The controversy that finally killed the Senate health care bill.

The Controversy That Finally Killed the Senate Health Care Bill

The Controversy That Finally Killed the Senate Health Care Bill

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July 18 2017 1:03 PM

The Controversy That Finally Killed the Senate Health Care Bill

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Mike Lee of Utah, destroyer of health care compromises.

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The Senate health care bill appears to be dead—done in by the Republican Party's inability to agree on a basic philosophical question: Should healthy Americans have to subsidize the sick?

Jordan Weissmann Jordan Weissmann

Jordan Weissmann is Slate’s senior business and economics correspondent.

This is the quandary that has dogged GOP lawmakers throughout their entire attempt to repeal and replace the Affordable Care Act. Many of that law's most popular planks—such as the rules banning discrimination against customers with pre-existing conditions—essentially force the young and well to pay a bit more for their health coverage so that the old and ill can pay less. Committed conservatives loathe these regulations and want to roll them back. They would prefer to let every household pay only for the coverage they want, while letting the sick buy insurance through subsidized high-risk pools. But, either because of the political optics or because they sincerely don’t like seeing the infirm drown in mountains of debt, moderate Republicans have been wary of attacking consumer protections that help sympathetic cancer and diabetes patients.

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The conflict has led to some uneasy policy compromises during the GOP's repeal push. In the House, moderates and right-wing hard-liners brokered a deal that would let states opt out from most of Obamacare's key regulations, leaving the hard calls up to governors. A variation on the waiver idea made it into the Senate bill as well, but conservatives there wanted to go further. Senators Ted Cruz and Mike Lee offered a proposal, a version of which was included in the most recent draft bill, which would allow health insurers to sell unregulated, bare-bones coverage that they could price based on a customer's health status as long as they also sold some Obamacare-compliant plans.

For a moment, it seemed like this bargain might set the stage for the bill's passage—especially after Cruz announced his support. (This was assuming, of course, that Senate Majority Leader Mitch McConnell could also throw enough money at the pet concerns of a handful of fence-sitting GOP moderates, too.)

Then, Monday night, things fell apart. Like the cracked wall of a glacier crashing suddenly into the ocean, the Better Care Reconciliation Act's prospects collapsed after Lee and Sen. Jerry Moran of Kansas simultaneously announced their opposition, leaving GOP leaders shy of the 50 votes they would need in order to move the legislation. Moran explained his position with generalities, saying in a statement that the bill “fails to repeal the Affordable Care Act” and that Republicans “should not put our stamp on bad policy.” Lee, however, spelled out exactly why he was voting no in a blog post at the Resurgent. In short, he was upset about last-minute changes to his and Cruz's amendment.

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In theory, the Cruz-Lee plan—they called it “the Consumer Freedom Amendment”—was supposed to split the health insurance market roughly in two. On the unregulated side, Americans could choose to buy inexpensive coverage priced based on their health status. Meanwhile, sicker people would likely gravitate toward the Obamacare-compliant plans. That coverage would be expensive, but some families would receive federal tax credits to lower the cost, effectively turning the ACA market into a well-financed high-risk pool for a slice of the middle class. (Those with pre-existing conditions who earned too much to qualify for subsidies would have to pay the full, outrageously expensive premium.)

However, the version of Cruz and Lee's amendment that Senate leaders inserted into their draft bill included a caveat. Technically, it left in place Obamacare's rule that required insurers to treat all of their customers within a state as part of a single “risk pool”—the group of customers whose health costs companies average together to determine the price of insurance. To many, including myself, this mostly seemed like a fig leaf meant to make the proposal seem less cruel to the ill and assuage antsy moderates. It would lump healthy and sick people together for some accounting purposes. But as long as insurers could sell unregulated plans priced based on health, the market would still be split in two, with the sick paying more.

Some conservatives didn't see it that way, however. Cato's Michael Cannon argued that creating a single risk pool could force insurers to raise prices on regulated and unregulated plans by the same amount each year, foisting higher costs onto the healthy. Others noted that the approach would require a regulatory rule-making process at the Department of Health and Human Services. A Republican health secretary like Tom Price would of course set up the single risk pool in such a way as too allow unregulated plans to flourish. But later on, a Democratic administration could change the rules to stamp them out.

This was all apparently too much for Lee. In his Resurgent post, he wrote:

Experts are divided on the impact keeping this Obamacare regulation would have on the Consumer Freedom Amendment. Some say it would make no difference, while others say it would nullify the entire amendment. Either way, a new analysis by a government agency claims it would raise insurance premiums for people on freedom plans by $600 a year.
I do not want to gamble $600 in relief for middle-class families in exchange for an amendment that might be undermined because of Obamacare regulations.
That is why I will vote “no” on the motion to proceed on the new Senate health care bill.

The government analysis Lee is referring to doesn't appear to have been released yet, though his communications team promised on Twitter to share it. But the $600 figure fundamentally seems less important here than the principle: Lee doesn't believe that healthy Americans should help pay for sick ones through their insurance premiums, and he doesn't want to put his name on a bill that might—in theory, depending on regulatory decisions, maybe, one day—allow that to happen. Say what you will about the man's stance, but at least he has the courage of his convictions.

The Republicans never resolved the fundamental question of how they should assist the sick. Instead, they tried to muddle past the issue with a series of murky compromises. Now, their entire seven-year quest to repeal Obamacare seems to have sunk under the weight of that indecision.