President Donald Trump has made it clear he is out to ruin Obamacare, and he is doing it with as much grace and subtlety as a bull in a China shop.
Last week, the Trump administration announced it will stop paying the cost-sharing reduction subsidies, which reduce deductibles for low income people who buy silver plans on healthcare.gov. The move is the ultimate act of nihilism since all it does is cause short-term confusion and chaos for insurers. But because of the interplay of different elements of the Affordable Care Act (ACA), it could result in the federal government spending more money on subsidies to help people afford insurance in the long run.
On October 17, Trump seemed to be open to a bipartisan deal that would undo some of the damage he caused. But he completely reversed position less than 24 hours later on Twitter, sending everyone involved scrambling yet again.
Trump wants to lash out at Obamacare and doesn’t seem to care if his outbursts actually achieve good or bad policy. All he seems to want is confusion that will likely hurt the law.
Additionally, Trump signed an executive order last week designed to help people and small businesses buy insurance plans that don’t satisfy Obamacare regulations, which could lead to a segmenting of the market. He also dramatically cut outreach efforts, planned to take healthcare.gov offline for a needlessly long stretch of time, and made it unclear if the individual mandate will be enforced.
All Trump is trying to do now is remove as many Jenga blocks from Obamacare, as he legally can. The problem is that Obamacare is made of Jenga blocks in the first place.
To call Obamacare complex would be an understatement. It is an elaborate system of regulations, subsidies, taxes, fees, partnerships, marketplaces, and rules designed to create something approximating universal health care.
For it to “work,” it requires an active buy-in from insurers, state officials, federal officials, health care workers, and a Congress nimbly prepared to make quick legislative corrections. It needs regular people to have a complex understanding of health insurance, subsidy structure, and their own likely health care needs over the next year to be able to use the system as intended.
It needs regular people to have knowledge of health insurance policies, subsidy structure, and when open enrollment is, as well as their own likely health care needs over the next year to be able to use the system as intended. Things the public is mostly ignorant about.
And even if all these parts of the law did function well together, the design of the system still screws over healthy freelancers and self-employed people making over $47,500 a year by creating a massive effective marginal tax rate. Large tax credits to help people afford insurance end for anyone making even one dollar over that cut-off.
Obamacare was designed so that these people are basically the only individuals America requires to pay full price for health insurance without any government help. By choosing to effectively leave these people out to save money, Democrats created a perfect opening for Republicans to undermine the law.
This group of healthy middle class people screwed by the law are a natural pool of resentment for Republicans to both try to agitate and for whom they can claim to be trying to “help” with efforts to undermine regulations and consumer protections.
The worst part is this was all completely predictable
Well before Democrats ever passed the Affordable Care Act, both state and federal Republicans promised they would do everything they could to undo and undermine the law, and Democrats chose not to believe them.
That is why back in 2009, I actively tried to warn Democrats of the danger of going with an underfunded and complex system of mandated private insurance:
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. [emphasis added]
While the power of the executive office has allowed Trump to do more to undermine the law than any other Republican, this is not a Trump problem. This is a Republican problem.
After all, the only reason Trump can end the cost-sharing reduction subsidies is that House Republicans first brought a lawsuit against it. This recent attempt at a bipartisan deal wasn’t just undermines by Trump but also by House Speaker Paul Ryan. At the state level, numerous Republicans refused to expand Medicaid, build their own exchanges and brought lawsuits against the law.
The only thing I got wrong was that I assumed Republicans would at least be clever about their efforts to undermine the law to create plausible deniability. Instead of trying to kill Obamacare with a thousand surgical cuts, Trump is blindly chopping away at it with a hatchet.
The only positive thing Trump’s recent sabotage has done is ensure health care will remain a top issue for Democrats in 2020.
It should also be even more clear that “fixing” the ACA is not enough. Democrats do not just need to undo the damage Trump is causing. They need a new health care law that is Trump-proof—a simple and direct system like single-payer that cannot be easily undermined.