Hmm: Could a Cruz Compromise Salvage the Senate Healthcare Bill?

Posted: Jun 30, 2017 12:01 PM

Here is a sentence that may surprise some readers: Vox has a good, clear write-up of a compromise solution offered by Ted Cruz that may hold the key to bringing divergent factions of the GOP together to rally around an Obamacare replacement plan.  Once your brain computes that information, here is Allahpundit crisply summarizing the 'Cruz Amendment' in layman's terms, with several useful points of reference.  There are hurdles, to be sure, but this strikes me as genuinely constructive and interesting: 

Earlier this year, Susan Collins and Bill Cassidy proposed a compromise: Why not give states the option of whether to keep ObamaCare or not? Blue states could retain it, red states could opt for waivers that let insurers offer cheaper plans with less coverage. Cruz’s plan is an intrastate variation of that hybrid approach. Instead of letting each state decide whether to opt in or out of ObamaCare, he proposes letting insurers in each state offer whichever plans they like so long as they offer at least one ObamaCare-compliant plan. If you want to pay more for a plan with all the bells and whistles that O-Care requires, go nuts. If you want something less expensive and less comprehensive, that’s on the menu too. People with preexisting conditions could choose the bells-and-whistles plan, healthier folk could choose the skimpier fare. Win/win! That may make Republican moderates and conservatives happy enough to get McConnell 50 votes. Just one question: Who’s going to cover the revenue shortfall for insurers when healthy consumers start swapping their expensive ObamaCare plans for cheaper Cruz-enabled ones?

On its face, this idea could solve a number of problems (read the Vox analysis about "dominoes falling"), but AP zeroes in on one of the biggest question marks: If sicker people gravitate toward souped-up, mandate-loaded Obamacare plans, and healthier people sign up for cheaper but less comprehensive options, won't that disparity create a mini-death spiral for the expensive Obamacare-compliant plans?  After all, to keep them solvent, insurers might need to hike up premiums on those plans, even if they leave the less expensive ones alone, because those are populated by healthier consumers.  Theoretically, attracting an influx of healthier and younger consumers into the statewide individual market risk pools would be a boon to insurers' bottom lines, affording them some wiggle room to absorb losses on 'costly' consumers.

That's what wider risk pools could achieve -- as narrow, disproportionately unhealthy risk pools has been Obamacare's fundamental flaw all along  But you'd also have the countervailing problem of some of the healthier, younger who actually have decided to sign up for coverage through the existing exchanges (risk-averse people, or folks who were compelled by the individual mandate tax) flocking to more affordable options.  They'd still be paying into the system, but at a lower price point.  In other words, there's a good chance that people with expensive pre-existing conditions would still see their rates spiral, as Cruz admits.  What then?  Somebody would have to either provide those consumers with bigger tax credits, or inject cash directly to the insurers to keep them relatively stable.  And that 'somebody,' Cruz says, would be US taxpayers:

“If those with seriously illnesses are going to be subsidized, and there is widespread agreement in Congress that they are going to be subsidized, I think far better for that to happen from direct tax revenue rather than forcing a bunch of other people to pay much higher premiums,” Cruz said.

In exchange for providing more Americans coverage more options with lower premiums, Uncle Sam would open up the piggy bank for sicker people through "direct tax revenue," whether in the form of bigger credits, or via 'stabilization' funds to boost what would amount to quasi-high risk pools.  The fact that this man is promoting this idea is proof positive that root-and-branch repeal is well and truly out the window.  Instead, Republicans would be essentially telling people, "if you like Obamacare's myriad, costly requirements, you can keep them," but if others want cheaper plans that don't cover as many things, insurers are now allowed to put those on the menu, too -- so long as at least one Obamacare-style plan remain intact in each state.  If the GOP is prepared to pump lots of dollars into the system to keep those plans solvent, they could conceivably claim credit for saving and expanding the individual market while bringing rates down for millions.  Add some major Medicaid reform into the mix, and that might just be good enough.  It would not be "repeal" in any real sense, but it could result in a less dysfunctional system that makes needed adjustments to a terribly flawed and unsustainable entitlement program.  Good enough?  

By the way, let's say McConnell gives this idea the green light and the bill passes.  Could House conservatives reject a plan that was good enough for someone with a hardline reputation as robust as Cruz's?  Early indications suggest that the Freedom Caucus would embrace the Cruz proposal enthusiastically, which may also give McConnell some breathing room to throw more money at moderates.  Remember he has some "extra" cash to play with thanks to the CBO score, but there's now talk about keeping at least one of the Obamacare taxes in place in order to finance other parts of the bill -- which are getting more generous (see this beefed-up opioid addiction treatment line item, for instance).  Maintaining that tax could also move a potent line of attack by Democrats, namely that the GOP bill cuts investment taxes while "slashing Medicaid" (more on that later) for poor people.  Conservatives are also seeking changes to allow more flexibility on how tax-free Heath Savings Account dollars can be spent on healthcare-related expenses.  Make no mistake: This thing is still a moving target, and I still wouldn't bet the farm on passage, but it does like the various camps are inching toward meaningful progress.  One additional hurdle to Cruz's idea, which could scuttle the whole proposal, is whether it adheres to reconciliation rules.  That's an open question, although Cruz says he's feeling confident on that score, for what it's worth:

The other looming threat to Cruz’s proposal is the Senate’s “Byrd Rule,” which is supposed to limit the health care bill to policies that directly affects federal spending and revenue. Many outside experts are doubtful that changes to insurance regulations meet that standard. But Cruz told me Wednesday that he thought his proposal would work under those rules and that the Senate would not have to take the drastic step, as he had previously advocated, of overruling the Senate parliamentarian who adjudicates these issues. “I think under the plain text of the Budget Act of 1974, it satisfies the Byrd test,” he said.

Meanwhile, the Obamacare status quo continues to crash.  Another carrier is high-tailing out of Ohio, with rural Nevadans also feeling an access squeeze "crisis" as plans vanish.  Keeping Obamacare as-is really isn't a viable option.  Even as the law's favorability rises in the face of hysterical opposition to Republicans' alternative, fully 61 percent of Americans still say the law needs to be partially or fully dismantled.  Its ongoing deterioration is a fact that must be dealt with by lawmakers who were elected to deal with it.  Republicans can either fashion something with as many conservative principles and solutions as possible, or they can cede ground to Democrats.  On that note, the Wall Street Journal's editorial board is again pressing GOP holdouts on whether they're addicted to big government:

The biggest policy divide concerns the future of Medicaid, and here the problem is the moderates who are acting like liberals. Despite their campaign rhetoric, some Senators now want to ratify ObamaCare’s Medicaid expansion as an unrepealable and unreformable welfare program...The Senate bill attempts to arrest [the program's] unsustainable surge by moving to per capita spending caps from an open-ended entitlement. When states spend more now, they generate an automatic payment from the feds. The goal is to contain costs and give Governors the incentive and flexibility to manage their programs. Meanwhile, four long years from now, the bill would start to phase-down the state payment formula for old and new Medicaid beneficiaries to equal rates. Governors ought to prioritize the most urgent needs.

This would be the largest entitlement reform ever while still protecting the most vulnerable. The bill is carefully designed to avoid overreach and would save taxpayers $772 billion compared with what Medicaid would otherwise spend under current law, according to the Congressional Budget Office. This does not “cut” spending; it merely slows the rate of increase...If Republicans fail to pass a bill or weaken the Senate bill so much that it won’t make a difference, the result will be a calamity of a different kind. GOP Governors who declined to join ObamaCare’s new Medicaid will conclude that the expansion is permanent and the political pressure will rise to take the federal bribe. Medicaid costs will soar, and national Republicans will show that they’re incapable of doing what voters sent them to Washington to do.

Decision time.  I'll leave you with (a) additional analyses debunking the Left's hyperbolic, fear-mongering claims that replacing Obamacare would "kill" tens of thousands of people per year (recall that under this standard, Obamacare is already doing exactly that), (b) a piece pushing back on the Democrats' "totally overblown" talking points about 'gutting' Medicaid, and (c) this clip of Mary Katharine Ham going on offense against Democrats over healthcare, prompting reviews like this:

What did she say?  Watch the video, but she called out liberals' dreadful track record on Obamacare predictions and promises, slammed their demagoguery, and demanded to know how it's definable not to reform Medicaid -- which was already failing before Obamacare crammed millions of new, less-needy people onto its rolls -- with the the less-needy population given more federal help than the truly indigent population that was already being very poorly served by it.  How is that fair?  It's a great question that Democrats should have to answer -- as should Republican Senators who are gun shy over reform.