Monty Hall time: Senate GOP plays "Let's Make a Deal"

It’s been a long time since I watched legendary game-show host Monty Hall run Let’s Make a Deal, but it was one of the strangest TV shows on when I was a kid. Adults dressed up and acted like lunatics in order to get Monty’s attention, and the nuttier they got, the more success they had. They’d gamble wildly on deals, getting burned occasionally by “zonks” or worthless prizes, but they’d still have their 15 seconds of fame. There may not be any better preparation for a career in politics than growing up with LMaD.

In the final minute or so of the broadcast, Monty would go through the audience, offering quick deals for a few more audience members in order to get them engaged. That somehow came to mind earlier today, after a few reports of the horse-trading going on among Senate Republicans, as they rush to keep ObamaCare repeal from becoming the world’s biggest zonk. For all of the talk about the CBO score last week being an obstacle, it’s freeing up cash to toss out to the players:

Senate Republicans are adding $45 billion to their ObamaCare replacement bill to fight opioid abuse, according to sources familiar with the discussions.

The move was widely expected as an attempt to win over moderate Republicans like Sens. Rob Portman (Ohio) and Shelley Moore Capito (W.Va.), who have both made the opioid epidemic a priority.

Politico reports that Mitch McConnell has about $188 billion in cash to divvy up, based on the CBO scoring of the bill and the threshold for qualifying under reconciliation. Opioid treatment was the most predictable pot-sweetener, but there are other big targets McConnell can hit in the final stanza:

Republican leaders could also funnel more money into tax credits to reduce the burden of premiums in Alaska’s particularly expensive individual market to lock in Murkowski’s vote, and respond to a range of asks from senators across the spectrum.

Sen. Marco Rubio, for example, said he’s mulling his own set of proposals aimed at shoring up Florida’s Medicaid and individual markets. Of course, sweeteners targeted to specific senators could sow discontent among the rest of the conference, especially those keen on preserving the bill’s deficit savings. That puts further pressure on McConnell to spend his billions wisely.

Wisely or not, he’ll be spending them, and quickly enough to get to 50 — if possible. They may need to increase tax credits/subsidies back to the 400% of poverty level rate of ObamaCare to appeal to some moderates in the caucus worried about the cutback’s demographic impact.

Still, there are only so many dollars to toss around. At some point, Republicans have to also make sure the entire structure works, too. The big key to bridging that gap between the conservative and moderate visions for a post-ObamaCare world, Vox’s Dylan Scott reports and Allahpundit noted earlier, may have been provided by … Ted Cruz?

No legislative text of Cruz’s proposal is yet available, but this is the gist: As long as a health plan offered at least one Obamacare-compliant plan in a state, the plan would also be allowed to offer non-Obamacare-compliant plans in that state.

Nothing is certain, but I’m told this is the main conservative ask on the health care bill right now. Senate Majority Leader Mitch McConnell (R-KY) is working hard to find a compromise by the end of the week, after the embarrassment of postponing a vote on the legislation until after July 4.

If conservatives get that win on insurance regulations, they might be willing to accept fewer tax cuts for the wealthy in the bill. Smaller tax cuts would, in turn, free up more money for McConnell to spend on Medicaid and insurance subsidies for poor and middle-class Americans. Those concessions are likely necessary to win over moderates who currently oppose the bill, some of whom are already agitating to scale back the tax breaks for the rich.

That has its own risks, of course. The ObamaCare-compliant plans will get mainly picked up by those with higher utilization rates, while those with less need will gravitate to the less expensive non-mandate-compliant plans. That will end up creating some top-heaviness in the former, but it’s also roughly what we’re seeing in the exchanges now anyway. At least the Cruz model would let insurers assign risk a little better, and encourage those who have left those markets to return.

There also seems to be a lot of avoidance in dealing with the Medicaid expansion among dissenters, but unfortunately that’s where most of those reconciliation dollars originate. And as Charles Blahous points out, the expansion badly needs reform to return the program’s priorities to the poor:

The latest CMS projections show other concerning trends as well.  From 2018 to 2026, per capita expenditures for covering the expansion population are now projected to grow more rapidly than they are for Medicaid’s more vulnerable historically eligible population of pregnant women, poor children, seniors and disabled.  This rapid expansion expenditure growth would occur on top of the unexpectedly large costs in evidence to date.  In other words, expansion has made Medicaid spending more poorly targeted.  We’re already spending a far greater share than expected on Medicaid’s relatively less needy participants, and this poor targeting is expected to grow worse.

As I note in my Fiscal Times column, that’s a bad deal that’s getting worse all the time, and a point that Republicans have to make publicly:

At the time, the expansion was justified by predictions that getting people into the system would eventually reduce the costs of the expansion. Unfortunately, as Charles Blahous points out this week, the expansion has increased per-person costs, and not in a small way. For 2015 and 2016, actual per-person costs ran sixty percent higher than predicted at the start of the Obamacare/Medicaid expansion implementation. In the most recent report from the Centers for Medicare and Medicaid Services, projected per-person costs for 2022 has now been changed from 2013’s prediction of $4,875 to $7,436 – fifty-two percent higher than predicted.

Blahous also notes another trend in the overlooked actuarial reports. Projected expenditures for the expansion enrollees will grow faster than those in the core program. Rather than serving as a short-term release of pent-up demand, the funding for the expansion will crowd out the resources necessary for those truly in poverty. …

All of this provides Republicans with plenty of ammunition to argue for a repeal, and a phase-out of the expansion’s differential reimbursements, if not the expansion itself. A better use of Medicaid resources would focus on those below the poverty line, not above it, and more participation from the states in the costs would incentivize better efficiency. The elimination of mandates and the taxes that funded these mistargeted subsidies could help boost the economy and create jobs if used properly.

Instead, the lack of preparation and unity for this debate created a vacuum among Republicans, which allowed Democrats to create the dominant narratives on reductions in coverage and worse.

Perhaps Cruz’ deal will lessen the pressure on Medicaid reform, but that doesn’t mean it’s not necessary. Without it, this version of the ObamaCare repeal-and-replace plan may well tip over into zonkitude.