Tom Scully: Even If Health Law Survives Court Challenge, Congress Could Delay Timetable

Washington, DC, United States (KaiserHealth) – This interview is part of KHN’s video series “Supreme Uncertainty: What’s Next After The Court Rules,” which solicits views from public officials and policy experts about the upcoming Supreme Court ruling on the health law and its implications for the future of health care.

Thomas Scully, who ran Medicare and Medicaid under President George W. Bush (2001-2003), believes that the 2014 implementation of the Affordable Care Act will have to be delayed, even if the Supreme Court upholds it. Next year, Congress will have to negotiate a major deficit reduction deal, and could find savings by postponing the law. Scully, an attorney, is now a health care consultant.

Here’s an edited transcript of the interview:

MARILYN WERBER SERAFINI: If the Supreme Court upholds the law, is the implementation going to happen on schedule?

THOMAS SCULLY: The issue that I think is not going to be ready is the money. I mean, that’s really what you get to if you have 9 percent of GDP deficit, and you’re looking next spring at what’s likely to slow this down. Let’s assume the Supreme Court upholds [the law], let’s assume Congress has a similar makeup to today, let’s assume President Obama gets re-elected—all of which are wildly interrelated assumptions, but I think those are the most likely outcomes—you’re going to have a massive budget deal next year, there’s no way around it.

And you’re going to have to redo the tax code—which itself is a nightmare—and raise revenue. You’ve got to cut defense spending. You’re going to have to massively cut Medicare and Medicaid, except that there’s one moving piece that takes all that pressure off, and that’s to say we all want to do universal coverage. Some Republicans may not, but they’re not going to be able to repeal the thing. We all want to do the right thing, but guess what, 2014, we can’t do it in this deficit environment.

So, I think in a big mega-deal, the obvious pieces are: The Republicans agree to “read my lips,” we’re raising taxes—which they’re not going to want to do, but they’re going to have to do it to some degree—which is their holy grail, and the President’s holy grail is the health care bill.

The pieces that are a big deal to me are higher revenues, you’re obviously going to cut defense, but the real tradeoff is: You are going to really cut Medicare and really cut Medicaid, raise co-payments (for beneficiaries), raise deductibles, move the retirement age to 67. All of which should happen, all of which probably will happen, but the big pressure relief valve, the deal is to say—which Republicans I’m sure will push for—”Let’s not do this in 2014, let’s do it in 2015, and let’s phase it in over more years.” I don’t think they’ll be able to downsize the benefits any, but I do think the obvious pressure-relief valve is the massive amount of money you’re going to spend on this health care bill.

MARILYN WERBER SERAFINI: So if the Supreme Court strikes down the health care law, what should Republicans do?

THOMAS SCULLY: What should they do? They should come back with a scaled-back version of states’ rights, with some subsidy and some exchanges with subsidies, and a catastrophic benefit in a much more streamlined benefit—that’s what they should do. I think the reality is there’s been enough venom—maybe non-substantive venom—built up about this, that I think nothing will happen for years. People talk about various things, but if the bill gets struck down, it will be a decade.

MARILYN WERBER SERAFINI: If it’s struck down, are there pieces of the law that are worth salvaging and could potentially be salvaged?

THOMAS SCULLY: Well, my own personal view — and I’ve been in this forever — the George Bush 41 plan, the first President Bush, had (effectively) exchanges. Insurance reforms and exchanges, along with refundable tax credits or transfer payment to insurance companies to pay for basic benefits, are all good ideas. The issue is how much and at what level? And how much federal structure do you impose? How big are the subsidies? How many people are covered? So the basic construct of what President Obama was trying to do, I personally don’t have any problem with; the issue is the magnitude, the size and the spending, and I think that all got out of control.

So, do I think people should get back to that? Yeah, I’ve been advocating that for 25 years, as you know. But, I would have done the Obama-lite plan, with a lot less subsidies. You can debate the individual mandate, and how you structure it; whether it should be state by state. But exchanges, with transfer payments for people for an appropriate policy that’s not an overblown policy, for the right number of people—I think bringing the subsidies to 400 percent of poverty was unrealistic from the beginning and I just don’t think that’s sustainable.

>> Related: Vladeck: Deaths Will Increase If SCOTUS Strikes Health Law Down

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