ObamaCare Moment of Truth

GOP moderates get all they want and they still won’t commit to yes.

 Opinion Journal: The Senate’s New Health-Care Plan
Opinion Journal Video: Editorial Board Member Joe Rago on the Senate’s latest effort to repeal and replace ObamaCare. Photo Credit: Getty Images.

Republican leaders unveiled a revised health-care bill on Thursday, setting up a Senate watershed next week. Few votes will reveal more about the principles and character of this Congress.

Months of stations-of-the-cross negotiations between conservative and GOP moderates have pulled the bill towards the political center, and for the most part the new version continues the journey. This leftward shift is Majority Leader Mitch McConnell’s bid to meet the demands of still-recalcitrant Republican moderates. The bill remains a net improvement over the Obama Care status quo, but the question now is whether they’ll take yes for an answer.

In the new bill, the GOP’s economic growth wing made a major and bitter concession by retaining the 3.8-percentage-point surcharge on investment income. This political capitulation doesn’t even phase out the tax. Repealing this millstone on investment and rising wages has allegedly been a Republican goal for years, and the Senate voted to do so as recently as 2015. Markets have also been expecting relief, meaning the retreat will undercut an economy that can’t afford many political shocks. 

As worrisome is what this capitulation shows about GOP fortitude against relentless progressive opposition. Moderate Republicans folded amid a false if completely predictable tax-cuts-for-the-rich narrative, as if they’ll somehow get credit for reneging. Has opposition to the bill lessened even an iota? Choking over the tax doesn’t bode well for tax reform, when Democrats will be invoking “the affluent” at every turn.

The priority has to be growth and increasing incomes, not the short-term politics. Or maybe Republicans could do a better job making a political argument about jobs and wages instead of nothing. Any reform worth passing is difficult, and Republicans have sent a signal they’ll give up at the first whiff of grapeshot.

The new bill uses the revenue from the investment tax to pay for spending the moderates favored, which might once have been called tax-and-spend liberalism. This includes expanding eligibility for insurance subsidies, increasing subsidies for out-of-pocket expenses and higher up-front spending in Medicaid, such as for hospitals that provide uncompensated care for the uninsured. Financing for high-risk pools and insurance market stability is tripled.

It also dispenses $45 billion for heroin and opioid abuse treatment. In February 2016, President Obama proposed a $1.1 billion plan that would increase access to addiction therapy, boost public-health education, stockpile the anti-overdose medicine naloxone, deter fentanyl trafficking, expand needle-exchange programs and make sundry grants to law enforcement and rural communities. The Senate bill is 40 times as large. Don’t believe anyone who claims this isn’t enough money, because it probably reaches the limit of what government can do to mitigate the crisis.

The most important residual virtue of the McConnell rewrite, and the main reason it is still worth passing, is that it maintains the original Medicaid reform. This would transition the program to per capita block grants and equalize payments for the poor and the disabled compared to ObamaCare’s Medicaid expansion population of able-bodied adults. The revision is too generous in the early years and has a long runway to give Governors time to plan and adjust, but it shifts to a budget growth rate in a decade that is fiscally sustainable.

Moderates intensely opposed this transformation, but structural changes are the only way to make the entitlement state even remotely affordable. The discipline will save $772 billion over 10 years.

Conservatives gained a modest expansion of Health Savings Accounts and a version of Ted Cruz’s “freedom option,” which would allow insurers that sell ObamaCare-compliant plans to also sell deregulated plans. Combined with state waivers, this could lead to significantly lower premiums for most consumers.

The Senate bill has never been the “root and branch” repeal that some Republicans overpromised, but any legislation with a chance of passing must negotiate both political reality and health-care conditions that have developed over decades. The bill is now a pragmatic, modest compromise that tries to satisfy all camps.

Most Senate conservatives like Mr. Cruz are warming to the bill despite previous concerns about ObamaCare Lite, and we’ll support it too despite its watered-down tax cuts and reform. Moderates now have to decide if they can say the same, having extorted almost everything they asked for and then some.

Moderates never objected to the repeal-and-replace agenda and surely benefitted from the slogan politically, yet some are still threatening to vote against even allowing a debate. If what they really want is ObamaCare, they should have said so earlier, though now at least they’ll be accountable for their true position. Mr. McConnell is right to hold a vote next week to force Republicans to honor their avowed principles—or betray them.

Appeared in the July 14, 2017, print edition.

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