So, Senate Majority Leader Mitch McConnell has done precisely what everyone expected: he has unveiled a watered-down version of the already weak House Republican Trumpcare bill. The bill is actually so weak that even Obamacare architect Jonathan Gruber is chortling that it doesn’t actually repeal Obamacare.
That’s because it doesn’t.
That doesn’t mean that every provision is bad. It does mean that the bill does little or nothing to lower premiums, undermines the solvency of insurance companies, and makes changes to Medicaid so far down the road that they may never materialize.
But the bill does do three crucial things that Republicans want: it restructures an entitlement, which is Speaker of the House Paul Ryan’s raison d’etre; it provides the necessary government cutbacks to allow the Congressional Budget Office to score savings which will then be applied to tax reform; and it allows Republicans to brag emptily about having “repealed” Obamacare. In the short term, all of that may provide a bit of salve for a largely-useless Congressional term. But in the mid to long-term, it’s actually disastrous: by preserving Obamacare’s key provisions and calling it a “free market reform,” when premiums go up and insurance companies go out of business, Republicans and the free market will take ownership. The next step will be a swing into Bernie Sanders’ Medicaid-for-all column from voters.
Here’s what you need to know.
1. The Bill Retains Obamacare’s Core Regulatory Scheme. Insurance companies will still be mandated to cover pre-existing conditions. The minute you force insurance companies to do this, they begin hemorrhaging money, since people will simply wait until they get sick to get insurance. The Obamacare scheme offers subsidies to insurance companies, raises taxes, and mandates purchase for the general public. As we’ll see, the Republican bill leans heavily on subsidies and does away with mandates and taxes, which carves a hole into the already-creaky hull of Obamacare. States would be allowed to alter the basic benefit package required within the states and the minimum contributions from insurance companies — but the result will likely be less comprehensive services, higher costs, or both. As Daniel Horowitz of Conservative Review puts it, "The bill merely loosens existing waiver authority up to the discretion of HHS for a few regulations, a provision that will not be strong enough to signal flexibility to insurers enough to reduce premiums."
2. The Bill Re-Enshrines Subsidies to Insurance Companies. As Peter Suderman of Reason magazine states, the Republicans originally opposed Obamacare subsidies for insurance companies. They even sued to stop them. The new bill not only re-enshrines those payments, it allows back payments of such subsidies. This means:
[T]hey are proposing to explicitly authorize and continue the very policy their House colleagues took the previous administration to court for pursuing. It amounts to an expansion of Obamacare, and while it may reduce uncertainty in some markets, it is unlikely to halt premium increases or fully stabilize the exchanges, which were degrading even before Trump threatened to withhold the payments. Moreover, it is an admission that Republicans do not believe they can meaningfully improve on the Obama administration's implementation of the law.
3. The Bill Provides New Entitlements For Middle-Income Americans. Obamacare gives subsidies for insurance purchase to families of four making four times the federal poverty level ($98,000). The Senate Republican bill merely reduces the cap to $86,000. But as prices rise — which they will, given continuation of the Obamacare pre-existing condition requirement and the end of the Obamacare mandates and taxes — those subsidies will not be enough. This also creates a cliff in coverage for families who make just more than the prescribed amount. The Senate version ties subsidies to income rather than age, which means that it weakens incentives for young people to buy insurance.
4. The Bill Dramatically Alters Medicaid … Down The Road. This was Paul Ryan’s great priority, and the Senate bill retains it. Originally, the House bill would begin rolling back federal funding on a need-based basis beginning in 2020 and end the open-ended funding of expansion of Medicaid enrollees. The Senate bill would now begin the rollback in 2021, after the next election cycle, and in 2025 would create a growth cap on Medicaid payments linked to inflation rather than health cost inflation. This provides savings down the road…but those will never materialize, since Congress can always dump those cuts by the side of the road. As Suderman says, “The Medicaid provisions … may best be understood as budget gimmicks.”
5. The Bill Defunds Planned Parenthood … For One Year. Medicaid would not be able to fund Planned Parenthood for a period of one year. There is no long-term plan to block Planned Parenthood funding; it’s hard to imagine that this provision is anything but a sugar cube to the Right in an attempt to sweeten a bitter drink.
6. The Individual Mandate And Taxes Disappear. Like the House bill, the Senate bill does away with the individual mandate. That’s good, except that by retaining Obamacare’s regulations and getting rid of the mandate, the Trumpcare bill would exacerbate the Obamacare death spiral. Furthermore, because the Medicaid cuts take place only down the road, this means that Republicans are basically borrowing to pay their bills.
As always, once Republicans accept the political premise of Democratic policy, they merely become Democrats in disguise. The biggest problem here is that by owning Democrat-lite policy, that disguise is ripped away, and Republicans will now be blamed for whatever comes next.
Already, several conservative senators including Mike Lee (R-UT), Rand Paul (R-KY), Ted Cruz (R-TX), and Ron Johnson (R-WI) have said they cannot support this bill. It remains to be seen whether Republicans will cave to public pressure the way so many House conservatives did, or whether they actually demand repeal.