Tuesday, March 07, 2017

Psst, Democrats: Help Republicans out of the repeal box via Cassidy-Collins

I don't want to be prematurely optimistic, but the House ACA repeal bill, the so-called American Health Care Act, seems despised from all sides -- so much so that both Jonathan Chait and Jonathan Bernstein speculate that it's designed to fail. It's being denounced by Tea Partiers as Obamacare Lite and by progressives -- and conservatives with any commitment to extending insurance access -- as certain to un-insure millions to tens of millions of low income ACA beneficiaries.

More to the point, its release was immediately preceded by a letter to Mitch McConnell from four Republican senators in states that have expanded Medicaid -- Portman, Capito, Gardner and Murkowski -- warning that the repeal bill should provide "stability" for beneficiaries of the expansion.

Still, perceptions of the way things are likely to fall out change quickly. Leadership in both the House and Senate have declared they want to move quickly -- McConnell indicating he'd give the House bill a quick floor vote in the Senate, though later half-walking that back. Underlying the process is the enormous pressure Republicans have built under themselves over seven years to rip the ACA apart. If the bluster from the far right about faux repeal blows over, the moderates defending Medicaid could go wobbly. In fact, they've left themselves space to. Look at the language with which they've "defended" the expansion (my emphasis):

We are concerned that any poorly implemented or poorly timed change in the current funding structure in Medicaid could result in a reduction in access to life-saving health care services. The Medicaid population includes a wide range of beneficiaries, many of which cycle on and off Medicaid due to frequent changes in income, family situations, and living environments.  The Department of Health and Human Services reports that nearly one-third of individuals covered under the Medicaid expansion have a mental health or substance use disorder. As the largest payer of mental health and substance use services in the United States, it is critical that any health care replacement provide states with a stable transition period and the opportunity to gradually phase-in their populations to any new Medicaid financing structure.

We believe Medicaid needs to be reformed, but reform should not come at the cost of disruption in access to health care for our country’s most vulnerable and sickest individuals. Any changes made to how Medicaid is financed through the state and federal governments should be coupled with significant new flexibility so they can efficiently and effectively manage their Medicaid programs to best meet their own needs. We also believe a gradual transition is needed to ensure states have the time to successfully implement these new changes. The Affordable Care Act is not working for states or the federal government and must be repealed and replaced with a plan that reforms Medicaid and protects individuals and their families over the long term. However, the February 10th draft proposal from the House does not meet the test of stability for individuals currently enrolled in the program and we will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states.
While the letter criticizes the leaked February 10 draft, from one perspective it seems designed to embrace the bill as modified before release. The current bill preserves Medicaid expansion funding to 2020 -- and for then-current enrollees who remain enrolled beyond that point.  It also uses a relatively moderate per capita cap formula that leaves much of the burden for state cost overruns on the federal government.*  The letter provides space for the signatories to claim that their demands were met in the revisions to the bill released yesterday.

What this says to me is that Democrats should work to shore up not only these four but the twelve-odd Republican senators who have expressed qualms about un-insuring millions, particularly through rollback of the Medicaid expansion.  If some quorum of three or more of them are to stand firm and block insta-repeal via budget reconciliation, they need a viable alternative to rally round; they need a plausible path to working with Democrats to conservatize the ACA -- and even, gasp -- gain license to stabilize it by claiming to remake it.

That path exists, in the form of the Patient Freedom Act introduced in late January by Senators Cassidy and Collins, co-sponsored by Capito and Isakson. The PFA sets up an alternative structure to the ACA marketplace that states can opt into, which channels subsidy money into health savings accounts to be spent in a deregulated insurance market in which catastrophic health plans figure prominently. The subsidy pot is spread further up the income scale, thinning resources for low income beneficiaries.

The PFA is as noteworthy for what it does not do as for what it does. It does not repeal the ACA. It preserves the taxes that fund ACA benefits and allows states to continue with the Medicaid expansion – and, if they wish, with the ACA’s income-based premium subsidies and coverage rules.

The alternative HSA-centric coverage model the PFA puts forward -- and privileges -- is pretty toxic to Democrats. Moreover, the bill is something of an incoherent mess, with a host of ambiguities and a level of complexity that makes the ACA look like a simple three-legged stool. No one, including, I suspect, the authors, would think to implement it in its current form.

But the PFA visibly points the way to a compromise that healthcare scholars across a pretty wide ideological spectrum have suggested is the only way to end the parties' ideological world war over health insurance access. That is to open up a provision of the ACA, the "innovation waivers" that states can seek to remake their marketplaces. ACA Section 1332 stipulates that such waivers can be used to seek approval for alternative schemes that cover as many people as the ACA would, as comprehensively, at comparable cost.

Since such waivers are subject to HHS approval, conservative state governments could probably do whatever they want with them right now and win approval from Price and Verma.  But loosening HHS oversight, and criteria for approval, would be a states' rights bounty.

The PFA preserves these waivers. So while it's structured to put two alternatives in tension, HSA Nirvana vs. EHB Candyland, it's easy to imagine negotiation softening that binary choice and opening the innovation channel wider -- a path to a superwaiver promised land.

What's not so easy to imagine is Republicans accepting a solution that leaves ACA taxes and benefit funding substantially intact. That leads us back to the staged failure scenario. That may not be so much a conscious design as a path predetermined by the manifestly impossible task Republicans have set themselves: undercutting ACA funding while delivering superior benefits. But if their caucus does fracture and fail to pass Plan A, Cassidy-Collins could provide a framework for Plan B.

In my view, Democrats should make that happen by engaging with Cassidy-Collins -- perhaps, at this stage, just in the quiet rooms of Mitt Romney's fond imagining. If the Republican center is not to hold, or rather swallow the poles, then the Republican "left", such as it is, needs shoring up.  I hope someone is doing that shoring.

While Republicans are in a bind, Democrats need a healthcare truce as much as Republicans do. Without it, Republicans may well close their eyes and jump -- if not this year, then soon, perhaps after expanding their Senate majority. Without it, too, Republican paralysis may collapse the ACA marketplace and wider individual market, in which case we'll be left with a nuclear blame war and a dysfunctional if unrepealed ACA.  What Don Taylor said three years ago remains true: both sides need a deal. Superwaiver is it.

* A misread on my part.


  1. If the Senate was the only legislative body, it might make sense to work on a compromise with the more realistic conservative Republican Senators. But isn't this preemptive compromising the sort of "omnidirectional placation" you used to criticize in President Obama. As long as the House operates on the Hastert Rule and the Freedom Caucus holds the swing votes, how could any version of Cassady-Collins pass the House? The Democrats are better off leaving the ACA in place and running on it and against TrumpCare/RyanCare in 2018 and 2020.

    1. That's a good point re the House. But even if engaging on Cassidy-Collins leads nowhere, I think it's worth doing, to keep Senate moderates off the insta-repeal train.