The meandering path of healthcare legislation

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Republicans have yet to make good on their oft-repeated promise to “repeal and replace” GovCare. If their efforts fall short, look for bipartisan legislation to bail out the individual healthcare insurance (HCI) business, which provides mandated HCI coverage to working age Americans who don’t either (a) work for employers who provide group healthcare plans, or (b) qualify for Medicaid coverage.

There is still a chance for a different outcome, and another Republican healthcare bill may be put to a vote in the Senate this week. What does the Graham-Cassidy bill provide? What are its prospects? Should fiscal conservatives support it?

I. Back story - As a Senate showdown on healthcare neared before the August recess, we predicted (“at the risk of sounding like cockeyed optimists”) the passage of some kind of Republican healthcare bill. A conference committee would then resolve the differences between the Senate bill and the House bill that had been passed earlier. Fish or cut bait on healthcare bill, 7/24/17.

After a motion to take up healthcare legislation passed 51-50 (with the vice president casting the tie-breaking vote), several alternative bills were considered and rejected. The last one was a so-called “skinny repeal” bill (basically a shell designed to move the subject on to a conference committee). GOP Senators Susan Collins (ME), Lisa Murkowski (AK), and John McCain (AZ) voted against the SRB, resulting in its 51-49 defeat. Hopes for Obamacare deal fade in Senate, Robert King, Washington Examiner,
8/1/17.

GOP Senators Bill Cassidy (LA), Lindsey Graham (SC), Dean Heller (AZ), and Ron Johnson (WI) began working on yet another Republican bill to “repeal and replace” parts of GovCare, but we initially didn’t see much chance of success. Oops, that’s not what was supposed to happen, Section G,
9/11/17.

More realistically, efforts are underway to prop up the individual healthcare insurance business on government-run exchanges with more taxpayer dollars so this part of the healthcare system won’t go into a “death spiral” and collapse.

Having picked up more support than we were expecting, Graham-Cassidy may have a shot at Senate passage. The time window for using the reconciliation process to avert a filibuster will close on September 30 (per a ruling by the Senate parliamentarian), however, so if there is to be a vote on the bill it must take place this week.

II. Policy – No one is citing the bill number for the Graham-Cassidy proposal, as the bill hasn’t yet been introduced. On Sept. 23, Fox News aired comments of HHS Secretary Tom Price that the authors of the bill were still working on it. A section-by-section outline (23 pages) is making the rounds, however, and numerous sources have recited what they deem to be the key provisions. Here’s our understanding of the proposal.

GC repeals the HCI mandates for individuals and larger employers, and it also repeals some tax levies imposed by the Affordable Care Act such as the tax on medical devices. That’s good, in our opinion.

States would be given the option to require nondisabled, non-elderly, non-pregnant individuals to satisfy a work requirement as a condition for receiving Medicaid medical assistance. This also seems like a plus.

The current Medicaid fund allocation procedures (which heavily favor CA, NY, MA and MD) would be modified by phasing in a per capita limit by 2026. Further, states would be given an option to receive block grants for traditional Medicaid. The principal incentive for shifting to block grants would be enhanced state flexibility as to how the funds could be spent.

In lieu of the funds available under existing law for Medicaid expansion (which some states have opted for, primarily at federal expense, and some states have rejected thus far) and other subsidy payments provided by the Affordable Care Act, the federal government would distribute the following ACA funding rebates. (We haven’t attempted to decipher the provisions re division of these payments among the several states.)

Screen Shot 2017-09-24 at 4.06.55 PM

Congressional Budget Office scoring of GC has been requested on an expedited basis, and a preliminary report is expected this week. The CBO analysis will probably indicate a marginal reduction in federal healthcare outlays, tax revenue losses, and little if any net deficit reduction.

The CBO will project a substantial reduction in the number of Americans with HCI coverage, as in the case of all the other GOP healthcare bills that have scored, due to the assumption that many Americans wouldn’t voluntarily acquire HCI coverage or even sign up for Medicaid if the individual mandate was repealed.

A DC-based consultancy named Avalere Health has done a study re the reduction in healthcare payments to states under Graham-Cassidy. The study reportedly indicates an overall reduction in payments to the states of $215 billion through 2026, with 2/3 of the states losing funding and 1/3 of states gaining funding. Washington Times,
9/20/17.

This relatively modest loss of federal funding for state healthcare programs hasn’t been cited in other reports (it will be interesting to see the CBO estimates), but it harmonizes with a statement (emphasis added) by one of the GC sponsors as to the intended effect of this legislation. Sen. Lindsey Graham: We’ll get the votes for Obamacare repeal bill, David Sherfinski, Washington Times,
9/24/17.

I’m very excited about it. We finally found an alternative that makes sense — take the money and power out of Washington — the same amount of money [we] would have spent on Obamacare and let states design systems.

The reduction in federal outlays for Medicaid would be substantially larger due to a 15% cap on the amount of ACA rebates that could be expended on Medicaid benefits as opposed to other healthcare programs. Avalere has posted a state-by-state recap showing the loss of Medicaid funding: $713 billion for 2020-26 or $3,573 billion for 2020-36 (this reflects the dubious assumption that the $200 billion of ACA rebates in 2026 would be reduced to zero in 2027 and thereafter). Avalere Health, press release,
9/22/17.

Effective cancellation of the plan to expand Medicaid seems beneficial. Medicaid was already a very costly and poorly managed (in part due to the division of management responsibility between two levels of government) program. It’s a mystery why anyone thought it should be expanded to provide HCI coverage (at least on paper) for millions of additional Americans.

III. Politics – The key selling point for Graham-Cassidy is that it represents the last chance to partially roll back GovCare. Unless action is taken this week, any further efforts along these lines could be blocked by a Senate filibuster. Republicans would be left looking disorganized and ineffectual, a bad omen for the mid-term elections. One last Obamacare try, Wall Street Journal, 9/14/17.

The question is whether a last-ditch effort by Sen. Graham and a few colleagues represents an improvement over the Obamacare status quo. The answer is yes. ***
The budget procedure that allows the Senate to address the law with a 51-vote majority expires on Sept. 30. Obamacare’s exchanges will continue to deteriorate, and Democrats will blame Republicans for every premium increase from here to November 2018.

Staunch Democratic resistance to Graham-Cassidy is a given, with the immediate goal being to preserve the GovCare status quo by blocking any substantial alterations of the Affordable Care Act.
Ibid.

One lesson for moderate Republicans is that no dilution or revision will placate the left, which has panned Graham-Cassidy as evil and heartless sight unseen. 

Some big political guns have slammed Graham-Cassidy, including a former president. Obama: “Aggravating” to see GOP try to unravel Obamacare, Solange Reyner, newsmax.com,
9/20/17.

Now, the legislation that we passed was full of things that still need to be fixed. It wasn't perfect. It was better. And so when I see people trying to undo that hard-won progress, for the 50th or 60th time, with bills that would raise costs, or reduce coverage, or roll back protections for older Americans or people with preexisting conditions — the cancer survivor, the expecting mom, or the child with autism or asthma for whom coverage once again [would] be almost unattainable — it is aggravating.

Representatives of healthcare providers and insurers are said to oppose any fundamental changes in the healthcare law, i.e., what they want is more taxpayer money to keep the individual HCI business afloat. Senator Chris Coons interview on Brett Baier show, excerpts,
9/21/17.

. . . I listened earlier today to the leaders of Delaware's healthcare community, the head of our largest hospital, a representative from the American Cancer Society, folks who are charged with delivering healthcare and folks who advocate for those who receive healthcare. They were unanimously opposed to this proposal. That's also true at the national level. America's doctors, through The American Medical Association, America's hospitals through the American Hospital Association, the AARP which advocates for America's seniors, are all opposed to this bill because they see it ending Medicaid as we know it, putting a cap on how much the federal government will spend on any individual with Medicaid going forward, and they see it as creating chaos in the individual markets.

Some media personalities have slammed Graham-Cassidy, notably Jimmy Kimmel on his late evening talk show. Jimmy Kimmel blows healthcare feud with Sen. Bill Cassidy wide open, Washington Examiner,
9/21/17.

"This guy, Bill Cassidy, he just lied right to my face," Kimmel said during his monologue Tuesday. "For lots of people, the bill will result in higher premiums, and as far as lifetime caps go, the states can decide on that, too — which means there will be lifetime caps in many states."

Liberal academics have also been circling their ideological wagons. The Graham-Cassidy show is like “Jaws” – and you’re the swimmer, Alan Blinder (economics professor at Princeton University), Wall Street Journal,
9/21/17.

Graham-Cassidy is a mean-spirited and totally partisan effort, but it is not frivolous. There is a real chance it could squeak through the Senate with 50 votes and a tiebreaker from Vice President Mike Pence, sail through the House, and deprive tens of millions of Americans of health coverage over the coming decade. It’s time to sound the shark alarms on Amity Island.

Some Democrats are itching to go back on the offensive, as was demonstrated by the response to the “Medicare for all” bill (
S. 1804) introduced by Senator Bernie Sanders on 9/13/17. Their argument is not that single payer would work better than the current system (let alone a more market-based approach), but simply that healthcare is a right so no one should have to pay for it.

A bevy of co-sponsors quickly materialized, including three “speculative candidates” for the 2020 Democratic presidential nomination, Sens. Cory Booker (NJ), Elizabeth Warren (MA), and Kamala Harris (CA), and the Democratic reaction in the House was equally telling. Six United States senators are ALL IN for socialized medicine, Chris Panodolfo, conservativereview.com,
9/12/17.

A companion bill in the U.S. House introduced by Rep. John Conyers, D-Mich., has attracted 177 Democratic co-sponsors, nearly two-thirds of the caucus. [Rep. Lisa Blunt Rochester of Delaware wasn’t on the list.]

Never mind that S. 1804 provided no indication of how the massive cost of universal healthcare would be funded. Bernie Sanders’ single-payer healthcare plan is a joke, Philip Klein, Washington Examiner,
9/14/17.

The Sanders bill would add hundreds of millions of people into an already financially-strapped program while making it more generous -- within four years. At no point in the legislation does he describe how he would expect to pay for this ambitious idea or deal with massive disruption it would mean for businesses, workers, and those trying to access care.

OK, there’s no chance for bipartisan cooperation, but Republicans are in the majority and they can avert a filibuster (by acting before September 30). Doesn’t that mean Graham-Cassidy should pass, after which a conference committee would craft the legislation to be presented to Congress for final approval on a “fast track” basis.

Yes, if Senate Republicans stuck together, but with a 52-48 majority there is little margin for error. If a few GOP senators were disposed to vote against Graham-Cassidy, it wouldn’t be hard for them to rationalize doing so.

•Moderate Republicans - GC wasn’t developed through “regular order” – lacks bipartisan support – hasn’t been comprehensively scored by the Congressional Budget Office –would result in millions of Americans losing HCI coverage – might enable states to water down the principle that HCI can’t be refused for patients with preexisting conditions.

•Conservative Republicans – GC would leave much of the ACA structure in place, so after all this effort we would still face voter wrath for not making good on our promise to repeal GovCare.

Three or more GOP defectors would ensure defeat of Graham-Cassidy, and there are at least four candidates for this role - the three defectors in July (Collins, Murkowski & McCain) and Senator Rand Paul (KY). The Republicans who may save Obamacare, Karl Rove, Wall Street Journal,
9/20/17.

Having recently served notice that he isn’t joined at the hip to congressional Republicans, what role is the president playing in this matter? In recent days, he has:

•Publicly supported Graham-Cassidy, as in this response to a question at a joint appearance with the president of Egypt. GovCare has been a disaster and is collapsing - something needs to be done - GR will give more authority to the states – that’s better than the previous repeal and replace approach. Trump and VP Pence speak about Graham-Cassidy bill, youtube.com, video (1:13 TO 4:43),
9/20/17.

•Attempted to influence wavering GOP senators, notably the junior senator from Kentucky, through public “tweets” and private phone conversations. Trump urges “negative force” Rand Paul to support GOP’s last-ditch healthcare bill, Anna Giaritelli, Washington Examiner,
9/20/17.

The president’s appeal won’t necessarily be heeded. Rand Paul responds to Trump: “I won’t be bribed or bullied” into supporting Graham-Cassidy healthcare bill, Al Weaver, Washington Examiner,
9/22/17.

Will Graham-Cassidy garner a majority, go down to defeat, or not be voted on at all? Supporters of the bill were disheartened by Senator McCain’s Sept. 22 announcement that he planned to vote “no” again. But as Yogi Berra once said, “it ain’t over till it’s over.”

IV. Assessment – Forget the politics, does Graham-Cassidy merit support from the standpoints of (a) legislative process and (b) policy substance?

#PROCESS –The bill is still being written only days before senators will be asked to vote for it – no committee proceedings – zero bipartisan cooperation - CBO analysis won’t be ready in time – Sept. 30 deadline is based on obscure technicalities of the reconciliation process (which is being used to avert a filibuster). There must be a better way for Congress to do the people’s business!

SAFE suggested earlier that multiple bottlenecks like this one were developing and suggested a solution. Fixing the fiscal problem: work on what matters,
6/26/17.

If the work of Congress was ahead of schedule, it might be OK to take August off, but that’s simply not the case. Not only are the detailed appropriation bills for fiscal year 2018 lagging, but bills need to be passed (or at least proposed and debated) on healthcare, tax reform, and half a dozen other subjects.

There is no way to go back in time, however, and cancel the August recess. Likewise, it’s hard to imagine achieving a spirit of bipartisan cooperation on healthcare legislation unless one side of the other declares unconditional surrender – which, as already discussed, neither side seems disposed to do.

True, Senator Lamar Alexander (R-TN) proposed bipartisan proceedings on the Senate Health, Education, Labor and Pensions [HELP] Committee aimed at shoring up the individual HCI business. Lamar Alexander wants bipartisan fix by end of next week, Robert King, Washington Examiner,
9/6/17.

The HELP committee proceedings have stalled, however, most likely due to the inflexibility of Democratic members of the committee. The panic on Graham-Cassidy, Wall Street Journal,
9/21/17.

Tennessee Senator Lamar Alexander . . . negotiated in good faith with Democrat Patty Murray to make modest repairs to insurance markets for 2018. There were hearings. There were meetings. Yet this week Mr. Alexander pulled the plug because they had “not found the necessary consensus.” Democrats claim Mr. Alexander was coerced by GOP leaders and the White House, but in our experience the Tennessean doesn’t give up easily or on anyone’s orders. Senate Democrats refused in the talks to make more than de minimis changes to Obamacare’s waiver process to give states more regulatory flexibility.

#POLICY MERIT – Graham-Cassidy is hardly the best approach imaginable for improving the healthcare system, nor would it constitute a “repeal” of the Affordable Care Act. Instead of comparing the bill to some vision of theoretical perfection, however, it should be compared to a continuation of the status quo.

We appreciate the repeal of the individual and employer mandates, tax on medical devices, etc., these are steps in the right direction.

Although GC wouldn’t materially reduce the federal deficit through 2026 (or probably thereafter), it at least wouldn’t increase the deficit.

Shifting control over healthcare programs from the federal government to state governments is hardly a panacea, but there would be notable advantages. (1) Minimize managerial overlap in the current healthcare system, which promotes duplication of effort and a lack of accountability. (2) Make decision-makers more accessible to the people whose lives are being affected, e.g., a Delawarean will find it easier to contact an official in the First State than to interact with an unknown bureaucrat in DC.

The current healthcare status quo is inherently unstable. Note the title of SAFE’s page on this subject:
“Healthcare – Something Must Change!”

If Republicans fail to move the needle in favor of a more market-oriented, patient-centered healthcare system while they are in the ascendancy, the changes will predictably move in the opposite direction. Lindsey Graham: Obamacare repeal is “Bernie Sanders’ worst nightmare,” Kimberly Leonard, Washington Examiner,
9/18/17.

"This is Bernie Sanders' worst nightmare," Graham said in an interview on Breitbart News Saturday on SiriusXM, speaking about his healthcare proposal. "It's either this or we're going to Obamacare and Berniecare. Now, Berniecare is full-blown single-payer socialism. It is his dream and that's where Democrats are going."

Critics have slammed Gramm-Cassidy as the polar opposite of single payer, which arguably suggests the best answer must lie somewhere in the middle, but the asserted equivalency isn’t supportable. Only one of two new healthcare proposals qualifies as “extreme,” Jonah Goldberg, townhall.com,
9/20/17.

Graham-Cassidy is very close to the kind of legislation we would have ended up with if Republicans had an idea of what they wanted from the get-go and the Democrats were interested in compromise. But we live in a time when extremism is defined as not getting everything you want.

* * * * *


In sum, the Republicans are out of time on this issue. They should move ahead with Graham-Cassidy, and we hope they will be successful.


**********FEEDBACK**********

•It be dead.  The RINOs won. – SAFE director

Democrats seem far more successful in maintaining party discipline, on this and other issues. Wonder what their secret is.

•Whatever McCain says is fine with me.  I'll stick with Arizona's leader. – Retired finance manager

His statements on the subject have hardly been a model of consistency. McCain’s MANY promises to repeal Obamacare, video (1:48), youtube.com, 7/20/17.

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