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Last-ditch effort to repeal Obamacare might just bring moderate and conservative Republicans together

Yesterday four Senators—Lindsey Graham, Bill Cassidy, Dean Heller, and Ron Johnson—released the latest bill to repeal and replace Obamacare.

Like every other bill, it only partially repeals Obamacare because it aims to satisfy the Senate’s reconciliation process, which allows a bill to be passed by a bare majority and avoid a filibuster.  As such, the bill can only include budget provisions related to revenue and spending.

The reconciliation process also puts a severe time constraint on the bill’s passage because, according to the Senate parliamentarian, the current reconciliation instructions expire September 30—the end of the federal fiscal year.

Once that time expires, it’s not clear when Republicans in the Senate will have another opportunity to pass a bill with a bare majority.  Presumably, a new reconciliation process could be taken up in the FY2018 budget, but Republicans will likely want to use that process for tax reform.  Doing both in the same bill would be extraordinarily challenging.

Thus, this may truly be the last-ditch effort to repeal and replace Obamacare for the foreseeable future.

The bill, of course, faces long odds considering the divide that remains between moderate and conservative Republicans in Congress and that September 30th deadline.

Yet, this bill might just be enough to bridge that divide.

Importantly, Graham and Cassidy—who have been working on variations of this bill for months—are now joined by Sen. Heller of Nevada and Sen. Johnson of Wisconsin.  Representing a Medicaid expansion state, Heller was concerned about the impact on how repealing the Medicaid expansion would impact Nevada’s poorest residents, while Johnson stood as one of the Senate’s staunchest supporters for repealing the expansion.  If Heller and Johnson are satisfied, then maybe both moderate and conservative holdouts will come on board.

For moderates, the key is that the bill retains all of Obamacare’s taxes, except the medical device tax, which leaves enough money available to repeal Obamacare’s Medicaid expansion and replace it with a program with enough funding to protect health care for a state’s poorest residents.

The replacement program should have broad support from both moderates and conservatives.

The basic idea is to repeal the Medicaid expansion, individual tax credits, small business tax credits, and cost sharing reduction payments, and then funnel all of that money back to the states in the form of a block grant to establish their own health care programs.

As Sen. Graham emphasized at their press conference yesterday, this approach will give people more control over the health care system because they have direct contact with the state lawmakers who will be responsible for the system, who live in the same neighborhood and go to the same hospitals.  By comparison, all of the people suffering today under double-digit premium increases and narrowing networks have no one to complain to but a faceless bureaucrat in Washington.

Moderates and conservative should also fully support how the bill expands Health Savings Accounts and, in particular, allows these accounts to be used to pay premiums for individual health insurance.

Finally, folks should be able to come together to support the bill’s elimination the individual and employer mandates, two of the most unpopular provisions of Obamacare.

Moderates may still be skittish over the fact that the bill includes the per capita payment reforms from the Better Care Reconciliation Act that puts a cap on Medicaid payments to states.  No doubt moderates will be worried these caps will strap their state Medicaid budget moving forward.

Conservatives, on the other hand, will almost certainly still be skittish over the fact that the bill does not repeal the insurance regulations responsible for the skyrocketing insurance premiums across the country.  The fact is, with no change to these regulations, there is no guarantee any of this will work.  Conservatives will also find retaining nearly all of Obamacare’s taxes tough to swallow.

Though moderates and conservatives still have concerns, there may be enough in the bill to get them to a yes.  For moderates, all the money retained by not repealing Obamacare’s taxes may be enough to satisfy concerns over the new caps on Medicaid spending.  It seemed to do the trick for Sen. Heller.  However, not all states come out the same.  In fact, one of the key design elements of the bill is to equalize funding between states for low-income populations, which means some states will lose out.  Most states on the losing side are states with very generous Medicaid programs run by Democrats.  But there may be Republicans in some states with concerns over the funding formula.

For conservatives concerned about Obamacare’s regulations, the bill allows states to receive waivers from key regulations, including restrictions on varying health premiums on age and health status charging, as well as waivers from health benefit mandates and medical loss ratio rebate requirements.  These waivers can apply only to health coverage provided by a health plan that receives federal funding under the bill and provided to an individual who directly benefits from the funding.  The reason for this limitation is to tie the waiver to the funding so that the waiver qualifies as a budget item under the reconciliation process, an idea I proposed back in March.

Considering there is no way to fully repeal Obamacare’s regulations through the reconciliation process, these waivers offer conservatives their best hope at turning back these regulations.

Of all the repeal and replace bills to date, the Graham-Cassidy-Heller-Johnson bill delivers the best chance to bring moderate and conservative Republicans together.  On top of that, there’s a bunch of great policy included that gives states a real chance to turn around both their Medicaid programs and their health insurance markets.

The bill is likely the last best hope for Republicans to get something positive accomplished on health care.  It’s time for Congress to finally get it done.

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