The upside for Republicans would be threefold. First, they could say they had replaced Obamacare without actually owning the hard — perhaps even impossible — choices necessary to replace Obamacare. Second, they could say they did it in a way that accorded with Republican principles — by handing the power over to the states rather than dictating a single solution from Washington. Third, it would be states, not the Trump administration, who were responsible for whatever went wrong, or whichever conditions went unfilled.
The upside for the country would be a blossoming of health policy experimentation. Rural states could design a health program that's a better fit for rural needs. Maryland could expand their all-payer rate setting into a model for the rest of the country. Indiana could take Mike Pence's Medicaid reforms and use them as a blueprint for a whole new system. California is more than big enough to make a single-payer system work, if it so chose. Texas is more than big enough to make a consumer-driven system work, if it so chose. Perhaps some state, somewhere, comes up with something truly fantastic, and 10 years later, half the country has adopted it.
I tried this idea out on both liberal and conservative health experts and got mostly positive reactions. Liberals liked it better than what they feared Republicans were going to do. Conservatives — who are increasingly anxious that Obamacare repeal will blow up in the GOP's face — were also open, and have in fact been discussing it among themselves.
"The state-based opt-out idea is one that is attractive to some conservatives and in fact has been pitched as an idea," says Avik Roy, head of the Foundation for Research on Equal Opportunity, who ran policy for Rick Perry's presidential campaign. "The problem is that the federal role in health care is so significant that it's not clear how you could structure something like this."
Roy is right, the details of a plan like this one will be difficult. Setting funding levels, for instance, would be critical; this would be a disaster if it was a Trojan horse for spending cuts. But that's true with any replacement plan. And for all the challenges, handing most of the work over to the states would almost certainly be easier than trying to find agreement on every single measure of a full, one-size-fits-all replacement — particularly given, as Speaker Paul Ryan admitted the other day, that a genuine replacement will need 60 votes in the Senate, and thus eight Democrats.
A state-based approach could also address one of the conceptual mistakes many right-leaning health wonks think the Obama administration made during health reform — doing too much, all at once, through the blunt tool of federal lawmaking.
"If you think of health care in the US as a separate economy, it would be the 5th largest economy in the world," says Stuart Butler, senior fellow at the Brookings Institute. "It would be larger than the French or British economy. The idea that you could redesign something the size of the French economy, in one bill, going through the American political system, is inconceivable. You need legislation that is inherently dynamic, that allows lots and lots of change to occur."