AUSTIN – As the United States Senate considers the fate of the Graham-Cassidy healthcare reform measure, it is incumbent upon our leaders to stay the course and fully debate the legislation. The current discussions have the elements necessary to form the path to consensus, and there remains the possibility of a grand bargain to get both the reforms those seeking full repeal of Obamacare desire and resolution for the concerns of those worried about the reduction in Medicaid expansion.

The recent iteration of the legislation has much to like and a number of new and existing concerns that must be addressed.  Our analysis of the current Graham-Cassidy legislation as compared to the original draft can be found [HERE]. Notably, the bill retains its core positive structure of devolving power on Medicaid to the states, as the original program intended. This will provide for greater flexibility to implement much-needed reforms. Further, the legislation removes the penalties for both the individual and employer mandates, which are significant steps to free up consumers and small businesses.

We remain deeply concerned, however, that the bill retains the structure whereby the cost-driving regulations remain as the default rule and waivers must be sought by states, limits those waivers only to individuals receiving federal subsidies, and hardens the requirement on pre-existing conditions and thus limits state ability to innovate. Furthermore, the latest iteration seemingly neuters the ability for states to waive out of many of Obamacare’s regulations, calling in to question the intended goal of lowering costs. Additionally, the latest version gives the CMS Administrator sweeping authority to rewrite the funding formula and unilateral discretion on how to spend over $800 billion within the new health care grant program.  Those concerns raise reasonable questions about the relative benefits associated with the bill’s Medicaid devolution and the direction of the legislation.

Accordingly – our belief is the next step for the Senate ought to be to keep working. Work to gain majority support for a grand compromise in which greater spending for Medicaid expansion is provided in exchange for the freedom of states to provide a competitive environment to drive down prices for their citizens.  For example, under current law and under every proposal put forth this year, Texans are prohibited from contracting with one another for a health insurance product to mitigate risk without adhering to federal restrictions. If one state wishes to move toward single payer, another state ought to be able to choose market-based solutions. A grand bargain can be found and would represent true federalism as opposed to simply partial devolution.

For over 6 months, the American people have watched as their elected leaders have put forth numerous healthcare reform proposals under a call to repeal Obamacare. Throughout this process, the Texas Public Policy Foundation has strived to provide objective analysis of these reform efforts while distilling the complexity of the legislation for easier consumption for our fellow Americans. Our standard for positive reform against which we have tried to measure reform proposals has been whether we promote a system that will keep federal bureaucrats and courts out of Texas and gives us a shot to lower the cost of insurance and healthcare in a functioning market. We believe the Senate has made much progress on these fronts but has more work to do. The September 30 deadline is only a hard requirement if the Senate allows it to be – and this issue is sufficiently important that the Senate should keep working.

For more information, please contact Alicia Pierce at apierce@texaspolicy.com or 512-472-2700.