GOP’s Health-Care ‘Deal’ Still Offering Fake Federalism And No Real Solution

GOP’s Health-Care ‘Deal’ Still Offering Fake Federalism And No Real Solution

Real federalism in health care is state control over the factors governing supply and demand of health care, not bits of control offered piecemeal by Washington bureaucrats.
Chip Roy and Drew White
By

DC discussions continue in an effort to reach a health-care “deal” for Republicans more concerned with replacing Obamacare than simply honoring their promise to repeal it. The talks center on enhancing Department of Health and Human Services Secretary Tom Price’s waiver authority and administrative powers so he could try to do Congress’ job.

But there’s a catch. The proposal, as we currently understand it, would require state governors to request a waiver of certain Obamacare mandates. As our colleague, Chris Jacobs, has pointed out, however, the only way for people to truly gain access to quality care is by repealing all of the regulations lest there be perverse and unsustainable outcomes for providers and patients.

This deal is being touted as a commitment to federalism, to freeing up states to have competitive markets, and in effect, to choose whether they want Obamacare or a more free-market-oriented health-care system. In theory, it is laudable to increase options for each state to choose how to regulate health care within its borders. Indeed, the Texas Public Policy Foundation is so committed to federalism, we have a center that focuses on the Tenth Amendment as a centerpiece to limited government and freedom.

But federalism doesn’t work in a theoretical vacuum. Federalism centers fundamentally on locating decision-making in the context of the constitutionally limited powers granted to the federal government. That Tenth Amendment limitation is not supposed to require states to beg for crumbs of discretion from the king. Moreover, token federalism is not a substitute for free markets, wherein we magically say “leave something to the states” under patchwork regulation then expect the markets to function.

The Current Discussion Promises More of the Same

So, would the framework being discussed in the ongoing negotiations actually work—would it improve access to care? Would it accomplish what proponents promise? The answer appears to be no. Further, the deal being floated behind closed doors could pose perilous policy and political consequences that could undo much of the Freedom Caucus’s hard-earned efforts. While we cannot know for sure until legislative text has been released, we can outline how we would analyze it and whether what we currently understand would work.

First, enhancing the HHS secretary’s authority smacks of the very same centralization of power in the executive branch that Republicans loudly decried during the Obama administration. For far too long, Congress has abrogated its Article I responsibilities and outsourced its job to the administrative state and the courts.

Second, notwithstanding the possibility of a longer-term waiver, a waiver-centric regulator structure would have a limited shelf life and could be undone by a future president.

Third, allowing states only a partial opt-out of some mandates and regulations would affirmatively keep Obamacare intact as the default setting, creating a deeply flawed approach akin to the Cassidy-Collins “if you like your Obamacare, you can keep your Obamacare” proposal, which was roundly criticized. This patchwork approach would create dual, contradicting systems, leaving insurers with vast uncertainty in an ever-shifting environment comprised of both a full federal regulatory construct maintained as the “default” by numerous states and new competing state constructs that don’t have full freedom to innovate, but rather partial freedom.

Fourth, reliance on waivers causes additional uncertainty in the marketplace. Would governors even take the waivers when Congress is taking a pass on repealing the regulations? Opting out of an existing system with perceived benefits is a big lift for any one governor, much less all 50. How many states have opted out of the Medicaid expansion after receiving those enhanced federal funds? The answer is none.

Fifth, the people who will be hurt the most are patients trying to understand an even more complex and contradictory bureaucratic regime than the one already in place. It will be families and individuals bearing the brunt of the costs passed down from providers attempting to navigate an even more muddled regulatory scheme.

Baiting and Switching Has Bad Consequences

The rumored deal appears to be fake federalism, a shiny object that does nothing to change the fact that Congress is abrogating its promise to fully repeal the regulatory statutes inflicting so much pain on the American people. Real federalism would turn health care over fully to states so that they can—by choice and not coercion—make decisions on the best way for their citizens to get access to care. Real federalism can be accomplished on Medicaid devolution—which, in fairness, the American Health Care Act takes large steps forward to carry out.

Long term, Congress risks losing the fight to restore true federalism if they promote something to be federalism when it’s not. Real federalism in health care is affirmative state control over the factors governing supply and demand of health care, not bits of control offered piecemeal by Washington at the discretion of federal administrators and bureaucrats.

The House Freedom Caucus’ principled opposition has been substantively correct and has provided an opportunity to get things right. Contrary to media and establishment narratives, its members have been reaching across the ideological “aisle” to their Republican counterparts to compromise on Medicaid expansion and the new refundable tax credit, among other provisions. Each of these elements are wildly at odds with conservative principles, placing Washington DC and its mountain of debt-funded federal dollars at the center of Americans’ health-care funding. But the Freedom Caucus has stayed at the table despite these misgivings and should be applauded for being the only group reasonable enough to try to reach agreement.

Obamacare’s insurance regulations and mandates are the main drivers of increasing premiums and deductibles and have contributed to the dramatic decrease of coverage options available to people on the individual market and in the rapidly deteriorating exchanges. Without directly repealing the statute that created these regulations and mandates, the GOP would be walking away from its promise to those who put them in power and condemning vast swaths of the American people to continued rising health-care costs. That reality falls not on the shoulders of the Freedom Caucus, which continues to fight for the best policy possible, but on those in Congress, who frankly never showed up to the fight.

If Congress is looking to promote real federalism and give states more control over health care, they should do it the right way—by affirmatively repealing all of Obamacare, including the Title I federal mandates and regulations that have taken such control out of their hands in the first place. This has the benefit of being both proper federalism and good policy, while also making good on the promise made to their constituents. What a happy coincidence.

Chip Roy, former chief of staff to U.S. Sen. Ted Cruz, is the director of the Center for Tenth Amendment Action. Drew White is senior federal policy analyst at the Texas Public Policy Foundation.

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