Yuval Levin takes a close look at the Senate health care bill. He agrees with those of us who don’t consider it a repeal of Obamacare, Rather, like the House bill, the Senate version “addresses discrete problems with Obamacare within the framework it created, while pursuing some significant structural reforms to Medicaid.”
Levin believes, as I do, that “the cause of good policy (almost regardless of your priorities in health care) would be better served by a repeal and replacement, with appropriate transition measures, than by [the] sort of tinkering” proposed by both the Senate and the House. Repeal and replace would provide “more coverage, a better health-financing system, and a more appropriate role for government.”
However, Levin assesses the Senate bill on its own terms. He finds it “mostly better” than the House bill. “Better than the House bill isn’t extravagant praise,” he concedes, “but it is certainly one bar such a bill ought to clear.”
Levin examines (1) the tax credits in the Senate bill, (2) its reform of Medicaid, (3) its effort to give states regulatory flexibility and control over the individual insurance market, and (4) its prospect of passing muster under “reconciliation.”
I won’t attempt to summarize Levin’s analysis of these issues. Instead, I will quote two passages that, in particular, caught my eye.
The [Senate bill’s tax] credit. . .reaches all the way down to the bottom of the income scale, which I think of as an element of the bill’s Medicaid reform. Where today, people newly covered by Obamacare’s Medicaid expansion (who tend to be childless adults with relatively higher incomes than the non-expansion population) are funded by the federal government on much better terms than the traditional Medicaid population (which tends to include more women with children and people with even lower incomes), the Senate bill would gradually equalize funding for the two groups, effectively shifting Medicaid’s focus back to the most vulnerable of its beneficiaries.
In states that respond to that by pulling back the expansion—and for states that have not pursued an expansion—the fact that the credit now goes all the way down means the Senate bill would provide an income and age-based subsidy that would allow these lowest-income individuals to afford at least modest insurance coverage in the individual market.
That’s an improvement over the House bill and Obamacare. . . .
But the biggest change from the House bill, and from Obamacare, might prove to be the way in which the Senate bill tries to give states regulatory flexibility and control over the individual insurance market. . . .
The federalization of health-insurance regulation is the core of Obamacare, and of the problem with it. The House bill sought to reverse it partially by allowing the states to obtain waivers from a couple of elements of Title I of the law—particularly the definition of essential health benefits, and the age-bands that govern how widely premiums can vary between younger and older people. The Senate bill pursues similar goals within the framework of Obamacare, by vastly expanding the range of permissible state waivers under Section 1332 of the law.
Under Obamacare, these waivers technically allow states to pursue different insurance-regulation regimes, but they are very limited in scope because a state has to show that it would achieve exactly the same thing the federal Obamacare rules would achieve, which means states can’t really do anything all that different. The Senate bill removes most of these “guardrails” on the waivers, requiring only that a state show that its proposed alternative would not increase the federal deficit.
So while a state could not, for instance, end community rating rules (because the 1332 waivers have to operate within the framework of community rating created by Obamacare), it could very significantly change other kinds of rules and requirements within its borders—to a far greater degree than anything the House waivers envisioned. And the bill requires that these waivers be more or less automatically approved.
States could not only roll back essential health benefit definitions and broaden age bands to where they were before Obamacare, but also alter the uses to which federal dollars are put. They could take the amount their residents are eligible to receive in premium-subsidizing tax credits, for instance, and use it instead to create a new state benefit designed very differently. They could combine it with the stabilization fund dollars provided under this bill and with a state Medicaid reform to experiment with a different approach to providing access to insurance for their residents. They could alter the balance of benefits between younger and older people in the individual market, or change or eliminate the exchange in the state.
If this were enacted, and once states got their bearings about just how much it would allow them to do, we could see some genuinely different approaches to health-insurance regulation among the different states—with blue and red models, rural and urban approaches, and more and less competitive systems.
I view the the regulatory flexibility provided by the House bill as its best feature, and maybe its saving grace. If the Senate bill does better in this respect than its House counterpart, that’s an important point in its favor.