Senate Republicans released a draft of their plan to repeal the Affordable Care Act on Thursday, delivering a cleaned up version of the messy bill that passed the House of Representatives. It would remove protections built into the original law for the individual insurance market, but, more than that, makes large-scale changes to Medicaid, the government program for providing health insurance to the poor.
Medicaid is a sticking point, because some moderate Republicans come from states that chose, as part of the ACA, to expand Medicaid. It means taking insurance away from their constituents. At the same time, four hard-core conservatives, including Rand Paul and Ted Cruz, warned that they may not support the bill because it is too much like the ACA.
The stock market loves the bill – probably because investors think it is unlikely to pass. Healthcare stocks rose Thursday, and that included insurance companies like Molina Healthcare (up 2%) and Centene (up 3%) that manage Medicaid insurance plans. Cuts to the the Medicaid program, even if they won’t start to go into effect until 2021, won’t help those companies.
But the stock market isn’t always right. The bill, despite the huge hurdles that Mitch McConnell, the Senate majority leader, has in front of him in getting the necessary 50 votes, has something going for it: it’s ideologically consistent. Republicans could have done the politically expedient thing and chosen to repeal the ACA in a way that would have been easy for moderates to tolerate. Instead, they reversed an ideological compromise that was built into their opposition to the ACA.
Think about this: opposition to the ACA has essentially meant opposing the state insurance exchanges, a mechanism for allowing people who don’t get insurance from their employers to buy it. This is what people usually think of when they talk about “ObamaCare.” But an equally big part of ObamaCare has been to offer states extra funds to entice them to expand Medicaid, the government program for the poor, for children, and for people in nursing homes. The Republican opposition to the ACA has focused on hobbling the exchanges, a free market solution based on ideas originally proposed by conservatives, but they have allowed the expansion of Medicaid to blossom into an entitlement that people will not want to give up.
The obvious path for the Senate would have been to leave Medicaid alone. Instead, Republicans are using the opportunity to turn Medicaid into a system that is not only run more at the state level, but for which the federal government will pay only a set amount of money, instead of paying for healthcare needs as they arise. That is a huge policy victory. To get an idea how much this is so, read the glowing take from my Forbes colleague Avik Roy, a conservative who did not like the House bill because of its sloppiness.
At the end of the day, is Ted Cruz going to stand in the way of this bill? Hurdles – including decisions from the Congressional Budget Office about how much the bill and its associated tax breaks will cost and decisions from the Senate parliamentarian regarding whether it can be passed through a stripped down, budgetary measure that only requires 50 votes – remain. But this bill could pass.