Can The Republicans Replace Obamacare Before The Next Election?

This article was originally posted at on May 15, 2018.

Yes. They could do it. But only if they accept two principles:

  1. All the Obamacare money must be used for health care – it can’t be used to cut taxes for the rich or for special interests.
  2. There must be a clear and sustainable path to lower premiums and better access to care.

A lot of people think Sen. John McCain betrayed the Republican party when he cast a “no” vote on a health care bill last year. In fact, he saved the party.

The bill that passed the House and almost passed the Senate would have taken health care away from about 20 million people and used the money to cut taxes for insurance companies, pharmaceutical companies and rich people everywhere.

Along with a tax reform bill that is widely perceived as a giveaway to the rich, the electoral consequences would have been disastrous. There would have been no chance the Republicans could have kept the House, and the Senate might have been in jeopardy as well.

Three years ago, Pete Sessions (House rules Committee Chairman), Bill Cassidy (the most knowledgeable person on health policy in the Senate) and I decided that you cannot repeal Obamacare without replacing it. (See our plan for universal coverage in Health Affairs.) We agreed on three parameters:

  • Once people have an entitlement, you can’t take it away from them; you can privatize it, but you can’t end it.
  • You cannot use health care money to cut taxes for the rich; you can cut taxes for the rich in tax reform, but not as part of health reform.
  • Money that is funding Obamacare needs to stay in the health care system and be used for conservative health reform.

These ideas are now accepted by almost all Republicans in Congress. They were incorporated into the Graham/Cassidy/Heller/Johnson proposal in the Senate to block-grant Obamacare funds to the states.

So why didn’t the block grant pass? Because there was no acceptance of the second principle—the necessity for a path to greater access and lower premiums. That principle requires that the system be able to answer these questions: How does the cancer patient know she will be able to continue seeing her oncologist? How does the heart patient know he will be able to find a cardiologist? How does the diabetic know his needs will be met? How does someone who is too sick to work know she will find affordable coverage in the individual market?

In assuring that these questions are answered satisfactorily, the Republicans face two serious problems: (1) voters trust Democrats a lot more than Republicans on health care – by a wide margin and (2) 34 states have completely abdicated the opportunity to manage their own exchanges and turned that responsibility over to the federal government.

How can Republicans make a convincing case that they can make things better with a block grant? Answer: they already have made things better in a very similar system.

Obamacare was created by Democrats. Medicare Advantage (under which about one-third of seniors enroll in private plans) was created by Republicans. Both systems subsidize private health insurance. But the contrast couldn’t be starker.

Under Obamacare we have skyrocketing premiums, a race to the bottom on access to doctors and hospitals and soaring deductibles that few families can afford. Under Medicare Advantage, there is no mandate to buy, no discrimination against pre-existing conditions, premiums are affordable, out-of-pocket limits and access to providers are reasonable, and there is a functional exchange.

Republicans should give the states the freedom to reform Obamacare, using principles that work so well for seniors. In doing so, they must guarantee the system doesn’t discriminate against the sick. Someone who has paid insurance premiums for many years into a group plan and who becomes too sick to work should be able to buy comparable insurance for a comparable price in the individual market.

Among the freedoms states will need are (1) the ability to stop group insurance from dumping high-cost patients on the individual market, (2) the ability to stop health plans from dumping high-cost patients on each other and (3) the ability to stop individuals from gaming the system by acquiring insurance only after they get sick.

If states cannot do these three things, they will not be able to enact sensible reform. And if they are given the ability to enact sensible reforms, Republicans must be able to publicly explain why everybody will gain because of those reforms.