Republicans have come up with an innovative, new plan to repeal Obamacare.
Instead of cutting health-care spending for the poor and letting insurance companies once again discriminate against the sick in the name of personal freedom, they want to cut health-care spending for the poor and let insurance companies once again discriminate against the sick in the name of state freedom.
Like I said, it's innovative.
Now, there are two things you need to know about this last-ditch effort to eliminate Obamacare.
The first is that Republicans only have until Sept. 30 to do so. That's when their ability to pass a health-care bill with just 50 votes in the Senate instead of the 60 it takes to beat a filibuster will turn into a legislative pumpkin, assuming that they want to preserve this power for their tax cuts later on (which, it goes without saying, they do).
The second is that this latest plan, which they've settled on by default since they've already voted down all their others, might actually go further to cut health-care spending than their previous ones. We can't say for sure, though, because the nonpartisan Congressional Budget Office won't have time to conduct a full analysis beforehand.
So what do we know?
Well, the big picture is this plan, co-sponsored by Sens. Lindsey O. Graham (R-S.C.) and Bill Cassidy (R-La.), would take all the money Obamacare currently spends on subsidizing health insurance and expanding Medicaid, and give some of it back to the states directly. This is what is known as a “block grant.” But there are a couple of key differences here.
The first is that this money would come with far fewer strings attached than it does under Obamacare. States, for example, could go back to letting insurance companies charge sick people more — good luck affording coverage if you have a preexisting condition like diabetes, or depression, or … acne? — or de facto do so by selling skimpy plans to healthy people and more expensive ones to everybody else. Not to mention that they wouldn't be required to use this money to help cover people like they are now. If they wanted to, they could put this money toward things like paying providers or keeping out-of-pocket costs down — worthwhile goals, but not ones that would give insurance to somebody who doesn't have it.
The second difference is who would get the money. Cassidy is worried it's “not fair” that "37 percent of the revenue from the Affordable Care Act goes to Americans in” the “four states” of California, New York, Massachusetts and Maryland. He has a point — just not for the reason he thinks. The important thing to understand is that these states get so much of the spending not only because they have a lot of people, but also because they have a lot of people on Medicaid after they accepted Obamacare's expansion of the program. This would be a much smaller share of the total, though, if Texas and Florida had done the same. But they didn't, and neither did a lot of Republican-controlled states.
Poor people in red states, then, really are getting left behind by a system that, thanks to the Supreme Court, allows their governors to decide to leave them behind.
But rather than try to get these states to accept the mostly free money the federal government has been dangling in front of them, Republicans have an alternative approach. To rectify the injustice of, say, Idaho's government deciding not to expand Medicaid like Illinois, Republicans would simply take money from Illinois to give to Idaho. No, really. Cassidy-Graham wouldn't give states the same amount of money in block grants that they got from Obamacare, but would rather divvy the whole pot up based on a fairly esoteric formula that would benefit rural states and ones that didn't expand Medicaid at the expense of urban states and ones that did.
California and New York would, according to the left-leaning Center on Budget and Policy Priorities, be the biggest losers under this redistributive scheme, while Texas and Georgia would come out the most ahead.
The third difference is how much money there'd be at all. It turns out that the block grants wouldn't just move money from blue to red states. They'd also cut how much money there was in the first place.
Indeed, the Center on Budget and Policy Priorities estimates that, in 2020, Graham-Cassidy's block grants would start out $26 billion smaller than what states would have gotten from Obamacare, and would then grow so slowly that by 2026 they'd be $83 billion smaller. But that 34 percent cut in 2026 is nothing compared to what would happen in 2027: a 100 percent cut. Yes, that's right. The block grants would disappear entirely in 10 years. Sure, Congress might renew them at that point, but it really might not. That'd still be a lot of money to come up with — money that Republicans would much rather use on, say, tax cuts.
The final difference is what it would do with Medicaid. That's nothing less than a fundamental transformation of it. Like previous Republican plans, you see, it would turn Medicaid from an open-ended program that grows as need does to one that's capped on a per capita basis and only grows according to inflation — and a particularly low rate of it, at that. The nonpartisan Congressional Budget Office estimates that this, together with an end to Obamacare's Medicaid expansion for the working poor, would result in Medicaid spending being 26 percent lower in 10 years, and 35 percent lower in 20 years.
None of this is really new, of course.
Cutting Medicaid for the poor, health insurance subsidies for the middle class, and protections for the sick is what almost every Republican plan would do. What's different about Cassidy-Graham, though, is just how disruptive it would make this. That's because it wouldn't keep any of Obamacare's structures in place, not even watered down versions, like other Republican plans would.
Instead, it would force individual states to set up their own health-care programs, give them a lot less money to do so than they're getting now, and, to top it off, force them to plan for the possibility of losing it all 10 years from now. They would ostensibly be doing this out of fealty to federalism — what could be better than letting states decide for themselves if they want to make insurance unaffordable for sick people? — but this freedom to not cover as many people isn't one that a lot of governors want. Even Republicans John Kasich of Ohio, Brian Sandoval of Nevada and Charles Baker of Massachusetts have come out against it.
After all, you can't cut this much health-care spending without costing tens of millions of people their coverage. We won't know if that'd be something like 20 million or 30 million until the CBO has time to run the numbers, but we know those are probably in the ballpark.
Meet the new Trumpcare, same as the old Trumpcare.