Graham-Cassidy Bill Is the Latest (Dim) Hope for Health Reform

(Bloomberg View) -- Health-care reform is like one of those ill people in a Victorian novel. They are pronounced close to death, with no possibility of a cure … and then they linger on for hundreds of pages of breathless plotting, while the reader wonders: “Is this it? Could they possibly live after all that suffering?”

The latest bedside miracle is the Graham-Cassidy-Heller proposal, which would cut spending, cap spending, and shift spending away from states that expanded Medicaid to those that haven’t. At the same time, it would give states considerable discretion to design local solutions for health-care provision, something that, as I’ve noted before, is likely to be the key to getting us out of the morass in which we’re currently mired with Obamacare.

Is this the turn? Has the fever broken? Or is this just a stalling tactic, before more agonizing months and years, before the patient is finally pronounced truly and utterly dead?

Well, the political math certainly looks difficult. Republicans hold a majority in both houses, but their Senate majority is narrow enough to give them precious little wiggle room when it comes to passing a bill. Considering that Rand Paul has already been pretty negative about the bill, that wiggle will have to be more like a tremor: If Rand won't back the proposal, they’ll need either Susan Collins or Lisa Murkowski, who have so far proven unwilling to vote for previous iterations of GOP reform ideas.

Moreover, they’re going to have to shimmy pretty quick. This bill is not, needless to say, going to garner Democratic votes. Democrats don’t want to do anything to Obamacare except pour more money into it, and this particular version is going to hurt blue and purple states that expanded their Medicaid programs.

So to get it through the Senate, the Republican sponsors will have to use a budget process called reconciliation. The reconciliation instructions expire on Sept. 30. In that time, the bill needs to get a CBO score and work its way through the torturous parliamentary procedure for bringing a bill to the floor and voting on it, as well as the lengthy arm-twisting that will probably be required to get enough senators on board. It’s not actually impossible to meet that deadline -- but it doesn’t look all that possible, either.

The Medicaid changes are also going to be a problem for Republican senators from states that took Medicaid money, a group that includes Lisa Murkowski of Alaska (don’t count on that vote), and also true-red, die-hard conservatives like Tom Cotton of Arkansas. Whipping those votes would be a Herculean challenge, and it’s far from clear that leadership has any appetite for that fight.

And yet, readers caught in this interminable saga can’t quite say “It’ll be dead by page 900.” Nevada is an expansion state, but one of its senators, Dean Heller, is co-sponsoring the bill. Something about this bill is appealing to him, and maybe that something will appeal to the waverers among his colleagues.

So it seems worth asking whether, as a policy matter, this bill is a good idea. (We will assume, arguendo, that our nation’s legislators can be swayed by the policy merits.)

There are indeed a lot of things to like in this bill, from a Republican perspective. It shifts money toward red states and away from blue ones, and achieves a longstanding goal of block-granting Medicaid -- ending the perverse incentives created by having the states manage the program while the federal government picks up part of every bill. And it gives states more autonomy, which is consistent with both conservative philosophy and red-state interests. Obviously if you’re fond of Obamacare, this is going to seem a poor substitute. But you may have noticed that most Republican legislators aren’t particularly fond of it.

That said, it still leaves some of the regulations in place that have caused so many problems with the exchanges for individual insurance policies. Tinkering with the money side while leaving those regulations intact is a dangerous game. It’s a good idea to let states figure out how to patch the holes that Obamacare has created -- but given the sums involved, it seems eminently possible that states simply won’t be able to.

In trying to put the nation’s health-care system on a sustainable basis, Republicans may have to choose between their smaller-government ideals, and actual smaller government. The more ambitiously a bill cuts spending on a major entitlement like Medicaid, the less likely they are to actually get that bill passed.

The years of passing never-never repeal bills under Obama were a political and ideological dead end; they achieved nothing, and left the party woefully underprepared to tackle the program when they actually seized the reins of power. Republicans should take a lesson from that: Small steps towards a goal are much more productive than giant leaps that leave you flat on your face.

Just capping the program’s growth, and eliminating its perverse incentive structure, would be a major achievement for Republicans, and for any American who wants a smaller and less intrusive federal government -- or for that matter, one that is not headed for a fiscal crisis. Republicans are more likely to achieve that goal if their block-granting proposals are generous, allowing precarious moderates to go back to voters and say: “See? Don’t listen to Democrats who tell you we’re cutting Medicaid. We’re reforming a program in dire need of it.”

Graham-Cassidy’s architecture seems more likely to support that kind of trade-off than the bills that died before it. But it probably also isn’t quite enough. Which is why, come Sept. 30, the bill is likely to have proven as hopeless as the other tinctures applied to this interminably ill patient called health-care reform.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of “The Up Side of Down: Why Failing Well Is the Key to Success.”

To contact the author of this story: Megan McArdle at mmcardle3@bloomberg.net.

To contact the editor responsible for this story: Philip Gray at philipgray@bloomberg.net.

For more columns from Bloomberg View, visit http://www.bloomberg.com/view.