Senate Republicans released their draft bill to repeal and replace ObamaCare on Thursday, and Majority Leader Mitch McConnell is hoping for a vote next week. The binary choice now is between pushing past the media and Democratic flak to pass a historic achievement, or wilting under the pressure and ratifying the ObamaCare status quo.
The bill is an imperfect compromise between moderate and conservative Republicans, and it makes pains to accommodate different interests and the Americans, states and businesses that have adapted to ObamaCare over the years. The center-right nature of the details means the Senate won’t be ushering in some free-market utopia. But the reform is a major improvement over the U.S. health-care status quo that will worsen if the bill fails.
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The Senate bill works off the American Health Care Act that the House passed in May. Like the House, the legislation replaces ObamaCare’s subsidies with tax credits for people who buy insurance on the individual market, ends Medicaid’s status as an open-ended entitlement, and starts to resolve some of the health-care system’s abiding flaws.
Medicaid was most divisive for Republicans in their months-long internal debate, so the pleasant surprise is that the Senate’s entitlement overhaul is somewhat stronger than the House’s. The program originally meant for poor women, children and the disabled—which ObamaCare opened to able-bodied, working-age adults above the poverty level—would be modernized for the first time. This could become the most consequential social reform since the welfare reconstruction of 1996.
Like the House, the Senate would end the funding formula that rewards states for spending more and transition to block grants, allocated on per capita enrollment. Governors would receive far more regulatory flexibility to manage their programs. Under the final House bill, the grants would max out at the rate of inflation plus one percentage point, starting in 2020.
The Senate waits four years instead of three but pegs the grants to inflation with no adjuster. The danger of delay is that grants become another phony rule like the old Medicare “doc fix” that Congress refused to enforce. But the Senate’s structural changes are more ambitious, and the benefits of those revisions will compound over time.
The Senate also ends ObamaCare’s discrimination between old and new enrollees, which liberals caricature as “rolling back” the Medicaid expansion. The government now pays the whole cost for the expansion population, to encourage Governors to join, but states are only compensated at a national-average 52% match rate for traditional beneficiaries like poor kids. Funding everyone equally—starting in 2021—will cause Governors to find efficiencies and retarget care to the most vulnerable.
