The demise of the GOP’s health plan

Surprisingly, Senate Majority Leader Mitch McConnell concocted an “Obamacare” replacement that is worth passing. Unsurprisingly, it is already dead. Let’s call the deceased plan “Mitchcare,” because “McConnellcare” is just a bit much. The main event in this endeavor should be to create a functioning individual health-insurance market. Obamacare regulations have destroyed this market for most Americans. Unless heavily subsidized or seriously sick, the only plans now available are lousy-value propositions.

The Obamacare approach was to make people buy them anyway. That hasn’t worked. And it isn’t right.

Sen. Ted Cruz offered a constructive remedy, which was another surprise. So long as insurers offered a plan that met the Obamacare requirements on the exchanges, they could offer non-compliant plans off the exchanges.

These plans could be tailored to meet consumer preferences and priced according to risk. Just like real insurance.

The Cruz amendment triggered an unproductive debate about the cost of health care for those with pre-existing conditions, since the likely effect of allowing people to purchase health insurance that’s a good value proposition off the exchanges would be to increase the cost of Obamacare-compliant policies on it.

The true policy question isn’t whether to subsidize those with pre-existing conditions. It’s whether to do so directly through taxes or indirectly through higher premiums for everyone else. The latter makes individual policies a lousyvalue proposition for everyone else and leads to a dysfunctional market, a la Obamacare.

Arizona Sen. Jeff Flake got it exactly right when he explained his support for the Cruz amendment to the Wall Street Journal: “If we’re going to subsidize Americans who can’t afford health insurance, do it directly. Don’t do it through the premiums of others.”

Mitchcare included billions of additional tax dollars to do that. Whether that’s enough, or dispensed the right way, are the questions that should be debated. In the meantime, let the individual health-insurance market function like a true insurance market, and give those without access to group insurance something other than only lousy options.

The demise of Mitchcare is partly explained by the reaction of Arizona’s other senator, John McCain. McCain vowed to offer amendments to alleviate the alleged dastardly deeds Mitchcare would inflict on Arizona’s Medicaid program, including the so-called early-expander penalty.

That “penalty” is a good illustration of the nonsense that passes for discourse about the Medicaid changes here and across the country.

Arizona voted to cover childless adults up to 100 percent of the federal poverty level in 2000. Under Obamacare, the federal government increased its share of the cost for this population from roughly 70 percent to 80 percent. Under Obamacare, the percentage is supposed to continue increasing to 90 percent. Mitchcare would keep it at 80 percent.

Oh, the injustice! Makes a fella want to break out his “Don’t Tread on Me” flag.

Mitchcare, as the other GOP replacements, didn’t repeal the Obamacare Medicaid expansion, contrary to common descriptions. Medicaid would still cover childless adults up to 138 percent of the federal poverty level.

All Republicans are proposing is that the federal reimbursement for the expanded population be the same as for the previously covered populations. That just makes sense. There’s no policy rationale for the federal government picking up a larger share of the health-care costs of an able-bodied adult making more than the poverty level than for a disabled adult making less. Yet, that’s what Obamacare does.

Arizona has one of the highest federal reimbursement rates in the country, at roughly 70 percent. Twenty states have reimbursements rates of 55 percent or less. We shouldn’t be crying in our beer over proposals to rationalize and stabilize federal expenditures on the program.

McCain also issued a clarion call to work with the Democrats on a bipartisan alternative. All the Democrats want is more subsidies to prop up the Obamacare exchanges. That’s the bottomlesspit approach. McCain used to care about the health of the federal fisc and bringing spending and deficits under control. These days, not so much.