Five Things You Need To Know About The Graham-Cassidy Obamacare Replacement Bill

Louisiana Republican Sen. Bill Cassidy’s health care bill, which focuses on setting states free to modify the ramshackle Obamacare system as they see fit while repealing the current federal insurance mandates, has been largely lingering on the sidelines of the congressional health care debate while other efforts at a repeal-and-replace solution have moved forward.

But with a Sept. 30 deadline approaching beyond which Obamacare can’t be repealed using the budgetary reconciliation process and those other efforts having failed, the Cassidy bill – which is now the Graham-Cassidy-Heller-Johnson bill, with Sens. Lindsey Graham (R-South Carolina), Dean Heller (R-Nevada) and Ron Johnson (R-Nevada) having signed on as sponsors – is now getting its moment in the sun.

So for our readers who haven’t paid a lot of attention to the Cassidy bill, here are five things worth understanding about the bill.

1. IT’S A FEDERALIST SOLUTION TO THE HEALTH CARE MESS

One thing which is more or less unavoidably true at this point is you’re simply not going to be able to pass a “Republican” or conservative Obamacare repeal-and-replace plan which has all of the items in it Republicans want done, like creating an interstate health insurance market or medical malpractice reform or promoting health savings accounts. Those things are too rich for the blood of some of the weaker Republicans in the Senate and you won’t find a single Democrat vote for any of them. That makes for a very small window of items which can fit in a bill capable of passage – which, sadly, excludes a straight repeal of Obamacare.

We know that the Republican Senate majority for a straight repeal was a fraud when it passed in 2015 – there were votes for that repeal which were purely duplicitous, as they didn’t exist when there was a real prospect the president would sign it this year as opposed to the sure veto that was coming from Donald Trump’s predecessor.

So Cassidy’s bill starts from the premise that whatever would pass would have to give blue states the opportunity to be blue states and red states the opportunity to be red states. And that’s a salutary premise, after all; the country was founded as a federal system in which the states would be able to chart very different courses on policy issues. The history of that policy disparity is, of course, not unassailable, but we already know that having all policy flow out of Washington isn’t great, either. So here’s what the bill does, from a FAQ page on the bill’s website…

  • Federal block grant given annually to states to help individuals pay for health care.
  • States would have significant latitude over how the dollars are used to best take care of the unique health care needs of the patients in each state.
  • The grant is run through CHIP and subject to a mandatory appropriation.
  • The grant dollars would replace the federal money currently being spent on Medicaid expansion, tax credits, cost-sharing reduction subsidies and the basic health plan dollars.
  • Repeals the individual mandate, employer mandate, and medical device tax.

The last line is the deliverable for conservatives in the bill. If you repeal the individual and employer mandates you can claim, at least somewhat credibly, that you’ve repealed Obamacare. Obviously not root and branch like the GOP promised for seven years without result, but the most obnoxious piece of Obamacare was the unconstitutional notion that the federal government could force people to buy something they don’t want, and getting rid of that is a substantial thing – it returns to a more constitutional status quo ante without having to swallow the Supreme Court-generated fiction that the mandate is a tax, contra the specific claims of the Obama administration before its passage in 2010 that it wasn’t.

Meanwhile, this bill would take the Obamacare money and dump it on the states in hopes they could craft solutions that would fit their needs better than the feds can. Some other features the sponsors tout…

  • Strengthens the ability for states to waive Obamacare regulations.
  • Returns power to the states and patients by equalizing the treatment between Medicaid Expansion and Non-expansion States through an equitable block grant distribution.
  • Protects patients with pre-existing medical conditions.
  • GCHJ also eliminates the inequity of four states receiving 37 percent of Obamacare funds and brings all states to funding parity by 2026. As an example, Pennsylvania has nearly double the population of Massachusetts, but receives 58 percent less Obamacare money than Massachusetts.

California’s health care market is likely going to look significantly different than Texas’ market will if this bill passes. At this point it’s probably a good idea that become the case.

2. THIS BILL ACTUALLY DOES LOOK LIKE IT CAN PASS

There was an article just Tuesday afternoon at The Hill touting the surprisingly high chance of the Cassidy bill getting to 50 votes, which would then allow Vice President Mike Pence to break the tie in the Senate. From the piece…

“I’ve never felt better about where we’re at,” Sen. Lindsey Graham (R-S.C.), one of the bill’s sponsors, told reporters after senators met with Vice President Pence to discuss the new health-care proposal.

“At the end of the day, I really believe we’re going to get 50 Republican votes,” he added.

Other GOP senators said the measure has a real prospect of success.

“Our members are thinking about it, they’re studying it. They’re talking to the authors of the bill. But I think we’ve made good headway,” said Senate Republican Conference Chairman John Thune (S.D.).

The roadblock to passage of previous repeal-and-replace efforts has been the timidity of Republican liberals like Lisa Murkowski and Susan Collins, plus the dopey iconoclasm of John McCain. So far Murkowski says she’s undecided and Collins says she’s a “likely no” on the bill, and while McCain’s objections remain – he demands that any bill coming through on health care go through “regular order,” meaning a full committee markup – his precious NDAA bill passed without that process taking place; some 110 amendments were crushed into one giant package and then crammed down the Senate’s collective throat in order to pass the bill and McCain didn’t have an argument against doing so. There are a few others who haven’t quite come around yet, like Alaska’s Dan Sullivan and West Virginia’s Shelley Moore Capito, who say they’re undecided. But Pence is pushing hard for the bill on behalf of the administration and the word we hear in Washington is they’re making progress toward 50 votes.

The only actual Republican “no” so far is Rand Paul. We’ll talk about him in a minute. If you don’t have Paul and Collins but you do have everybody else, you’re at 50 and Pence can break the tie. The House GOP leadership has already said they can pass the bill if the Senate can. So this is it.

3. IT TURNS OUT THAT TRUMP’S SURRENDER ON THE DEBT CEILING MADE THIS BILL POSSIBLE

The article at The Hill referenced above has an interesting bit of irony surrounding this bill which will make Trump supporters exclaim “So much winning!” at the top of their lungs…

The unexpected second wind for the ObamaCare repeal effort has been helped greatly by the deal President Trump struck with Democrats earlier this month to fund hurricane relief and postpone a battle over federal spending and the debt limit until December.

Republicans at the time panned Trump for cutting GOP leaders out of the loop, but now his decision looks like a master stroke as it has created time on the schedule to take a second shot at health-care reform.

The upcoming deadline of Sept. 30 has also played a leading role in the rising prospects of the legislation. If an ObamaCare replacement bill isn’t signed into law by then under budget reconciliation rules, it would need 60 votes to pass.

Under the special rules, 50 votes plus a tie-breaker from Pence would send it to the House, where leading Republicans have indicated they would pass it and send it to Trump’s desk before the end of the month.

What everybody expected after the last go-round on health care was that September would be spent feuding over the debt ceiling and nothing else would get done amid a shutdown fight. Trump cut that Gordian knot by cutting a deal with Nancy Pelosi and Chuck Schumer, and while it doesn’t look like the president managed to get any real concessions from them to do so, it looks like the president and the congressional GOP fell into an opportunity to whack Obamacare after all as a result.

If they claim they meant to do that, they’re probably lying. But it’s worth a good laugh in Schumer and Pelosi’s face that their debt-limit victory cost them Obamacare. They’re going to respond to that defeat, if it happens, by trading exceptionally unreasonably when the debt limit comes back up in December and you can bet there will be a government shutdown with a decent chance of doubling your money.

4. CASSIDY IS CATCHING HELL FROM LOUISIANA’S GOVERNOR ON THE BILL BECAUSE OF MEDICAID

Because the bill essentially liquidates the Obamacare Medicaid expansion the acceptance of which was the first thing John Bel Edwards did as Louisiana’s governor taking office last year, it’s not a colossal surprise that Edwards is screaming bloody murder about the Cassidy bill now that it’s getting close to possible passage. Edwards had his Louisiana Department of Health Secretary Rebekah Gee pump out a breathless letter Monday screaming about how horrible the bill is For The Poors…

The letter spends a good deal of time talking about a study done by the left-wing Center on Budget and Policy Priorities (funded by all the usual suspects, including the Kellogg Foundation, the Ford Foundation and George Soros’ Open Society Institute) which says by 2026 Louisiana will be out a billion dollars in Medicaid expansion money courtesy of the bill’s liquidating the Obamacare formula and turning it into a block grant. In the letter Gee says the bill’s strategy to level out the amount of money the feds shell out in order to subsidize health care for people making between 50 and 138 percent of the poverty line would hurt Louisiana because the state has the 2nd highest proportion of people under 50 percent of the poverty line and those people are covered by the Medicaid expansion.

That’s a dubious argument, to be sure. Why aren’t those people covered by regular Medicaid if they make less than 50 percent of the federal poverty line?

Cassidy was wholly unimpressed by Gee’s letter and had this response…

“If Dr. Gee had called and asked how this bill would impact Louisiana, she could have been walked through as to why her concerns are unfounded. Instead, she chose to echo a left wing think tank which is working to preserve Obamacare. On the other hand, on one thing, the letter is correct. Our proposal spends less money than Obamacare. We eliminate the penalties paid by individuals and business which do not conform to Obamacare mandates. If Dr. Gee thinks that more money is needed, she should suggest that these taxes be re-imposed on state level. For the record, I oppose this as 58% of individual mandate penalties are paid by families earning less than $50,000 per year. I think these families should be helped, not penalized.”

Sick burn.

But the Medicaid expansion angle is a big deal for Edwards, because if in fact this bill passes and there is any truth to the numbers in the Center on Budget and Policy Priorities analysis, then he will have bought the biggest pig in a poke in the history of Louisiana and by 2019 the state will be staring down the barrel of hundreds of millions of dollars in deficits thanks to his acceptance of that Medicaid expansion. So far Edwards is selling that decision as a brilliant move which saved the state tons of money, though that also is a dubious statement and a risky one seeing as though the win he claims only pans out if in fact he can depend on catching a check every year from a federal government $20 trillion in debt. When was that ever a good bet?

That’s why Edwards signed on to a letter John Kasich, John Hickenlooper and a few other governors sent to Schumer and Senate Majority Leader Mitch McConnell howling about how terrible Cassidy’s bill is. The letter encourages the Senate, instead of passing the Graham-Cassidy-Heller-Johnson bill, to endorse a bipartisan deal being cooked up in the Senate Health, Education, Labor and Pensions Committee to make health care more affordable.

Well, that committee’s chairman Lamar Alexander trashed those efforts this afternoon and said there was no way a bipartisan deal was getting done. So that’s John Bel Edwards’ great alternative to Cassidy’s bill, up in smoke within a day of his backing it.

By the way, on Rand Paul’s objection – he might say he’s opposed to this bill because it doesn’t have any of the conservative goodies he wants, but that’s a crock. If Mike Lee and Ted Cruz can stomach the Cassidy bill on that basis Rand Paul can. The real reason he’s opposed to it is the same reason Edwards opposes it – like Louisiana, Kentucky took the Medicaid expansion money and Paul is worried about a political backlash against his ally, Governor Matt Bevin in that state. McConnell, who is no friend of Bevin’s, couldn’t care less about the governor’s problems.

Again, though, Cassidy would argue these numbers are bunk and that the states will be fine with the money they’ll be getting given that it will come with far fewer strings attached and therefore they’ll be able to waste a lot less of it.

5. AT THE END OF THE DAY, WE PROBABLY DO WANT THIS TO PASS EVEN IF IT ISN’T EVERYTHING WE WANTED

Cassidy’s bill has been sort of an ugly duckling throughout this process, but at the end of the day it’s the last chance for the Republicans in Congress to fulfill, at least in enough of a substantial way as to be credible, their long-standing promise to repeal Obamacare. The mandates go away, which are a big deal, the medical device tax goes away, which is also a big deal since that tax was one of the stupidest pieces of policy ever to come out of Washington – it’s a tax on innovation at a time when the healthcare industry needs it in the worst way – and the Hobson’s choice presented to the nation’s governors, most of them Republican, on the Medicaid expansion would also go away. One of the most insidious things about Obamacare was the political grenade it tossed to the governors: the pressure to take the “free” federal money is always huge, and conservatives who refused to take it would get castigated for leaving dollars on the table that could be used to take care of their people.

Never mind that Medicaid produces no better health-care outcomes than not having insurance, or that the states’ costs of expanding the program are guaranteed to spiral, or that Medicaid expansion creates perverse incentives among its users, or that the feds are going to go broke providing all this “free” health insurance. Trying to explain all that is like trying to sell vegetables when the other guy is giving away candy. Couple that with the argument that states which resist the federal dollars are just subsidizing other states, which is a stupid argument but always seems to work, and you have a recipe for irresponsibility. What this bill does is level the playing field between the states who chose the expansion and the states who didn’t, taking out the fuse on that political bomb.

At Investors Business Daily, the editors call the bill “surprisingly good”

Put together by Sens. Bill Cassidy and Lindsay Graham, the plan would take the money being spent on ObamaCare’s insurance subsidies and Medicaid expansion, and give it to states in the form of fixed block grants.

States would then have wide latitude in how they spend the money — for example, they could use it to set up high-risk pools, reduce out-of-pocket costs, pay providers or subsidize premiums. They’d also be able to get out from under ObamaCare’s disruptive and costly market regulations and benefit mandates.

It would repeal ObamaCare’s individual and employer mandates, and its tax on medical devices. It would expand Health Savings Accounts and for the first time let those with accounts spend HSA money on insurance premiums. It would reform the rest of Medicaid by replacing the current open-ended matching grant program with fixed per-capita payments. And it would also let states impose work requirements for able-bodied adults enrolled in Medicaid.

Interestingly, while trying to craft legislation that would appeal to Republican moderates in the Senate, Cassidy and Graham have created a plan that is in some ways more conservative than the earlier House and Senate repeal-and-replace bills.

Those plans retained ObamaCare’s disastrous “guaranteed issue” and “community rating” regulations and carried over its essential health benefits mandate, replacing one federal ObamaCare subsidy scheme for another. The plans were overly complicated and difficult to defend, but easy to attack.

The Cassidy-Graham bill, in contrast, is comparatively simple and straightforward. It lets states run their insurance markets as they see fit.

This is a welcome return to federalist principles that the GOP had forgotten when crafting their earlier ObamaCare replacement bills.

Is the Cassidy-Graham bill ideal? Of course not. Liberal states could keep ObamaCare in place, or use the money to finance single-payer health care. It concedes that the federal government is responsible for providing massive health care subsidies to the states. And it leaves many other free-market reforms off the table.

But look at the complaints from its critics, and you get a sense of why it’s a step worth taking.

IBD says McCain is for the bill, which we haven’t seen elsewhere, and Murkowski’s vote is the deciding one. It also predicts the Congressional Budget Office will score this bill as putting 20 million people out of health insurance, which it says Congress should ignore because the assumptions behind that claim are idiotic.

And they’re correct in all of these statements. The fact is, passing something which repeals the key pieces of Obamacare and is billed as an Obamacare repeal is a huge victory not just for the Trump administration and the Capitol Hill GOP, but it’s a victory for democracy. The country has wanted this to go away since it got passed, and that’s a huge mission accomplished.

But more than that, it would be a victory for the legislative process. Because on health care, the entire Democrat caucus in the Senate has dug in their heels and taken the most intransigent position possible in favor of keeping the status quo on Obamacare. They know it doesn’t work and it’s doing economic damage, and people are going broke trying to pay for overpriced, worthless health insurance, and they don’t care. Because it was the signature, if not only, legislative achievement of the Obama administration and when it goes, he passes into complete historical irrelevance from a policy standpoint. So you’ll get nothing from the Democrats – not even the Joe Manchins, Joe Donnellys and Heidi Heitkamps who are in red states and really can’t afford to be loyal to the party line.

Ahh, but repeal Obamacare and now there’s no status quo to defend. Now those Democrats become free agents and there is no party line they have to adhere to. Now you can pick up some of their votes for other changes to the health care system this bill doesn’t provide. That’s a future which could be considerably better than the present.

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