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Obamacare repeal tax plan could hand GOP a double victory

  • Senate Republicans are now putting an Obamacare repeal into their tax reform bill.
  • That seems suicidal since the repeal effort failed this summer.
  • But treating Obamacare like a tax could be the key to getting the repeal and tax reform all at once.
President Donald Trump, center, speaks as he meets with Republican senators about health care in the East Room of the White House of the White House in Washington, DC on Tuesday, June 27, 2017. Seated with him are Sen. Susan Collins, R-Maine, left, and Sen. Lisa Murkowski, R-Alaska, right.
Jabin Botsford | The Washington Post | Getty Images
President Donald Trump, center, speaks as he meets with Republican senators about health care in the East Room of the White House of the White House in Washington, DC on Tuesday, June 27, 2017. Seated with him are Sen. Susan Collins, R-Maine, left, and Sen. Lisa Murkowski, R-Alaska, right.

As if the Republican tax reform efforts weren't facing enough hurdles and moving parts already, the Senate Finance Committee has put repealing Obamacare into Senate GOP bill as well.

Yes, that would be the same Obamacare repeal idea that crashed and burned over the summer for the GOP asthree Republican Senators joined Democrats to defeat it.

So is the GOP leadership in the Senate deliberately trying to derail its crucial tax reform efforts by shoving an already proven loser into the bill?

Or is this a case of the Republicans finally realizing that their tax and health insurance agendas are and always have been one in the same?

Call it "The Revenge of Chief Justice John Roberts"... or at least "The Lesson of John Roberts, Five Years Later."

That's because it was Roberts who nailed it by accurately calling Obamacare a tax in his landmark decision upholding the Affordable Care Act in 2012. And until now, Republicans have been clueless about the opportunities that distinction gave them in their fight against Obamacare and beyond.

Because not only is the Obamacare insurance mandate a tax, it's a tax that hits the middle class and lower middle class hard. That's especially true for people in high-cost states and cities where higher incomes disqualify them from getting subsidies to buy Obamacare plans. Younger and healthier Americans are required by the ACA to shell out their money for higher priced premiums than the old major medical plans that used to be popular for their demographic. The idea of the mandate is to get more of them signed up and paying for health insurance so the insurance companies have more resources to cover older and/or sicker patients Obamacare requires them to cover.

Now, there is an argument to be made that those young and healthy people still should sign up for Obamacare plans. For many of them, the added upfront costs would be worth it once they do get sick or get into an accident. But even with the current spike in Obamacare signups, the fact is that the upfront cost is still a big turnoff to millions more healthy Americans than the CBO and a lot of the other so-called experts predicted. And that sticker shock has always been the ticket for the GOP to repeal the ACA. Now that the premium sticker shock is being framed in the language of tax cuts, the Republicans may have a winning message.

Obamacare has always sounded like a tax, acted like a tax, and helped one group of Americans at the expense of another just like so many other taxes throughout our history. The fact that it's taken so long for the so-called anti-tax Republicans to realize this and focus their anti-Obamacare message along those lines is ridiculous.

Now, based on the statements we heard Tuesday night, the GOP seems to be getting it not only as a matter of policy but by using the right terminology as well. Here's what Senator Tom Cotton, R-Ark., said that was particularly enlightening:

"Repealing the mandate pays for more tax cuts for working families and protects them from being fined by the IRS for not being able to afford insurance that Obamacare made unaffordable in the first place. I urge the House to include the mandate repeal in their tax legislation."

And then Texas Republican Senator John Cornyn put it even more plainly and effectively by saying, "We're going to repeal the tax on poor Americans."

Cotton and Cornyn are finally making a winning argument against Obamacare by referring to it as a tax and making it a matter of class, fines, affordability, and -- worst of all -- the IRS.

This is a winning message compared to the endless cries of how Obamacare deprives people of their right to be uninsured, will lead to rationing, and is a government takeover of health care. No matter how accurate those other arguments may be, they sound too much like scare tactics and pale in comparison with a simple presentation of Obamacare as a costly tax burden to those who can't afford it.

There's a refreshing bit of honesty here as the Republicans are realizing that they can't present a major tax reform bill to the public without tackling the major tax that is Obamacare along with it.

But won't including the repeal in the tax reform bill doom it to failure?

After seeing what happened in July, the knee jerk answer is "yes." But the strategy could easily produce a different outcome for two reasons.

First, the renewed effort to present the Obamacare repeal as tax relief for the middle class and lower middle class could be what it takes to get Republican senators like Maine's Susan Collins and Alaska's Lisa Murkowski on board. The lower middle class makes up a very large part of both of those senators' constituencies and including the repeal in the tax reform bill suddenly presents many of their voters a new tax, and paperwork, break.

Before now, Obamacare was being referred to more as a government program and not so much as a tax even by Republicans. Showing Collins and Murkowski how the ACA hurts a lot of their own voters may not get them to flip their votes on the repeal, but it at least improves the odds. And since it's likely their objections to the repeal have much more to do with Medicaid than Obamacare, there's always been a chance to make a deal with Collins and Murkowski based on a separate deal on Medicaid.

The second reason is that the other Republican who voted against the repeal, Arizona Senator John McCain, has been a much stronger supporter of the tax reform plan. Lumping the Obamacare repeal into this bill and essentially letting McCain know he can't have one without the other could also move him back on the side of the majority of his party.

And the on-the-fence on tax reform Republican Senator Rand Paul of Kentucky is the one who made the first call to include the repeal in the bill. Doing so virtually guarantees his support.

No, this move hardly means that tax reform and the Obamacare repeal are a lock. But it does breathe new life into a repeal effort that seemed doomed and helps the still mostly rudderless congressional Republicans hone their message. And when you consider the cases of people like Senators Paul, Collins, and Murkowski, shoving an Obamacare tax repeal into the reform bill is far from the suicidal move some pundits already believe it is.

But this move does prove that Chief Justice Roberts' gift to the Republicans fighting taxes and Obamacare has finally been accepted by at least the Republican Senate. Let's see if the rest of the GOP and a critical mass of the voting public follows suit.

Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

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