The New GOP Plan to Repeal Obamacare Is Pure Destruction, or Trumpism In a Nutshell

Graham-Cassidy would repeal the ACA and gut Medicaid with no viable replacement—leaving millions of Americans without healthcare.

Josh Bivens and Hunter Blair September 20, 2017

Republicans are making a last-ditch effort to repeal Obamacare, and their new plan is worse than ever. (Melina Mara/The Washington Post via Getty Images)

The first plan the House of Rep­re­sen­ta­tives put for­ward to repeal the Afford­able Cart Act (ACA) was the Amer­i­can Health Care Act (AHCA). The Con­gres­sion­al Bud­get Office pro­ject­ed that the AHCA would cost 24 mil­lion Amer­i­cans their health insur­ance cov­er­age by 2026. An amend­ed ver­sion, which passed the House, cut this num­ber to 23 mil­lion. Besides inflict­ing these cov­er­age loss­es, the AHCA would have cost jobs and increased out-of-pock­et costs faced by Americans.

It is a raw negative-sum redistribution of resources to those currently in power.

The sec­ond plan, the Bet­ter Care Rec­on­cil­i­a­tion Act (BCRA) failed nar­row­ly in the Sen­ate. The CBO pro­ject­ed that the BCRA would have cost 22 mil­lion Amer­i­cans their cov­er­age by 2026. On one hand, it may have seemed like progress of some kind to reduce the num­ber thrown off the insur­ance rolls rel­a­tive to the AHCA, but the BCRA back-loaded severe cuts to Med­ic­aid beyond the bud­get win­dow that CBO tra­di­tion­al­ly exam­ines. This means that in the longer run, the BCRA would have been even more destruc­tive to health secu­ri­ty than the House-passed plan. Addi­tion­al­ly, unlike the AHCA, the BCRA cut not just the expan­sions to Med­ic­aid passed under the ACA, but cut deeply into tra­di­tion­al, pre-ACA Med­ic­aid, shift­ing the bur­den of pay­ing for health­care onto states and/​or poor households.

Think of the lat­est Repub­li­can entry, known as Gra­ham-Cas­sidy, as the BCRA on steroids. After the CBO bud­get win­dow pass­es, Gra­ham-Cas­sidy is not a repeal-and-replace the ACA” plan. It’s not even a straight ACA repeal” plan. Instead, it’s a plan that repeals the ACA and cuts Med­ic­aid over and on top of that. It’s, in short, an attempt to roll­back not just the ACA, but even the cov­er­age pro­vid­ed by the pre-ACA Amer­i­can health care system.

Just to remind every­body, this pre-ACA cov­er­age sys­tem was unrav­el­ing at a rapid rate, with rough­ly 15 mil­lion work­ers los­ing employ­er-based cov­er­age between 2000 and 2010.

Pre­vi­ous CBO scores of the cov­er­age loss­es of a straight ACA repeal are more than 30 mil­lion by the end of the bud­get win­dow. And these straight repeals did not include the cuts to pre-ACA Med­ic­aid spend­ing trends that are embed­ded in Gra­ham-Cas­sidy. An hon­est account­ing of the effect Gra­ham-Cas­sidy would take all of this into account. But the bill’s spon­sors are clear­ly hop­ing to avoid this hon­est account­ing — the back-loaded cuts are a clear attempt to juke the CBO score and hope­ful­ly hide just how many peo­ple it will deprive of health secu­ri­ty in the long run.

In the 10 years between pas­sage and when the bill’s archi­tects tried to hide the full impact of their bill, the changes made by Gra­ham-Cas­sidy are grotesque. These changes anni­hi­late pro­tec­tions for those with expen­sive pre-exist­ing con­di­tions. They destroy the indi­vid­ual mar­ket­places that pro­vide sub­si­dized, decent cov­er­age for those work­ing fam­i­lies whose employ­er doesn’t pro­vide them insur­ance. Under the ACA, tax­pay­er dol­lars go to pur­chase health insur­ance cov­er­age for fam­i­lies in the exchanges. Under Gra­ham-Cas­sidy, these dol­lars can be repur­posed for a num­ber of things, includ­ing straight give­aways to insur­ance companies.

Final­ly, the bill rad­i­cal­ly redis­trib­utes the rapid­ly shrink­ing Med­ic­aid financ­ing of the next decade, tak­ing mon­ey away from blue states like Cal­i­for­nia and New York — states that have actu­al­ly tak­en up the ACA Med­ic­aid expan­sion to cov­er mil­lions of their cit­i­zens. Red states — includ­ing many that refused the ACA Med­ic­aid expan­sions that would have cov­ered mil­lions of their cit­i­zens — would see large wind­falls rel­a­tive to these blue states, yet their over­all lev­el of Med­ic­aid fund­ing would even­tu­al­ly be sav­aged as they sim­ply man­aged to grab a larg­er share of a swift­ly shrink­ing pie. Basi­cal­ly, the Gra­ham-Cas­sidy redis­tri­b­u­tion of Med­ic­aid dol­lars is sim­ple ret­ri­bu­tion against those states that col­lab­o­rat­ed with the hat­ed Oba­ma admin­is­tra­tion by tak­ing the ACA’s offer of mon­ey to pro­vide health insur­ance to their citizens.

Fur­ther, par­tic­u­lar­ly with­in the next ten years, Gra­ham-Cas­sidy will dras­ti­cal­ly degrade the auto­mat­ic sta­bi­liz­ers” pro­vid­ed by pub­lic spend­ing, which help us weath­er reces­sions. When a reces­sion hits, state bud­gets come under immense strain. Rev­enues slow, as peo­ple pay less in income, sales, and prop­er­ty tax­es. At the same time, spend­ing increas­es as new­ly-job­less peo­ple qual­i­fy for safe­ty net pro­grams. In par­tic­u­lar, spend­ing on Med­ic­aid increases.

Cur­rent­ly, the fed­er­al gov­ern­ment helps pick up part of this unex­pect­ed tab, pay­ing for a por­tion of new Med­ic­aid enrollees. If these enrollees are cov­ered by the ACA Med­ic­aid expan­sions, the fed­er­al gov­ern­ment picks up most of this tab. This acts as an auto­mat­ic sta­bi­liz­er, inject­ing spend­ing into the econ­o­my and keep­ing state gov­ern­ments from hav­ing to cut spend­ing or raise tax­es, which could fur­ther harm the econ­o­my. Research has shown clear­ly that Med­ic­aid spend­ing that comes online dur­ing reces­sions is extra­or­di­nar­i­ly effec­tive in help­ing blunt the impact of these down­turns. For exam­ple, esti­mates of the Med­ic­aid spend­ing increas­es by the Amer­i­can Recov­ery and Rein­vest­ment Act dur­ing the Great Reces­sion are that it saved over a mil­lion jobs.

Gra­ham-Cas­sidy turns the Med­ic­aid expan­sion and exchange sub­si­dies of the ACA into fixed block grants, which would crip­ple their abil­i­ty to expand dur­ing reces­sions and pro­vide macro­eco­nom­ic shock absorbers. Under the ACA when peo­ple lose the employ­er-based cov­er­age, they can count on the Med­ic­aid expan­sion or indi­vid­ual mar­ket sub­si­dies to help them retain health insur­ance, with min­i­mal effect on states’ bud­gets. This, in turn, would lead to an inflow of fed­er­al resources just as the econ­o­my need­ed it. But if Gra­ham-Cas­sidy becomes law, block grant spend­ing won’t budge dur­ing down­turns. Fur­ther, Graham-Cassidy’s per capi­ta cap on Med­ic­aid spend­ing means that over time, the reces­sion-blunt­ing abil­i­ty of even pre-ACA Med­ic­aid will also erode, as the inflow of Med­ic­aid dol­lars into a state dur­ing a reces­sion will steadi­ly shrink over time.

The cur­rent GOP health­care offer­ing is a hor­ri­bly destruc­tive bill. It is a tick­ing time bomb that will end up repeal­ing the ACA with no viable replace­ment. It’s worse than even the ter­ri­ble pre-ACA sta­tus quo, with Med­ic­aid cuts falling on the backs of the poor­est Amer­i­can fam­i­lies. It is struc­tured explic­it­ly to juke a CBO score, putting off its most sav­age cuts until 2027. Since they can­not start the huge Med­ic­aid cuts right away (again, juk­ing the CBO score means they need to wait 10 years), the archi­tects of Gra­ham-Cas­sidy put in pro­vi­sions to make the next 10 years a com­plete­ly par­ti­san redis­tri­b­u­tion of shrink­ing fed­er­al gov­ern­ment fund­ing from blue to red states.

Gra­ham-Cas­sidy is Trump­ism in a nut­shell. It is com­plete­ly cyn­i­cal. It is a raw neg­a­tive-sum redis­tri­b­u­tion of resources to those cur­rent­ly in pow­er. It lacks any pol­i­cy depth at all — it sim­ply repeals the ACA and slash­es Med­ic­aid. And, like the rest of Trump­ism, its end result will be deep dam­age to America’s work­ing families.

This post first appeared at the Eco­nom­ic Pol­i­cy Insti­tute.

Josh Bivens is the direc­tor of research at the Eco­nom­ic Pol­i­cy Insti­tute (EPI). Hunter Blair joined EPI in 2016 as a bud­get ana­lyst, in which capac­i­ty he research­es tax, bud­get, and infra­struc­ture policy.
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