Senate Republicans owe their majority to their seven-year pledge to repeal and replace Obamacare. But the draft legislation unveiled by Senate Majority Leader Mitch McConnell, R-Ky., reads less like an Obamacare repeal bill and more like an Obamacare rescue package.
Now, granted, it's easy to see how a casual observer of federal politics and policy might have viewed the reactions to the healthcare bill and come away a bit confused. Those on the right who accused Republicans of selling out and enshrining Obamacare's spending and liberals who warned that the bill would destroy Obamacare and make steep cuts to Medicaid seem to have been describing two different bills. And in a sense, they were. That is, the Senate bill can be thought of as almost as one bill that helps keep much of Obamacare intact in the coming years, and another bill that would institute increasingly significant changes to federal healthcare spending in the longer run.
Specifically, in the near-term, the bill spends a substantial amount of money to prop up Obamacare's failing insurance markets. In addition to authorizing spending on insurer subsidies that Republicans sued President Barack Obama over, the bill would include two different stabilization funds. One funnels $50 billion to insurers through 2021 and the other would feed $62 billion to states over the next decade.
The bill would also keep funding Obamacare's Medicaid expansion as is until 2021 and Obama's subsidies toward the purchase of insurance until 2020.
States would only have limited ability to opt out of some Obamacare regulations, but not most of them, including the regulation that forces healthier individuals to pay the same for health insurance plans as those with higher medical costs. Most, but not all, of the law's taxes would be eventually eliminated.
Though Obamacare's insurance subsidies would be made less generous after 2020 (for instance, they would phase out at 350 percent of the federal poverty level rather than 400 percent), they would be structurally similar. Rather than a "tax credit" that reduces an individual's tax burden, these Republican tax credits, like Obamacare, would be subsidies paid directly to insurers to help qualifying individuals with their premiums at the point of purchase.
Also, starting in 2020, states would be able to obtain more flexibility over their Medicaid programs by applying for block grants that would provide them more leeway over covering their Medicaid populations, rather than the current system in which the federal government funding comes with a lot of strings attached. Starting in 2021, the federal government would start phasing out the financing for Obamacare's Medicaid expansion over three years. Then, in what would be a big victory for fiscal conservatives if it ever got implemented, starting in 2025 Medicaid growth would only grow at the standard rate of inflation, which is typically slower than the rate of medical inflation. In the long-run, this would represent significant savings and is what Republicans are referencing when they describe their bill as entitlement reform.
So, for opponents of Obamacare evaluating the proposal, the question boils down to whether to place more emphasis on the spending in the coming years or in the promised reforms in the next decade. Based on history and common sense, conservatives have every reason to place much more weight on the idea that the short-term spending is going to come through, and the promised spending cuts and reforms are very unlikely to ever be implemented.
If a Republican majority that was elected on the promise of repealing and replacing Obamacare is putting off the elements of the bill that are reducing benefits, then why should we think that future Congresses would feel any obligation to see them enacted?
The party in power typically loses seats during a midterm election and commitment to the changes would not only have to survive 2018 but remain firm in 2020 and 2021 – a presidential election and the first year of a next presidential term. Again, the most significant change to Medicaid wouldn't occur for eight years – after four more Congressional election cycles and two more presidential elections. Just think of how much has changed in politics since 2009, when Obama was in his first year in office, Democrats had a 60-vote majority in the Senate, and Donald Trump was roughly halfway through his run as host of "The Apprentice." There's no reason to expect that in 2025, Congress and the president would feel bound to cuts in Medicaid growth rates set by this current Congress.
On many occasions, Congress has passed ambitious reforms that were never implemented. The most notorious example were limits to doctors' payment rates through Medicare passed in the late 1990s, that Congress routinely delayed – sometimes for months, sometimes for years – until Republicans cut a deal with Obama in 2015 to permanently prevent the payment changes from going into effect.
If this bill passes as written, there's very little reason to believe that the long-term spending reforms will ever see the light of day. But in the meantime, there's every reason to bet on the fact that Congress will follow through on the hundreds of billions of dollars in spending it's using to sustain Obamacare.