If we want to make headway on improving public policy discourse, a good place to start might be with how we’re debating Medicaid policy, in particular how it might be affected by pending legislation to repeal and replace the Affordable Care Act (ACA), including legislation presented on Thursday by Senate Republicans.
Medicaid has long been on an unsustainable cost growth trajectory. This was true long before the ACA was passed in 2010, though the ACA exacerbated the problem. Annual federal Medicaid spending is currently projected to grow from $389 billion in 2017 to $650 billion in 2027. The biggest problem with that growth rate is that it’s faster than what’s projected for our economy as a whole. As with Social Security and Medicare, Medicaid costs are growing faster than our ability to finance them.
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The Senate bill is the product of a decision not to repeal Obamacare but to improve things where possible—moving incrementally in the direction of a more functional and more market-oriented system—within the framework Obamacare established.
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The House bill contained a fatal flaw. Its flat tax credits would price millions of near-elderly low-income workers out of the insurance market and trap millions more in poverty. Fortunately, buried in the House bill was a way out. Section 202 of the bill contains a transitional schedule of tax credits that was meant to serve as a bridge between the old Obamacare system and the new Paul Ryan system. If you simply kept that bridge in force, and got rid of the flat tax credit, you’d solve the problem with the House bill. By making that change, the near-elderly working poor would be able to afford coverage, and the poverty trap would be eliminated. And that’s precisely what the Senate bill did! Section 102 of the Senate bill—the Better Care Reconciliation Act of 2017—closely mirrors Section 202 of the House bill, with age- and means-tested tax credits up to 350% of the Federal Poverty Level.
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Senate Republicans released their draft bill to repeal and replace ObamaCare on Thursday, and Majority Leader Mitch McConnell is hoping for a vote next week. The binary choice now is between pushing past the media and Democratic flak to pass a historic achievement, or wilting under the pressure and ratifying the ObamaCare status quo.
The bill is an imperfect compromise between moderate and conservative Republicans, and it makes pains to accommodate different interests and the Americans, states and businesses that have adapted to ObamaCare over the years. The center-right nature of the details means the Senate won’t be ushering in some free-market utopia. But the reform is a major improvement over the U.S. health-care status quo that will worsen if the bill fails.
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Senate aides expect that Majority Leader Mitch McConnell (R., Ky.) will bring the health bill as soon as Tuesday, shortly after the Congressional Budget Office has scored the bill. Both chambers have to pass the exact same bill, and there are a few ways for that to happen. The quickest option would be for the House to take up and vote on the Senate bill, but it’s not yet clear if there is enough support in the House to pass it. If they did, it would go straight to the White House. The House could also tweak the Senate bill and send it back to the Senate, which would have to vote on the modified bill. Or GOP leaders in both chambers could put together a group tasked with forging a compromise between the House and Senate bills. The new compromise bill would then have to be approved by both the House and Senate.
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The new Senate bill 1) Reduces the number of people eligible for subsidies, reduces the values of the premium subsidies, and lowers the cap on total subsidy expenditure; 2) Eliminates the individual and employer mandates; 3) Restricts coverage for abortion; 3) Ends the cost-sharing reductions — but not before paying insurers back for the money they’ve already laid out; 4) Gives states a great deal more flexibility in the waiver program; 5) Gets rid of a lot of Obamacare taxes; 6) Provides market stabilization funds; 7) Winds down the Medicaid expansion funding, but not as fast as the House bill; and 8) Converts Medicaid to a per-capita allotment rather than an open-ended entitlement.
Any legislation that clears Congress under the repeal and replace banner needs to do four things:
- It needs to rescue millions of people in ACA exchange plans now who are at risk of losing their coverage because of ObamaCare’s multiple failures.
- It must provide states more flexibility in managing their Medicaid programs so they can better serve their neediest citizens.
- It needs to provide a system of subsidies for people who need help in purchasing coverage but who aren’t offered health insurance at work and who are not eligible for public programs, especially Medicaid or Medicare.
- And it needs to return more authority to the states to oversee their health insurance markets, but with new flexibility and resources.
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Health care legislating ain’t pretty. In many cases, it’s downright coyote ugly. Particularly in the absence of a coherent and consistent majority in favor of substantially revising the status quo. Hence, today’s Senate Republican leadership “discussion draft” bill.
To be fair, leaders can’t go where they don’t have enough followers. So a good bit of today’s exaggerated reactions on the Right involves failure to come to terms with the divergence between past feel-better rhetoric and today’s grimmer political realities. There are neither enough votes nor popular support to repeal Obamacare simplistically, or engineer a softer landing toward substantial reform of the ACA — let alone offer a long-term path toward market-based health policy in practice. A long parade of mistakes in politics and policy were made AFTER March 2010 that helped deliver us to today’s limited set of legislative options.
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Senate Republicans plan to vote before the July 4 recess on their legislation to repeal and replace ObamaCare.
Senate Majority Leader Mitch McConnell (R-Ky.) has little margin for error, as he can afford just two defections from his conference with all Democrats expected to oppose the bill. Vice President Mike Pence could then be called in to break the tie.
Here’s a look at where McConnell’s conference stands on the legislation, which was unveiled on Thursday.
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The House-passed bill left large numbers of Americans uninsured, in part because very low-income households could not afford to enroll in private coverage even with the House’s tax credits. Medicaid is the nation’s safety net insurance program. In practical terms, there is no real alternative to Medicaid for a person below the poverty line. Under the approach recommended here, federal Medicaid funding would be dispensed to the states to strengthen the safety net for the poor, even as there would be less support for expanding the program to persons with higher incomes.
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