Senator John McCain cast the deciding vote to jettison Republicans’ latest Obamacare reform effort, handing a victory to Lisa Murkowski of Alaska and Susan Collins of Maine, moderates whose opposition to any substantive health-care reform has become nearly intractable. But the legislation for which Republican leaders asked their conference to vote was so unpalatable, and the process so objectionable, that it is almost difficult to fault him.
The Congressional Budget Office suggested that the “skinny” health legislation on which the Senate voted would raise premiums by as much as 20 percent. It assumed that since the legislation ended the fines for going without insurance, many healthy people would drop coverage, and premiums would have to pay for a sicker population. The estimate may be too high, since the CBO has repeatedly overestimated the impact of the fines. But it almost certainly had the basic story right.
Senator McCain may have been taken aback as well by the CBO’s projection that the bill would result in 16 million fewer people having insurance coverage — something Democrats nearly unanimously portrayed as “taking away” insurance from all of those people. In fact, this projection is based almost entirely on the end of the fines. The CBO estimates that once they can make a decision free of the threat of fines, 15 million people will forgo coverage.
Is this because of those premium hikes? No, not in a large fraction of the cases. Only 5 million of the 15 million are in the segment of the market where this problem—the departure of healthy people from the market causing premium increases — would arise. (For example: The CBO says 7 million fewer people will take Medicaid if the fines go away. They wouldn’t be paying higher premiums.) And even in this group of 5 million, everyone making under four times the poverty level would be protected from premium increases: Their Obamacare tax credit, untouched by the Republican bill, would go up if their premium did. Even on the CBO’s pessimistic estimate, then, around 14 million people who “lost” coverage would do so because they would prefer to go without it.
We are willing to bet that McCain didn’t know any of this. A lot of health-policy experts are unaware of it too. The legislation was unveiled, after all, only a few hours before the vote. There were no hearings on it. The CBO had only provided the relevant numbers the same day, with the inferences we have made above left unstated.
Republican leaders such as Mitch McConnell were asking senators to vote for a poorly understood bill that would likely raise premiums in the expectation that something better would emerge from a conference committee between the House and the Senate. But there was a chance that the House would end up just passing the skinny bill. And if the conference committee was capable of coming up with something better that could get 51 votes in the Senate, why couldn’t the Senate come up with that “something better” itself?
Congressional moderates deserve blame as well. Many senators who had run for years on repealing and replacing Obamacare turned out not to want much about the law to change at all. And President Trump was essentially AWOL during the debate, seemingly incapable of saying anything intelligent about the choices before Congress. But we would urge Republicans in the Capitol not to indulge in too many recriminations, both because few of them are sinless and because they still have power to exercise responsibly. Now that the skinny bill has been defeated, a lot of Republican senators are saying that they still want to work toward repeal and replacement. If they mean it, they have several options still available.
Option one would be another slim bill. This one would abolish the fines but also take some steps to keep its abolition from raising premiums. Earlier Republican bills have coupled abolition with such steps. Insurers could be allowed to offer bigger discounts to young people. People who leave the market and then want to come back could be made to wait a few months before becoming eligible for any federal assistance — thereby encouraging them to stay insured. And insurers could be given some subsidies to ensure the orderly working of the market.
That last step would provoke some grumbling from Senate conservatives; we’re saying it through gritted teeth ourselves. They might be willing to support it, though, if the bill also includes spending cuts. The original Senate bill included reforms to Medicaid that would restrain spending. Some Republican senators balked at it. Would 50 of them be willing to support a watered-down version of those reforms? They should be asked, in a process that involves committee hearings.
The Senate parliamentarian would be another obstacle. She has indicated that it would take 60 votes to let insurers offer cheaper policies to the young and to delay tax credits for people returning to the market. On both of these technical points, a majority of senators would have to be willing to overrule her. There’s a case for requiring supermajorities for some legislative changes and majorities for others. There’s no case for letting majorities abolish the individual mandate but not take the further steps that would make that policy work.
This uncertain, contentious process looks appealing only against the backdrop of option two. Here Senator McCain deserves criticism for naïveté. He believes that there should be bipartisan reforms to Obamacare (which is a far cry from what he had previously campaigned on). But the Democrats have made it clear that the only “reforms” that interest them are increased taxpayer commitments to shoring up the program, including increased subsidies to the insurers. In practice, this option would amount to higher spending and, at best, a fig leaf of reform; it would become law through the votes of nearly all Democrats and a handful of Republicans.
Option three, the “let it burn” approach, is simply untenable. Senator Lindsey Graham is among those who counsel Republicans to do nothing while Obamacare generates less and less satisfactory results, and then count on Democrats’ coming around to the need for reform. But more insurers can pull out of more markets without getting the Republicans to a consensus on how to change Medicaid, let alone yielding a bipartisan consensus. Meanwhile, every month of Republican control of Congress and the White House will make the public at large more inclined to hold Republicans responsible for the status quo. Option three is likely, then, to be option two in slow motion.
Consideration of the alternatives should bring Republicans back to option one. Try, try again, but this time with more deliberation.