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Trump and the GOP Are Not Discussing Whether to Let Obamacare Die. They Are Plotting to Kill It

Monday, July 24, 2017 By Dean Baker, Truthout | Op-Ed
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Senate Majority Leader Mitch McConnell (center), Sen. John Thune (right), and Sen. John Cornyn, speak to the media July 19, 2017 at the White House in Washington, DC. The senators met with President Donald Trump to discuss the Republican healthcare bill. (Photo: Mark Wilson / Getty Images)Senate Majority Leader Mitch McConnell, Sen. John Thune and Sen. John Cornyn speak to the media July 19, 2017, at the White House in Washington, DC. The senators met with President Trump to discuss the Republican health care bill. (Photo: Mark Wilson / Getty Images)

After their efforts to approve a replacement for the Affordable Care Act (ACA) went down to defeat (again), the Republicans came up with a new strategy on health care. As Donald Trump put it, they are going to "let Obamacare fail."

The idea appears to let the health care exchanges, which are the centerpiece of the ACA, fall apart as more insurers leave. Then, when there are few exchanges operating with any substantial level of competition, Trump and the Republicans will sail in with some version of the plans that have collapsed in the last five months. They will now have the compelling argument that their replacement plan is better than nothing, since there will be little or nothing left of the health care exchanges.

While it is possible that this strategy could work, there is a really important point that often gets left out of the picture: the exchanges are not dying. In fact, according to experts who study this issue and aren't on Donald Trump's payroll, the exchanges are actually doing quite well.

The assessment of the Congressional Budget Office, the Kaiser Family Foundation and others is that the health care exchanges had largely stabilized and insurers were now able operate profitably. In other words, the people who don't have something to gain by lying about the health of Obamacare say that the program is actually working. Predictably the people who do get paid by the White House, pronounce such assessments as "fake news."

The basic point is a simple one. Contrary to the claims of Trump and congressional Republicans, the exchanges are not in a death spiral, enrollments are increasing. That is the wrong direction for the Obamacare critics' story.

Of course many people have heard about all of the counties with little or no competition in their exchanges. More than 1,300 counties only have a single insurer in their exchanges and some don't have any.

That is indeed bad news, but the lack of competition in the exchanges is overwhelming a problem for people who live in states controlled by Republicans. While more than 20 percent of the people who live in states with Republican governors only have one insurer in their exchange, this is the case for less than 2 percent of the people who live in states with Democratic governors. (This figure excludes North Carolina, where a Democratic governor just took over in January.)

Many states with Republican governors did not expand Medicaid. This expansion helped the exchanges since it pulled out many of the less healthy people from the patient pools in the exchange. These governors also were not aggressive in promoting the exchanges. As a result fewer healthy people signed up for insurance, making the exchange population less healthy than in states controlled by Democrats trying to make the ACA work.

The result is that Republicans can now happily boast about their success in undermining the insurance market in much of the country. Trump is apparently prepared to build on this success and see if he can undermine the exchanges even in the states controlled by Democrats. And, he does have tools to do it.

The first tool is the reimbursements the government makes to insurers for covering out-of-pocket costs for low income people. If insurers did not cover these expenses, insurance would be unaffordable for many low income people. And, the insurers won't cover the costs if the government is not picking up the tab.

Even more importantly, Trump could refuse to enforce the individual mandate. This is an essential part of the system, since insurers are prohibited from discriminating against people based on their health. As a result, a healthy person could decide to go years without insurance and only start paying premiums if they develop a serious illness. In this situation the insurance pool ends up being less healthy and more costly for insurers.

This is a sure path to a death spiral. In this scenario, insurers raise rates because of their less healthy pool. The higher rates discourage healthier people from getting insurance, further worsening the health of the average insure. This cycle will continue until the pool only includes the least healthy and most expensive patients.

Through these and other mechanisms President Trump certainly is capable of killing Obamacare. But let's not play games here, Trump is not talking about letting the patient die. He is talking about murder. Trump and the Republicans are not discussing whether they should let Obamacare die. They are plotting to kill it.

Enjoying what you're reading? Click here to help Truthout publish more stories like this one.

Copyright, Truthout. May not be reprinted without permission.

Dean Baker

Dean Baker is a macroeconomist and codirector of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He is a regular Truthout columnist and a member of Truthout's Board of Advisers.

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Trump and the GOP Are Not Discussing Whether to Let Obamacare Die. They Are Plotting to Kill It

Monday, July 24, 2017 By Dean Baker, Truthout | Op-Ed
  • font size decrease font size decrease font size increase font size increase font size
  • Print

Senate Majority Leader Mitch McConnell (center), Sen. John Thune (right), and Sen. John Cornyn, speak to the media July 19, 2017 at the White House in Washington, DC. The senators met with President Donald Trump to discuss the Republican healthcare bill. (Photo: Mark Wilson / Getty Images)Senate Majority Leader Mitch McConnell, Sen. John Thune and Sen. John Cornyn speak to the media July 19, 2017, at the White House in Washington, DC. The senators met with President Trump to discuss the Republican health care bill. (Photo: Mark Wilson / Getty Images)

After their efforts to approve a replacement for the Affordable Care Act (ACA) went down to defeat (again), the Republicans came up with a new strategy on health care. As Donald Trump put it, they are going to "let Obamacare fail."

The idea appears to let the health care exchanges, which are the centerpiece of the ACA, fall apart as more insurers leave. Then, when there are few exchanges operating with any substantial level of competition, Trump and the Republicans will sail in with some version of the plans that have collapsed in the last five months. They will now have the compelling argument that their replacement plan is better than nothing, since there will be little or nothing left of the health care exchanges.

While it is possible that this strategy could work, there is a really important point that often gets left out of the picture: the exchanges are not dying. In fact, according to experts who study this issue and aren't on Donald Trump's payroll, the exchanges are actually doing quite well.

The assessment of the Congressional Budget Office, the Kaiser Family Foundation and others is that the health care exchanges had largely stabilized and insurers were now able operate profitably. In other words, the people who don't have something to gain by lying about the health of Obamacare say that the program is actually working. Predictably the people who do get paid by the White House, pronounce such assessments as "fake news."

The basic point is a simple one. Contrary to the claims of Trump and congressional Republicans, the exchanges are not in a death spiral, enrollments are increasing. That is the wrong direction for the Obamacare critics' story.

Of course many people have heard about all of the counties with little or no competition in their exchanges. More than 1,300 counties only have a single insurer in their exchanges and some don't have any.

That is indeed bad news, but the lack of competition in the exchanges is overwhelming a problem for people who live in states controlled by Republicans. While more than 20 percent of the people who live in states with Republican governors only have one insurer in their exchange, this is the case for less than 2 percent of the people who live in states with Democratic governors. (This figure excludes North Carolina, where a Democratic governor just took over in January.)

Many states with Republican governors did not expand Medicaid. This expansion helped the exchanges since it pulled out many of the less healthy people from the patient pools in the exchange. These governors also were not aggressive in promoting the exchanges. As a result fewer healthy people signed up for insurance, making the exchange population less healthy than in states controlled by Democrats trying to make the ACA work.

The result is that Republicans can now happily boast about their success in undermining the insurance market in much of the country. Trump is apparently prepared to build on this success and see if he can undermine the exchanges even in the states controlled by Democrats. And, he does have tools to do it.

The first tool is the reimbursements the government makes to insurers for covering out-of-pocket costs for low income people. If insurers did not cover these expenses, insurance would be unaffordable for many low income people. And, the insurers won't cover the costs if the government is not picking up the tab.

Even more importantly, Trump could refuse to enforce the individual mandate. This is an essential part of the system, since insurers are prohibited from discriminating against people based on their health. As a result, a healthy person could decide to go years without insurance and only start paying premiums if they develop a serious illness. In this situation the insurance pool ends up being less healthy and more costly for insurers.

This is a sure path to a death spiral. In this scenario, insurers raise rates because of their less healthy pool. The higher rates discourage healthier people from getting insurance, further worsening the health of the average insure. This cycle will continue until the pool only includes the least healthy and most expensive patients.

Through these and other mechanisms President Trump certainly is capable of killing Obamacare. But let's not play games here, Trump is not talking about letting the patient die. He is talking about murder. Trump and the Republicans are not discussing whether they should let Obamacare die. They are plotting to kill it.

Enjoying what you're reading? Click here to help Truthout publish more stories like this one.

Copyright, Truthout. May not be reprinted without permission.

Dean Baker

Dean Baker is a macroeconomist and codirector of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He is a regular Truthout columnist and a member of Truthout's Board of Advisers.