The Daily - Wednesday, Dec. 20, 2017

Episode Date: December 20, 2017

The individual mandate started as a Republican idea to fix health care, but it was at the heart of a Democratic president’s signature measure. Now Congress is using the tax bill to kill the mandate. Why did Republicans turn on their own big idea, and what does it mean for the future of the Affordable Care Act?Guests: Margot Sanger-Katz, a health care reporter for The Times; Jonathan Gruber, a professor of economics at M.I.T. who advised Mitt Romney’s team on overhauling health care in Massachusetts, and the Obama administration in drafting the Affordable Care Act. For more information on today’s episode, visit nytimes.com/thedaily.

From The New York Times, I'm Michael Barbaro. This is The Daily. Today, the individual mandate started as a Republican idea for fixing health care, but became the heart of a Democratic president's biggest achievement. Now, Congress is using the tax bill to kill it. Now, Congress is using the tax bill to kill it. Why Republicans turned on their own big idea and what it means for the future of the Affordable Care Act. It's Wednesday, December 20th.

This was the early 1990s and Bill Clinton had just been elected president. I feel so strongly about this. All of our efforts to strengthen the economy will fail. And one of the first things that he did... Unless we also take this year, not next year, not five years from now, but this year, bold steps to reform our health care system. ...is he decided that he really wanted to tackle health care reform.

Margot Sanger Katz covers health care for The Times. And somewhat unexpectedly, he put his wife, Hillary Rodham Clinton, in charge of the effort. And she developed a very detailed proposal that would have really made major changes across the whole health care system. What we are trying to do is not just to take care of those people who get up every day and go to work, but they don't make quite enough money to be able to afford insurance and their employers don't help them. They are uninsured. It was not very well received by Republicans, and it was also not well received by the health care industry and the insurance industry, which were really freaked out by the idea that the government was going to get so involved with

their business. So there was this huge backlash. And in the midst of this backlash, a lot of Republicans seized on a different idea about how to reform health care. Let the free market decide what kind of health care we're going to have instead of the government. And so what is the conservative market-based vision that Republicans come up with at this moment? So a central idea in the Republican vision at this time is the idea that instead of having your employer provide you with health insurance, individuals should go into a market and be able to select and buy insurance for their families. But there's a problem with that solution. It turns out that health insurance markets don't really work the way markets for rice or cell phones or televisions work.

And there are two reasons. One is that if you decide that you just don't want to buy health insurance, it's not a priority, and you'd rather just kind of roll the dice that you're not going to get sick and you get hit by a bus tomorrow, you are still going to be treated in the emergency room and in the hospital. And someone is going to have to pay your bill if you can't afford it. And so that creates what some people call a sort of free rider problem, where all of us who are responsibly paying for our health insurance are absorbing the costs of people who choose to be uninsured. The other problem is if sick people buy insurance and healthy people decide to roll the dice, then you end up with a market that's very expensive because you have the average cost of insurance reflects the fact that all the people who are buying it have very high medical bills. So to solve this problem, the Conservative Heritage Foundation, which is a think tank in Washington that has been very influential in

conservative policymaking for many years, they come up with this plan and includes this new idea. And this idea is that families should be required to buy health insurance. And that way everyone gets in before they get sick. So the idea is that a family would have to buy health care. It would not be an option. Yeah, that's the idea, that there would be some incentive for them to buy insurance. And if they didn't, they would face some kind of penalty. That sounds like a Democratic idea and just the sort of thing that conservatives typically

get outraged about, that the government is stepping into people's lives and making them do something. I think that that's true. At the time, there was this argument that it's just sort of a natural consequence of their desire to have a market-based system. You have to deal with these weirdnesses of the health insurance market. And so they kind of come around to this idea that you have to force more people to participate in the market in order for it to function well. What you're describing, Margot, sounds like the individual mandate. Yeah, it's a lot like the

individual mandate. And the individual mandate eventually becomes a central tenet of Obamacare, which is kind of confusing because we're talking about conservatives. Yeah, it really is. Now I hope that all of our time has come. I hope that this committee, building on its rich tradition and many contributions, this individual mandate, an idea that starts with Republicans who really like it as a way of reforming the health care system? So this idea kind of just keeps kicking around. There are some members of Congress, both Democrats and Republicans, that get interested in this idea. There's some legislation that's introduced into the Congress. But it really starts to pick up steam again when Mitt Romney becomes the governor of Massachusetts, and he decides that he wants to work with the Democratic legislature of that state to try to get Massachusetts to universal health coverage.

What we found is that if you have people who sit outside the system and instead just show up at the hospital when they're sick and expect someone else to pay, that's a free rider system. It's bad health care for them. It's expensive for everyone else. Now we're saying, everybody come on in. We want you to buy insurance if you can afford it. And we also will help you buy insurance if you can't afford it. So Romney included this conservative idea of an individual mandate in the Massachusetts health care program that he got passed. He did. And it's kind of interesting. Like he had to be sold on this idea. Romney didn't come to the governorship thinking, I want to put into place an individual mandate. And I think actually at the beginning, he was a

little resistant to it. Why should I force people to buy health insurance? Why can't we just make it affordable, make it easy to find in the market? And he was very influenced by some experts and economists who came to him and sort of ran the numbers. And they said, look, if you don't have this mandate, insurance is going to be way more expensive. It's going to cost the state almost as much money, and you're going to cover many fewer people. And when he saw those numbers, he really was persuaded, and he became a real champion of this idea. I think really it was just an idea until Mitt Romney adopted it. Jonathan Gruber is an economist at MIT who advised Romney in Massachusetts. It was sort of something a lot of people talked about, and a lot of policy wonks sort of thought was a good idea, but was sort of viewed as really just sort of something that wasn't politically possible

until Mitt Romney decided it was. And how did both Republicans and Democrats respond to this idea once it had been adopted by Governor Romney in Massachusetts? Republicans loved it. Honored guests, ladies and gentlemen. Indeed, at the bill signing ceremony on the platform was Governor Romney, Ted Kennedy. You have given Massachusetts just what the doctor ordered. And the speaker from the Heritage Foundation talking about what a victory this was for conservative principles. On behalf of my colleagues at the Heritage Foundation, just allow me to express our deep appreciation. And after it passed, I think it was quickly successful. I think there was sort of bipartisan interest in it. Republican governors

and Democratic governors around the country were asking how they could make this work in their states. This is the product of a bipartisan cooperation that is a model where too often excessive partisanship corrodes civility. You have seen exactly the opposite here in the state of Massachusetts. This reform is new. This reform is different. This is very imaginative. Nothing like it has ever been attempted anywhere else in the United States. Margot, how does the individual mandate go from a success story in Massachusetts, a law supported by Republicans and Democrats, to an idea embraced by Barack Obama?

So this is a little bit of an interesting story because like Governor Romney, Barack Obama is a late convert to the individual mandate. A mandate means that in some fashion, everybody will be forced to buy health insurance. When he was first running for president in 2007 and 2008 in the Democratic primary, he was against the mandate. Hillary Clinton actually embraced it. So she had been against it in the 90s. But after seeing what happened in Massachusetts, she really latched onto this idea. So I am adamantly in favor of universal health care.

And that means everybody is covered and we will have a system to make it affordable. But it will be required as part of shared responsibility under a new way of making sure that we don't leave anybody out. I was a health care reporter at the time. And so I would watch all of these presidential debates, and they were so boring. The two of them agreed on everything. And then they would get to the health care section. It was like the most fun section. It was so combative.

I think I should have the opportunity to respond very briefly, and I'll try to make it as quick as possible. Very briefly, absolutely. Number one, understand that when Senator Clinton says a mandate, it's not a mandate on government to provide health insurance. It's a mandate on individuals to purchase it. They really disagreed about this. I think Barack Obama at the beginning was very uncomfortable with the idea of forcing people to buy insurance.

He used to say, I believe the problem is not that folks are trying to avoid getting health care. The problem is they can't afford it. If we just make insurance affordable enough, people are going to want to buy it. We don't have to force them to buy it. But after he got to the White House,

a lot of the same economists came to him who talked to Romney. They showed him the same numbers. And what we were able to show with the modeling I did and other people's work was that essentially by adding the mandate, you could cover about twice as many people while only raising the cost by about a third. And that it was a much more efficient way to expand health insurance. And he found that very appealing. And after he heard from all the experts, he really started to come around to the idea that you do need to have this individual mandate to create an incentive for younger and healthier people to purchase health insurance and keep the overall price of insurance low. So like Romney, he instantly sort of saw it as a numbers question.

Exactly. President Obama, to his credit, took a Republican idea, which he'd actually opposed during the campaign, and adopted it. You don't have an individual mandate, then what would everybody do? They would wait until they get sick, and then you'd buy health insurance. And as the Affordable Care Act was being created and pushed through Congress, how did conservatives who conceived of this thing in the first place react to it suddenly becoming a central component of what becomes known as Obamacare? So I think the individual mandate becomes their biggest nightmare in the law that they loathe. They really coalesce around this argument that the individual mandate is un-American. Tragically, this bill will destroy freedom and do incredible damage to the very fabric of our society. This bill is a bailout for the insurance companies. They get the individual mandate. They want it all along,

a mandate that is un-American and unconstitutional. That it is unfair. What's in the bill, as you well know, is a mandate that the government tells you what kind of health care you've got to have. Is that what you want? No! That it is punitive and that it is unconstitutional. The high cost of this bill comes from a non-constitutional mandate. cost of this bill comes from a non-constitutional mandate. It comes from the fact that for the first time in the 225-year history of the country, the federal government is telling you you got to buy

something. I mean, that's kind of extraordinary. Even though the individual mandate was originally a conservative idea and Republicans supported it when Mitt Romney tried it in Massachusetts, it becomes their single biggest source of outrage when it's included in a Democratic president's plan to reform health care. There was a time in opposition to Hillary in Hillarycare that the Heritage Foundation and lots of folks supported. The more we looked at it, the clearer it became that, in fact, it would lead the politicians to redesign the entire health system in order to define the mandate. So just to be clear, even the Heritage Foundation began to oppose the idea of the individual mandate. Yes. I mean, quite vociferously, they really disavowed it.

I am here to tell our supporters, the conservative movement and the American people that the Heritage Foundation will do all within its power to recommend and to make the intellectual case for the repeal of these intolerable acts. They were very publicly against it. They sort of led the charge. They were involved in the lawsuits that were designed to bring it down. I remember going to meetings at the Heritage Foundation in the early years of Obamacare and sitting around a table and hearing them just rail against it. You would never think that that was the place where this idea had originated. While the Heritage Foundation recognizes that our health care system requires reform, such reform cannot proceed until this intolerable act

is consigned to the dustbin of history. To that goal, we are dedicated. Margaret, you cover health care so closely. What do you make of this, the Republican about-face on the individual mandate? The Republican Party has changed a lot since the 1990s. I think that the Republican Party has become more libertarian than it used to be. And so there is a lot more discomfort among your average Republican with the idea that the government is going to tell you what you have to

buy. So the mandate part of the individual mandate has become increasingly more toxic to the modern Republican Party. Yeah, I really think it has. On this vote, the ayes are 51, the nays are 48. The Senate recedes from its amendment and concurs in H.R. 1. With further amendment, the Tax Cuts and Jobs Act is passed. taxes is a repeal of just the individual mandate. So they're leaving all the rest of Obamacare in place, but people who fail to buy their own insurance will no longer have to pay a penalty starting in 2019. And what would happen once this key provision of the Affordable Care Act is gone? It's actually like this super interesting mystery because over time, it looks like the individual mandate may be less important than we thought. So there are two things that we know are going to happen when the mandate goes away.

One is that health insurance is going to get more expensive for everyone. And the other is that fewer people are going to get covered. But the exact magnitude of that effect is a little bit uncertain. The Congressional Budget Office estimates that 13 million fewer Americans will have health insurance at the end of 10 years without a mandate than with it. They also estimate that the average cost of health insurance for people who buy their own coverage is going to be about 10 percent higher in each year than it would be if the mandate stayed in place. But, and I think this is an important but, the CBO itself said that it thinks its own estimates are wrong, that they are in the process of re-evaluating their assumptions, and that they think if you ask them the same exact question next year,

they would say that the effects are probably smaller. And just help me understand a little bit more why it won't be as bad as maybe we thought it would be for the individual mandate to go away. Why this doesn't mean the end of the Affordable Care Act as we know it. So it looks like over the last few years of the Affordable Care Act that the individual mandate hasn't been as powerful as many analysts and economists had thought. That there are more people who are choosing not to buy insurance than was expected. So that means that they probably aren't feeling quite as much of a push from the mandate. And that also people who are getting a lot of financial assistance buying health insurance, so low-income people who qualify for a lot of subsidies, those people are signing up at really

high rates. And so that suggests that actually maybe Barack Obama was right, that if you make insurance affordable enough, that is a strong enough incentive for a lot of people to buy insurance. So to be clear, we really don't know what's going to happen when the individual mandate goes away. Something like this has never happened before. And it's going to be this moment where we're going to find out, is it going to ruin these markets or are they just going to be a little bit worse? Do you think conservatives put the repeal of the individual mandate, their idea originally, into their tax plan to try to undo the Affordable Care Act or because they just generally object to it? I think actually they did it for a completely different reason. They have no love for the individual mandate and they've been fighting it for a long time. a long time. But it actually turns out if you take away the individual mandate, fewer people will buy health insurance and fewer people will sign up for Medicaid because they're not getting

that same push from the mandate. And that means that the federal government actually is going to spend less money helping people get health insurance. And that ends up saving the federal government money. And what the Republicans really want to do in their tax plan is they want to cut taxes as much as possible. And so by including this provision, it gives them more fiscal space to cut taxes because they get these savings that come from the mandate going away. So this is a pure money-saving measure that in some ways isn't really about the ideology of health care. I think that's right. of health care. I think that's right. And one piece of evidence for that is that when Republicans were debating their Obamacare repeal and replacement bills earlier in the year, all of them included some replacement for the mandate. When they were dealing with it as a health care provision,

they were realizing, oh, we probably need to have some other incentive for people to get in the insurance market. And there were a couple of different options that they tried. With this bill, they're not trying to replace it at all. And so I think it definitely reflects their dislike of the mandate and their kind of long crusade to get rid of it. But I think that the sort of primary motivation in this moment is just that it's going to save a lot of money. Margot, thank you very much. You're welcome. In the early hours of Wednesday morning, the Senate narrowly passed the Republican tax bill, including the repeal of the individual mandate, joining the House, which had passed it on Tuesday afternoon. On this vote, the yeas are 227 and the nays are 203. The conference report is adopted without objection.

The motion to reconsider is laid upon the table. But there was a small hiccup. Last-minute changes to the Senate bill will require the House to pass it again as early as this morning. Not a single Democrat in either chamber is supporting the legislation, which President Trump has pledged to sign into law by Christmas. We'll be right back.

Here's what else you need to know today. Thank you, everyone everyone for your patience. I am Bella Dinzar, board member of the National Transportation Safety Board. Our other investigators have arrived in Seattle and we will be beginning our on-scene investigation of the derailment of Amtrak train 501. Federal investigators have found that the Amtrak train that jumped the tracks outside Seattle on Monday, killing three people, was traveling 50 miles per hour over the speed limit when it derailed.

Preliminary indications are that the train was traveling at 80 miles per hour in a 30 mile per hour track. mile per hour track. The accident is putting renewed attention on Amtrak's safety practices, the role of human error in rail accidents, and the need for technology that automatically slows trains that are traveling too fast. And our mission is to not just understand what happened, but why it happened, and to recommend changes so that we can prevent another tragedy from happening again. That's it for The Daily. I'm Michael Barbaro. See you tomorrow.