President Trump speaks at the White House. (Jabin Botsford/The Washington Post)

Michael A. Needham is chief executive of Heritage Action for America.

Anyone who thinks real compassion is found in a federal government program hasn’t spent much time at the post office. That’s the central insight motivating the inclusion of the state waiver from the Obamacare program in the House-passed American Health Care Act. And it’s the reason President Trump was wrong to call the bill “mean.”

Almost everyone is frustrated with the process of repealing and replacing Obamacare that has played out this year. Conservatives are most justified in their frustration. After consistently being told the Republican Party was unified in the objective of repealing Obamacare lock, stock and barrel, we’ve had our worst suspicions confirmed about the cynicism of so many in Washington.

That frustration, however, does not let us off the hook for cool-headed analysis of the legislation being formed.

The House-passed American Health Care Act would be an important step forward in taking power away from indifferent federal bureaucrats and giving states the opportunity to truly experiment in how they insure older and sicker patients.

Some states, no doubt, would opt to stay within the onerous progressive mandate structure of Obamacare. Their citizens would, unfortunately, experience the cold bureaucracy of government programs.

Other states, however, would choose to loosen the bureaucratic regulations imposed by Obamacare in favor of allowing innovation and personalized products that cover only what is needed by the consumer, not what is prescribed by Washington. Think of what a difference that would be from the status quo under Obamacare, in which one-third of counties now have only one insurer on Obamacare exchanges.

This is not to say the Senate should rubber-stamp the House-made product. But as the Senate does its work, conservatives are going to be watching closely three critical demands.

First, it is vital that the Senate preserve the flexibility to allow states to get out from under Obamacare. Many conservatives would prefer the Senate maintain and improve the deal brokered by House Freedom Caucus Chairman Mark Meadows (R-N.C.) and Rep. Tom MacArthur (R-N.J.). Others suggest jury-rigging Obamacare’s Section 1332, which was created to allow a state such as Vermont to move past Obamacare toward single-payer insurance.

Regardless of which path is taken, conservatives will not support any legislation that does not empower states to move out of the costly and burdensome rules and regulations of Obamacare.

Second, the Senate absolutely must maintain the significant entitlement reforms made in the House bill to Medicaid. Obamacare’s unsustainable expansion of Medicaid to able-bodied adults at an enhanced federal match rewarded states that prioritized Medicaid populations least in need over states that declined the expansion to focus their programs instead on the most vulnerable. The House bill’s effort to roll back the enhanced match for this population and establish per capita caps on Medicaid spending would end these perverse incentives and begin the work of establishing a sustainable financing model for Medicaid. This entitlement reform was among the bill’s greatest achievements, an important point in favor of an Obamacare repeal conservatives otherwise rightly deemed insufficient.

Finally, some are suggesting the Senate will not repeal all of Obamacare’s taxes due to the Senate’s Byrd Rule, which requires that the bill not increase the deficit. The concern stems from the Senate’s misguided inclination to keep additional Obamacare spending on the books. If that happens, senators will argue they have no choice but to preserve some of Obamacare’s financing provisions. That will be a non-starter for a lot of conservatives.

The American Health Care Act does not fully repeal Obamacare. Passing it will not fix America’s broken health-care financing system. That task will remain urgent. For the United States to have health insurance markets worthy of our nation, it will require ending the enormous tax preference given to purchasing health insurance negotiated by your boss rather than yourself. It will require freeing the country from the regulatory burdens created by Obamacare and decades of other forms of federal meddling.

Nonetheless, the House-passed American Health Care Act was a step forward. And its most important insight — that true compassion lies not in Washington, but across this country in local communities where neighbors know and care for each other — should be the central insight the Republican Party brings to all future debates.