Politics & Policy

The MacArthur Amendment

This week is witnessing what must count as at least the third round of the House GOP’s peculiar, staccato legislative process on health care. In some ways, it resembles the prior rounds: An idea has emerged that seems like it could address the daunting political problems that bedevil any significant Republican health reform advanced through reconciliation, and so it is being held up as the end-all proposal. There is a rush to vote. The overall bill remains unfinished in key respects. And a great deal of incoherence and dysfunction has been driven by the House Republican moderates yet blamed on the conservatives. 

All of that we have seen for two or three months. But this round does feel different, and to me at least it seems reasonably likely to end in the passage of a bill through the House. 

For one thing, the substantive idea itself—embodied in the MacArthur Amendment—is a real step in the right direction. As I suggested around here a few weeks ago, state waivers from federal insurance regulations are (unlike much of what Republicans have tried so far this year) an idea native to the actual circumstances Republicans now face: the uneven (at best) commitment of some Republican members to actually doing anything about Obamacare, the constraints of the budget reconciliation process, and the sheer multiplicity of problems now confronting the individual insurance market in different parts of the country. 

It is also responsive to what House Republicans have learned about the priorities of different factions within their coalition in the course of the prior rounds of this internal debate. The Freedom Caucus prioritizes deregulation of the individual insurance market to lower costs and constrain the federal role. The moderates prioritize coverage levels and protection for people with pre-existing conditions. These are both very worthwhile sets of causes to prioritize, and they are in some important respects compatible. But rather than try to arrive at a single overall balance between them, the approach House Republicans are now pursuing says to state governments that they can have relief from the rules that drive up costs and make their insurance markets unsustainable if they themselves propose alternative rules that would still protect people with pre-existing conditions and make coverage accessible. This course recognizes that different states will approach the tense balance between these priorities differently, and allows them to do that—thereby perhaps also enabling congressional Republicans to achieve the precarious political balance they require. 

The extent of the waivers is constrained, in light of the political pressures involved, though it would allow for some meaningful variation and experimentation with insurance rules. If they show that their proposed alternative rules would reduce premiums, increase coverage, or otherwise strengthen insurance markets, states can request to waive the age bands on premiums starting next year. They can set their own essential health benefits (and therefore can recover the right to define insurance coverage in their jurisdictions to a significant degree) starting in 2020. And, if a state has established a high-risk pool or similar mechanism for covering people with pre-existing conditions, it can allow insurers to consider health status when pricing coverage for people who have not been continuously insured. 

The waivers approach may also help the bill survive the reconciliation process in the Senate. Because it explicitly connects state regulatory waivers to effects on premiums and other factors that would influence the cost of a federal insurance subsidy, it creates a link between insurance-rule changes and federal spending that might not otherwise be clear. This at least is the theory behind the argument that this approach could make it through reconciliation in the Senate. I see no reason to consider that any more than a theory, but it’s probably a better theory than Republicans have had so far.

The practical implications of this amendment would depend heavily on how many states actually seek waivers, and of what sort. It’s possible that few states will want to play ball. But given the very real problems states are seeing in their individual insurance markets, there is reason to think that different states—both red and blue—would seek and find different ways to maximize their options under the waiver regime given their particular circumstances. They could well be under pressure from insurers and providers to find such ways, and they would have help too: I’d expect that a fair amount of model waiver language would be out there next year if something like this passes—language from insurers, providers, and activists on the left and right intended to help states pick up the pieces of their individual markets and put them back together in different arrangements to suit different needs, interests, and preferences. This would be a good thing. And the political pressures involved would likely drive states to prioritize coverage—even in the reddest states, the constituencies governors face are much more diverse and complicated than those of most Republican House members.  

There are certainly some peculiarities in the amendment. For instance, allowing some waivers to take effect in the 2018 plan year seems to introduce some needless complications into an already horribly complicated transitional challenge for insurers. It also seems to me (as it has to others) that on its face section (a)(5)(A)(ii) of the amendment exempts members of Congress from the amendment’s effects, which would be truly just insane and inexcusable. Word is that this provision will now be removed (through a separate amendment), but that it was ever there is pretty staggering. 

There is also no question that this bill, even with the MacArthur Amendment, is no one’s idea of an ideal solution. It retains Obamacare’s regulatory architecture as a default from which states can opt out, and only in restricted ways. But as a compromise that takes account of the fact that a full replacement is beyond Republicans’ reach given their numbers and the rules of the Senate, it does look like a meaningful step. 

This would be an amendment to the broader AHCA that has, and would still have, some significant further problems. But with this amendment, the bill would reach the Senate in a form that could be made into a workable partial repeal and replacement of Obamacare, and might be reasonably close to the most that congressional Republicans can do about Obamacare at this point that would also be worth doing. 

There would be some significant work for the Senate to do if this passes the House, and we should hope there is a real legislative process in the Senate and not a rushed vote on the House product as it is. The premium tax credit in the bill will need to be rethought so as to be more useful to more of the uninsured, and this could be done in ways that also make the bill more likely to survive reconciliation rules. That could involve something like Avik Roy’s very constructive proposals or it might even involve a move away from a tax credit toward a benefit more suitable for a state-waiver approach (which might also assuage concerns about reconciliation and the Hyde Amendment that otherwise could easily still kill the whole process in the Senate). Some ideas on how to proceed are out there, and Senators and staff are already chewing them over. And of course some fundamental questions about spending levels will need to be resolved, and ought to be resolved in ways that prioritize protecting the vulnerable. Essentially punting these questions to the Senate offers some hope that this could happen, but it will not be a simple matter. 

Still, it does now look as though the rough, frustrating, unruly process House Republicans have been going through, with its multiple near-death experiences, has actually enabled some learning about their own priorities, the nature of the substantive policy challenges they face, and the difficulties involved with bringing their conference together. In the end, if this is the end of this stage of the process, what has worked best on the latter front has been direct negotiation between the different factions of the House Republicans, rather than leadership efforts at preventive mediation to assuage them all while keeping their substantive differences below the surface. There is surely a lesson in that for everything else Republicans imagine they can achieve this year. Republicans are divided, this president is not likely to play the role presidents usually play in overcoming internal divisions in their parties, and that means differences will need to get worked out through frank bargaining. Face to face discussions between different flavors of Republicans—not finished products from above, let alone “now or never” dictates and cheap twitter bravado from down the street—is how reconciliation bills might work in this Congress. And for other bills, some frank bargaining with actual human Democrats might be required too. 

Even if the House does pass this amended bill, much work and time will remain before they get near any final product on health care. That is as it should be. It makes no sense to rush this effort, especially now that Republicans are exploring a relatively novel set of approaches—rooted in federalism and responsive to the distinct political and substantive constraints they face. There are lots of needles left to thread. But progress is something, and this looks like progress. 

Yuval Levin — Yuval Levin is the editor of National Affairs, a quarterly journal of essays on domestic policy and politics. He is also the Hertog Fellow at the Ethics and Public Policy ...

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