The Final Showdown On 'Repeal And Replace' Obamacare: What To Watch For This Week

09/25/2017 01:36 pm ET Updated Sep 25, 2017

The first question is a political question that might be answered quite early in the week: If Senator Susan Collins of Maine or Senator Lisa Murkowski of Alaska comes out publicly as a confirmed “no” vote on Monday or Tuesday, will Senate Majority Leader Mitch McConnell pull the vote on the Graham-Cassidy bill (technically an amendment to the “repeal and replace” bill approved previously by the House of Representatives) he had previously indicated would take place this last week of September to beat the deadline for achieving passage with only 50 votes?

Probably not if only one of the two stakes out a negative position, because the White House is still working to turn Senator Rand Paul of Kentucky into a “yes” by offering some kind of response to his “list” of demands for change in terms of the bill’s central structure of block grants to the states-based current Obamacare subsidy levels (Paul wants to go back to 2009 baseline figures, much lower than current health care insurance subsidy amounts). Paul also wants states to “opt in” to the Obamacare minimum coverage standards they want to continue, rather than “opt out” of standards they want to change or eliminate – examples include coverage for pregnancy and maternity care, drug abuse treatment, contraception coverage mandates and mental health coverage.

Of course, if Paul wins these points, it could further jeopardize GOP efforts to keep some moderate GOP senators on board – or even some of the bill’s more conservative sponsors, who really believe in the block grant concept. The GOP the leadership and Trump Administration would most likely cross that bridge when they come to it for the value of a possibly momentum-changing turn of Senator Paul from a “no” to a “yes.”

If the Paul effort fails, the leadership offered sweeteners to Senator Murkowski in what amounts to a clone of the infamous Cornhusker Kickback deal offered and then withdrawn in shame to then-Senator Ben Nelson of Nebraska by his fellow Democrats to win his vote for the original Obamacare legislation. Under the new “Alaska Purchase,” Senator Murkowski would win a more or less blanket exemption for her state from key provisions of Graham-Cassidy that would cost Alaska (already suffering from a lack of sufficient health care resources and choices and a large Medicaid–dependent population) a serious amount of Federal grant support.

Should the Alaska Purchase indeed “purchase” Senator Murkowski’s vote, there would probably be an equivalent hue and cry of shame that doomed the Cornhusker Kickback, in this case with shoe on the other foot for both Democrats and Republicans.

Moreover, one senator’s win is always another senator’s opportunity, so if shame doesn’t matter this week, the line up of other GOP senators (and even House members who would still have to vote again on the new version of repeal by week’s end) seeking equivalent deals to help their re-election chances in “blue” states disfavored by the Graham-Cassidy financial gerrymandering that takes money from mostly “blue” states (California and New York) to pass over to “red” states (e.g., Mississippi and Texas). As even President Trump has pointed out, health care politics is very complicated, and when you give a little on one point to one senator, it can turn another two or more against until till you come up with something for them, which in turn can turn off the first one back into a “No.”

A good example of that sort of effect involves Texas Senator Ted Cruz and his colleague Senator Mike Lee of Utah, who have apparently asked for, and won, unspecified changes in the Graham-Cassidy draft only to find over the weekend that those changes had been eliminated – as the bill continues to be tweaked to fit with the rules relating to what can and cannot be included in “reconciliation” legislation. If a proposed policy change cannot not realistically be deemed to have a relationship to, or tied to, budget considerations, then it would likely be “out of order” in Graham-Cassidy bill unless the Senate would vote to overrule its parliamentarian. But that would also require 50 votes plus Vice President Pence to do so. Again, any changes Cruz and Lee would want, given their particular brand of conservatism, would likely turn Senators like Collins and Murkowski and perhaps others against the bill.

All this horse-trading discussion, of course, ignores the substance of Graham-Cassidy, which has earned the opposition of just about every medical and insurance lobby in the nation, let alone patient advocates like the AARP and Planned Parenthood. Yes, Graham-Cassidy would defund Planned Parenthood like the other Obamacare repeal efforts, at least for a year.

The pervasive nature of the changes of the changes the bill would impose on the health insurance and health care structure of the United States has been subject to detailed reporting: cuts to the growth of Medicaid; waivers for states to drop essential coverage requirements under Obamacare; an end to all Federal subsidies to insurers and low income insured, especially the elderly, in exchange for an equivalent total of block grants to the states based not on whether they had expanded Medicaid under Obamacare but rather on their respective populations; the right of states to request waivers from the Department of Health and Human Services’ Center for Medicare and Medicaid to drop essential insurance coverage elements defined by Obamacare, and also to permit insurers to charge risk-based rather than community-rated premiums for patients with pre-existing conditions if “adequate and affordable” coverage was made available. The net result of Graham-Cassidy is essentially to shift medical care decision power not to “doctors and patients” as repeal and replace proponents always claim but rather back to the officials of state capitals and insurance companies, working in concert, with essentially no surviving federal standards that could not be waived or watered down by a sympathetic HHS Secretary. Essentially this would return America to the health insurance marketplace of 2009, where insurers found that pregnancy, or simply being capable of one, could be deemed a pre-existing condition. Likewise, merely having once taken a prescription antacid could deem a personal uninsurable except at a much higher premium. “Pre-existing conditions” were not really limited in the insurance market pre-2009 to dreaded illnesses like heart disease, cancer, stroke or diabetes. It is hard to find the constituency supporting Graham-Cassidy that is urging its passage based on returning to those “good old days.”

The most disruptive aspect of Graham-Cassidy, however, has largely gone unreported: ie, the end of both the individual and the employer “insurance mandates” under Obamacare. As with all previous repeal and replace efforts, this provision would put at risk the shape and very existence of the vast majority of Americans who get their health insurance as part of their compensation package. As pointed out during previous repeal and replace debates but not so far in the rush consideration of Graham-Cassidy – if even only one state obtained waivers of essential coverage elements under Obamacare like mental health, maternity, or addiction rehabilitation coverage – or to increase the cost of any pre-existing condition coverage – then every employer in the U.S. subject to the mandate would be free to offer only that “lowest common denominator” level of insurance to all its employees across the U.S., not just in the state which obtained such waivers.

To suggest financial officers and directors of the smallest companies subject to the mandate, or even America’s largest multinational corporations, especially those with weak or no unions, would not take advantage of this opportunity to enhance shareholder returns by taking advantage of such waiver options, strains credulity. Consider how a solid majority of small business owners opposes the Obamacare mandate and have adjusted their full-time workforces to come in under the Obamacare benchmark of 50. Also look at the “repatriation” issue”: how many of the largest American corporations have taken advantage of the opportunity to engage in intricate technology transfers and accounting devices to stash trillions of dollars of income in countries with lower tax rates than the U.S. since that option was granted under the tax code. how small business interests have opposed the Obamacare mandate from the start and adjusted their full-time work-forces to come in under the Obamacare benchmark of 50 – or how many large U.S. companies have taken advantage of the opportunity to engage in intricate technology transfers and accounting devices to stash trillions of dollars of income in countries with lower tax rates than the U.S. since that option was granted under the tax code.

Again, it is hard to find the constituency for the proposition that “if you like your workplace health insurance, you may not be able to keep it” under Graham-Cassidy. The fate of this final proposal to repeal and replace Obamacare would have been sealed before this week in all likelihood if the media had sufficiently reported that, under that bill, all employer-based health insurance covering an estimated 155 million Americans – not just the 20 million that gained coverage under Obamacare – would be subject to the decision of one state legislature or governor, and HHS Secretary Tom Price.

Terry Connelly is an economic expert and Dean Emeritus of the Edward S. Ageno School of Business at Golden Gate University.

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