- - Sunday, September 24, 2017

Back in 1996 I worked with House Speaker Newt Gingrich and House Majority Leader Dick Armey to pass one of the most historic bipartisan policy solutions in modern times: the welfare reform act.

That bill has so many historical parallels to the fight over the Graham-Cassidy Obamacare reform legislation that it is worth recounting some of the lessons. Just as with the Graham-Cassidy bill, the welfare reform bill block-granted money to the states so they could operate their own welfare systems. It encouraged tough love: work requirements, time limits, education, training and child care for low-income working parents. Most importantly an open-ended federal entitlement was capped, so states had incentives to run their programs cost effectively.

When that bill passed, liberals argued, as they do now with Graham-Cassidy, that people would die as a result of the coldheartedness of the GOP-Clinton plan. Marian Wright Edelman, then president of the Children’s Defense Fund, seethed that the new law would “leave a moral blot on our nation that will never be forgotten.” Rep. Maxine Waters warned that the law would cause “hungry children to starve.”And these were some of the kinder attacks.

But of course welfare reform worked far better that even our most ardent supporters expected. Ron Haskins, an architect of that bill and now a welfare expert at the Brookings Institute found: “Welfare rolls plunged by over 60 percent, as many as two million mothers entered the labor force, earnings for females heading families increased while their income from welfare payments fell, and child poverty declined every year between 1993 and 2000.”

That’s not all: “By the late 1990s, both black child poverty and poverty among children in female-headed families had reached their lowest levels ever.”

Jimmy Kimmel, are you listening? Does that sound like a result that is going to ruin the lives of poor people and cause the sick to go without treatments?

One reason welfare reform succeeded beyond our wildest expectations is we discovered that 50 governors could come up with innovative solutions to end a corrosive federal welfare system that had financially incentivized out-of-wedlock births and trapped so many millions of black and low-income white families in a cycle of poverty that was passed on from one generation to the next. We learned that states and the governors are not heartless scrooges. They care more about their citizens and neighbors a lot more than Washington does.

The Graham-Cassidy bill similarly turns a welfare program, Medicaid, over to the states. States will get a lump sum of money, and they will be required to set up programs to provide insurance coverage for their eligible low-income residents.

Contrary to the histrionics in the media, it requires states to find ways to cover its residents who have pre-existing conditions. But it will get rid of the preposterous federal matching requirement that doles out as much as 90 cents to a state for every dollar they spend. This is an invitation for states to capture more funds from the feds by wasting money. You couldn’t devise a dumber program to incent bloated spending.

A similar experimental block grant waiver given to Rhode Island back in 2000 had spectacular successes. The state covered more people, improved care, rooted out tens of millions of dollars of wasteful spending, and is a shining example of how the Graham-Cassidy reforms could transform our Medicaid system to benefit everyone.

There is one other critical political lesson from the ‘96 Welfare Reform policy victory. From the very start Republicans and moderate Democrats — they existed back then — adopted a smart strategy that proved decisive. Welfare reform was never sold as a way to save money. It was about saving lives. It was about lifting poor families out of the poverty of a life on public assistance and into the fulfillment and dignity and upward mobility of having a job.

One strategic mistake of the Graham-Cassidy bill is the infatuation with cutting the Medicaid budget. The White House and Republican talking points boast that Graham-Cassidy cuts spending by $435 billion and the deficit by $135 billion. This plays into the hands of the liberal critics who say that 10 million Americans will lose their health insurance and that children with pre-existing conditions will lose treatments. No one needs to lose their insurance under the Republican plan.

We should plow all those savings back into a fund for pre-existing conditions and to reimburse states that lose money on this transition.

This isn’t about saving money or cutting the deficit. It’s about creating a 21st century health care system that taps into the power of free markets, consumer choice and competition to expand coverage, improve care, and make health insurance affordable to everyone. Hopefully, even Jimmy Kimmel couldn’t be against that.

• Stephen Moore, a senior fellow at the Heritage Foundation and an economic consultant with FreedomWorks, served as a senior economic adviser to the Trump campaign.

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