Now, Block-Grant Obamacare

It’s the only realistic way to ‘repeal and replace.’

With their defeat in King v. Burwell, Republicans are reduced to a simple choice: They can resign the whole health care issue, and any hopes of governing, for at least a generation. Or they can unite behind the idea of block-granting Obamacare—in effect, letting states opt out of Obamacare’s onerous mandates and regulations, without losing federal money. I predict Republicans will take the latter option.

Does this prediction sound unreasonable? I come to it by a process of elimination. Consider.

For six years, Republicans have been thwarted at every turn to stop a federal takeover of health care. They’ve lost in Congress. They’ve lost in the courts. At each stage, President Barack Obama and Democrats have called upon them to lay down their arms.

They have always refused to do so. And they won’t now.

Republicans are still winning the health care issue in the polls. Of 189 polls on the law during President Obama’s second term, according to RealClearPolitics, 188 have shown opposition trumping support. The law’s one “good” poll showed support below 50 percent.

The public’s skepticism is understandable. Obamacare isn’t working. Things aren’t noticeably better for most Americans. Indeed, for millions of families, they’re noticeably worse. Costs are still high, and still rising. Premiums are up. Deductibles are up. Copays are up. And despite more people having an insurance card (more of them via Medicaid than Obamacare’s exchanges), more than 30 million Americans remain uninsured. If this is what success looks like, how exactly would we define failure?

At the political level, the GOP has won the health care debate hands down, judging by the results of two straight midterm elections (2010 and 2014), which were effectively referendums on the health care law. Obamacare is the political gift that keeps on giving—to Republicans. Why would they lay down their arms and accept it? If anything, their incentive after King (which merely affirmed the status quo) is to double down.

Meanwhile, the Democrats carry a heavy burden. In laying claim to complete victory, they also lay claim to the right to govern. Health care is their issue now; they must take responsibility for its flaws. If Obamacare is “woven into the fabric of America,” as the president claims, then every problem in health care is now due at least in part to Obamacare. Got a complaint? Send it to the Party of Obamacare.

The law’s opponents need only to point out the law’s continuing failures to keep gaining converts. And those failures will continue.

But of course, to win a chance to govern, critics must do more than criticize. They must offer better ideas.

For six years, Republicans have talked about ‘replacing’ Obamacare and creating “patient-centered solutions.” They’ve been mocked, with some justice, for having no better idea of their own. But that criticism has been only partly fair. Conservatives do have ideas, plenty of them—too many, in fact. The real problem is their inability to coalesce around one specific idea or approach, a problem abetted by elected Republicans’ timid reluctance to offer a political target that can be shot at.

But after King, procrastination is a luxury. It’s do or die time. With their rank and file restive, Republican leaders risk overthrow if they give up the fight. It’s not an exaggeration to say that House Speaker John Boehner, R-Ohio, may lose his job if he caves on health care.

And while Congress can’t force the president to sign a bill, it can put something on his desk. It can show the public how it would fix health care. The public may be tired of this endless quarrel, but it remains open to new ideas, because the reforms of 2010 haven’t worked.

Prediction: Republicans will carry on their war against Obamacare, even if their leaders’ hearts aren’t in it.

Prediction: Republican leaders, driven by their rank and file, will attach a health care bill to a budget reconciliation package next month.

Prediction: That bill will pass—if it block-grants Obamacare.

If it does not—I make no prediction.

Republicans, as I say, have too many health care ideas. Their instinct will be to toss them all into one big, thousand-page package. They should resist that urge. Now is not the time to push unconstitutional, unnecessary, half-baked or controversial ideas. Those are distractions, and will give the other side needless excuses to say no. Instead, focus on one thing, and one thing only: enabling health insurance markets to work.

There are essentially only two options for doing that: tax credits or block grants—grants to individuals or grants to states. Republicans could do either or both. They should do whatever unites them, and avoid what divides them. Block grants can unite them. Tax credits are likely to divide them.

Some conservatives think tax credits a bad idea in principle. Others oppose them because they’re at the heart of Obamacare’s own complicated subsidy scheme. Replace Democratic tax credits with Republican ones? What’s the point? Wouldn’t that just be Obamacare Lite? (The answer, basically, is yes.)

Block grants, by contrast, enable Republicans to save face and Democrats to win a truce. They amount to contingent repeal or a jump-ball for states: Let the Affordable Care Act’s mandates and subsidies remain fully in effect in those states that decline to take the block grant (a win for Democrats). End the mandates in those states that opt for the grant (a win for Republicans). Preserve the overall level of federal subsidies (a win for Democrats). Let the “block grant” states redistribute the money internally as they think best (a win for Republicans). Finally, require the “block grant” states to focus this money on people with low-incomes and/or preexisting medical conditions (a win for both sides).

With contingent block grants, the GOP could change the terms of debate from whether to help the uninsured (and hard-to-insure) to how to do so. That’s something it should have done six years ago – nay, 20 years ago.

To retain the political high ground, Democrats would have to persuade the public of the inherent superiority of centralized, top-down control from Washington. They might win that debate, or they might lose it. I suspect they’d lose it. But let’s have it, and see.

Contingent block grants would set up an historic social-science experiment pitting Obamacare states against block-grant states with respect to cost and coverage. Two models would be tested simultaneously: laboratories of democracy. The ultimate result might be the decisive victory of one or the other model—or perhaps a merger of the best aspects of both. But let’s try it, and see.

This is not radical. The block grant I’m describing has been tried before, in the Welfare Reform Act of 1996.

Welfare reform offers a model for bipartisan health care reform. The 1996 bill was a bipartisan experiment, passed by a Republican Congress, and signed by a Democratic president, after some initial resistance. It converted an entitlement to individuals (the old, controversial Aid to Families With Dependent Children program) into a capped block grant to states with very few strings. States were liberated to help the poor as they deemed best. Their incentives shifted from expanding the rolls to helping the neediest.

It worked. The safety net got stronger. Poverty went down. Taxpayers saved money. Welfare reform worked. Block grants worked.

Republicans must choose. They can resign themselves to defeat, or they can offer a better (and proven) model. They can go with despair, or hope.

Prediction: hope.

Dean Clancy, a former senior official in the White House and Congress, writes on U.S. budget, health care, and constitutional issues. Follow him at or on Twitter @deanclancy.

[Originally published at, June 26, 2015. @USNewsOpinion. Reposted at]

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