Given that Democrats have filled the airwaves with wild claims that the bill amounts to mass murder, it may feel jarring to think of the bill as a historic achievement. But it is.
For decades, free-market health-reform advocates have argued that the single best idea for improving U.S. health care is to maximize the number of Americans who can afford to buy health insurance for themselves, instead of having to depend on the government or their employer. The Senate bill transforms the American health insurance landscape in this direction.
For four years, thanks to Obamacare, Americans who buy their own coverage have been under tremendous economic pressure. The Democrats' health law, on average, doubled the underlying cost of premiums for these individuals. Some premiums quadrupled. Deductibles and co-payments have skyrocketed as well. While the law's premium and cost-sharing subsidies cushioned the blow for those near the poverty line, childless adults making more than $30,000 a year have gotten hammered.
In many places where there were once a half-dozen insurers competing for Americans' business, individual insurance markets have collapsed. In 2018, there will be more than 1,000 counties with one or zero insurers participating in the exchanges. In 2010, the Congressional Budget Office predicted that 23 million people would be enrolled in Obamacare's exchanges by now. The actual number is closer to 10 million.
The Senate bill contains a plethora of measures that will lower premiums and bring competition back to the market. In particular, the bill would end Obamacare's destructive practice of massively overcharging young people for their coverage by overregulating the prices at which they can buy coverage. The bill provides resources to states that will help stabilize insurance markets, especially for vulnerable populations, in ways that will bring premiums down for the healthy.
The Senate bill repeals Obamacare's Medicaid expansion — an expansion that has trapped more than 12 million people in a program that researchers have shown has health outcomes no better than being uninsured. In its stead, the Senate bill offers low-income Americans robust tax credits to buy affordable private health insurance, just as those formerly enrolled in Obamacare's exchanges will be able to.
The Senate bill also substantially improves the structure of the tax credits in the House bill by adjusting their value to account for those who need more financial assistance due to ill health, old age or costly location.
The end result will be a thriving, consumer-driven individual insurance market, with as many as 30 million participants, available to the healthy and the sick and the young and the old, whose successes will lay the groundwork for future efforts at entitlement reform.
But that's not to say that the Senate bill punts entitlement reform into future legislation. The bill not only replaces Obamacare; it also reforms the legacy Medicaid program by giving states the option of pursuing a block grant or a per-capita allotment for their Medicaid populations.
Block grants have long been a goal of conservative policy reformers; per-capita caps were first proposed by President Bill Clinton in 1995. Democrats are screaming about how per-capita caps will reduce Medicaid spending — by about 1 to 2 percent over the next decade — but they are silent about the dozens of tools that the Senate bill gives states to manage their Medicaid programs more efficiently and effectively.
One note of caution: The Senate bill does not at this moment contain a continuous-coverage or waiting-period provision to compensate for the lack of a mandate. This is something that the bill's authors are likely to include later but in the near term will worsen the score expected to be released by the Congressional Budget Office next week.
That CBO score was already going to be bad on coverage numbers because the CBO won't give Republicans credit for the way they improve health-insurance markets. The CBO believes that by merely repealing Obamacare's individual mandate, Republican legislation will reduce the number of people with health insurance in 2026 by about 18 million.
Credible experts on both sides of the aisle are skeptical of the CBO's projections. The agency has yet to adjust its overly static thinking. That means GOP senators will soon have to endure a new flurry of headlines claiming that their bill will "reduce" the number of people with health insurance by 18 million or more.
Senate Republicans should stand strong. If this bill passes Congress and is signed by the president, it's likely that more people will have health insurance in five years than do today but in a market with lower premiums, lower taxes and a more fiscally sustainable future. History will remember these Republicans for that.