Obamacare Repeal Is Dead. Here Come the Bailouts.

New legislation would convert the health law into a series of flat payments to states.


Ron Sachs—CNP/Sipa USA/Newscom

After nine months of legislative drama, the GOP effort to overhaul Obamacare is dead. Last week President Trump seemed to say as much, tweeting that Republicans should accept defeat on health care and move on to reworking the tax code.

Even if congressional Republicans wanted to take another shot at rewriting the health law, they have little time left, thanks to Senate rules: The reconciliation instructions that would have allowed the bill to pass in the upper chamber with a simple majority expire at the end of the month.

What that means is that, even if they have not quite admitted it yet, Republicans have accepted that Obamacare is here to stay, whether they like it or not. Now they question is what comes next.

The simple answer is that Republicans don't know. There is no consensus plan about where to go from here, as a report from Vox's Dylan Scott makes clear. In many ways, this is just an extension of the original failure: Republicans never had a consensus plan on what to do with Obamacare, and in the wake of the failure of that non-plan, they still have not developed one.

But in the short term at least, there are some possibilities. One is that Republicans will work with Democrats to prop up the health insurance exchanges erected under the health care law. Health insurers are continuing to pull out of those exchanges, with insurers announcing last week that they would scale back operations in Virginia and Kentucky. The Senate, in turn, has already begun to hold hearings about how to stabilize the government-run marketplaces, and Senate Majority Mitch McConnell suggested over the summer that should the repeal effort fail, the fallback plan for congressional Republicans would be to work across the aisle to make sure the exchanges don't collapse.

Republicans, in other words, could pivot from attempting to take down the health care law to attempting to save it at taxpayer expense. Although some of the stabilization plans that have been discussed are temporary, temporary patches often have a way of becoming unofficially permanent. One potential and even likely outcome of this approach would be a recurring series of temporary bailouts, in which the exchanges are always teetering on the brink, and stabilization funding is always about to expire, and Congress comes together each year to ask what can be done and then decides to merely extend the funding for another year. This is the path of least resistance, the one that asks nothing of Republicans except a willingness to spend on Obamacare rather than attempt to solve its problems.

Another, more interesting, possibility is that Republicans will pursue one last legislative vehicle to overhaul the health care law.

Today, Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) are expected to release draft legislation that would essentially convert Obamacare into a system of block grants to states. Sen. John McCain (R-Ariz.), who helped kill the last GOP health care legislation in a dramatic late night vote in July, has already said he is willing to support it. Like previous GOP health care legislation, the new plan would eliminate Obamacare's individual mandate but maintain its rules requiring insurers to cover everyone. It would also eliminate Obamacare's system of health insurance subsidies. Instead, it would take most of the funding now used to pay for Obamacare and allow states to use it as they saw fit, meaning that the subsidies could be retained or altered. The block grants would be constrained from growing, so that a decade from now the total amount would be much less than under Obamacare.

The potential downsides are clear enough: The federal preexisting conditions protections that are the major driver of premium increases would be left in place. The combination of preexisting conditions rules and no coverage mandate would likely cause insurance markets to enter a death spiral. States would not be required to use the block grants to provide aid to the poor, so some of the funding might not be targeted towards the needy. Giving the states more freedom would mean more variation in performance; it is likely that some states would use the money poorly, and that others would simply continue with systems that look rather like Obamacare does now.

The timeline presents obstacles as well. Because of reconciliation rules, the bill would have to be passed by the end of the month, but so far there have been no hearings, and the Congressional Budget Office has not released a score. One of the reasons congressional Republicans have had such difficulty with health care legislation so far this year is their reliance on a rushed and often secretive process. It's not clear that the politics of this plan are better than previous iterations.

Yet as a fallback option, the plan has some appeal as well: Over time, the block grant caps it might help contain the health law's spending growth. States that wanted to keep an individual mandate in place could do so. States would not be required to spend on the poor, but could also use the plan's flexibility to find ways to better target the poor and the needy. The variation in performance would likely mean that some states come out better than they would under the current system, and that those experiments could then be replicated, and perhaps even improved upon, in other states.

There would be no guarantee of success, of course; state level experiments might prove self-serving and ineffective. But the alternative, of lingering instability and endless bailouts, might be worse.

The Cassidy-Graham plan, then, is a recognition, of sorts, that Republicans have failed at the federal level, and that state experimentation may now be the best alternative. It is an imperfect attempt to decentralize control of the law's operations, deferring to local governance and local accountability. And it is best understood as a tacit admission that Obamacare is here to stay, and that congressional Republicans don't know what to do about it.

It would not repeal Obamacare. It does not even offer a specific theory of how to reform Obamacare. But it does offer a theory of how to figure out how to reform Obamacare. And that is more than Republicans have had so far.

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  1. Republicans should accept defeat on health care

    Congressional Republicans sure did get their asses beat by those congressional Republicans.

    1. Need to primary the shit out of the RINOs.

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  2. This is why the whole “Trump isn’t really a Republican” nonsense in hilarious.

    Republicans don’t seem to put much stock in “Republican philosophy”

  3. Good Lord. What a bunch of morons.

    1. How does it follow the news like that?

    2. Not morons, actually quite Machiavellian. They have the other party pass this massive government overreach, put up a big show of being against it, letting it limp through the legislative gauntlet. When it comes to your time to destroy the bill, you “self destruct” and further “build up” it’s shaky legitimacy.
      This is how big government builds itself, bipartisan efforts to protect your “political opponent’s” overreach.

  4. Republicans never had a consensus plan on what to do with Obamacare, and in the wake of the failure of that non-plan, they still have not developed one.

    Stick with what works.

  5. When you say ‘Republicans didn’t have a plan’ you’re right, but saying that seems to indicate that the only way to repeal the ACA was to replace it with ‘something’ which just goes to show how far gone everything really is.

    Their only chance was a full repeal, full stop, and they failed. No surprise, but the spiral will continue.

    1. There are institutions and relationships established by Obamacare, and people and companies with coverage provided for by Obamacare. Even if you’re going to repeal and just let the market do its thing, you still need a transition plan to defund and wind down these things.

      1. I don’t think that’s what anyone at all means by ‘Republicans don’t have a plan’. Any Republican plan that isn’t repeal is just another flavor of ‘what kind of unicorn can we sell to our base for reelection’ in my view. At the very least, this is what Republicans mean when they say they should have a plan.

        1. Right, people understand that ‘repeal and replace’ means “replace it with some other kind of doomed government boondoggle.” Just like we understand that ‘just repeal period’ means “I don’t understand how political procedures and incentives work.”

      2. I do admit I’m always a bit amazed at how quickly the government can wind something up, but how long it takes to wind something down.

        1. Nobody in Washington has any experience at ending a federal program, so there’s definitely a learning curve.

          1. The entire Department of Homeland security wound up in what, less than 72 hours?

            1. ACME
              One(1)Gov. Dept.
              Level: Federal
              Type: Security, Domestic
              Pensions not included.

        2. I believe that is an elective at the Kennedy School of Government.

    2. ObamaCare is working exactly as it was designed to work. It’s going to fail, and Congressional Republicans will negotiate with Democrats to provide Medicaid for all. (Not Medicare, Medicaid.) Then they’ll squabble on just how to fix Medicaid, with Republicans arguing that responsible government can only pay for 75% of what Democrats promise … until the Democrats get 100% of what they want, and then Democrats will campaign for 150% and Republicans will argue that government can only pay for 125%.

      1. Yep.

      2. The only thing I might argue there is the numbers, which might be too low.

      3. This is exactly the US government in a nutshell, Fabian Socialist to the core.

  6. The Senate, in turn, has already begun to hold hearings about how to stabilize the government-run marketplaces

    Let me guess… these meetings, they go a lot like meetings went in the old Soviet Union and New Venezuela?

    1. One should always be concerned by any situation in which the phrase “we need to act to stabilize the government-run marketplaces” is spoken.

      1. Especially when the answer to the problem is in the question.

      2. Government: If you think the problems we create are bad, just wait until you see our solutions.

        1. Put another way, just substitute Progressivism for Government.

  7. Republicans never had a consensus plan on what to do with Obamacare

    Funny – they had one before Trump got elected . . .

    1. Yep, and that has been revealed to be the lie that it always was. I wish it would have been the truth, but with the number of Republicans who actually fought for repeal instead of a different flavor of buying off the people I think it’s safe to say that it was simply false and there was never any intention of repealing.

  8. How about simply not bailing it out?

  9. RE: Obamacare Repeal Is Dead. Here Come the Bailouts.
    New legislation would convert the health law into a series of flat payments to states.

    Oh good.
    More bailouts thanks to the gutless GOP.
    Whatever happened to, “We’ll repeal Obamacare?”
    I guess the republicans are a big a socialist party as the democrats.
    Who would’ve thought that?

    1. “Whatever happened to, “We’ll repeal Obamacare?””

      It was a lie from the beginning.

      The first bill they put up to “repeal” the ACA when they had both control of both houses and a Republican in the WH so they couldn’t be sure the bill would be vetoed was nowhere near a repeal, it was just tinkering around the edges that if anything would have made things worse than they already are.

    2. “legislation that would essentially convert Obamacare into a system of block grants to states.”

      So all that’s left of fighting Obamacare is how much faster than the CPI will we let it grow, and what strings will we attach to the grants to help out favored constituents?

    3. “legislation that would essentially convert Obamacare into a system of block grants to states.”

      So all that’s left of fighting Obamacare is how much faster than the CPI will we let it grow, and what strings will we attach to the grants to help out favored constituents?

  10. They do not because a majority of the voters are supportive of the parts of ACA that give them stuff but are opposed to the restrictions on themselves. There are not enough Republicans who are willing to put their political careers on the line to go against the voters. Unlike the Democrats who were willing to be defeated in order to put the government in charge of health care.

    The essential pronlem.is that the electorate is showing a distinct preference for a perrception of security and equality over liberty.

    1. “The essential pronlem.is that the electorate is showing a distinct preference for a perrception of security and equality over liberty.”

      But you know, it’s those Mexicans we have to fear the most….

  11. “Senate Rules” bull shit excuse for the rule makers to fuck around and not do anything.
    This is why everyone hates congress they make the rules and they can change the rules on a dime if they really wanted to get anything done. that said the less they do the better but in this case they need to undo the crap they’ve done

  12. Alt text: And then there’s Maude!

  13. I believe we should primary any Republican who signs on to this legislation. I believe we should primary any Republican who votes for this legislation. I believe any Republican who votes for this no longer represents the voters and should be removed from office.

  14. They shouldn’t attempt to save anything.

    All they have to do is make it legal to buy and sell normal, old-fashioned, health insurance, and let everything on the exchanges death spiral.
    Fuck anyone who bitches about pre-existing conditions.

    1. This but then the Repubs. should start working in the statehouses across the country to deregulate the state laws that keep competition out and prices high.

    2. Fuck anyone who bitches about pre-existing conditions.

      The problem is that the law cancelled a lot of people’s insurance plans. My mother, for example, had a catastrophic plan that had a $4k deductible but paid absolutely everything beyond that. Obama didn’t like her plan, so she didn’t get to keep it. She then had to go out on the insurance market as a woman in her 60s.

      I think one element Rand Paul got right in his plan was a grace period where everyone gets back on a plan that they want to keep, and then after 3-5 years go back to people getting turned away for pre-existing conditions.

      1. Obama’s stench is going to linger for years to come. You’re gonna need a bigger can of Febreze.

    3. Gosh hazel, what if some of those people with pre-existing conditions are brown people? Racist much?

  15. Right, block grants to states will help “reform Obamacare”, because other block grants have worked so well in the past. How often have the states, particularly the red ones used these grants to balance their budgets instead of helping the people the grants were intended to help? No matter if they are called block grants or subsidies, it is still tax payer money. I have no desire to see my taxes go to subsidize tax cuts in Kansas under the ruberic that it is helping to fund insurance exchanges. The American people have fallen for this bait and switch tactic too often before; they must not fall for it again.

    1. I have no desire to see my federal taxes go to ANYTHING not expressly permitted in the Constitution.

      Not that that has ever stopped your sort from pissing away vast amounts on cronyism masquerading as good intentions.

      Bait and switch my ass. Your chosen side created this rolling disaster, and you still own it. So take your red/blue rhetoric and shove it.

  16. Republicans – Democrats without spines…

  17. The day it became law I told you guys you were stuck and fucked with it.

  18. Socialized medicine here we come. At least 5 senate Democrats are now supporting “Medicare for all”, including all likely 2020 presidential candidates.

  19. Marxism has even infected the GOP

    1. So when I say we need a return to McCarthyism, maybe I actually have a legit point?

    2. It has been there almost all along. Do not forget that the GOP was once the home of the progressives.

      1. What progressives, and when?

  20. How do you bribe the electorate when the money’s all gone?

    1. Bread and circuses have always been very cost-effective.

  21. it is over folks, we must go back to being “rugged individualists” and rely on ourselves. We must stop feeding the beast. Find ways to avoid paying taxes and do not participate is the mandatory health insurance scam. I will not buy unless I can buy exactly what I want and what suits my needs only. We must all resist in any way we can. Cheat if you have too, they do.(gov) America is over, done, dead. Lying, political whores, with very few exceptions. I am done. Voting, and participating. Join me.

  22. Isn’t this essentially what Canada does? But without HH&S mucking it up. I would be for block grants in education if we got rid of The Department of Education but that would never happen. The block grants would happen but politicians never eliminate government.

    1. They’d never be able to resist the urge to attach strings to the money. They never have.

  23. Rand Paul said politicians are like dinosaurs – big heart but small brain.

    Republicans are small dinosaurs – small hearts AND small brains.

  24. So…Obamacare is dead, long live Obamacare?

  25. Vote out each one of these commie rats!!!

  26. Before ObamaRomneyHeritageCare there was a steadily growing vacuum in the American health care system – due to the effective collapse of the individual market and the de-industrialization of America (i.e., good jobs with benefits turning into bad jobs without). The continuing neglect of this by the Republicans not named Romney, and even then not running for POTUS, led to the Democrats using it as an issue and implementing ORHC. The Republicans railed on ORHC’s warts and was able to win the House and eventually the Senate, but could not do anything until one of their own was POTUS.

    Finally, the Republicans would give us a great free-market health care plan that would be as good as the good in ORHC, but without the bad. And of course, they failed about as horrifically as possible. With this failure on the books, the Democrats can be emboldened to simply say that MediSomething-For-All will fix ORHC’s warts, and in the mother of all ironies, the Republicans will be forced to *defend* ORHC – and the had better try to work out something in this Congress since they will be taking some Congressional losses in 2018 and a loss of the POTUS in 2020.

  27. I don’t think Obama meaningfully enforced the individual mandate. The IRS accepted silent returns while he was president. Maybe they sent bills for penaltax later, but I doubt it was a regular thing.

    But why should we be forced to purchase a product at the government’s mandate only to prevent a “death spiral”? Let it come. If millions of Americans drop their healthcare, then it only bolsters our position – people don’t like being forced to buy high end products, especially when they can’t always use it.

    Frankly, the death spiral is the only thing that will compel both parties to come up with a solution. The democrats will obviously demonize the GOP, but if millions of Americans drop their coverage, again what message does that send? Kill the individual mandate and replenish the market with plans forbidden by ACA. Let the mini plans and alternatives return. And I think the insurers will be VERY interested in reducing the essential benefits mandate. Most people don’t need mental health coverage and such.

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