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Here are 3 health bill issues where Democrats and Republicans can actually make a deal

  • Democrats and Republicans could actually make a deal on the health bill in these three areas.
  • Each of these areas aren't really tainted by partisanship.
  • Instead, it's crony capitalism with industries that have too much influence over both parties that is getting in the way of real reform.
Senate Minority Leader Charles Schumer, D-N.Y.
Tom Williams | CQ Roll Call | Getty Images
Senate Minority Leader Charles Schumer, D-N.Y.

The fate of the Republican Obamacare replacement effort is now in the hands on the five GOP senators who say they cannot vote for the bill as it stands. But Senate Minority Leader Chuck Schumer is starting to make some real noise about Democrats joining the negotiating process.

Is he dreaming?

It's possible that he and the rest of the Democrats aren't completely in fantasy land, especially with the Trump White House goading them to get involved in the process. The question is: Are there any areas where Democrats and Republicans could actually work together?

The answer is yes, but doing so would require both sides casting off something that's usually even harder for them to shed than political partisanship. That would be political patronage.

To explain that contention, let's look at the three main areas where both sides in Congress could and should cooperate:

1) Allow for insurance sales across state lines

Republicans have wanted for years to allow health insurance companies to sell their plans across state lines. But given a chance to write that measure into the House and Senate Obamacare replacement bills, that notion was conspicuously absent. This omission sure seems like a sign of crony capitalist protections for the biggest insurers who don't want competition from smaller firms that would benefit from the provision.

Of course, the Democrats' Obamacare law was also set up to help entrenched insurers with everything from the coverage mandate to generous subsidies to prop up premium costs.

These protections from both parties aren't about partisanship, but lobbying and cronyism. And while it would be naive to expect either party to cast off this relationship entirely, some kind of paring of the cozy arrangement between insurers and legislators should be possible in the face of an angry electorate.

That's where a relatively modest, but likely effective change like allowing insurance sales over state lines comes in. The Democrats can even shame the Republicans into finally putting their money where their mouths have been in this issue by proposing it on their own.

2) Reduce the hospital pricing premium

In a blatant anti-competitive advantage, hospitals have long been legally allowed to charge insurance companies and Medicare and Medicaid more money for the same services provided to patients at private practice facilities. The reasoning behind this is that hospitals give patients access to a wider array of services and deserve some kind of added compensation for being forced to treat anyone who shows up an emergency room in need of urgent care.

Okay, some of that logic is solid. But hospitals have exploited this advantage most egregiously by buying up private practices and then charging more for the exact same service provided in the exact same building by the exact same doctors.

Another major result of this skewed pricing schedule is that hospital consolidation has exploded in recent decades, sending the cost of health care soaring, insurance or no insurance.

Again, none of this is because of partisanship. It's all about the power of the hospital industry in Washington and in state capitals across the country to sway both Democrats and Republicans. But if both parties buck that industry's pull with just a minor reduction of its pricing advantage, that move could go a long way towards lowering overall costs.

3) Rethink the Medicaid reduction

This issue may not seem like it's about cronyism. But when you consider that hospitals lobbied harder and got most of the benefits from the Medicaid expansion, it covers much of the same territory mentioned above.

Instead of demanding that the Republican bill keep the entire Obamacare Medicaid expansion in place, both sides should come to a new agreement on how each state can deal with this entitlement. This is another case where a lot of Republicans have balked when it comes to walking the walk to go along with their anti-government spending talk.

For one thing, several Republican governors accepted the Obamacare Medicaid expansions in their states, and there are a good number of GOP senators and representatives who are downright terrified of what will happen in their states and districts if millions of people suddenly don't qualify for the plan. So while the Medicaid expansion is supposedly a partisan issue, in reality not as many Republicans and Democrats are divided over it. Money talks.

With that in mind, the Medicaid roll reductions in the current Senate bill could be scaled back or phased in over a much longer period of time. This will give the Democrats a victory of sorts while a lot of Republicans would be quietly happy about it too.

So what about those true conservatives in Congress who are dead set on getting this Medicaid reduction? The good news for them is the fact that individual states actually administer Medicaid anyway. Conservative governors, like Rick Scott of Florida, rejected the Medicaid expansion of Obamacare and he and his peers could simply continue to do.

Meanwhile, if the rest of the GOP Obamacare replacement bill helps to lower overall health costs, especially the hospital pricing advantage mentioned above, then the cost of an expanded Medicaid will be greatly reduced anyway. This reasoning should allow a critical number of Medicaid opponents to vote for a scaled back Medicaid reduction or phase out process.

Both sides need to give a little something here. The Democrats should accept some of the Medicaid roll reductions, and the Republicans should give up their dreams of rolling back the Obamacare Medicaid expansion entirely.

But whether they do it or not, each of these three areas are where members of Congress from both sides of the aisle have acted less like partisans and more like crony capitalists and borderline corrupt politicians.

Most politicians won't throw off those crony connections for nothing. But with this health bill carrying the fate of so many incumbents in both parties come next year's elections, there's definitely a powerful force pushing for some compromise here. And if there's one thing congressional incumbents care about more than partisanship and cronyism, it's self-preservation.

Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

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