October 18, 2017

Robert Graboyes on the Alexander-Murray Deal

Robert Graboyes

Senior Research Fellow

We’re a long way from any deal reaching the president’s desk for a signature. And from the early hints about a bipartisan deal, the results would be small potatoes on both sides. The whole saga illustrates the downside of stage-managing a fifth of the economy by executive order—from presidents of both parties. As originally written, the Affordable Care Act (ACA) was and is unsustainable. President Obama repeatedly used his pen and phone to effectively amend the law, allowing it to survive to this point. President Trump’s recent executive order undid one of those patches—the cost-sharing reduction (CSR) payments to insurers, which a federal court ruled were illegal, since Congress never appropriated the billions of dollars paid out. From a constitutional standpoint, ending those payments is certainly correct—though it’s not unreasonable to suppose that the action was more about politics than about high-minded legal principles.

Even if one likes the ACA, the CSR payments were always a needless complication that herded a substantial number of people into silver plans, rather than allowing them to choose freely among the broader array of bronze, silver, and gold plans with the help of the constitutionally valid premium subsidies. For all the rhetoric, it’s not clear that the CSR cancellation will make much of a difference for insurance purchasers. Some have noted that purchasers may actually benefit from the cancellation. 

As for the deal now under discussion, it appears to legalize the currently illegal payments for a brief period of time in exchange for some modest adjustment of state waiver details. In other words, it appears to be a combination of two marginal adjustments to a sector with deep problems that can’t be solved by whittling away on the margins. Congress and the President need to turn their attention away from the minutiae of insurance and focus on unleashing the delivery system and the innovators who can actually bring better care to more people at lower cost, year after year.

To schedule an interview contact Camille Walsh at 504-33-8785 or cwalsh@mercatus.gmu.edu