Since the House of Representatives passed the American Health Care Act, lawmakers in the Senate have been working feverishly behind closed doors on their own version of Obamacare “reform.” The focus of the debate, by most accounts, is on the extent to which the Medicaid expansion should be retained and on the scope of the GOP’s refundable-tax-credit subsidy scheme. This is misguided and a distraction from what Americans care about, which is the regulations driving up costs and making care and coverage unaffordable.
There is a way out, however. Even if senators are unwilling to repeal Obamacare “root and branch,” as they absolutely should and absolutely can, they can still forge a path forward that delivers on the most important part of their promises to the American people for over seven years. Simply put, the Senate must reverse the House’s approach from a waiver-granted partial opt-out of Obamacare to one in which states may voluntarily choose to opt in to Obamacare’s regulatory structure, leaving other states fully free from Obamacare’s regulatory nightmare.
Recall that the House-passed version of the AHCA contained limited waivers that, if obtained, would provide states with partial opt-outs for some of Obamacare’s regulations starting in 2018 and 2020. But the very existence of these limited waivers is an implicit acknowledgement that the AHCA does not actually repeal Obamacare.
Most of Obamacare’s mandates would be retained as the default for all 50 states. The waivers are limited so that many of the costlier regulations, such as community rating and guaranteed issue, either cannot be waived or can be waived only in a limited fashion. The AHCA opt-out framework effectively lets senators from New York, California, or any other state still dictate what kind of coverage health insurers must provide for the citizens of Texas, Arkansas, or Nebraska. This is neither true federalism nor policy that will strengthen our health-care system.
Rather than passing a bill fully repealing Obamacare’s heavy-handed federal regulatory provisions that have caused premiums and deductibles to double or triple on average (depending on the state) in the past four years, the Senate appears poised to accept as the high-water mark the limited benefit provided by the House bill’s partial, optional waiver for states. This is merely offering crumbs of liberty in a classic Washington effort to “pass something.” Failure to remove the regulations will not create an environment for success and will only take us farther down the road to single-payer government-run health care.
To avoid this, the Senate should lead. First, as the default rule, fully repeal the Obamacare regulations and mandates. This would free all states to operate under the pre-Obamacare regulatory environment, as imperfect as it was. Those regulations should be reviewed as well, but that will have to come another day. Second, provide a pathway for states such as California and New York to trigger an opt-in to Obamacare’s federal regulatory regime if they so desire.
The goal is to fully respect federalism to free states to choose — and give them a real opportunity to operate in a market-oriented environment unencumbered from all of Obamacare’s mandates. Not only will this significantly lower premiums and deductibles, but it will also flip the burden from proactively trying to get out of Obamacare — as the current AHCA framework does — to proactively choosing to get back in to Obamacare. If a state’s leadership wishes to keep their citizens bound up in Obamacare’s highly regulated health-care environment, this approach allows them to do so and join other states to operate under such a federal regulatory framework.
The Medicaid expansion and enhanced subsidies offered in the House bill represent significant remaining issues. It is noteworthy that these conversations focus on money: more money for Medicaid, more money for entitlements and insurer subsidies. All of it would increase government spending. This is how deals are made in Washington. In essence, this is an effort to buy votes for states that have expanded Medicaid and are now dealing with the negative consequences. Republicans should oppose these deals because subsidies and expanded Medicaid are flawed policies that distort the market and create perverse incentives.
If the Senate is going to cut a ‘deal,’ the absolute baseline is respect for federalism and the empowerment of states to be free to operate outside of Obamacare.
But if the Senate is going to cut a “deal,” the absolute baseline is respect for federalism and the empowerment of states to be free to operate outside of Obamacare. What we need — as freedom-loving people — is liberation from the regulations prohibiting our access to free-market healthcare. Any subsidies and expanded funding of Medicaid will eventually collapse under $20 trillion in debt and over $100 trillion in unfunded liabilities. It’s fake money for a fake deal. The only thing that will save us is a robust private market leading to lower costs, more doctors, and an innovative system that raises the standard of care. This will give America’s battered health-care system the opportunity to recover.
The best way to do that is for Congress to keep its promise to fully repeal Obamacare and begin unraveling Washington’s grip on our health-care system so an actual competitive market can flourish. Short of that, eliminating all Obamacare regulations as the default while leaving an opt-in trigger, so states that wish to maintain the regulations may do so, is the only remaining compromise worth considering.
Anything less is a broken promise. Anything less would fail to respect federalism and would allow the bureaucrats in the D.C. cartel to continue holding senators’ constituents hostage to Obamacare, which has a death grip on our health-care system.
— Chip Roy is the director of the Center for Tenth Amendment Action, and Drew White is the senior federal-policy analyst — both at the Texas Public Policy Foundation.