Republicans want to unleash the ‘laboratories of democracy’ — but only for mad scientists…. (More)

“States, those laboratories of democracy…”

Senate Republicans insist that Graham-Cassidy is all about letting states find innovative solutions on health care:

To hear Republican senators tell it, of course, this isn’t about forcing governors to make decisions that Congress is too gutless to make itself.

No. It’s about federalism!

States, those laboratories of democracy, are better suited to craft insurance policies – which are, at their core, boring financial contracts – narrowly tailored to their own unique state needs.

Which is nonsense.

What, people in Tennessee don’t get cancer? People in Hawaii don’t give birth or have heart attacks? Adverse selection isn’t a problem in Alaska?

Generally speaking, diseases and laws of economics don’t recognize state borders.

That was Catherine Rampell at the Washington Post, and I encourage you to read her entire takedown of this sham. She argues that Graham-Cassidy is really about punting problems to state governments, and New York Magazine’s Ed Kilgore agrees:

But there’s an equally basic motive that makes this particular bill an ideal vehicle for bringing the frustrating cycle of failed GOP health care legislation to a merciful close: More than past templates, Graham-Cassidy allows members of Congress to shift many real and consequential decisions on health-care policy to the states. CNN’s Lauren Fox sums it up nicely:

One big advantage of Graham-Cassidy is that the bill outsources many of the toughest decisions about health care – what to prioritize, how to regulate the marketplace and cover health care for the poor – to the states. Graham-Cassidy allows individual senators to imagine health care policy in their own image even if outside groups have warned a number of states – some even led by Republicans – would lose federal dollars if the bill passes.

Do those mean old health-care policy wonks mock your claims as a conservative lawmaker that we’re wasting taxpayer-financed Medicaid dollars on lazy able-bodied adults who ought to get off their duffs and get jobs? Let the states, the “laboratories of democracy,” put it to the test and see who’s right! Are you caught between insurers’ complaints about having to cover people with expensive chronic health conditions and the empathy so many have for sick people who can’t get health insurance? Why let Jimmy Kimmel beat up on you when you could just point to the nearest state capital as the proper place to sort it all out!

It’s not about finding better solutions. It’s abut ducking blame for predictable failures.

“The largest intergovernmental transfer of financial risk from the federal government to the states in our country’s history”

And it’s not just pundits who say that. The officials who run their states’ Medicaid programs agree:

The National Association of Medicaid Directors (NAMD) warned Republicans on Thursday that the Senate’s latest ObamaCare repeal bill would place a massive burden on states.

The bill, sponsored by Sens. Lindsey Graham (R-SC) and Bill Cassidy (R-LA), would eliminate ObamaCare’s Medicaid expansion and subsidies beginning in 2020, converting the funding to state block grants.

It would also change the federal government’s funding of the traditional Medicaid program from an open-ended commitment to the states to a per-capita cap on each enrollee.

“Taken together, the per-capita caps and the envisioned block grant would constitute the largest intergovernmental transfer of financial risk from the federal government to the states in our country’s history,” NAMD’s board of directors wrote in a statement Thursday.

Rather than unleashing those laboratories of democracy, the NAMD officials say, Senate Republicans would dump impossible problems on them:

The GOP bill would also require states create their own health-care programs by 2020, which the directors argue is a massive undertaking.

“The scope of this work, and the resources required to support state planning and implementation activities, cannot be overstated,” the directors said.

“States will need to develop overall strategies, invest in infrastructure development, systems changes, provider and managed care plan contracting, and perform a host of other activities. The vast majority of states will not be able to do so within the two-year timeframe envisioned here, especially considering the apparent lack of federal funding in the bill to support these critical activities.”

And as The Atlantic’s Vann Newkirk writes, state officials would have to do that with almost no information on what exactly what challenges they’ll face:

To paraphrase a former secretary of defense: There are known knowns, there are known unknowns, and there are unknown unknowns.

In policy, as in military strategy, the first two epistemological categories are acceptable: People either know exactly how a policy will work, or they can make educated guesses based on data parameters they can’t quite know for certain. The unknown unknowns – what we don’t know we don’t know – are the problems, the things that could derail an entire policy and, in the process, ruin lives. Traditionally, the goal in lawmaking has been to eliminate the mystery from legislation so that there are as few unknown unknowns as possible. But, as it turns out, tradition can be easily broken.

Senate Republicans are building as many “unknown unknowns” as they can into this bill:

But while the failure of those bills may suggest to some a flaw in legislators’ approach, to Republican leadership the low-information shock tactics on display have proved valuable in the new health-policy landscape. The latest repeal attempt, led by Senators Lindsey Graham and Bill Cassidy, is a perfection of the form – their law could very well pass next week with even its sponsors in the dark about its effects.
[T]he formula Graham-Cassidy would use to allocate Medicaid expansion and exchange funding to states is complex, and not completely outlined in the text itself. It would involve different inputs from year to year about state choices, cost-sharing-reduction calculations, inflationary factors, total federal expenditures, population risk adjustment, the actuarial value of existing programs, and a bevy of other demographic factors and year-to-year economic factors. Additionally, the biggest unknown is what happens after 2026, when the block grant ends. Will states have access to funding at all? If the funding does suddenly end, are there guardrails to keep state health infrastructures from collapsing? What pieces of the current law would apply or not apply in that scenario?

With all these question marks, it’s impossible to come up with a firm number of people Graham-Cassidy would cover, which is the key output for any health policy.

Newkirk says Republicans are using that opacity as a political tactic:

What the GOP learned in that attempt was that, despite McCain’s pleas, eschewing regular order is a pretty good strategy for minimizing opposition. The kind of grassroots mobilization that was so effective in fighting Obamacare repeal over the summer takes time and money, and now has to fight against fatigue. Messaging against the bill requires analysis first, and then media digestion of that analysis. And citizens can’t express their displeasure about the legislation in polls if polls can’t collect their samples before the vote.

And all so they can tell their angry base that they repealed Obamacare.

“Northeastern states generally rank among the healthiest overall states, while southeastern states generally rank among those states with the greatest challenges”

If this were actually about “laboratories of democracy,” Senate Republicans might start by looking at comparative health scores among the states, as America’s Health Rankings did yet again last year:

The report ranks each state across 34 measures of behaviors, community and environment, policy, clinical care, and outcomes. This year, northeastern states generally rank among the healthiest overall states, while southeastern states generally rank among those states with the greatest challenges.

Turns out Hawaii is the healthiest state, and Mississippi is the least healthy:

Hawaii has ranked first for five straight years and has been in the top spot eight times since 1990, the most for any state in the history of America’s Health Rankings. It has been in the top six states since the first edition of America’s Health Rankings in 1990. Hawaii also scores far better than other top-five states. Hawaii’s strengths include a low prevalence of obesity, a low percentage of people without health insurance, and a low rate of preventable hospitalizations. In addition, HPV immunization among females aged 13 to 17 years increased 38% from 38.0% to 52.4% in the past year. The prevalence of diabetes decreased 13% from 9.8% to 8.5% of the adult population.
Mississippi’s challenges include a high prevalence of smoking and low birthweight, and a high percentage of children in poverty. Mississippi ranks in the bottom 10 for 25 measures, including ranking in the bottom three for all measures of clinical care.

Scroll through that report and you’ll find a clear pattern: blue states have better determinants (health care infrastructure and policy support) and better outcomes (life expectancy, disease rates, etc.) than red states. If this were truly about treating states as ‘laboratories of democracy,’ health care data say we should tell red states to copy what blue states are doing …

“It … takes money from the states that best implemented the Affordable Care Act and gives it to the states that obstructed the law”

Instead, Graham-Cassidy does precisely the opposite, forcing blue states to copy the failures of red states:

Starting in 2020, the Graham-Cassidy bill replaces the ACA’s Medicaid expansion and individual insurance subsidies with a fixed block grant to states.[…]

Overall, we estimate that federal funding under the new block grants would be $107 billion less than what the federal government would have spent over the period 2020-2026 for expanded Medicaid coverage, premium tax credits, cost-sharing subsidies, and the basic health program.

There would be a significant redistribution in federal funding across states under the block grant proposed in the Graham-Cassidy bill. In general, states that have expanded Medicaid under the ACA and/or have had substantial enrollment in the health insurance marketplaces would see reductions in federal spending for coverage expansions, while other states would see increases. The median change in federal funds under the block grant program relative to current law is -11% for Medicaid expansion states, for a total of $180 billion in reduced funding over 2020-2026, versus a median increase of 12% (a total of $73 billion) in states that have not expanded Medicaid[.]
The two main provisions in the Graham-Cassidy proposal – converting ACA coverage expansions to a block grant to states and converting traditional Medicaid financing to a federal per enrollee cap – affect coverage for more than 80 million Americans and have substantial implications for states’ ability to finance health coverage for their residents. Most states would lose federal funding under this proposal over the period 2020-2026. Because overall funding for health coverage is lower under the bill than we project under current law, the number of people uninsured would likely grow.

While some states – especially those that did not expand Medicaid under the ACA or did not experience significant enrollment in the health insurance marketplace – may gain new funds under the block grant, they would lose federal funds for their traditional Medicaid program. In addition, states that have already expanded Medicaid under the ACA or have seen big gains in marketplace enrollment would generally lose federal funds.

That was a preliminary report by the Kaiser Family Foundation. Justin Giovannelli, Sabrina Corlette, Kevin Lucia and JoAnn Volk of the Georgetown University Health Policy Institute are even more scathing:

First, the funding cuts to Medicaid and marketplace subsidies leave state officials in a lose-lose situation. The only “flexibility” they’ll be getting is to make politically painful decisions about where and how to cut their coverage programs.

Second, even states with progressive leaders who want to maintain the ACA’s insurance reforms will be forced to consider rollbacks of EHB and rating requirements. Why? Because, in addition to cutting the ACA’s subsidies, Graham-Cassidy repeals the individual mandate. Both the subsidies and the mandate are essential to keeping healthy people covered and insurance rates affordable. Insurance companies, whose participation in this market is entirely voluntary, will not want to participate if only sick people sign up. Most likely, they will turn to their state legislatures and demand waivers from the ACA’s consumer protections as the only way to protect themselves from high-risk enrollees. Legislators, in turn, fearing a total collapse of their individual market, may well grant insurers’ requests. This is not speculative – several states, pre-ACA, faced similar dynamics in their insurance markets. Their experience was not pretty.

Far from freeing up “laboratories of democracy” – in any meaningful, empirical sense of that phrase – Graham-Cassidy would take the worst results from the maddest scientists and tell everyone else: “Do what they’re doing!”

“Alaska … will continue to receive Obamacare’s premium tax credits while they are repealed for all other states”

Unless one of your senators happens to be the key swing vote:

One solid report on an important inducement is from Politico; the text of Graham-Cassidy already includes a provision that may allow Alaska and four other “low-density states” (Montana, North Dakota, South Dakota, and Wyoming) to escape, at least through 2026, the per capita cap on traditional Medicaid payments that the bill imposes on all other states. Helpful as that exemption might be to Alaska, its effect has already been factored into the state-by-state estimates that show Murkowski’s constituents losing quite a bit of money from the overall effects of Graham-Cassidy.

Hazier rumors today suggest some tasty treats for Alaska (and Hawaii, which often shares special arrangements with the federal government with its icy first cousin) in a new and unreleased draft of Graham-Cassidy that are of an entirely different order of magnitude, per the Independent Journal-Review. In addition to the delay in the Medicaid per capita cap, “Alaska (along with Hawaii) will continue to receive Obamacare’s premium tax credits while they are repealed for all other states,” even though “it appears this exemption will not affect Alaska receiving its state allotment under the new block grant in addition to the premium tax credits.” For dessert, the basic formula for federal Medicaid payments would be changed to Alaska’s advantage.

This deal, if it’s real, does not technically amount to what some Twitter pundits are describing as “Alaska can keep Obamacare,” since the insurance regulations would change, the individual and employer mandates would still go away, along with the existing Medicaid expansion money. Even the Medicaid per capita cap would apply after 2026. But from a fiscal point of view, the rumored deal would be a wash or perhaps even an Alaska windfall, along with the luxury of a relatively non-disruptive transition to the new system. It’s about as close as a total exemption from change as the sponsors could probably devise.

Never mind that this vote-buying exemption may well violate the Constitution:

The so-called “Alaska Purchase” would maintain existing premium support credits for those purchasing health insurance on the individual market…but only in Alaska and Hawaii.

They probably can’t do that. Article I, section 8 of the Constitution says “all Duties, Imposts and Excises shall be uniform throughout the United States.” Joseph Story, writing in 1834, thought that the point of that provision was to prevent coalitions of states from ganging up, in Congress, to benefit themselves at the expense of others. While the “uniformity clause” has been watered down over time, it’s still enough to swamp the Alaska Purchase proposal.

That’s by Georgetown law professor Brian Galle, and he gives a detailed legal analysis of why the courts would probably overturn this scheme. But the courts couldn’t review it until Graham-Cassidy were passed into law … when it wouldn’t matter, at least not in Senate Republicans’ calculus. They’ve made it clear that they don’t care how bad this law is as policy, so long as they can pass something:

In a conference call with Iowa reporters, Grassley expressed support for the Graham-Cassidy health care reform proposal currently before the Senate, arguing that the GOP has pledged to repeal the law known as Obamacare and must seize any opportunity to do so.

“You know, I could maybe give you 10 reasons why this bill shouldn’t be considered,” Grassley said. “But Republicans campaigned on this so often that you have a responsibility to carry out what you said in the campaign. That’s pretty much as much of a reason as the substance of the bill.”

“We promised to pass something and, however awful this may be, it’s something” … is a pathetic excuse.

“Legitimate factors”

And just in case all of that weren’t horrid enough, the bill would let the Secretary of Health and Human Services turn the government’s health care budget into a $1.2 trillion political slush fund:

While the bill’s proponents claim the legislation will increase state authority, in reality the bill gives unelected bureaucrats the power to distribute nearly $1.2 trillion in taxpayer dollars unilaterally. In so doing, the bill concentrates rather than diminishes Washington’s power – and could set the course for the “mother of all backroom deals” to pass the legislation.
Page 30 of the Graham-Cassidy bill, which creates a “state specific population adjustment factor,” completely undermines the rest of the bill’s funding formula: “IN GENERAL. – For calendar years after 2020, the Secretary may adjust the amount determined for a State for a year under subparagraph (B) or (C) and adjusted under subparagraphs (D) and (E) according to a population adjustment factor developed by the Secretary.”

In other words, if the secretary of Health and Human Services (HHS) doesn’t like the funding formula, he can change it however he likes. That’s a trillion-dollar loophole that leaves HHS bureaucrats with the ultimate say over how much money states will receive.

The bill does say that HHS must develop “legitimate factors” that affect state health expenditures – so it can’t allocate funding based on, say, the number of people who own red socks in Alabama. But beyond those two words, pretty much anything goes.

That was conservative health care wonk Christopher Jacobs, writing at The Federalist. Hardly a wild-eyed liberal. New York Magazine’s Jonathan Chait games out what might happen:

The bill says that adjustment must be based on “legitimate factors,” but otherwise places no specific limitations. So, if President Trump wanted, say, to reward a political loyalist or punish a political foe, he could order the secretary to come up with any facially plausible reason to shift around money as he sees fit. This would be written into permanent law if it passes, but it seems especially relevant that Trump is completely open about his corrupt view of politics and expectation of loyalty above all else, and HHS Secretary Tom Price is, uh, not exactly a paragon of ethics. A Republican senator who gets too nosy about, say, the Russia scandal might suddenly learn that his or her state’s health-care needs were less serious than previously believed.

And guess who’s left holding the empty bag when that happens? Yeah, those “laboratories of democracy,” state officials who tried to work out a plan and a budget based on one set of unknowns, only to get slammed with the biggest unknown-unknown of all … whether their state ended up on the God-King’s shit list.

Coz that’s how science works, right?


Image Credits — Original Photo: Bride of Frankenstein; Transform: Crissie Brown (


Good day and good nuts