Of course, nothing's over til it's over. We've certainly seen health care reform die several times already over the past year, and given how heavily Republicans dug in on repealing Obamacare during the 2016 election it's not crazy to think that this issue will come back up sooner rather than later.
When it does, it will most likely share at least one feature of the shambolic bill that Republicans just tried to pass: state-by-state implementation.
One of the most important aspects of Republican thinking on health care reform is deregulation. The GOP would like the lightest possible government touch on the markets, and handing off power from Washington D.C. to 50 different state capitals goes a long way toward accomplishing that goal. Each step away from the federal government allows red state governors to issue their own, minimal regulations. (Here it's important to note, however, the party's extremely situational love affair with federalism.)
Just as importantly, as we saw with Graham-Cassidy, handing off health care to the states opens up a critical dodge for a party that has spent the better part of a decade making impossible promises. The dirty little secret of repeal-and-replace is, and has always been, that Republican leadership has no plan for reforming health care. GOP legislatures know that they can't deliver the better, cheaper, low-regulation system that they've spent years promising their voters. That's why, in campaign after campaign, they never rolled one out.
But they still made promises. A lot of promises. Their new leader literally stood on stage and vowed that reforming health care "will be so easy," tying the party to reform.
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It's not easy. It's not avoidable. So party leadership found a third option: passing the buck to the states. By requiring the states to establish their own markets Republican leadership can dodge responsibility for reform failures while still patting themselves on the back if any legislature does come up with a workable solution.
It's politically quite clever, which is why it may return. It's also a policy disaster just waiting to happen.
"What this would suggest is that every state would have to figure out how to make their own system work, mechanically as well as from a policy perspective," said Jack Hoadley, a researcher with Georgetown's Health Policy Institute. "It's potentially pretty much a wild west market out there in the sense that every state could try and figure out what to do."
"What could a state do compared to the current ACA framework?" he continued. "A lot of the talk is the guaranteed issue provisions might not be extended, so a state that wants to allow people to pay different rates depending on their health status [could]. This kind of thing would have pretty big effect on how the market would play out if a state chose to do that."
It's important to remember that a 50-state framework was more or less the system in place before the Affordable Care Act. In that era, the government had a light regulatory footprint nationwide and each state could define its own marketplace, leading to the Massachusetts experiment under Mitt Romney that eventually became the framework for the ACA itself.
Current Republican leadership hasn't argued in favor of returning to that system in large part because the success of Obamacare has changed the narrative around health care in America, possibly for good. Today voters expect politicians to deliver a system that protects them against medical bankruptcy and guarantees coverage for pre-existing conditions. Doing that, however, takes regulation and money… a lot of it.
"It really threatens chaos for the state insurance markets, certainly in the short term. Over the long term what will end up happening is what we call market segmentation, ultimately, probably, in most states reverting back to what we had before the ACA," said Sabrina Corlette, also a professor with Georgetown's Health Policy Institute. "I think even in your more progressive states that would like to keep the essential benefits and would like to keep the pre-existing condition protections, they're going to be forced to restrict protections."
For all its many complicated moving parts, health care has a simplicity at its core: somebody has to pay the bill. In a private insurance marketplace that money comes from healthy people who pay for far more than they get in exchange for a promise to someday receive far more than they pay if need be. In fact, all insurance everywhere operates on this principal of paying for someone else so that they'll someday pay for you.
Single payer and government plans use government funds to pay the bill, either absorbing 100 percent of the costs or making up for shortfalls in private funds. The Affordable Care Act created an amalgamation of these systems, attempting to drive people into participating in the private market but using government funds to help them do so.
Few states have the money necessary to build and fund comprehensive versions of either of system on their own, and all versions of Republican health care reform promise sweeping cuts to federal funds. California alone has explored the costs of a single payer plan, and found hundreds of billions of dollars in likely costs.
Throwing people back onto a low regulation, low funding version of the private market will cause millions of people to lose their coverage; at least 15 million by one Brookings estimate.
There is much to be said, and which will continue to be said, about the push to devolve health care regulation to the states. One of the most important things to say, however, is that it would be a disaster whether enacted today, tomorrow or suspiciously after the 2018 election.
States which choose to roll back protections could leave their populations at the mercy of fate once again, hoping not to get sick before Medicare kicks in. States which try to cover their people more generously will have to build complicated regulatory structures and foot enormous bills.
And if people on Capitol Hill have a better solution, they're keeping it very close to the vest.