Some Thoughts on Graham-Cassidy

These are…triggered…by Thursday’s Wall Street Journal piece on how the Graham-Cassidy Plan Would Change Health Coverage.

The Congressional Budget Office has said that, without a rule requiring insurers to charge all customers comparable premiums, health plans could become prohibitively expensive for some people with pre-existing conditions.

The plans wouldn’t be insurance plans, either, since the premiums wouldn’t have anything to do with the risk being transferred.  The plans would be welfare plans.

Separately, states could also waive a requirement that insurers provide a set of medical benefits like mental-health services and prescription-drug coverage. If those benefits aren’t required, people with costly medical conditions could have difficulty buying insurance with the relevant services or medications.

Certainly a possibility. However, that’s a matter between a State’s citizens and their State government. The Federal government has no legitimate role to play in this.

The bill seeks to distribute funding roughly equally among states. But under the ACA, 31 states expanded Medicaid, and some states had considerably higher enrollment in subsidized plans. Because that funding would go away to be replaced by block grants, some states would see a net funding gain and others would see a loss.

This is the only problem I have with Graham-Cassidy, albeit not for the reasons the WSJ cites others as having.  With roughly equal funding across States, low-population States will get more per capita money than those with larger population without regard to the relative health of the populations.  The block grants should be sized to each State’s population of citizens and legal immigrants, so that the per capita funding is roughly equal, not the per-State funding.  The biggest “losers” would still tend to be States with Progressive-Democratic Party-led governments, but these also are the States with the most profligately wasteful spending, and on a host of programs, not only on Medicaid.  There’s no valid reasons other States should be forced to continue to subsidize these wastrels with continued taxpayer dollar redistributions.

The bill rescinds the ACA’s Medicaid expansion, which for the first time extended coverage to childless, low-income adults. So states couldn’t use their block grants to cover these low-income adults under Medicaid.

Money is fungible, though, and Medicaid is a State program, even if it is heavily subsidized with Federal (i.e., your and my tax) dollars.  If a State thinks covering childless, low-income adults, et al., is a good idea, it certainly can reallocate monies from other spending to its Medicaid program for the purpose.

[T]he bill also for the first time places funding caps on traditional Medicaid and shrinks spending on the program significantly over time. Analysts say the reduced federal spending could blow a hole in state budgets….

It’s a start.  The Federal block grants should be put on an annually declining basis so that over 10 years (say), the grants disappear, and the States would be free to—and responsible for—designing and funding their own Medicaid programs without Federal strings, without subsidization with the tax dollars of other States’ citizens, and without having to send their own citizens’ tax dollars to subsidize other States.

Too, the analysts are wrong on this, and they demonstrate a breathtaking lack of understanding of responsibility.  Reducing Federal transfers to the States won’t blow a hole in any State budget.  The only thing capable of blowing holes in State budgets are those States’ governments via their spending decisions.  State governments just will have to spend their own citizens’ money, with less OPM coming in.

Unfortunately, guys like Senators John McCain (R, AZ) and Rand Paul (R, KY) prefer Obamacare to even this much compromise-y progress, and so they’re going to betray their constituents by voting to preserve Obamacare rather than replace it with Graham-Cassidy.  Their reasons for preferring Obamacare?  In McCain’s case, it’s all about ego and his precious Maverick status.  Nothing will ever be pure enough to suit Paul, so he’ll just vote “No,” no matter what.

If this bill fails, that’ll be these two Senators’ legacy–voting to keep Obamacare intact.  Senate Majority Leader Mitch McConnell (R, KY) should bring the bill to a vote this week regardless of his vote count.  He needs to put those Republicans who prefer Obamacare on the voting record for the coming Republican primaries.

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