Note: An earlier version said deficits would rise, but the CBO’s latest projections estimates they will fall by about $330 Billion.

The Republican alternative is out and Democrats must shaking their heads. The GOP’s latest bill seems to accept many of the premises of Obamacare. Let’s set aside the Medicaid expansion and focus on the individual market. Right now, Obamacare is in a near death spiral as more counties are losing providers and the problem requires a major overhaul. The changes proposed do little to fix the situation. Created to maximize political appeal, it keeps the many of the more popular parts of the law, while ending many of the taxes. It reduces subsidies for some people, changes the penalty for forgoing insurance, and allows more types of insurance to be sold. Ideally, the GOP’s hope is that their deregulation of some insurance offerings will create more low cost plans and entice the younger and healthier back into the market. Is this a fair assumption? To a certain extent. It allows more types of catastrophic coverage, which have fewer benefits, but cover large expenses with a cheaper premium. These plans would appeal to people with few healthcare expenses, which the market has driven away, . However, these plans won’t appeal to the bigger users of healthcare. Instead, plans with more comprehensive coverage will see their more profitable demographic shift to lower cost coverage, imperiling the already poor health of these plans. So rather than free market reform, we get a slightly toned downed Obamacare with possibly less stable markets. More and more this looks like an act of political cowardice than a serious attempt to fix healthcare markets.

Of course this is supposedly only step 1 in repeal and replace, but what is the path for the next two steps? The next is administrative action, which is not insignificant, but full replacement requires the third, legislative action. Democrats have already shown their overwhelming opposition to a major overhaul that reduces government intervention and Republicans will have to deal with internal disagreements that could put GOP votes at risk. The regulatory scheme, a major cost driver, is almost completely in place and would remain so. The GOP’s efforts would effectively cause them to own a dying program and Democrats could happily blame them for the program’s demise. It seems very unlikely that the GOP would be able to institute the free market proposals it’s been touting for the past few years if done in these stages. While they purport to call the latest law an act of federalism, if they truly believed in federalism and free markets the healthcare fix becomes much more simple. Allow states to regulate their own markets and use the Commerce Clause as it was intended, eliminating barriers to trade between states by allowing people to buy across state lines. This would create a very competitive regulatory market between the states and offer far more options to consumers. People would complain that the healthy would migrate to less expensive plans and thus wouldn’t help subsidize heavy spenders, but so what? Why should those who are young and poor and take care of themselves be on the hook for the old and wealthy and those who don’t take care of themselves. We should allow the young to save more money when healthy so they can afford increased healthcare spending when older. Further, this change would dramatically expand the size of the individual plans and thus create more stable and predictable actuarial tables, driving down costs even for the more comprehensive plans. Trump and congressional leaders have been in talks about making adjustments, but if no significant changes are made Obamacare lite seems like a fair criticism. This law won’t help fix the healthcare markets, but it might help fix the Dems’ poor political position.