The new Obamacare replacement legislation — a solid step in the right direction

From a conservative perspective, I think it’s clear that the new House Obamacare legislation — the MacArthur Amendment — is an improvement over the original bill concocted by Speaker Ryan. But how much of one?

Yuval Levin makes the case that the core concept of the new legislation — state waivers from Obamacare insurance regulations — represents a significant improvement, in terms of both substance and political pragmatism. He writes:

[S]tate 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.

Waivers accommodate the main concerns of the two key factions in the House Republican caucus:

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.

This approach is consistent with sound principles of federalism. But how much flexibility would states have?

If [states] 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.

Levin is fairly confident that more than a few states will seek waivers, given the very real problems they are seeing in their individual insurance markets. And it’s likely that the Trump administration will be receptive to waiver requests.

Unfortunately, we cannot expect a Democratic administration to be. This is one of the weaknesses of the revised legislation. On the other hand, it may not be possible to pass anything better.

As Levin says:

There is. . .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.

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