3 red-flag provisions in the Graham-Cassidy health care bill
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3 red-flag provisions in the Graham-Cassidy health care bill

Posted September 21, 2017 08:36 AM by Daniel Horowitz Red flag storm warning
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Previously, I noted that while Graham-Cassidy does nothing to change the fundamentals of the current system of health care and medical insurance, it at least repeals the individual mandate, which will allow us to escape from the dumpster fire and potentially start a new system. But any “holding of the nose” to pass this bill should only be under the condition that the other provisions are not worse than the status quo. That’s the only way we can take “half a loaf rather than none” — or in this case, more like ten percent. That rationale breaks down if there are provisions that will make the system worse or further entrench Obamacare in current law.

Thus far, I have found three concerning provisions:

Protected class for insurance coverage

Page 13 of the bill stipulates that “a health insurance issuer may not vary premium rates based on an individual’s sex or membership in a protected class under the Constitution of the United States.”

Readers of Conservative Review are well aware that the radical king courts have already made foreign nationals and transgenders protected classes under the U.S. Constitution in many respects. Most certainly, once we codify such language into statute, there is no limit to what lower court judges and Anthony Kennedy will do to expand “constitutional” rights to all sorts of insurance coverage. They could use this provision to mandate coverage for illegal aliens. They could use this provision to carve out all sorts of coverage for homosexuals and for sex-change operations. Most certainly, it will give states trouble in cutting off subsidy funding for abortions.

This might possibly be worse than current law.

Forcing Texas and conservative states to expand government-run health care

Proponents of the bill are touting this system as an exercise in federalism because it devolves the subsidies and Medicaid expansion to the states in one giant pot. Some D.C. conservatives think it’s a good thing that red state that didn’t originally expand Medicaid will “get their fair share.” However, those who truly oppose Obamacare and understand free markets know that expanded Medicaid not only is costly and creates dependency but also distorts the market and inflates the cost of health care for everyone else. Furthermore, it hurts private practices because the programs pay hospital physicians more than private practice physicians. Medicaid expansion has been a boon for the hospital cartel and has destroyed any semblance of market-based health care.

Until now, we all celebrated the one silver lining of some red states not expanding Medicaid. Now, this bill brings this aspect of Obamacare, and its ensuing price inflation on the market, to the states that don’t currently have it. Worse, the bill (page 15) puts a gun to the heads of these states and says that if they want a waiver for even the few regulatory relief provisions offered in this bill, they must take and administer the federal Obamacare/Medicaid expansion grants.

Thus, to the extent a state can waive a regulation for an individual insurance contract, they must give subsidies to that individual — regardless of his status. He could be a millionaire!

As Chris Jacobs, noted health policy expert at the Texas Public Policy Institute, wrote, “Moreover, some conservatives may view provisions requiring anyone to whom a waiver applies to receive federal grant funding as the epitome of moral hazard—ensuring that individuals who go through health underwriting will receive federal subsidies, no matter their level of wealth or personal circumstances.” He further observed, “By requiring states to subsidize bad actors—for instance, an individual making $250,000 who knowingly went without health coverage for years—with federal taxpayer dollars, the bill could actually raise health insurance premiums, not lower them.”

Thus, this is not a “half a loaf,” this is a poisonous loaf. While blue states are free to move the funding further to the Left and create single-payer, in no way can red states move towards free markets, because for every step they make towards regulatory relief, they must add more market-distorting funding than even under the status quo. This will hook the politicians from the reddest of red states on the dope they didn’t fully embrace before now.

The bailout fund

It would be one thing to leave most of Obamacare in place, as opposed to leaving it all in place. But this bill adds a state bailout fund that entrenches Obamacare even further. Not only does it codify the illegal cost-sharing subsidies for three years (and we all know the three years will be expanded indefinitely), it creates an unaccountable $35 billion slush fund for HHS to dole out at their full discretion to “fund arrangements with health insurance issuers to address coverage and access disruption and respond to urgent health care needs within States.” And of course, rather than disappearing in 2020, this will create a funding cliff that will only expand the program thereafter.

As I mentioned before, the only saving grace of this bill is that repeal of the individual mandate will prompt consumers to leave the insurance cartel and create direct care and health-sharing associations as an alternative to this entire scheme. However, by creating an unaccountable bailout program, HHS bureaucrats will work with state bureaucrats and insurance cartel lobbyists (no elected officials involved!) to mask the price inflation to keep the insurance monopoly intact.

It will codify, enshrine, and expand Obamacare.

Overall, it’s understandable why conservatives would want to support something over nothing at this late hour. And with the right focus on supply-side market reforms, we could possibly make a partial repeal work, with the elimination of the mandates. But politicians must first focus on not making things worse. Moreover, they should at least negotiate to get rid of the bailout fund and these onerous provisions while working for some true health care reforms, such as price transparency and parity of tax treatment. If this requires using the reconciliation bill for next year to fix health care, then so be it.

The mother’s milk of the D.C. swamp is the false dichotomy of “take or leave it.” Don’t fall for the trick without first fighting for more.


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Daniel Horowitz is a senior editor of Conservative Review. Follow him on Twitter @RMConservative.