Editor’s note: Below are the video and transcript to Heather Higgins’ speech at the Freedom Center’s 2015 West Coast Retreat. The event was held March 6-8 in Palos Verdes, CA.
Heather Higgins: The thing that I do that spends actually most of my time and is not something that is terribly sexy for donors, but that I think is hugely important is work on Obamacare. That’s kind of how I backed into the political stuff. I had been very involved in 2009 in trying to help fund and orchestrate and message the entire battle against Obamacare because there was no infrastructure on the right that was really set up to do that. And then coming out of that had the epiphany that since Reid and Pelosi were not moving, maybe the way to do that was to go into the Massachusetts race for Ted Kennedy’s seat, that special election which was being run on the issues that had polled well in September, which were the national security issue and the economy, and instead redefine the race as being about healthcare and the 41st vote, which every political consultant I took that to thought that I was on drugs and that that was a waste of money. So we wound up being the only independent expenditure in Scott Brown’s first race to make it be about healthcare and the 41st vote. [Applause.] Thank you.
And then in the summer of 2010 I was appalled that nobody was talking about Obamacare so we created the Repeal Pledge which is actually the only pledge about Obamacare that still exists of the ones that were started then; and coming out of the 2010 election where we had used it, I looked for the group to join to think strategically about not working at cross purposes between what the Senate might do, the House might do, the court case from Florida that was then rising up to the Supreme Court, what outside grassroots group could do, and there was none. So I’ve started something called the Repeal Coalition which meets every 3 to 4 weeks in the Capitol. It has leadership staff from both the House and the Senate. It has a lot of staff from different Members and Senators. It has a lot of outside groups that are policy wonks to grassroots groups, and we talk about all the things we wish that would get done that don’t get done, and we talk about things that sound like good ideas and figure out if they’re dumb ideas and try and prevent dumb things happening. There is an overriding purpose to this which is remembering, of course, the long-term goal.
The long-term goal is repealing the law which will involve various components. I think pretty much everybody agrees that if you’re going to repeal it, you actually are going to need to have some sort of replacement plan or plans. You need to win the presidency, and you need to try to keep the Senate, and even then you’ll probably need some Democrat votes because we don’t have 60 votes, we’re not likely to get 60 votes. The 2016 Senate election is going to be the opposite of 2014. Every shorthand way of thinking about Senate elections is that they’re the echo of whatever happened 6 years before. So in 2008 we had a massive Democratic wave which made a lot of Democrat senators vulnerable this cycle, but we’re going to be looking at the echo of 2010 when you had a lot of Republicans winning seats that were historically Democratic. We’re going to be playing almost entirely defense come 2016 for Senate seats.
Into this we throw King v. Burwell which I’m sure, if most of you were paying attention, it was argued this week in the Court. For most of you who’ve not followed it closely, the Reader’s Digest summation, and I am not a lawyer and I am not a policy wonk, so forgive me if I’m not as precise as I should be, but basically within the law, the Patient Protection and Affordable Care Act, with that wonderfully Orwellian name, there is language that was pretty clearly explicitly intended to be a carrot for states to establish their own exchanges in order to get the benefit of all this money going to people who were now going to have more expensive insurance to pay. The carrot was needed because coming with those subsidies is also a lot of mandates on individuals and employers. Only depending on how you want to count it, 13, 14 states plus the District of Columbia, and then arguably Nevada and Oregon, New Mexico, which they did sort of technically establish state exchanges, but then they got the federal government to run them, two of them started to disestablish, now they’re sort of in limbo, so that’s why the number’s always a little bit imprecise; but the vast majority of states had federal exchanges, and the IRS decided to change their understanding of the definition of the law and to move it so that suddenly subsidies would apply to the federal exchange states, not just to the state exchange states.
The consequences of this, if the Court holds for the plaintiffs, is that those states that have currently federal exchanges will be relieved, probably 57 million people is the estimate, of mandates and penalties and they also will be saved from the challenges of job loss that comes with the employer mandate and the way people react to that. The downside is that the estimate has grown in just the last month from 5 million to 6 million to 7 million to 8 million to, Fox was saying, 9 million people — not clear where they were getting these numbers — who are going to potentially be losing their subsidies and, in fact, to drive that number up, that’s part of why Obama recently opened the enrollment period to extend it so that you would have more people enrolling and so you would have a bigger threat to the Court, and the Court really cares about this. In fact, that’s why you see the left driving this argument to try and terrify certain Justices that the Court will be causing enormous damage to people’s lives for which it will be blamed. If the Court decides to go ahead anyway and rule for the plaintiffs, then there is also the risk that then Republicans will be blamed if they don’t do something about this. So there’s a big political risk which comes with a good decision.
The important thing to keep in mind is that the right is not unified and nobody gives us talking points and everybody kind of goes in their own way and there are several different camps about how to respond to this, assuming the Court does rule for the plaintiffs. On the left, what you’re going to be hearing from Obama in concert with a campaign that we’re already starting to see on the part of Families USA, a parade of victims deeply sympathetic, the single mother with the kid who’s really sick who can’t afford her insurance anymore, that it’s now been taken away from her, and you’re going to have Obama saying, it’s so easy to fix, why don’t they just fix it, all it takes is four words to amend the law to say that a federal exchange is treated the same as a state exchange. It’s going to be a very simple message and it’s going to seem to most people like a very easy fix. So you have that, and you also have whether or not the Court rules on this which has to do with how the Court perceives it and, for those who are not ruling just based on the law but their concerns, and as we’ve seen before their current concerns do affect how they rule; and, in fact, I had the Jones Day team come into the Repeal Coalition and speak to us, and their No. 1 concern was not their legal arguments, it was the impression that was potentially being created by the right that they didn’t care about the people who’d be losing their subsidies, and they were very worried that Justices, should we name them, Kennedy and Roberts, would take this to heart and decide that this was just a bridge too far.
There are essentially, just for your own edification, three basic camps on the right on how to respond to a decision for the plaintiffs. The first are the people who architected the lawsuit in the first place, which would be essentially Michael Cannon at Cato, CEI which is the named plaintiff in Washington, etc., and their messaging until quite recently was pretty much exclusively about rule of law and how illegal what the Obama administration had done and how we need to return to rule of law and not let the IRS overstep its bounds and the administrative precedent that this caused and would cause for other agencies if the IRS could get away with this and blaming Obama for any hardship that befell others. The general feeling was that one did not need to worry about the people who would lose their subsidies, that it would be seen as a drop in the bucket. The opposite camp from that, in a sense, is the people who see any kind of holding for the plaintiff as an opportunity to move for full repeal. The way we solve this is we don’t focus on the people who’ve lost their subsidies, we go for the whole Megillah, or something close to the whole Megillah, and then it’s Obama’s fault for vetoing it.
The concerns with both of those are several fold. There’s the short-term concern because the Court hears those potentially and it doesn’t address the attorney’s concern or actually it magnifies their concern that it will believe that the Republicans are not serious about helping the people with loss of insurance in any sort of transitional way, because they will see the Republican Party as planning to do another defund, shut the government down, but not actually pass anything. They’re going to present to Obama things that he will necessarily veto and then there won’t be any assistance provided. There’s a third group, primarily it’s people who are full-time healthcare policy people who are free market in their orientation who want to actually move to a different system and their view is that you need to provide some sort of transition assistance. Their methods are varied. Some of them will be arguing tax credits, some of them will be arguing latitude for the states and freeing the states from some of the rules that Obamacare imposes on them that are precisely what is driving up the costs of insurance. So those are the three camps.
In order to try and resolve this, because it was pretty much an academic discussion with people holding different views about what would work well, and I will admit to a certain bias. All of my work would indicate that rule-of-law argument works incredibly well with us, and it’s terrible outside of this room with the average American, many of whom identify with that 1984 Apple commercial where the establishment is the big monitor and they’re perfectly happy to throw the sledgehammer through all the rules of the establishment if it makes the world a freer, more just place in their view. So rules, per se, are not something to be adhered to for their own sake and they don’t see those second and third-order consequences to breaking them. So what we did is we went and did focus groups and then an enormous 1,000-person survey across all of the federal exchange and battleground states. The answers were pretty dispositive, and I’ll tell you, I was happy to go with whatever the answer was. If it turned out that rule of law actually works well as an argument with everybody, I’m there, I’m delighted to hear it; but, in fact, in terms of messaging about the case, it’s very important to talk about the insurance companies, because most people aren’t aware that these subsidies don’t actually go to individuals, they go to insurance companies, so this is all about protecting insurance companies’ ability to continue to receive taxpayer dollars.
It’s really important to talk about the IRS and how this is the IRS changing the rules. Everybody hates the fact that the IRS is changing the rules. They feel that that’s not the way the process is supposed to work. Rule-of-law argument only works well with conservatives. It doesn’t work outside of that, so be aware when you’re talking to somebody, that’s not the argument you should use if you’re not talking to somebody who’s already one of your own. You also find that talking about the harms – one of the things that had not happened on the right — was trying to quantify how many people would benefit from a decision in favor of the plaintiffs and how many people would be harmed if we continued to hold to the way the IRS is doing that now. There’s attempts to try and quantify the enormous economic harms as well as the harms to choice and so forth so that you’re not doing a battle with sympathetic subsidy argument versus individual mandate payment; it just doesn’t work so well.
In terms of subsidies, 75 percent of Americans are very concerned, or I should say 54 percent of the 75 are very concerned, 75 percent overall are concerned that people will lose their subsidies and want to see something done to provide them at least transitional assistance. If you just – don’t show them pictures, don’t have interviews on Good Morning, America – just mention in a question the reminder that some of these people who will have lost their subsidies are going to be older, they’re going to be people who have children, they’re going to be people who are otherwise sympathetic, the number goes up to 80 percent right away. Even if you remind people that the people who will be losing their subsidies are people who are making too much money to qualify for Medicaid, still the people want assistance provided. Now, that does not mean, as the left wants to say, that they want to go back to just reextending the subsidies as they’re presently written, 44 percent of people oppose that and only 31 percent of people are in favor of that because they understand that with those subsidies come all of the mandates, both on employers and individuals, but it is going to be important for us to think through, if the Court holds this way, how do you create some sort of transition assistance that moves you towards repealing Obamacare and does not lead you towards a universe in which you wind up worse off after the Court decision than you had been had the Court not ruled for you at all.
Because here’s our challenge, if the Court rules for the plaintiffs and if we don’t do something, and assuming that the Congress holds strong and doesn’t pass Barack Obama’s proposed fix to the Affordable Care Act, which would be disastrous and we wouldn’t want them to do that, individual governors and individual state legislatures are going to face enormous pressure to become state exchanges, and we could end up with more states buying into Obamacare than we have got now because we got a good decision from the Court and we didn’t take advantage of it and capitalize on and try and reify whatever advantages we had even if we had to pay a small price in terms of transition assistance, and this is going to be potentially challenging because, if the Court holds all the way through, the scoring in Congress is going to change. The political scoring in the minds of the average person who cares about this is, well, what were we paying before if the Court hadn’t held for us, and what will we be paying at the end after some states move to be exchanges and maybe transition assistance is paid? But there will be people who will argue, “Hey, we are no longer scoring for all of these penalties and so forth, so if you’re going to re-impose payments to people, that’s a tax increase. We’re going to count that as a tax increase and we’re going to say that you’re a tax increaser and you’re doing Obamacare lite” – and that’s the way that you potentially get into a situation where nothing happens and you wind up having states creating exchanges.
So it’s a complicated chess game, but I wanted you to be aware of these many moving parts that are going to be going on. We’re going to be continuing to do our level best to try and make sure that everybody’s on the same page and keeping their eye on the long game, not doing anything that sets us back, but only advances us in the ability to impede the metastasis of Obamacare until we can actually fully repeal it. So I know that you all want to go enjoy what little bit of sunshine is left, and probably enjoy the cocktail hour and get changed for dinner, but if anybody has any questions, I’m happy to take them.
Audience Member: Can you differentiate between insurance subsidy loss and the patient subsidy loss that you had spoke about? I’m a little confused about that — you earlier talked about insurance care subsidy loss?
Heather Higgins: The way that the, what the left describes as subsidies going to people are actually subsidies going to insurance companies, which individuals get in the form of a refundable tax credit that is built into their policy, so the premium is some big number, they only have to pay a little number, and the difference is the refundable tax credit that’s based on their estimated income. One of the challenges you’re seeing, there was just a news article a couple weeks ago, I think 800,000 people are now going to get a refundable tax credit that is a fraction of the size of what they were told it was going to be because they just don’t have the systems to accurately calculate this. Most people have no clue that what we’re really talking about is subsidies to insurance companies.
Audience Member: I mean that just seems like the biggest positive spin on the whole thing that’s not coming through right now.
Heather Higgins: It is, but here’s the other interesting thing. One of the things we asked, both in the focus groups as well as in the survey, is should we just kind of be like the left, should we just insist that insurance companies can’t just cancel contracts even though they knew that this King case was coming, so in all of these recent iterations of these policies, they have escape cancellation clauses that should this King decision come down against them they can just cancel the contract. Should we just insist that insurance companies a) cannot cancel the contract, and b) cannot increase the amount of premiums that individuals would pay but in some way need to eat this? For those of you who have property rights concerns, Richard Epstein thinks this is actually legitimate in terms of a “takings” issue, but more interestingly — and I think a political solution may involve something along these lines — insurance companies don’t actually want to have to cancel on people. They know that their name is Mudd to begin with and the last thing they want to be doing is canceling on hardship cases, so there may be some political deal that can be worked out where they get some benefit for agreeing to not cancel on people. But what was interesting in the groups is if you presented them the option of just mandating that insurance companies couldn’t do that, people said no, as much as I don’t love insurance companies, all they’re going to do is raise the costs of my other insurance, so no, they shouldn’t have to be the ones to eat this cost. So, anyone else?
Audience Member: Of the many plans, the several plans that are out there in Congress right now, which of the current plans would you say people should and could have?
Heather Higgins: I think Mitch McConnell actually kind of got this right. He did an op-ed, and this was actually, you may have seen their op-eds by Senate leadership, and there was also an op-ed by the House committee that’s be appointed to do this, and both of them, because there was not time to actually lay out legislation that everybody could agree to, but there was enough time to persuade the House based on what Jones Day had told everybody, that they needed to at least make noises that would give comfort to the Court, that the House actually was serious about addressing this, and I think as you look at the different solutions that are being proposed, one of the one’s that is going to potentially have the greatest traction, and that’s why we’ve been trying to get letters from governors and op-eds from governors as well to make this point, is that the Congress, which is not trusted at all, should not be the entity to fix this. What the Congress should be doing is giving latitude to the states to free them from a lot of the — to allow them essentially to opt out of some or all of Obamacare. In order to make this particularly salable, you’d want to say opt out with the proviso that they provide, however they want to do it, transition assistance to these people so they’re not just left high and dry in the wake of the Court case. There may be some sort of tax remedy as well, but I think the push is going to be to try and get this to the states, which is the direction we ultimately want it to go. We want to get the federal government out of the healthcare business to the extent that we can and move it back to more local decision making with all of the variables that a republic and a federalist system entail. Yeah?
Audience Member: Why can’t you do a COBRA-type thing?
Heather Higgins: That was Ben Sasse’s piece and there is a discussion going on about that now. Ben, if you’ve met him, is really smart. The initial push back was that the problem with COBRA is that you, the individual, are paying in to make the plan be what it is and you’re dealing with people who don’t have the resources to pay in, so where’s the funding coming from and then how is this different, but there is an effort right now to try and figure out if something like that could be viable for the short term. And there’s division in the House, some people want to do transition for 6 months, others want to take it for 18 months to get you through the presidential election and then be able to really fix it, so I’m not sure where that’s going to break out.
Audience Member: The decision or the solution to you proposed puts enormous pressure on governors and state legislatures, correct?
Heather Higgins: Well, it would punt it to them, but it would also free them. Remember, these are states that didn’t want state exchanges and most – you actually had eight states joining the plaintiffs with Amicus briefs asking the Court to rule for the plaintiffs because they want more latitude and they don’t want to be treated like state exchanges. So the problem with federalism is you will have states like Massachusetts or Hawaii that decide to go off the deep end on the left, but that’s okay. I think they’re good examples for the rest of us, but as long as other states have the freedom to pursue other better approaches, there’re a lot of governors who would welcome that so.
Audience Member: And many of these governors are actually Republican governors?
Heather Higgins: They are. They’re largely Republican governors, yes. Anyone else? Yeah?
Audience Member: Working in medicine for 30 years, I see this as a huge opportunity to throw the insurance carriers under the bus once again. They’re already unpopular. I just know if the right will do it because what I think the public generally understands, they generally have a bad opinion of insurance carriers, but they really were one of the early ones that went in the bag for Obamacare, and they’re profiting tremendously from this, and we are later down the road now where people – Obama’s credibility on Obamacare is shot, and we’re not keeping our doctor and our rates are through the roof, so tie that together, is there a way to tie that together in the post-decision spin that would really resonate for so many in the grassroots?
Heather Higgins: Well, as I said, going after insurance companies is really important. Republicans don’t tend to because if you look, they get a lot of donations from insurance companies. The donations just don’t go to the left and, indeed, I will tell you of my personal little story. In the summer of 2010, I noticed that no campaigns were talking about Obamacare, which was insane to me. It was obviously an enormously resonant issue and, when I asked, I was told that it was Campaign 101, that if your opponent is in trouble and destroying himself you just shut up. So all of our Republican campaign consultants were telling their candidates not to talk about this too complicated issue, and obviously Democrats weren’t talking about it, so it just wasn’t happening as an issue, and I wanted it to be a mandate issue coming out of 2010. So I looked at the repeal pledges that existed and they were hideous. They were badly drawn, they were full of escape clauses, they were generally only economic, and they missed a lot of the key messaging issue points that people care about with the law, and I drafted one that would put Democrats in a box, particularly remember there were a lot of Democrats who were saying they were opposed to Obamacare, but there was nothing to prove that they were actually opposed to Obamacare, so they were getting by with it.
We took this to the NRCC. I just wanted to make sure that if I put out a repeal pledge that it wouldn’t mess up anything they were planning to do, and their response was actually, in fact, this will solve the problem – we haven’t been able to figure out how to solve it for the last 4 months. So please, this is going to be one of the few pledges that we actually request all candidates to actually sign. So I went out, I got the money, I built the web site, 3 weeks later I come back to them and I cannot get a returned phone call, and I finally get a senior Boehner staffer called me and said, look, I just want to put you out of your misery and this call never happened, but when you first talked to people, Republicans were likely to do, well, maybe get close to a majority. In the intervening 3 weeks, we’re now definitely going to get to a majority and in the last week the insurance company lobbyists have been all over leadership and nobody’s signing any pledges. So that’s why, if you look, Republican leadership has not signed the repeal pledge on Obamacare, except for McConnell, who, when he was in a primary, signed this last time.
So, yes, I think going after insurance companies is incredibly smart politics, hopefully Truth Revolt will have a field day with this, and get that into the Zeitgeist and the talking points that people use. My biggest concern is that you’re going to have certain presidential candidates on the right think that they can make political hay and do fundraising dollars by attacking certain targeted solutions as being Obamacare-lite which is a term that’s already been floated a couple of times, and then – I’m going to disparage the males in the room so I apologize, but you know how when guys go into a bar and one guy has a drink, then everybody else has to have an equivalent amount to drink, otherwise their manhood is a little bit in question here – it’s the same thing with Republican politics. If somebody says the conservative position is X, everybody else damn well better get over to wherever X is or you’re not really a conservative, and that happens a fair bit, and we have to be very careful on this particular fight that we don’t get so conservative and so pure that we can’t solve the problem and you wind up having all these states become state exchange states because they’re not getting the assistance they need to take that political pressure off of their governors and legislatures. Yep? Two more?
Audience Member: I was just going to ask you about if you think that Jonathan Gruber’s expose of the intention to put in punishment for the states that don’t establish their own subsidies, will that have any effect on the Court?
Heather Higgins: Probably not, because the Court goes based on the briefs and the rulings, right? They’re not a trial court of the fact, they’re trying to get an intention and he’s not really official, but I’m sure they’ve all seen it.
Audience Member: [Inaudible.]
Heather Higgins: No, I’m 50⁄50. I mean, the Kennedy questions were a little bit dispiriting, but on the other hand, there is a not-incredible theory that the reason the IRS changed its ruling was not just that it noticed that too few states had signed up to be state exchanges, but their decision on this, Phil Kerpen at American Commitment has done some wonderful work on this. If you look at the timing of their decision, it is very shortly after an article was written talking about how unconstitutional this aspect of the law was, that it put an undue burden on states to try to force them to sign up for state exchanges because the benefits were so high and the costs so high. So it is a legitimate question for Kennedy to ask and, in talking to some Supreme Court clerks, they told me that he not infrequently will ask the hardest question that he can that is from the point of view that is opposite from the one that he wants to take just to sort of test it. Roberts, I think we have all lost faith after the last decision, but interestingly, and I heard this from another former clerk, his name is Mudd among his fellow Justices. He lost everybody’s respect on that Court because of his last-minute flip on that decision, and he wants to redeem himself. So how he sees redeeming himself on this decision, particularly if Kennedy goes for the plaintiffs, he might come that way as well. So we will see. Have fingers crossed. Yeah?
Audience Member: After listening to you, I realize that if the plaintiffs win, it’s going to be – any solution violates the KISS principle, keep-it-simple-stupid principle. How will we possibly message this however we go about trying to explain it to people what we’re going to do?
Heather Higgins: That is a real challenge, particularly since their solution is so very simple, but you can boil it down to if you give states the ability to opt out of Obamacare, none of this is a problem, they can fix it on their own and they can fix it in the way that’s right for them because they have different populations and different problems. That’s not two words, but it’s pretty condensed, and it’s something that resonates really well. That is actually the No. 1 testing answer to give to people. So there is going to be a lot of work on this. I’m actually putting together a very large project to try and do both lobbying work within the Congress among the establishment types, different people talking to the conservative grassroots contingent, another person with – who shall remain nameless, but who has high status and stature among conservatives in the political realm – talking to all the presidential campaigns, and then a very active social media effort to try and drive our side of the case on this. That’s all a function of whether or not I can raise the funds, but conceptually I’m there, and I have faith that we’ll pull off something here so we will see. Fingers crossed.
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