On Monday, two plucky Senate Republicans are set to embark on one final madcap effort to repeal and replace Obamacare. Lindsey Graham of South Carolina and Bill Cassidy of Louisiana have promised to introduce a piece of practical, compromise legislation that will simply let states decide whether to keep the Affordable Care Act or ditch it for something they prefer.
“It would leave in place taxes on the wealthy, taking that money and giving it back to governors to come up with better health care,” Graham has told CNN. “If you like Obamacare, you can keep it. If you want to replace it, you can.”
This modest pitch is wildly misleading. Graham and Cassidy have been shopping versions of their bill for months now, and submitted a detailed version as an amendment in July. As it stands, the legislation would make it virtually impossible for dozens of states to continue operating Obamacare as we know it without kicking in unrealistic amounts of their own money. That’s because, in the short term, the law is designed to penalize states that embraced the ACA while rewarding those that resisted it. Further down the line, the legislation simply zeroes out all of Obamacare’s spending, a de facto repeal of the entire program that doesn’t include a replacement. As policy, it’s a bit like walking into somebody’s house, lighting the whole ground floor on fire, then telling them, “Hey, you can keep living here—if you like it.”
In its early years, Graham-Cassidy is about robbing Peter to pay Paul—or, to be more precise, raiding California’s health-care budget in order to temporarily lavish some extra dough on North Dakota. The bill would take all of the money Washington currently spends on Obamacare’s Medicaid expansion and premium subsidies, then distribute it to states in the form of block grants that, in theory, lawmakers in Albany or Topeka could use to fund whatever health care system they desired. Meanwhile, it leaves in place some of Obamacare’s consumer protections for patients with pre-existing conditions.
Sounds reasonable? There’s a catch. Instead of determining each state’s block grant based on how much money it receives under Obamacare today, the bill would doll out funding based on a baroque formula that favors poorer, older, sparsely populated parts of the country. As a result, it shifts spending from large states that expanded Medicaid, like California and New York, to small states that did not, like Mississippi and Alabama. There are some exceptions to this rule. For instance, nonexpansion states like North Carolina and Florida could see their health-care funding slashed, since lots of their residents get premium subsidies through the ACA’s exchanges today. Nevada, which did take up the expansion, could see a slight funding bump. But, as a whole, the bill starts off as a giant slap at states that committed the sin of trying to get more of their residents insured through Obamacare.
It gets worse. Graham-Cassidy schedules its block grants to grow slower than the cost of health care or insurance, thus eroding their value over time. According to the progressive Center on Budget and Policy Priorities, the system would would lead to a 34 percent spending cut by 2026. Nine states—California, Connecticut, Delaware, Florida, Massachusetts, New Jersey, New York, North Carolina, and Virginia—would see their federal health-care funding cut in half under the block grant system, compared to what they would have received from Obamacare’s Medicaid expansion and subsidy spending. Keeping the ACA in place would require spending vastly more of their own state revenue, which would be prohibitively expensive.
And what about the winners under the block grant setup? Many of them turn out to be losers, too. That’s because, like previous Republican House and Senate health-care bills, Graham-Cassidy would impose a per-capita cap on traditional Medicaid, designed to throttle its spending over time. By 2026, just eight states would end up with more overall health care funding than under current law—and many of them would probably be better off if lawmakers just swallowed their irrational animosity toward the ACA and expanded Medicaid.
But the real kicker comes after 2026. At that point, the block grant simply disappears, leaving states to fund whatever insurance scheme they’ve set up without federal assistance. As CBPP’s Edwin Park noted to me, this is even more draconian than what Republicans dreamed up in the previous House and Senate bills, both of which would have left in place subsidies that Americans could use to buy insurance. “Looking past 2026, both the House and Senate had their grossly inadequate tax credits, but they were permanent. Here, all funding for expanded coverage, the marketplace subsidies and Medicaid expansion, disappears,” Park said.
So far, nobody seems to be taking Graham and Cassidy too seriously, mostly because time is working against them. While Senate Majority Leader Mitch McConnell has dangled the possibility of a vote, few seem to think the pair can move their bill before the end of the month, when the legislative vehicle Republicans are counting on to pass repeal with a bare majority expires.”I don’t think there’s much of a chance,” Sen. Orrin Hatch of Utah, the Senate Finance Committee chairman, told Politco. Plenty of other Republicans apparently agree. President Trump, meanwhile, has not-so-subtly nudged everybody to move on.
Even so, this bill should make Obamacare’s supporters nervous, at the very least. It doesn’t merely shuffle Obamacare’s funding around, but rather chokes it off entirely over the course of a decade. Graham and Cassidy may be attempting the legislative equivalent of a half-court buzzer beater. But we’re in big trouble if they just happen to sink it.