Repeal Failed, So Will Trump Now Sabotage Obamacare?

Revenue Service said it would not be systematically rejecting returns from taxpayers who fail to disclose whether they have bought health insurance, as required by the Affordable Care Act (ACA). Failure to charge the penalty for not buying into the pool, for not "taking responsibility for oneself" as Republicans themselves advocate, deprives either the healthcare system or the insurance industry of the funds need to make the ACA work. More recently, the IRS confirmed it will continue to look the other way. This threatens to greatly weakening compliance as laxity becomes more widely known, leaving a disproportion of older, costly people more prone to illness in the insurance pool. Hospitals are alarmed because the no-longer-insured will present themselves for care with empty pockets, straining hospital finances.

Ethics tossed in the gutter, Tom Price, the head of Health and Human Services (HHS), engaged in a personal campaign disparaging the Affordable Care Act. He authored tweets and used social media to urge people to contact Congress to demand full repeal of Obamacare. The Daily Beast reported that HHS diverted taxpayer funds appropriated by law for "consumer information and outreach" and used them instead to finance a social media campaign that included videos of people complaining about their experience with the ACA — propaganda against the law that HHS is supposed to be championing and administering.

Trump staged a celebration in the Rose Garden at the beginning of May when the House passed a bill that, according to the Congressional Budget Office, would ultimately strip 23 million of healthcare, but then he was confronted with the more recalcitrant Senate. He hectored from the sidelines with tweets such as "If Republican senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date!". Alaska's Lisa Murkowski, one of two who voted against all three Senate measures, fired back. "To just say 'repeal and trust us — we're going to fix it in a couple of years' , that's not going to provide comfort to the anxiety a lot of Alaskan families are feeling right now".

The president was faulted by his own party for his lackadaisical support of little more than intemperate tweets. At a meeting in the White House with a number of Republicans, it was noted how little Trump had prepared himself even after discovering that "nobody" other than himself "knew that healthcare could be so complicated". Even the Wall Street Journal cracked down. "He never tried to sell the policy to the American public, in part because he knows nothing about health care and couldn’t bother to learn", said an editorial.

In reaction to the Senate's failure to pass reform, Trump's anger was on full display. He had made extravagant promises — “We’re going to have insurance for everybody ", "a [sic] healthcare that is far less expensive and far better”, "something terrific" — in total ignorance of how to deliver. He had always called the Affordable Care Act "the very, very failed and failing Obamacare law", and a "disaster" but promised that repeal will end with “a beautiful picture.”

When three bills of varying severity failed, and with as much to lose in prestige as Trump, even Majority Leader Mitch McConnell threwn in the towel, but a few days later, Trump, irate that he didn't win, was back, calling the Senate Republicans "total quitters":

The strangely bewildered president then tweeted:

What filibuster? The filibuster and the 60 vote rule did not enter in. Only 51 votes were already all that was needed to pass any of the three bills voted on in the Senate. Puzzled and peeved, McConnell responded,

"It's pretty obvious that our problem with healthcare was not the Democrats. We didn't have 50 Republicans. There are not the votes in the Senate as I've said repeatedly to the president…to change the rules of the Senate".

"I said from the beginning, let Obamacare implode, then deal", Trump said at a law enforcement event on Long Island. With Congress moving on to tax reform, it is feared that Trump will leave Obamacare to collapse under its own weight, and do what he can to cut the supports from under it. "I'm not going to own it. We'll let Obamacare fail, and then the Democrats are going to come to us".

That reverts to what Trump said months ago, counseling House Speaker Paul Ryan and Secretary Price to hold off on repeal for a year and let the country watch Obamacare implode. Otherwise, "people aren't going to see the truly devastating effects of Obamacare. If we end it, everyone's going to say, oh, remember how great Obamacare used to be".

The most serious problem with the Affordable Care Act is that it has become unaffordable. Its exacting requirements of what an insurance plan must cover — the 10 musts [link]– make for inflexibility and costly premiums. Rather than back off some of them — maternity care for 65-year-old buyers being the one that attracted the most ridicule — yet still offer good insurance, the Ted Cruz plan wanted anything goes, permitting junk plans that would come as a nasty and ruinous surprise to those who bought them and then fell ill.

The more immediate problem is Trump's threat that he will have the government cease paying so-called "cost-sharing reduction" subsidies to the industry. What's that about?

For low-income customers, the ACA requires insurers to reduce the cost of their out-of-pocket health expenses such as co-payments and lower their deductible threshold so that insurance will kick in sooner. By law, insurers then expect to be reimbursed by the federal government. Without re-payment, insurers would be out of pocket several several billion dollars a year. So House Republicans, seeing a way to destroy Obamacare, sued the government in 2014, saying that Congress had never authorized the funds that Health and Human Services was disbursing. Congress sought to defund its own law.

A federal district court agreed that the payments to insurers were illegal for not having been authorized. The Obama administration appealed and the payments have continued until the case is resolved.

But President Trump could simply tell the Justice Department to drop the appeal, which would let the court decision stand and halt the payments. Without reimbursement, insurers would cease offering the discounts, insurance would be unaffordable for low-income families, and the thumb off the scale will be another tilt to skew toward customers more susceptible to illness, costlier customers who cause insurers to charge still heftier premiums or to drop out of the market — an engineered death spiral.

Which is exactly what Trump has threatened to do out of pique for not repealing Obamacare. At end July he warned insurers that he could "hurt" them by ending the payments as way to force legislators to take up repeal again after three attempts had failed. "If Obamacare is hurting people, & it is, why shouldn't it hurt the insurance companies". That Obamacare — which has made insurance available to millions whereas before the ACA there was no such insurance — has hurt people made as little sense as tweeting it at 5:16 AM on a Monday morning.

But the repeal and replace obsession has aggravated premiums even further. Uncertainty is the hobgoblin of the insurance industry. If they think the Trump administration will block the cost-saving subsidies , if it will not enforce the individual mandate penalizing people who do not insure themselves, if it will not urge people to buy insurance, then insurers will raise premium charges enough to protect themselves combinatorially for all these threats. Whereas if the ground rules were known , premiums could drop.

So we saw Blue Cross Blue Shield of North Carolina file for a 23% increase but said it would be 9% if Obamacare rules continued. California announced a 12.5% average increase for next year but the agency director said the increase would be twice as high for popular “silver” plans if the Trump administration blocked cost-sharing payments. That's the biggest state talking. Idaho is one of the smallest in population,

but its insurance department said, "The proposed increases are significantly higher this year due to the potential refusal by the federal government to fund the cost-share reduction (CSR) mechanism".

And yet spinning the lie we have Texas Republican John Cornyn saying on the Senate floor,

"The idea that premiums are going to go up next year unless something changes is a product of the failure of Obamacare. It's nothing that this administration has done or will do that has caused that. "

The turmoil and uncertainty of repeal and replace is apparently imaginary.

Bipartisan groups in both the House and Senate are skirting the president's doomsday wishes realizing that allowing the Affordable Car Act to collapse would be calamitous, with millions cast adrift. Their primary mission is to craft legislation that will stabilize the insurance markets by defusing the

Realizing the consequences, Congress is pulling in the opposite direction. Republican Senator Lamar Alexander urged the president not to interrupt the payments and the health committee that he chairs would take up legislation in early September to “stabilize and strengthen the individual health insurance market”. Committee member Chris Murphy (D-CT) called it "essentially taking the keys to the American healthcare system away from the president of the United States because we're pretty convinced that he's going to use it [sic] to drive the healthcare system into the ground".

A bipartisan group of some 40 House members who call themselves the Problem Solvers Caucus moved more nimbly. They have already agreed on authorizing funds for the cost-sharing payments, coupled with raising from 100 to 500 the number of employees beyond which a business is required to pay for their healthcare, and eliminating the ACA tax on medical devices. Why Obamacare added taxes to make health care more costly is baffling, and anything that moves away from businesses having to pay for employees' insurance is commendable. It is a practice that dates from competing for workers after World War II that has never left us and you can't find an economist who doesn’t think it a bad idea.

The Affordable Care Act handed an enormous amount of business to the insurance industry. Given stability, iIt would seem that with the actuarials of this grand experiment now in hand after several years, insurers might pile back into what should be the very lucrative market of tens of millions of customers. Here's a hint of that from no less than an op-ed in the averse Journal:

The amount insurance companies spend on health costs relative to premium revenue, known as the medical-loss ratio, has fallen sharply in 2017, according to a recent analysis by the Kaiser Family Foundation. This suggests insurers are becoming more financially secure. The return to stable pricing means more insurers will want to enter the marketplaces, expanding competition and choice for consumers.

Out there in the marketplace, the headlines are about all the counties that no longer have an insurer — 38 of them. A Bloomberg analysis shows, however, that the all are rural and have a total of only 25,000 customers. (And aren't these likely to be the poorer counties where it is the threat of withheld cost-sharing subsidies for low-income customers that makes the insurance companies shy away?). Contrary to that, Bloomberg says 80% of current enrollees will have two insurers to choose from.

But the stabilization proposals of the two groups in Congress are only that. Insurance companies need to set their rates for 2018 now, with uncertainty continuing in full force. They will again be forced to set rates higher still in self-defense against a possible worst case scenario.

Across the seven years that Republicans had to come up with a replacement, they seem never to have thought about what that would entail, a failure of foresight that led to reform's hideous legislative proposals that won as little as 12% public approval. And that may now have led to a kind of surly vengeance this fall by a president who would have signed anything dropped on his desk, however malevolent, and angry that he did not win. In addition to the tactics already in play, Trump is reportedly considering reducing the subsidies that help people pay for insurance to shrink the pool by making insurance more costly. And when November comes around, there's the question whether any funds will be spent alerting people to the annual sign-up period. People must check what's available and the annually shifting prices — their coverage isn’t automatically renewed — so it matters greatly that they be alerted .

It wasn't always so with Donald Trump. In a 1999 interview on "Larry King Live", he took a very different stance. "If you can't take care of your sick in the country, forget it, it's all over. I mean, it's no good. So I'm very liberal when it comes to healthcare. I believe in universal healthcare. I believe in whatever it takes to make people well and better."