Avik Roy is president of the Foundation for Research on Equal Opportunity and a former policy adviser to Mitt Romney, Rick Perry and Marco Rubio.
A group of Republican senators, led by Bill Cassidy (La.) and Lindsay O. Graham (S.C.), have revived GOP efforts to repeal and replace Obamacare. Their bill has a number of attractive attributes: It would repeal Obamacare's individual mandate, for example, and make important reforms to Medicaid. But Cassidy-Graham also has an important, albeit fixable, flaw — what we might call "asymmetric federalism."
The core idea in the bill is to take the money Obamacare spends on expanding coverage to the uninsured and give it to state governments in the form of block grants. States, in turn, could use these block grants to address the health-care needs of their populations.
It's an attractive idea, in theory. Let states become laboratories of democracy, with some states using market-based approaches and others using government-centered ones — and then we'll see who does best at covering the uninsured.
But Cassidy-Graham, in its current form, would put a heavy Washington hand on the federalism steering wheel. The bill would make it relatively easy for blue states to expand the role of single-payer health care, while making it rather difficult for red states to achieve market-oriented reforms. Lawmakers would be wise to revise the law so that it is more evenhanded.
Single-payer health care, in which the role of private health insurers is ultimately eradicated, has become the cause celebre of the Democratic left. Vermont Sen. Bernie Sanders's "Medicare for All" bill has more than a dozen co-sponsors, including many Democrats who may seek the White House in 2020.
Under Cassidy-Graham, Democrats in a state such as New York could — in a single stroke — take their new block grant and use it to wipe out the private individual insurance market and replace it with a single, government-run insurance program.
But Texas Republicans wouldn't have an equally easy path to installing market-oriented reforms. Instead, the Lone Star State would have to apply, hat in hand, to the Centers for Medicare & Medicaid Services for a waiver from Obamacare's federal insurance regulations. Under a Republican president, such waivers may be granted. But under a Democratic White House, they are just as likely to be thrown in an underground file cabinet and locked away.
Practically speaking, because Cassidy-Graham block grants would begin in 2020, states would have to decide by the end of 2018 how to administer the new funds. That's 15 months from now. Given the short timeline, many states that would otherwise be eager to apply for waivers from Obamacare's regulations may find themselves instead pressured into replacing their private, individual insurance markets with an even larger Medicaid program.
It would be ironic, indeed, if a Republican health reform bill led to more Americans being on government health insurance than there are today. But that is a likely consequence of Cassidy-Graham in its current form. And it matters because private insurers consistently deliver better health outcomes for patients than do government-centered programs such as Medicaid.
Fortunately, this legislative flaw can be addressed. Lawmakers can tweak Cassidy-Graham's legislative language to require that states use block grants to support the private-sector individual insurance market and health savings accounts, rather than government-run insurance programs. It could also prohibit states from using the funds to expand Medicaid or enact Medicaid-like programs with a single insurance company. In doing so, blue states could continue to regulate private insurers as much as they like, but Washington would no longer be giving their single-payer dreams an advantage over the aspirations of more market-oriented states.
It's understandable that Cassidy-Graham has a leftward tilt. Cassidy, in particular, worked hard to solicit bipartisan support for his reform ideas, and allowing blue states the opportunity to expand government health care was part of the sales pitch. But now that Democrats have declared their universal opposition to Cassidy-Graham, Republicans should be true to their principles and expand coverage through competitive markets.
For nearly eight years, Republicans in Congress have pledged to replace Obamacare with patient-centered reforms. But the only way to achieve truly patient-centered reforms is to put patients back in control of the health-care dollars that Washington spends on their behalf.
Cassidy and Graham deserve enormous credit for developing legislation that could make historic progress toward this goal. They should do everything possible to get reform right.