“Herding Elephants” – Legislation to Repeal and Replace ACA Fails in the House

ACA Update 2.0

With the recent news of the failed attempt to repeal and replace the Affordable Care Act (ACA), many are wondering, “What now?” It’s important to review all that has happened, to predict how things might proceed.

March Madness in the House

Repeal & Replace Introduced: The “American Health Care Act” (“AHCA”) was introduced by the Republican leadership in the House on March 6, 2017 and it was designed to replace and repeal the Affordable Care Act (a.k.a. Obamacare). Congressional Republicans and the President had campaigned last year on replacing and repealing the ACA, and this was the first major hurdle in the legislative process. In our last update “ACA Update 1.0” we offered several of the tax provisions in the AHCA. Over the past two weeks, this legislation passed through several House committees and before going to the entire House last Thursday.

Legislation Moved to the House for Passage: The House leadership was tasked with trying to move the AHCA legislation through the House without any Democratic support. But, some opposition to the AHCA formed from within Republican ranks, mostly from those who wanted the legislation to go further in replacing the ACA. In fact, the leadership made several changes to the legislation on Monday, March 20, 2017 in an attempt to shore up backing for this bill. The president also offered his support and lobbied hard for the AHCA legislation.

Drama Ensues and Pushes House Vote Back, Ultimately the Legislation is Pulled: This lead to high-stakes political drama in Washington last week, and the vote on the AHCA legislation was pushed back one day while Congressional leaders scrambled for additional GOP votes. These efforts eventually failed to garner enough votes to secure passage and the AHCA bill was pulled again by House Leadership late Friday afternoon.

A Setback for House Republicans: This was a major setback for House Speaker Paul Ryan and Congressional Republicans as they wanted this ACA repeal and replace legislation to be their first major legislation enacted with the new administration. Ryan could not corral enough support within his own party to move the bill forward that many had campaigned for, and they have tried to repeal this several times in the past. Now, when they felt they finally had the numbers on their side, they still could not push it through.

Effects of this Legislative Defeat in Washington – What Now?

ACA Remains Intact: Mr. Ryan and President Trump indicated that the ACA will continue in place, at least for the time being.

ACA Repeal & Replace Could Resurface: There are some indications, however, that another attempt at ACA repeal and replace legislation will be made, it is just uncertain when this will be, what form it will take, etc. Unless there is some Democratic support, the House leadership will likely need the input early in the process from many factions within Congressional Republicans if they seek to re-craft new healthcare legislation.

Expect Tax Reform Legislation to Surface and Take Center Stage: The timeframe for any re-do at ACA repeal is uncertain, as Congressional leaders and the President now want to turn their efforts at Tax Reform legislation. Many business leaders and organizations monitored the healthcare debate, not only for the law that was being debated, but how the leadership handled the process of navigating a bill though Congress. With this unexpected setback on health care, many business groups are uncertain whether Congress can now move forward with what is arguably a much larger piece of legislation – a comprehensive tax reform package.

Tax Reform Faces More Difficult Road Ahead: The inability of Congress to enact ACA repeal legislation will make tax reform even more difficult as passing the AHCA first would have had a favorable budgetary scoring on the impact of tax reform.

President and House Leader Under Pressure: The ante has been raised even higher for Mr. Ryan and the President. If they can’t deliver comprehensive tax reform this year with majorities in Congress and the White House, it could hurt their entire legislative agenda.

Aftermath of Failed Legislation Will Challenge Speaker Ryan: Paul Ryan’s role as Speaker may be on the line as he tries to steer compressive tax reform through the House, and then navigate the choppy waters in the Senate with its intricate rules. Democrats may challenge the tax bill at every corner, and Ryan therefore must be able to shepherd his Republican colleagues through this process.

Tax Reform Expected to Elevate in April: Look for the House to begin taking up tax reform this spring, probably following the Easter recess. The process will likely last into the summer.

Stay tuned for upcoming developments, and yes, more political drama.

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