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If Graham-Cassidy is signed into law, it just might represent the death knell of today’s GOP. Needless to say, that is not the message we’re hearing from the Republican senators who back the legislation, who insist it instead represents the last, best chance for the party to fulfill its promise to repeal and replace Obamacare. If you’ve promised voters something for long enough, they will surely punish you for failing to follow through, or so the theory goes. We can’t dismiss this possibility out of hand. However, we also can’t neglect the possibility that Graham-Cassidy will create an entirely new post-Obamacare politics, a set of circumstances that will leave the GOP in a far less favorable position.
How will Graham-Cassidy change our politics? By shifting billions of dollars in federal health expenditures to state governments, the latest Republican effort to replace Obamacare will leave state politics forever transformed. Once state legislatures are fully in charge of Medicaid and premium subsidies on the individual insurance market, health care will go from one issue among many in state politics to the No. 1 issue by far.
While none of this ensures that Democrats would be the party to gain the upper hand in the Graham-Cassidy era, I’d say it’d be a pretty good bet. Though opinion on health care fluctuates a decent amount, recent surveys find that four-fifths of voters have disapproved of previous efforts to repeal and replace Obamacare. This is not an ideal starting point for Republicans, and it speaks to a lingering distrust of the GOP on health care policy.
This is a bigger deal for the future of our politics than you might think. If Graham-Cassidy merely meant that, say, Democrats would take back the House in 2018, then Republicans could potentially just claw their way back in 2020 or 2022. But if Democrats start winning back state legislatures, they can change the entire congressional landscape. Whereas Republicans now hold an overwhelming advantage in the states—they control 32 legislatures to 12 for the Democrats, with six split between the two parties—expect that to change. Barring a hitherto unforeseen transformation of the GOP into the party of health care socialism, it will be the Democrats, the party most committed to expanding public insurance programs, who’ll be in the best spot if control over health care decisions moves from the nation’s capital to state capitals. If Democrats do indeed start winning back state legislatures, they will be in a position to control the congressional redistricting process in the wake of the 2020 census, and to put their congressional candidates in a somewhat more favorable position. That is, they’ll be able to do something much like what Republicans did in numerous state legislatures after the 2010 census.
I want to stress that all of this could be true even if you believe Graham-Cassidy has some merit. To its defenders, the bill represents sound conservative principles. One of the chief conservative objections to Obamacare was that it amounted to a centralized, one-size-fits-all solution to the problems plaguing individual insurance markets across the country, despite the fact that those problems weren’t always the same. Regulations that might be a good fit for rich Massachusetts might not work so well for poor Mississippi, and so on. Graham-Cassidy loosens Obamacare regulations, with an eye toward giving state governments more discretion. Rather than prescribing a set formula for how federal subsidy dollars should be used, Graham-Cassidy gives state legislatures a much freer hand.
Moreover, Graham-Cassidy aims to equalize federal Medicaid spending. Because Medicaid is structured as a federal matching grant tied to state spending, states that spend more of their own money on Medicaid get more federal funds than states that don’t. This puts rich states, which by definition are in a better position to raise tax revenue, in a more favorable position than poor states, even though poor states get a more generous federal match. The Medicaid expansion worked a bit differently, with all states subject to the same federal match. (At first, the federal government covers 100 percent of the cost of covering all newly eligible beneficiaries before ticking its contribution down to 90 percent.) The net result is that states that expanded Medicaid under Obamacare got a much better deal than states that chose not to do so. By leveling out federal Medicaid spending over time, you could argue that Graham-Cassidy is doing right by poorer states, especially those that did not expand Medicaid. Or you could say it’s unfair to punish states that expanded their Medicaid programs while rewarding those that did not. No matter which side you come down on, it’s inarguable that if Graham-Cassidy passes, it will have a profound impact on state budgets.
Let’s give Graham-Cassidy’s champions the benefit of the doubt and accept that their approach will empower state lawmakers to craft health care solutions that meet the needs of their communities. What that would mean for state lawmakers in practice is that the complaints they could once deflect to Congress would land firmly on their doorsteps. Every single person employed in the health care sector and every single person who depends on subsidized medical care, whether directly or indirectly, would have a vested interest in ensuring that local health systems are generously funded and that funding grows robustly from year to year. They would soon learn that their livelihoods depend on the outcome of state legislative races, and they would vote accordingly. All of this is perfectly consistent with the conservative commitment to decentralizing health care policy. It is also perfectly consistent with Republicans losing elections.
As sympathetic as I am to the conservative critique of Obamacare—that it is too centralized and too prescriptive—there is no question that Republicans in Congress have struggled to unite around a compelling alternative. And it’s not at all clear that Republicans in state legislatures are better equipped to make the case for a move toward catastrophic insurance or for getting tough with price-gouging hospitals, which are often the biggest and most politically influential employers in their vicinity.
So in the medium term, at least, Democrats campaigning on boosting health care spending would almost certainly gain ground. While the tax hikes that would inevitably follow would halt their momentum, that would take a while to come to pass. In the meantime, Democratic-controlled legislatures would start redrawing congressional districts to give Democratic candidates a much-needed assist.
Of course, all of this hinges on Graham-Cassidy actually passing. That might not happen, as some of its regulatory provisions might not pass muster under the Byrd Rule, and because Sens. Lisa Murkowski and John McCain might break ranks with their fellow Republicans while Sens. Rand Paul and Susan Collins show no signs of softening their opposition. If the Republican dissenters continue to hold out, they will almost certainly stand accused of party disloyalty. But in a roundabout way, they might be doing their fellow Republicans a huge favor.