Pinkerton: Back to the Future — Generous 1990s Block Grants Show GOP Path to Obamacare Repeal and Replace

WASHINGTON, DC - OCTOBER 12: U.S. Sen. Rand Paul (R-KY) shows a thumbs up to President Donald Trump during an executive order signing as Vice President Mike Pence, Rep. Virginia Foxx (R-NC) and Secretary of Labor Alexander Acosta look on during an event in the Roosevelt Room of the White …
Alex Wong/Getty Images

Things move ahead on the healthcare front, albeit more slowly—okay, a lot more slowly—than many Republicans might have wished.

Still, just on Monday, President Trump was sounding bullish about his healthcare agenda: “I think we already have the votes,” he said at the White House, suggesting that a new vote “will take place probably in March or April.”  For good measure, Trump also met with Senate Majority Leader Mitch McConnell, who seems eager to deliver on the new timeline.

To be sure, after nine months of frustration, Republicans have a right to be wary about any bold new prediction about Obamacare.  Yet the pixels in the political kaleidoscope do seem to be arranging themselves to form a new pattern.

Indeed, the new pixels have been shifting for a few weeks now: On October 12, White House legislative director Marc Short told CNN’s Wolf Blitzer about the latest state of play on the Obamacare repeal-and-replace effort:

We now believe, when we get the next chance, that we now have the commitments for the votes. But the reality is, that that probably won’t be until a 2019 budget’s passed sometime next spring.

We might pause here to translate the Washington-ese: Short referred to the fiscal year 2019 budget; so, in fact, the vote could occur—if it occurs—in Spring 2018.

Let’s Make a Deal? Or Could We Have a Breakthrough?

This latest flurry of healthcare prophesying comes on the heels of an interesting two-part sequence of events—events that could be the domino-fall that Republicans have been looking for.

First, on October 7, President Trump tweeted some news:

I called Chuck Schumer yesterday to see if the Dems want to do a great HealthCare Bill. ObamaCare is badly broken, big premiums. Who knows!

For his part, the following day, October 8, the Democratic Senate leader told Politico:

The president wanted to make another run at repeal and replace and I told the president that’s off the table. If he wants to work together to improve the existing health care system, we Democrats are open to his suggestions.

So those were Schumer’s terms: Agree that Obamacare stays, and then we can talk.

For his part, Trump has never indicated any willingness whatsoever to give up on his goal of repealing-and-replacing Obamacare. And so we come to the second part of the sequence:

On October 12, Trump went the opposite way from a deal with Schumer; he signed an executive order aimed at eliminating the “cost-sharing reduction” payments that currently subsidize health-insurance-premium costs for policies purchased on the Obamacare “exchanges.”


President Trump and Senate Minority Leader Chuck Schumer (D-NY), during a meeting with other Congressional leaders in the Oval Office, September 6, 2017. (AP Photo/Evan Vucci)

As Trump put his signature on the order, Vice President Mike Pence, standing at his side, used language that could hardly have been less musical to Schumer’s ears:

Since day one of our administration, President Trump has made it a top priority to rescue the American people from the disastrous failure of Obamacare.

Trump’s actions provoked instant fury on the left. “The Sabotage Continues” spat a headline in The Huffington Post. Indeed, liberals worry that yanking the subsidies could unravel the exchanges, thus undercutting the viability of the “individual mandate” that’s a key pillar of Obamacare.

Thus we can see: As mad as Democrats are at Trump—and not just over Obamacare—they might still need him. He is, after all, in charge of the whole executive branch of government, including the Department of Health and Human Services.

So now we can see that the two parts in this little sequence—Trump calling Schumer on the 7th, and then Trump flouting Schumer on the 12th—might have their own connected logic, namely, bringing Schumer to the table, after all. You know, as in a good-cop-bad-cop routine: Trump was the good cop on Saturday, and the bad cop on Thursday. Trump could have been signaling to Schumer: Hey Chuck! Which version of me do you want to deal with? Do you want it easy? Or do you want it hard?

For his part, Schumer seems to be in no mood to negotiate with either Trump. In a string of tweets, he called Trump’s action “spiteful,” and added a prediction: “This will fall on his back and he will pay the price for it.”

Indeed, Democrats are eagerly agitating for other action, too, from lawsuits challenging Trump’s decision to new threats to shut down the government later this year.

So that’s the question: Who will be pay a higher price in the wake of Trump’s anti-Obamacare action: Will Republicans be blamed for presiding over Obamacare’s failings, or Democrats be blamed for thinking up Obamacare in the first place? The next midterm elections could well hinge on that question.

Still, despite the current acrimony, it’s still possible that there could a deal. After all, it was just last month that Trump reached a startling debt-ceiling deal with Schumer and House Democratic leader Nancy Pelosi. Indeed, the public seems poised to support such bipartisan dealing, and that can’t be lost on Trump: A Fox News poll found that 74 percent of Americans want the parties to work together on healthcare.

Or, as a slow-but-steady emerging alternative, there could be some other kind of resolution; that is, a new Republican push on Obamacare. As the White House man, Marc Short, said on Thursday, that could come as early as next spring.

The Times They Are a-Changin’

We might take note of two other recent transitions in the healthcare arena, both suggesting that a new chapter in the debate is about to begin:

First, the resignation of Health and Human Services Secretary Tom Price on September 29. As a former Republican Member of Congress, Price was heavily invested, of course, in 2017’s Congressional repeal effort—the one that cracked up.

Second, the expiration of the 2017 budget resolution on September 30, which marked the end of Congressional Republicans’ efforts to repeal-and-replace Obamacare through the old fiscal year’s reconciliation process; reconciliation, of course, would have enabled the Senate GOP to pass a bill by a simple majority, avoiding a Democratic filibuster. So yes, as Short indicated to CNN, nothing more is going to happen in 2017.

Okay, so Republicans have some time to regroup. So what could, or should, a plausible healthcare plan look like in 2018? As it happens, prior to the latest Trump-Schumer sequence, this author had published the first part of a three-part series here at Breitbart News; that piece recalled the pain that the GOP has suffered in its repeal-and-replace quest. And yet, at the same time, this author saw hope in the last-minute iteration of the GOP effort, the so-called Graham-Cassidy-Heller-Johnson (GCHJ) bill, named after its first four GOP senatorial sponsors. GCHJ put a new and shrewd focus on Obamacare’s Medicaid expansion, a ripe topic for revision. Yes, GCHJ fell short, but as we shall see, it represents an intriguing—and promising—shift in approach.

So now, in this second part, we’ll begin to survey what might be possible, legislatively, for Republicans in the coming year, building from their GCHJ base. Then, in the third part to come, we’ll look at other elements of the healthcare puzzlement, including the missing special sauce—actual medical-science progress—that any truly effective healthcare strategy requires.

Graham-Cassidy-Heller-Johnson 2.0

GCHJ focused on Medicaid expansion because that is, in fact, the largest single portion of Obamacare; more than 15 million Americans have gained healthcare coverage through the Medicaid expansion, compared to 6.4 million who have gained insurance through the exchanges.

The idea of GCHJ originated, interestingly enough, with a former colleague of Graham’s, Rick Santorum, who served in the Senate from 1995-2007. Back in the mid-1990s, then-Sen. Santorum spearheaded one of the most successful pieces of social-reform legislation in many decades, the Personal Responsibility and Work Opportunity Reconciliation Act, a.k.a. “welfare reform.” That legislation converted federal welfare funds into block grants going to the states, thus empowering each governor to tailor his or her state’s welfare system to local needs.

In that sense, welfare reform was true repeal and replace; governors, in both parties, had watched the welfare debate for a long time, and had developed their own, better, ideas. Indeed, by 1996, they stood ready to replace the failed federal welfare system with their better state-based welfare systems.

Even so, as with just about any big bill, Santorum’s legislation endured a bumpy path. Yet, in the end, it proved broadly and bipartisanly popular; it passed the House 239-184, including 26 Democratic votes, and in the Senate, it passed by an even larger margin, 74-24, including 23 Democrats—among them then-Sen. Joe Biden. And then, on August 22, 1996, President Bill Clinton signed the legislation into law.

We can note that the program was, by most people’s measures, a spectacular success. As Robert Rector of the Heritage Foundation notes, the number of people on “welfare” (then Aid to Families With Dependent Children, now, Temporary Assistance to Needy Families) fell by half.

The most notable gubernatorial hero of this era, we can add, was Wisconsin’s Republican governor, Tommy Thompson. As a welfare-reform crusader, Thompson brought his state’s welfare rolls down by some 90 percent; no wonder he was elected and re-elected a total of four times. To this day, he is the Badger State’s longest-serving governor.

Still, we must insert one key point here: Welfare was not, in the short run, a money-saver. That is, welfare spending continued to rise after 1996, albeit at a much slower rate; the new state-based approaches were better, but not instantaneously cheaper.

The real value of welfare reform—as Santorum, Rector, Thompson, and many others on the right have emphasized—is not the immediate dollars saved but, rather, the lives saved. As we all know, the dependent have little hope, while employed people do have hope, and hope leads to better life-outcomes (And in the end, of course, success saves money, not only for welfare, but for other kinds of social programs as well.).

And we can insert another key point that speaks, as well, to the current issue of healthcare: If the Republican effort at welfare reform had been merely a budget-cutting exercise, it never would have passed. Instead, thanks to the block-grant innovation—allowing the states to act as the fabled “laboratories of democracy”— the GOP had a demonstrably better approach, and that’s what passed. We can add, too: Better is a vote-getter.

So now back to the present day: As with welfare reform then, healthcare reform now must demonstrate that it can improve lives. After all, the flesh-and-blood well-being of folks is more meaningful to people—whether they’re part of the program or not—than abstract budget numbers. And so that’s the wall that the various Republican repeal-and-replace efforts kept running into: Many people couldn’t get past the reports showing that GOP plans would cost 20 million or more Americans their health insurance; that social loss was more real to them than any reduction in the deficit.

Yet at the same time, to be sure, budget numbers are still important. And that was the genius—the unfinished genius—of GCHJ: Thanks to its block grants, it offered the prospect of actually making Medicaid better.

One eloquent voice during the recent Obamacare debate was that of Mike Huckabee, the three-term governor of Arkansas. Huckabee was a steady supporter of Republican efforts, and yet back in March, he lamented the absence of block grants in an early iteration of the repeal-and-replace bill:

The biggest thing I wish Congress had done . . . [is] to block-grant Medicaid back to the states. This is something governors have been begging for. And let me tell you something, every governor, Democrat or Republican, for over 25 years, has said, “Give us less money but more flexibility. We’ll cover more people and do it better, because we will tailor it to our unique populations.”

Only later in the year did the GOP heed Huckabee’s advice, in the form of GCHJ; that belated iteration included, as we have seen, the block-granting of Obamacare Medicaid payments to all 50 states.

Such block-granting was, indeed, a big change, because today, Obamacare Medicaid payments go to only 31 states, plus the District of Columbia. Why this discrepancy? Why are the other 19 states missing?

Answer: Because under the terms of Obamacare, each state had the right to accept or reject funds for Medicaid expansion. And 19 states rejected it.

Such rejection was each state’s right, of course, but the rejections had the perverse effect of “bunching up” Obamacare funds in the states that did accept the expansion. To put it another way, through their federal tax dollars, the non-accepting red states were actually subsidizing the accepting blue states. The result was a windfall for the blues. As Cassidy said of the Obamacare status quo last month:

Right now, 37 percent of the revenue from the Affordable Care Act goes to Americans in four states—California, New York, Massachusetts and Maryland. That is frankly not fair.

And Graham made the same point in an interview with Breitbart News:

Let’s get back to the basics of being conservative. We take the money that we would spend on Obamacare in Washington, and we block grant it to the states. . . . No longer will four blue states get 40 percent of the money.

Rand Paul’s Regret

To be sure, there’s another way of looking at this block-grant issue: The block-granting of Obamacare funds to all 50 states is, in a way, an expansion of Obamacare; instead of increased Medicaid money for just 31 states, the funds would now go to all of them. That was the critique of Sen. Rand Paul; as he said last month:

This bill keeps 90 percent of the spending of Obamacare and reshuffles it. Really, when you look at how it reshuffles it, it does it just to take money from the Democrat states and give it to Republican states.

So yes, in a sense, Paul is correct—GCHJ would have meant more money for Republican states, even as it cut money for big-spending Democratic states. Is that really such a bad thing? Do we really want to encourage the liberal big spenders?

AP Photo

Sen Rand Paul (R-KY) tells reporters he plans to vote against a GOP bill to repeal and replace most of Obamacare, Sept. 25, 2017, in Louisville, KY. (AP Photo/Adam Beam)

Interestingly, according to an estimate from the consulting firm Avelere, of the 15 states that would have gained funds under the GCHJ reshuffle, 14 voted for Trump last year.

In any case, it must be noted that the purist Paul position—abolish Obamacare and leave it at that—has just about zero chance of passing. The polls today show that a plurality of Americans support Obamacare, while outright majorities are hostile to the recent Republican attempts to get it rid of it, even under the banner of “replace.”

In other words, people are getting used to Obamacare. So, it’s simply not realistic to think of uprooting the program; energy is best spent reforming it, or, hopefully, transforming it. Paul will always have a right to his honorable position, but others have a right to their position, too—and there seem to be more of them.

The Road Ahead

Most Republicans seem eager to continue pursuing the repeal-and-replace idea, especially now that they’ve been turbocharged by the block-grant idea. After all, back in ’96, that other block-grant idea, welfare reform, wasn’t easy, either—and yet it still got done. For the GOP faithful, that’s an inspiring precedent.

So, with that in mind, Republicans have the opportunity, over the next year, to play the numbers game in pursuit of their goal—bump up the number needed to get GCHJ over the finish line. After all, the good thing about a question of numbers is that compromise is relatively easy; if adjustment is needed, the numbers can be adjusted to the satisfaction of those involved—presto!

In the meantime, Republicans might conclude, as they look back on the last year, that the numbers they were pushing in repeal-and-replace, including GCHJ, were simply too low: According to that same Avelere study, the cuts in GCHJ, for example, totaled $489 billion in the next decade, and more $4.1 trillion in the next two decades. Evidently, such cuts were simply too much for the political system to handle—the proof is in the pudding, or lack thereof.

Okay, so Republicans should take the hint: Don’t make the cuts so drastic. That is, the cuts can’t be so deep that governors—and others who might be fans of block grants—conclude that the cuts are too much to handle. Improvements in efficiency are possible, and thus, too, cost-savings can be realized, but GHCJ champions must carefully assess what the political “market” will bear.

And again, as with welfare reform, the top priority has to be improving people’s lives; that means making a qualitative argument about better health, as opposed to a quantitative argument about smaller deficits—more on that, too, in the next installment.

In other words, a little high-minded horse-trading is in order, while at the same time maintaining the core principle of federalism—unleashing all those “laboratories of democracy.” And oh yes, let’s start operating on a level playing field, such that red states don’t inordinately subsidize blue states.

For his part, Cassidy seems ready for another round of negotiations on his bill. “I’m not a guy to quit,” he said, even as he outlined the challenge in the next phase of his quest:

There are some things that inevitably have to change, but we do think that the format of what we’re doing and the principles of what we’re doing are good and that the American people will like it because it’s ultimately about fairness.

Meanwhile, Ron Johnson, one of Cassidy’s legislative partners, was bullish, too, about the bill’s prospects: “It’s still alive and well, but we need more time.”

In fact, the GCHJ-ers do seem to be making progress; Republicans who have been negative on repeal-and-replace in the are turning positive. One such is Sen. Lisa Murkowski; as Politico reported on October 9:

Murkowski has said she likes the idea of block grants to the states but couldn’t get over the rushed process and the lack of key data before the vote would have had to be held.

With such practical-minded, problem-solving spirit, a legislative solution to the repeal-and-replace conundrum is possible.

And yet, there’s more that needs to be done to persuade the country as a whole. Why? Because as the polls show, the American public has grown skeptical that Trump and the Republicans have their best healthcare interests at heart.

We’ll take up those concerns in the next installment.


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