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Republicans' brave new strategy for fixing the U.S. health-care system

Catherine Rampell on

That's because Cassidy-Graham eliminates the Obamacare requirement that everyone have health insurance. It also doesn't replace this mandate with anything to incentivize healthy people to get coverage.

As a result, the relatively sick will buy insurance at higher rates than the relatively healthy, pushing up premiums and thereby driving more relatively healthy people out of insurance markets, further driving up premiums, and so on. The dreaded "death spiral," in other words.

To hold premiums down, states would probably be tempted to scale back benefit requirements and encourage the sale of cheap but nearly worthless insurance plans. These are sometimes called "mini-med" or "buffalo policies," so nicknamed because they pretty much pay off only if you get run over by a herd of buffalo.

Regrettably, Cassidy-Graham empowers states to shred these consumer safeguards: Unlike Obamacare, the proposal does not protect people with pre-existing conditions; has no mandatory coverage of cancer, prescription drugs, maternity care or other "essential health benefits"; and does not prohibit lifetime benefit caps.

"States would be given an enormous amount of money with no strings attached," says Larry Levitt, senior vice president at the Kaiser Family Foundation.

"No strings attached" is a bit of an understatement. Cassidy-Graham doesn't even require states to devote a single dollar of their block grants to insuring poor people. In fact, states could just use the grants to substitute for existing programs, Levitt says, allowing state funds to be directed to other purposes.

To hear Republican senators tell it, of course, this isn't about forcing governors to make decisions that Congress is too gutless to make itself.

No. It's about federalism!

States, those laboratories of democracy, are better suited to craft insurance policies -- which are, at their core, boring financial contracts -- narrowly tailored to their own unique state needs.

Which is nonsense.

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