Walker's health plan hinges on a tricky subsidy rollback

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Posted: Aug 23, 2015 10:26 AM
Walker's health plan hinges on a tricky subsidy rollback

MADISON, Wis. (AP) — Republican Scott Walker's plan for repealing and replacing President Barack Obama's health care law hinges on what many see as a nearly insurmountable obstacle — getting 60 votes in the Senate.

Walker's solution for winning over enough lawmakers? In a nutshell, he would first strip away the federal health insurance subsidies that they and their staff get as government employees. That, he says, would expose them to the same premium increases that many Americans have to pay and prompt Congress to act on his plan.

Skepticism abounds, and not just among defenders of the health law.

Would members of Congress really rally around his initiative after seeing their health subsidies disappear? And can he really end those subsidies without congressional action, as he vows he would do with an executive order on his first day as president?

"It shouldn't be taken seriously," Tim Jost, a law professor at Washington and Lee University in Virginia and an expert on the health law, said of Walker's plan. "It's just a political talking point."

In announcing his plan, Walker vowed: "On Day One, I will sign an executive order removing President Obama's special deal for Congress. Having to live with the same premium increases that other Americans have suffered under Obamacare should light a fire under Congress to act quickly."

But it's not that simple. Walker's campaign says his executive order actually would direct Cabinet officials to "undertake rulemaking" — typically a drawn-out process that involves research, debate by affected parties, public notice and public comment — toward the goal of removing the subsidies.

Congress was shifted from the federal employee plan to the health care law's insurance exchanges because of an amendment by Sen. Chuck Grassley, R-Iowa, back when the law was being debated. Grassley reasoned that what's good enough for the public should be good enough for lawmakers. If regular folks had to use the health insurance exchanges set up by the law, so should lawmakers and staff.

As a result, some 15,000 congressional staffers, lawmakers and dependents buy their health insurance through the Washington small business exchange. But the amendment did not specifically address whether they would keep getting the regular government contribution for employee premiums. And many Hill staffers make too much to qualify for income-based subsidies under the law.

To avoid disrupting health insurance for lawmakers and staff, the federal Office of Personnel Management published rules in 2013 stating the government would still subsidize about 70 percent of their premiums, just as it did before the health care law went into effect.

Republicans have attacked the rule as a special exemption under the law. Republican Sen. Ron Johnson of Wisconsin filed a federal lawsuit challenging it, but it was dismissed.

Walker said undoing the rule, and essentially raising insurance costs for members of Congress and their staffs, would serve as the motivation for lawmakers to repeal the health law and replace it with his plan. It takes 60 votes to break through delaying tactics in the Senate and repeal the law; Republicans hold 54 seats.

But absent a national emergency, Walker wouldn't have the legal authority to amend the rule to remove the subsidy, said Jost, a supporter of the health care law. And even if the rule were changed, it wouldn't hurt members of Congress because most lawmakers are either independently wealthy, have coverage through their spouses or are old enough to quality for Medicare, Jost said.

That would leave their staff members stuck with higher insurance costs, Jost said.

Gail Wilensky, an economist and adviser to Republicans, said Walker's going after Congress on that issue is a "red herring."

"To cause Congress and their staff to lose all subsidies would be unfair," Wilensky said.

A lawsuit would be inevitable, said Mike Stern, an attorney and former senior counsel to the House of Representatives from 1996-2004. Still, Walker's gambit "might very well survive a legal challenge," he said.

Legal challenge or not, there are better ways to rework the law, said economist Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank.

"In the end, if you're going to do a big reform you're going to need something that's bipartisan," he said, "or it won't be doable."

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Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.

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Follow Scott Bauer on Twitter at https://twitter.com/sbauerAP