It seemed as though congressional Republicans leading the effort to repeal and replace the Affordable Care Act had a slam dunk moment on Tuesday night during President Donald Trump’s first address to a joint session of Congress. “We should help Americans purchase their own coverage, through the use of tax credits,” Trump declared. These were the words those leaders and committee chairs, whose interests in including refundable tax credits for individuals to purchase insurance plans had met stiff conservative opposition over the last week, had wanted to hear. These credits would prevent some of the millions of people who had gained insurance under Obamacare from losing it under Trumpcare, and would ensure support from moderate Republicans in Congress. Conservatives have portrayed them, though, as an expensive new “entitlement.”
Did this move the needle on the debate?
“Yeah,” House Majority Leader Kevin McCarthy told me after the address. “I think the argument’s over, [as to] which way we’re going on it.” But the conservatives in the audience may have heard something different—or not heard a certain word at all.
“He didn’t say refundable tax credit,” South Carolina Rep. Mark Sanford, a House Freedom Caucus member, told me. “There is a difference. He said ‘tax credit.’ … The plan that Sen. [Rand] Paul and I introduced said ‘tax credits,’ but it’s not an advanceable, refundable tax credit. I think it’s important to watch the tea leaves here.” Ohio Rep. Jim Jordan and Iowa Rep. Steve King, two other Freedom Caucus members, echoed Sanford’s close reading.
Maybe the needle wasn’t moved so much after all.
Members weren’t sure earlier on Tuesday that Trump would get into the weeds of what he wanted in the reform effort. “You don’t usually get specific in State of the Union addresses,” Arizona Sen. Jeff Flake told me earlier in the day. And White House Press Secretary Sean Spicer, in a preview with media outlets, said he shouldn’t be expected to do much more beyond offer principles.
It’s true that Trump didn’t explicitly endorse the plan that congressional leaders and committee chairmen have been working on. They are still, theoretically, in the drafting phase. But he did come very close to endorsing the replacement framework that leaders are coalescing around: ensuring coverage for pre-existing conditions (likely through continuous coverage requirements), block-granting Medicaid, expanding health savings accounts, allowing insurers to sell across state lines, and most importantly, those tax credits. Or … some form of tax credits.
Republican leaders, like House Speaker Paul Ryan and Tennessee Sen. Lamar Alexander, had claimed earlier in the day that there was “consensus” on health care among Republicans. It was more like Republican leaders had a consensus around the belief that they would all tell reporters there was consensus.
“The draft proposals are proposals that have been created by a consensus in the Senate and the House,” Alexander, chairman of the Senate Health, Education, Labor, and Pensions Committee, said Tuesday afternoon. He added that the reconciliation process is “on a very good track and has a very good chance of unifying our party.”
Ryan, meanwhile, explained that last year, “House Republicans assembled a health care task force with all the committees of jurisdiction and any House Republican who wanted to participate in that. And out of that came a consensus plan that we all ran on together. It looked a lot like the Price plan.” He was talking about Secretary of Health and Human Services Tom Price’s model for replacing Obamacare. Then-Rep. Price’s plan included refundable, age-based tax credits for those on the individual market to purchase insurance.
“The Price plan was considered the conservative gold standard at the time last year,” Ryan continued. “Many conservatives co-sponsored that plan. That plan looks a lot like what we’re working on right now.” In other words, he was suggesting that those conservatives revolting now might have missed their window to throw a fit.
Sen. Ted Cruz had a different view of the party’s health care consensus: that the current framework—in one crucial, expensive respect—did not reflect any such thing. “We should focus on reform ideas on which there is consensus,” he said Tuesday afternoon. Among those ideas, he mentioned allowing insurers to sell across state lines, expanding HSAs, making insurance policies portable between jobs, encouraging states to set up high-risk pools, and pre-existing condition protection for those with continuous coverage.
What Cruz did not mention among replacement options was the big pricey one around which the managers of the replacement bill, at least, claimed to have consensus: refundable, age-based tax credits for those on the individual market to purchase insurance. “Rolling out a massive new entitlement program is not the right approach to go,” he said.
Cruz was not alone. Leaders of the two big conservative caucuses in the House, along with Cruz’s fellow conservative Sens. Mike Lee and Rand Paul, had also come out against the proposed tax credits with language that would be difficult to walk back. North Carolina Rep. Mark Meadows, chair of the House Freedom Caucus, has similarly titled such credits “an entitlement program” to be paid for with a “new tax increase.” (Meadows’ wife, delightfully, is encouraging people to call Ryan’s office to protest “Ryancare.”) He does not intend to vote for a proposal that includes those credits. North Carolina Rep. Mark Walker, chair of the Republican Study Committee, also said he would not vote for such a proposal. “What we don’t want to do is create a fourth column of entitlement when we’re already trying to reform some of the others,” he said.
Say conservatives would win the day and excise refundable tax credits from the proposal, perhaps replaced with tax deductions or nonrefundable tax credits that, for the neediest, amount to very little. This would cause a lot of lower- and middle-income people to lose their health insurance, creating moderate Republicans’ worst nightmare. Money was always going to be the moderate-conservative fault line in replacing the Affordable Care Act, and it arrived right on cue.
I asked Cruz after the speech if when Trump said “tax credits,” he heard that as an endorsement of the refundable tax credits being considered by leaders.
“I don’t believe we heard any specific legislative endorsements.”
One more word—“refundable”—and the process toward putting together a real “consensus” could have taken a huge leap forward. Instead, the nitpicking lives to see another day.