Pivotal Politics and the Extension of Canceled Insurance Policies

By Jeremy Kreisberg

I think it is fair to say that the conventional wisdom surrounding the administration’s decision to temporarily allow insurance companies to continue selling plans that do not meet the minimum standards established by the ACA to its existing beneficiaries (a.k.a., the “like it / keep it” fix) is that this decision was primarily motivated by political pressures.

Perhaps the conventional wisdom here is at least partially right.  But I want to develop an additional explanation that has lurked within the news coverage — one that sounds in policy and legislative strategy (and happens to be related to a paper I’m currently writing).  In short, I think it’s feasible to explain the administration’s fix as a policy that was designed to forestall an unpalatable legislative proposal that, in the president’s eyes, would have had adverse consequences for the ACA.  As one might imagine, this basic strategy of using administrative leeway to preempt undesirable legislation is not novel.  In fact, after the jump, I’ll recount how it was used by President Reagan to the same effect.  But the larger point I want to make here is that, while some policy analysts have criticized the administrative fix due to the complications it creates for the law, when viewed in light of the alternative legislation it may have replaced, the administrative fix might be viewed as a sounder policy than we would otherwise think.

In Pivotal Politics, Professor Keith Krehbiel theorized that “most lawmaking can be usefully approximated by a few points and a line” if we simply examine the preferences of certain pivotal legislators.  Assuming that legislators are rational actors who will prefer a bill if it is closer to their policy preferences than the status quo, the pivotal politics model posits that a bill generally will pass if it is more favorable than the status quo in the eyes of the 60th percentile Senator on the issue (the filibuster pivot) and either the president or the legislators whose votes are necessary to override a veto (the veto pivot).  We can introduce complications based on getting the bill to the floor or extreme median voters in the House, but this basic model should suffice for the purposes of this blog post.  The important thing to recognize is that the status quo is extremely important in this model.  If the status quo is extreme, a moderate bill has a much better chance at gaining the support of both the filibuster pivot and the president, who typically will have fairly different political ideologies.  However, if the status quo is moderate (i.e. between the preferences of the filibuster pivot, on one side, and the veto pivot and the president, on the other side), any bill will likely fail.

What does any of this have to do with the administration’s “like it, keep it” fix?  Well, imagine the alternative to the administrative fix.  In the aftermath of the increased publicity surrounding canceled policies on the individual market, the House considered a bill — the “Keep Your Health Plan Act” (KYHPA) — that would have allowed insurance companies to offer non-ACA-compliant plans for an additional year not only to new customers, but to all customers on the individual market.  According to Politico, “upwards of 100 House Democrats had threatened to support” this bill.  However, President Obama promised to veto it because it would “reverse the progress made to extend quality, affordable coverage to millions of uninsured, hardworking, middle-class families.”

The day before the House voted on KYHPA, President Obama announced his administrative fix.  Unlike the House bill, the administrative fix allowed insurance companies to extend non-compiant policies only to people already enrolled in the individual market so that those people could keep their plan if they liked it.  When the House ultimately voted on KYHPA, the bill passed with 261 votes, including 39 Democrats — a total shy of a veto-proof majority.  

What happened in pivotal-politics terminology?  Well, it seems to me that, due to the publicity surrounding canceled policies, the status quo before the administrative fix was further from the preferences of the veto pivot in the House (presumably a Democrat among the “upwards of 100″ mentioned in the Politico article) than KYHPA.  But the administrative fix changed everything.  As a result of the fix, the status quo became more moderate — now, many people who were insured on the individual market could keep their plans even if they did not meet the standards set by the ACA.  With a moderate status quo, many Democrats apparently preferred the status quo to the more conservative KYHPA, as only 39 Democrats ultimately voted for the House bill.  With a less-than-veto-proof majority in the House and President Obama’s continued threat to veto the bill, the Senate did not have to take up the KYHPA.  It was already dead.  So we might conclude that by issuing an imperfect administrative fix to the “like it, keep it” controversy, President Obama not only quelled a political controversy, but he also prevented an even worse alternative policy from becoming a reality.

As I mentioned at the top, the notion that the president might act with the intention of forestalling the legislative process is not novel.  Indeed, in Power Without Persuasion, Professor William Howell demonstrated how this basic strategy — using executive action to create a more moderate status quo and thereby halt a legislative proposal that is unacceptable to the president — was employed successfully by President Reagan.

Professor Howell called this his “preemptive politics scenario.”  In the 1980s, President Reagan opposed sanctions on the apartheid regime in South Africa, while a veto-proof Congress supported such a policy shift.  “[R]ather than stand by and watch, . . . Reagan unilaterally imposed some, but not all, of the sanctions included in the congressional bills” in an executive order issued before Congress could vote on a compromise version between a House and Senate bill imposing Congress’s desired sanctions.  According to Professor Howell, “[t]he [executive] order hit its mark.  It derailed a handful of conservative supporters — supporters who preferred vast sanctions to none, but whose support was lost now that a new, more moderate policy was law.  Lacking the votes to override a threatened veto, the congressional bill died before conference members could even consider it.”  Although the Reagan example is stronger due to the Senate’s prior engagement on the issue, the analogy should be apparent.  By using executive action to create a more moderate status quo, both Presidents Obama and Reagan were able to persuade members of their own party to vote against legislative proposals that the Presidents opposed.

One final shameless plug: I’m currently writing a paper on a related issue — specifically, when presidents can use administrative action to create an extreme status quo such that legislation is more likely to pass.  I’ve been developing several examples, but if our excellent commenters have any from their areas of expertise, I’d be very interested to hear them and discuss in the comments section!

P.S. H/T to Matthew Lawrence for pushing me toward this connection.

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