The Republicans are making yet another run at repealing Obamacare, this time with a bill sponsored by Republican senators Lindsey Graham, of South Carolina, and Bill Cassidy, of Louisiana. While this legislation doesn’t seem workable in its current form, as the old saying about Richard Wagner’s music goes, the bill is in some respects “better than it sounds.”
Think of Graham-Cassidy as allowing each state to try its hand at health care policy, backed by a federal lump sum payment. Not surprisingly, opponents fear the states could waive essential components of Obamacare, such as the individual mandate, required coverage for pre-existing conditions or the regulations for “essential” health benefits. Alternatively, states could use the money to help develop their own single payer systems or pursue other innovations. The bill would also replace the federal-state partnership on Medicaid with capped per capita aid to each state, a formula that would induce many states to spend less on the health program for the poor.
The critics correctly suggest that the federal government would be cutting back on its fiscal commitment to health care, and that the bill would boost the number of uninsured by millions. It seems the CBO won’t be scoring this bill in time for any possible vote, but note that the behavior of each state is not always easy to predict (the most critical interim projections are typically expressing worst-case scenarios)
So why might anyone take Graham-Cassidy seriously?
The most important reason is that any predicted increase in the uninsured is relative to the status quo, but perhaps the status quo isn’t stable. The CBO has estimated that the U.S. is on an unsustainable fiscal path, and over time will need to choose some significant mix of tax increases and spending cuts. Graham-Cassidy looks bad because it accelerates some of those fiscal adjustments, but American health care consumption will end up being curtailed anyway.
There is an unfortunate tendency of Obamacare defenders to pick and choose which CBO messages they publicize. If the CBO estimates that a Republican health care bill will cut insurance coverage, that estimate is played up. But when the CBO surveys the nation’s longer-term fiscal conditions, that is downplayed for fear it will discourage moves toward bigger government. Many fiscal conservatives, however, commit a similar error but in reverse.