Do Obama’s Higher Ed Reforms Have a Chance in Congress?

Jonathan Chait is pessimistic:

But the comparison raises the question of whether his higher-education agenda will repel Republicans just as his health-care agenda did. Finding ways to get the government to spend less on education sounds pretty conservative.

If you put more weight on the ideological explanation [for Republican opposition to the ACA] , then Obama’s higher-education agenda stands a chance of attracting Republican support. Republicans might even take some visceral pleasure in making their cultural enemies in the academy squeal. If you put more weight on the political explanation, then Republicans will convince themselves that Obama’s plan is evil no matter what. Republicans will find themselves believing that free-market principles require that whatever money the government spends on college access must have absolutely no conditions attached.

Josh Barro is more optimistic:

I view scorched-earth Republican opposition to health care reform as having been driven mainly by neither ideology nor animus toward the president. I think the key was a desire to protect Republican constituencies who benefit from the health policy status quo: doctors and Medicare recipients.

In the case of higher education, the constituency getting its ox gored by cost control will be college professors and administrators, hardly a fixture of Republican fundraisers or Tea Party town halls. That bodes well for bipartisan compromise on this issue.

Hmm, I want to side with Barro here, but I can’t for one big reason: Republican rejection of the Medicaid expansion. A quick refresher: Obamacare expanded Medicaid to cover all individuals with income up to 133% of the federal poverty line. Since Medicaid is a state-run program, the government agreed to cover the full costs of the expansion until 2017. From 2017 to 2020, the federal government covers 95% of the costs and thereafter it’s 90%. It’s a great deal for states. But the Supreme Court ruling last summer allowed states to opt out of the expansion. This leaves a gaping hole in Obamacare. Individuals with incomes between 100 and 133 percent of the federal poverty line will still be eligible for tax subsidies, but those with incomes below 100% of the federal poverty line who aren’t eligible for Medicaid already will not receive coverage.

Why does this matter to whether Obama’s higher ed plan has a chance of passing in Congress? Because, as Barro and Chait write, it depends on whether Republicans will immediately reject the plan out of opposition to anything President proposes or whether they will be open to it. Barro’s optimism is based on the fact that Republican opposition to Obamacare was not just pure nihilism, but was also a play to protect their favored constituencies. Except Republican rejection of the Medicaid expansion shows that it was more nihilism than anything else.

That’s because rejecting the expansion will hurt one of Republicans favored constituencies: hospitals and doctors. Obamacare discontinues Disproportionate Share (DSH) payments, which were used to offset uncompensated health care costs of the uninsured pre-Obamacare. When Obamacare expanded Medicaid, those payments became unnecessary. Medicaid would now cover everyone up to 133% of the federal poverty line so uncompensated costs would basically disappear. Thus, there was no need for DSH payments to continue. Except hospitals in states that rejected the Medicaid expansion are still going to face significant costs of treating uninsured patients and now they receive no DSH payments to recoup those expenses. That’s why hospitals have been aggressively lobbying Republican states to expand Medicaid. There’s a lot of money on the line for doctors and hospitals.

But that lobbying has proved ineffective so far. Twenty one states have already rejected the expansion with six still debating it. It’s a great deal from the federal government that allows millions of poor Americans to receive health care coverage. Even more, hospitals are crying out for the expansion. Nope, Republicans are dead set against it. No matter how much hospitals and doctors favor them, Republicans aren’t budging. Republican opposition to Obamacare is less based on protecting Republican constituencies than rejecting anything the President proposes. I don’t see Republicans treating Obama’s education proposal any differently.


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