Obamacare Is A Failure, But It Will Only ‘Explode’ If Trump Sabotages It
The American Health Care Act has gone down in a blaze of glory. It is time to focus on what President Donald Trump has long said would be his plan B.
Trump previously admitted he favored letting Obamacare collapse and then he would try to repeal the law after it completely failed.
“If we waited two years, it will explode like you’ve never seen an explosion,” Trump suggested.
Trump repeatedly alluded to this strategy on Friday after announcing the House Republicans’ failure to vote on AHCA, their bill.
The problem is, although Trump controls the federal government, he has significant power to force this explosion if he desires.
An honest assessment of the Affordable Care Act (ACA) allows us to understand its inherent failures and the potential results of sabotage.
Failing To Live Up To Key Promises
The ACA has failed to live up to many of its promises and goals. While Democrats have repeatedly moved the goal post to declare victory over the years, we should go back to what the party claimed it would do back in 2009 and 2010.
Keep in mind, this is not just about the empty promises made to serve as talking points—such as the assurance you could keep your plan and your doctor—but the more wide-reaching promises about systemic improvement.
Obama promised to make health care universal and affordable. During his 2008 campaign, he said his plan would “lower your premiums. If you don’t [have health care], you’ll be able to get the same kind of coverage that members of Congress give themselves.”
He promised the exchanges would make shopping for insurance as easy as purchasing a ”plane ticket on Kayak or a TV on Amazon.” The exchanges and the Consumer Operated and Oriented Plans—a weak nonprofit alternative to a public option commonly referred to as “CO-OPs”—were supposed to increase insurance competition.
More significantly, the exchanges were supposed to transform our system. They were not designed just to be a last resort for the working uninsured, but also a great place for small businesses to get “affordable, quality coverage.” That is why so much effort was put into the Small Business Health Options Program (SHOP) marketplace.
Obama’s advisor assumed people would love using the exchanges so much they would move away from traditional employer provided coverage. That was the intent.
I was always skeptical that the ACA could meet these promises, which is why in 2009 I predicted this failure if the Senate version of the bill was adopted:
The subsidies in the Senate bill are too small, the quality of the insurance is too low, and in many places, the enforcement will be too weak. These state-based exchange will not be seen as a good place to buy insurance, so only people who must use them will. Businesses, for the most part, will shun them. In some states, it might be executed well, but in many, it will be a failure. The program will be seen as a welfare-like structure that only serves a very small group of mostly lower income and politically less involved Americans. Even the people using the system may appreciate the help, but not feel a strong attachment to the program, due to its low quality of insurance. Costs will continue to grow, and it could easily become a target for budget cuts and the magic power of “de-regulation.” Death by a thousand cuts.
My predictions were sadly on the mark.
Few states even bothered to run their own exchanges, and some which tried ultimately failed.
The SHOP exchanges for small businesses were basically shunned by all businesses.
Because of high out-of-pocket costs and limited networks in the exchanges, many feel their coverage is basically useless.
While many sick people are happy to at least have some form of insurance, satisfaction among people enrolled in exchange plans is significantly below that for Medicare, Medicaid, or employer coverage.
Getting people to sign up for coverage on the exchanges the right way has also proven very expensive and difficult, even in states that really tried.
The only people using the exchanges are, for the most part, those who qualify for subsidies—as do 85% of those enrolled.
Partly because the subsidies were insufficient and coverage too expensive, there are millions who still can’t afford coverage.
“Good News” Is Obamacare Has A Built-In Floor
The ACA is likely to function indefinitely as what is effectively a welfare program, albeit a needlessly complex and wasteful one.
First, the Medicaid expansion has gone very well in states that participated, since it is merely an expansion of a proven public program. It has brought truly-affordable coverage to millions. It enjoys overwhelming support from the public. The vast majority of people who have benefited from the expansion are very satisfied with it and consider it good coverage. As a whole, people who have gained coverage via Medicaid are significantly more satisfied than those who did via exchange coverage.
Second, the exchanges will continue to function for the working poor if permitted. The design of the subsidies caps premiums for low-income individuals at a set percentage of their income. This means even if costs do rise, people who qualify for subsidies will not be required to pay more, and most people using the exchanges already qualify for subsidies. As a result of this design, a death spiral should be impossible as the Congressional Budget Office recently confirmed.
No matter how much premiums rise, there will always be a modest pool of lower-income people buying subsidized private insurance.
How Trump Can Disrupt the ACA
The ACA is stable but delicate because the exchanges rely on constant readjustments and the participation of private insurers. The Trump administration can disrupt its function and may to advance a political agenda.
The legislation gave the Department of Health and Humans Services (HHS) a lot of power to redefine policy and possibly sabotage the law. The Trump administration has already engaged in modest acts to reduce the ACA’s reach. It canceled awareness ads and weakened the individual mandate.
HHS Secretary Tom Price claims he wants to give states more flexibility with Medicaid, which may let Republican states make the Medicaid expansion significantly worse.
But the moves are small compared to the damage that could be done by starving the system or sowing chaos. There is currently a lawsuit, House v. Burwell, regarding the cost-sharing subsidies, which make exchange coverage workable for people slightly above the poverty line. If the Trump team allows the suit to succeed, it will decimate the exchanges.
Simply slashing the IT budget for Healthcare.gov would cause untold damage. As we saw under Obama, managing such a large web service is difficult even when officials are interested in success.
The administration could adopt a more subtle “operation chaos” strategy by offering an endless string of small, confusing, and legally questionable regulatory changes.
Private insurers need months to plan for each open enrollment. Uncertainty could cause insurers to leave the market, leaving more places with no insurers. Many areas currently only have one insurer, and that is only because of the active outreach by the Obama administration.
Republicans Lost But That Doesn’t Mean Democrats Won
In the short term, unraveling competing claims to properly assign blame will be a complex process.
Trump has repeatedly made it clear he will blame everything that goes wrong on Democrats, who he says “own Obamacare.” Democrats plan to blame all problems on the Trump team’s management of health care.
The Republicans’ disastrous repeal effort made the ACA marginally less unpopular, but its favorability rating is still below 50 percent. Democrats didn’t win this recent fight; Republicans simply lost.
In the long term, understanding that Obamacare failed to achieve many of its goals is essential to fixing our health care system.
Even if Trump does sabotage Obamacare, merely replacing him with a better executive committed to properly implementing the law is not enough. That would restore a wasteful and complex welfare program, which has major holes millions are falling through.
Achieving a system, which resembles another developed country’s sane health care system, will require more than just tweaks to private health insurance. It will require a commitment to undertaking a major shift in policy.