increasing access for patients with pre-existing conditions using high-risk pools. But he strongly opposes the federal government forcing guaranteed issue upon insurers." The staffer added that Gingrey favors full repeal of the ACA.

UPDATE 3: Phil Klein reports that Paul Ryan (R., Wis.) says that Congressional Republicans will not put forth a "replace" plan, which is consistent with what I have heard from numerous sources:

“We do feel obligated to articulate our vision for replace,” Ryan said when asked about the matter during an editorial meeting with the Washington Examiner. “Now, we’ve got nine weeks of session left. Do we want to cram through our own 2,700 page vision? No, that’s what the country hated. But do we believe in patient-centered health care and market-based medicine? A lot of us have put time and effort into this, yeah.”

In the last Congress, Ryan co-sponsored specific health care legislation.

“There are a lot of people with different ideas and so, number one, I think our nominee is going to have a lot to say about this and that’s really important,” Ryan said. “Number two, we’re all discussing these contingencies and how we best articulate our vision. I don’t think it’s a good idea to put out some big bill, thump it on the table, that’s thousands of pages and then try ramming it through, because that’s precisely the process that angered the country so much.”

Though Ryan said Republicans generally agree on goals, they haven’t yet coalesced around a way to get there.

“I think what we’ll probably hopefully do is put out a vision for how we think we should fix this thing and all the catalogue of solutions that are out there,” he said. “We’ve got lots of them, whether it’s insurance reforms, risk pools and pooling mechanisms, tax treatment of health care – the things we think are necessary to get to the root causes of medical inflation and get the patient-centered system in place. There are different ways of doing it. On tax treatment of health care, some of our folks really like deductions, others like the tax credit route. There are various ways of doing that. I don’t think we’re going to settle specifically on one bill, because there are a lot of people who have different ideas on how to do this. I think our nominee will have a lot to say on that. But I think what we will aspire to do is put out a vision on what a patient-centered health care system looks like. And that vision is the replace side of repeal, which is what we want to execute in 2013.”

The full transcript of the interview—which is a terrific read in full—is here.

UPDATE 4: Jake Sherman of Politico has a new story up, in which he describes concerns about GOP-endorsed guaranteed issue in the absence of an individual mandate as "group-think," without accounting for the inaccuracies in his reporting described above, from whence those concerns arose.

Sarah Kliff cites a New York Times report as endorsing Politico’s version of events, when in fact the Times piece hews closer to what I've described (emphasis added):

Republicans are dusting off proposals that date back more than a decade: allowing individuals to buy health insurance across state lines, helping small businesses band together to buy insurance, offering generous tax deductions for the purchase of individual policies, expanding tax-favored health savings accounts and reining in medical malpractice suits...

Mr. Upton said Republicans were already looking at which parts of the Affordable Care Act they would preserve. The “easiest one,” he said, is the provision that allows young people up to the age of 26 to remain on their parents’ insurance. That option has proved popular and effective.

A more difficult question for Republicans is what to do about another popular provision of the law, which will prohibit insurers from denying coverage or charging higher premiums to people who are sick or have disabilities. Republicans favor incentives rather than a mandate to carry insurance, and they acknowledge that rates could soar unless they find ways to keep healthy people in the insurance pool...

Representative Cathy McMorris Rodgers, Republican of Washington, said her party was willing to put more federal dollars than the Democrats into one type of assistance: high-risk pools, which offer subsidized coverage to people who are unable to obtain private insurance because of medical problems.

Senator Barrasso said such risk pools would be a major part of the Republican response to problems of the uninsured. But, he said, a Republican plan would be careful to limit access to federal subsidies to people with true existing conditions. Annual open enrollment periods, like those held by employer-sponsored health plans, would give qualifying individuals predictable access to the high-risk pools, but people could not enroll when they happen to become sick.

The main feature of a Republican plan could be federal assistance for the purchase of catastrophic health insurance with high deductibles, Mr. Barrasso said.

“No one would go bankrupt or lose a home as a result of injury or disease,” Mr. Barrasso said. But patients would face more up-front costs and would therefore have incentives to become more discerning consumers of health care, he said.

Ramesh Ponnuru's sources tell him the same thing mine do, that Republicans are focused on technical issues related to the overturning of Obamacare by the Supreme Court, and suspects that Politico is confused:

There was widespread confusion in the press about the House Republicans’ position on pre-existing conditions when they released their “Pledge to America” in advance of the 2010 elections. They had stated that they favored the pre-Obamacare law that required insurers to cover people with pre-existing conditions if they already had coverage. Some reporters confused this for the Obamacare provision that requires insurers to cover people with pre-existing conditions regardless of their prior coverage status: a provision that would make it possible for people to wait until they’re sick to get insurance, thus requiring some additional intervention such as an individual mandate to make insurance markets feasible. I wonder if a similar confusion is at work in last night’s story.

UPDATE 5: The Wall Street Journal reports that "House Republican freshmen from moderate districts" are feeling the pressure to "replicate popular provisions of the law."

House Republican freshmen from moderate districts say they need to have credible alternatives to present to their constituents if the court—or lawmakers—eliminate the law. They are eager to find ways to replicate popular provisions of the law, such as those requiring coverage for people with pre-existing conditions and allowing young adults to stay on their parents' insurance plans until age 26.