Can Senate Republicans really craft a grand bargain with Democrats on health care? That is reportedly Senate Majority Leader Mitch McConnell's plan if TrumpCare falls apart, which is looking increasingly likely. But I have my doubts.
Let's start with what each side wants. The Democrats' priorities for health care are pretty simple: Ensure that everyone gets affordable and meaningful health insurance. While the push for single-payer health care is gaining steam again on the left, Democrats have historically been willing to compromise on how to achieve universal coverage. Witness ObamaCare, which is a market-based approach that famously originated with the conservative Heritage Foundation.
What about the Republicans? Well, their priorities are trickier. They don't care as much about attaining universal coverage as ensuring there's as little regulation of the health insurance marketplace as possible. They say this will create a world in which everyone can afford the health care they want.
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Now, it might sound daunting, but a grand bargain between both sides should be technically possible. You could guarantee health insurance for everyone through a private marketplace while relying on minimal regulation. You'd just have to spend a ton of money.
To understand why, let's look at the Senate's version of TrumpCare. It has three big points:
1. Replace government-provided health coverage with private coverage. The Senate TrumpCare bill would slowly phase out Medicaid and replace it with private plans. That's also what House Speaker Paul Ryan has advocated for Medicare for years.
2. Make people spend more money out of pocket. Medicaid in particular is extraordinarily generous, paying for virtually all of its beneficiaries' medical expenses. While there's variation from state to state, its deductibles and other forms of cost-sharing are low-to-nonexistent. The private plans the Senate bill would replace Medicaid with have $6,000 to $7,000 deductibles on average, and considerably more for the old and the sick. Conservatives believe giving individual consumers more "skin in the game" puts market pressure on providers to hold down prices, eventually making health care cheaper for everyone.
3. Don't regulate private insurers. Under ObamaCare, insurance providers have to offer coverage to everyone, they can't charge sick people higher premiums than healthy people, they can't charge old people more than three times what they charge young people, and they have to offer everyone a basic package of essential benefits. Republicans are trying to scrap or let states opt out of virtually all of these regulations.
To your standard Democrat, all those changes probably sound insane. But technically speaking, Democrats should be able to find ways to compromise with Republicans here.
Ultimately, the purpose of ObamaCare's rules is redistribution via regulation — they force premiums for the young and the healthy to go up in order to pay for coverage for the sick and the old. But straightforward redistribution could accomplish the same thing. The only regulation Democrats would absolutely have to defend is the one requiring insurers to offer everyone coverage regardless of their health status. And that seems to be where the GOP is most willing to give ground anyway. If Democrats want to ensure universal coverage, everything else boils down to properly subsidizing people's premiums.
The next most important regulation is the package of essential health benefits. The GOP hates it. But a compromise here is also possible: The government could require every private insurer to offer at least one plan that matches the essential benefits package. Then index the subsidies to pay for that plan. Insurers could offer stingier plans, too. And if people chose those stingier plans, they'd still get subsidies designed to pay for the more generous coverage; any leftover they could just keep. This would create the market pressure via shopping that conservatives champion, while also making sure everyone can get generous coverage if they want it.
That brings us to the subsidies themselves.
ObamaCare's subsidies don't come in fixed dollar amounts; instead, they're designed to make sure a household doesn't spend more than a certain percentage of its income on premiums, regardless of how high those premiums are. The subsidies also phase out for everyone over 400 percent of the federal poverty line.
In a sense, this subsidy scheme is already designed to catch everyone whose premiums would go up if the GOP got the deregulation it wants. To protect even the worst-case scenarios, Democrats would just need to ensure those subsidies became much more generous: Raise the phaseout threshold much higher, and lower the percentage of their income that households have to spend.
Finally, high deductibles: These are a pain because most Americans can't afford to pay thousands of dollars on medical needs before their insurance even kicks in. Republicans want to create tax-free savings accounts into which Americans can sock away money to pay their deductibles. But again, most American households are already strapped for cash and don't have any extra money to save.
On the other hand, if the government itself put enough money into these savings accounts each year to cover everyone's deductibles, that would change the game. (To save money, the contributions could phase out in the same way as the subsidies.)
So that's the compromise. In pure policy terms, it's totally doable. But it has two enormous political hurdles.
First off, shopping for private insurance is a massive practical headache for ordinary people. The plans are complex products that are hard to understand. Even under ObamaCare, getting subsidies is a bureaucratic nightmare. Using health savings accounts is a bureaucratic nightmare, too. One big reason Medicaid is popular is it offers a relatively generous coverage package that's standardized: People know what they're getting, so they can spend their time worrying about other things in life.
Like I said, the right policy design could get insurers to offer a standard and generous package, and make sure everyone can afford it, while still allowing market freedom and choice. But this is still a tough needle to thread.
The deepest problem of all, though, is far simpler. The compromise I'm describing may give Republicans a lot of what they want, but it would require enormous amounts of government spending — far, far more than ObamaCare, or even single-payer.
Medicaid is cheap. It bargains for better health-care prices per unit than private insurers, and it has much lower administrative overhead. Holding constant the amount of care people get, subsidizing private plans is actually more expensive than just giving everyone direct government coverage. On top of that, the compromise I outlined above would also give people money to cover their deductibles. Government wouldn't just spend to subsidize care people actually use, it would spend to make sure they have money for care they might use — or might not. That, too, is obviously much more expensive than simply having the government buy people's care for them.
So yes, in the great universe of hypotheticals, there exists a grand bargain that would deliver relatively functional and humane health coverage for everyone. It would rely on private markets, and use a relatively light regulatory footprint — both long-standing GOP priorities.
But to sign onto it, the Republican Party would also have to decide it's okay with big government spending, big federal deficits, and higher taxes on the wealthy.
Anything's possible, I suppose. But I'm not holding my breath.
