Yes, the States Can Fix the Obamacare Debacle

Stephen Moore
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Posted: Sep 26, 2017 12:01 AM
Yes, the States Can Fix the Obamacare Debacle

Back in 1996, a Republican Congress and a Democratic president (Bill Clinton) enacted one of the most historic bipartisan policy victories in modern times: the Personal Responsibility and Work Opportunity Reconciliation Act for welfare reform.

The passage of that bill has so many parallels to the fight over the Graham-Cassidy Obamacare-reform legislation now before Congress that it is worth recounting some of the lessons. Just as with the Graham-Cassidy bill, the '96 welfare reform bill gave block grants to the states so they could operate their own welfare systems. The basic federal provisions encouraged tough love: requiring recipients to begin working within two years of receiving benefits; capping benefits at a lifetime total of five years; and strengthening the enforcement of child support. Most importantly, an open-ended federal entitlement was capped, so states had incentives to run their programs cost-effectively.

When that bill passed, liberals argued, as they do now regarding Graham-Cassidy, that people would die as a result. Rep. Maxine Waters warned that the law would cause "hungry children (to) starve."

But of course, welfare reform worked far better than even supporters expected. Ron Haskins, an architect of that bill and now a welfare expert at the Brookings Institution, found: "Welfare rolls plunged by over 60 percent, as many as two million mothers entered the labor force, earnings for females heading families increased while their income from welfare payments fell, and child poverty declined every year between 1993 and 2000."

Jimmy Kimmel, are you listening? Does that sound like the sort of result to ruin the lives of poor people and cause the sick to go without treatments?

One reason welfare reform succeeded is that we allowed 50 governors to come up with innovative solutions to end a corrosive federal welfare system that had financially incentivized out-of-wedlock births and trapped so many millions of low-income families in a cycle of poverty. We learned that state legislators are not heartless Scrooges.

The Graham-Cassidy bill also turns a welfare program -- Medicaid -- over to the states. States will get a lump sum of money, and they will be required to set up programs to provide insurance coverage for their eligible low-income residents. Contrary to what the histrionic media might have you believe, the bill requires states to find ways to cover residents who have pre-existing conditions.

A similar experimental block grant waiver given to Rhode Island back in 2000 had spectacular successes. The state covered more people, improved care and rooted out tens of millions of dollars of wasteful spending. It is a shining example of how the Graham-Cassidy reforms could transform our Medicaid system to benefit everyone.

There is one other critical political lesson from the '96 welfare-reform policy victory. From the very start, Republicans and moderate Democrats (they existed back then) adopted a smart strategy that proved decisive. Welfare reform was never sold as a way to save money. It was about saving lives. It was about lifting poor families out of poverty and life on public assistance and into the fulfillment, dignity and upward mobility of employment.

One strategic mistake of the Graham-Cassidy bill is the infatuation with cutting the Medicaid budget. The White House and GOP talking points boast that the proposed legislation cuts spending and the deficit by hundreds of billions of dollars. Focusing on this angle plays into the hands of liberal critics, who say that 10 million Americans will lose their health insurance and that children with pre-existing conditions will lose treatments. In actuality, no one needs to lose his or her insurance under the GOP plan.

We should plow all those savings into a fund for pre-existing conditions and reimbursing states that lose money in this transition.

This isn't about saving money or cutting the deficit. It's about creating a 21st century health care system that taps into the power of free markets, consumer choice and competition to expand coverage, improve care and make health insurance affordable to everyone. Hopefully, even Jimmy Kimmel couldn't be against that.