President Trump should avoid the temptation to delve back into health-care reform. He has already gotten into hot water with threats to wreck the system by depriving needy Americans of subsidies. Should he take the plunge and put the rest of his agenda (primarily tax reform) on the back burner, he’ll find himself treading water for the remainder of his time in office before the 2018 midterms.
Trump’s threat to withhold Obamacare subsidies is both ineffective and politically counterproductive. The Hill reports: “The Trump administration released a rule on Thursday aimed at keeping insurers in the ObamaCare marketplace. The Department of Health and Human Services (HHS) will make changes favorable to insurers in an effort to keep them from leaving the ObamaCare exchanges or raising premium costs next year.”
That doesn’t sound like an administration bent on destroying the system. Many of the rules are common-sense solutions that would help repair Obamacare and rebut the notion that it is in a “death spiral.” (The changes include shortening “the sign-up period for 2018 by half, lasting from Nov. 1 to Dec. 15,” preventing people from gaming the system by going in and out of the system and allowing insurers to collect past-due premiums.) Frankly, if these work as expected, Republicans’ artificial urgency — it’s failing! — will be undercut. In short, Trump’s threat to undermine subsidies to individuals directly contradicts HHS’s efforts to buck up insurers.
Moreover, it has turned into a political gold mine for Democrats, as Jonathan Cohn points out:
Those subsidies are a really big deal. Without them, insurers would have to jack up premiums ― by an average of 19 percent for typical policies, according to a Henry J. Kaiser Family Foundation study. That increase would be above and beyond any other increases in the works. . . .
House Minority Leader Nancy Pelosi (D-Calif.) called Trump’s statement “appalling” and accused him of trying to “manufacture a crisis.”
Her Senate counterpart, Minority Leader Chuck Schumer (D-N.Y.), said, “Our position remains unchanged: drop repeal, stop undermining our health care system, and we will certainly sit down and talk about ways to improve the Affordable Care Act.”
Nor is it clear whether Trump is prepared to carry out his threat. He ended up backing down from the last Obamacare-related ultimatum he made ― a demand, in March, that House Republicans vote on repeal legislation.
Even if Republicans and Democrats could be drawn back into a debate on health care, the underlying problem remains: There is no consensus on whether Obamacare can be fixed. On the GOP side, there is no agreement regarding the role of the federal government in health care. If Trump moves in the direction of Freedom Caucus purists, he loses House moderates and the Senate. If he makes a deal with Democrats (who’d love to lure him into a public-option plan), the House will reject it. It’s an insoluble Rubik’s Cube. With no solution in sight, Trump will spend precious time turning this way and that, with no conclusion.
The only real solution is to move on. As Trump’s idle threats on health care draw fire, reports suggest that Trump is exploring a new tax plan, different from his original scheme and different from the House plan — both of which are afflicted by the same maladies (big tax cuts for the rich and a huge revenue loss). The revenue problem, aggravated by Republicans’ inability to claw back revenue from repealing Obamacare, in turn spurred House Speaker Paul Ryan (R-Wis.) to push for a border adjustment tax (BAT), which would fall on consumers. Like his “A Better Way” health-care plan, his BAT has failed to garner Republican support, not to mention Democratic support. Trump is right to shy away from this train wreck.
Instead, Trump would be wise to undertake revenue-neutral corporate tax reform (broaden the base, remove special tax expenditures, promote capital investment) and couple that with a payroll tax cut. That’s right — focus on a tax cut that benefits working- and middle-class salary earners and (if the employer side of the tax is also reduced) makes it cheaper to hire workers. That’s a truly populist, pro-work plan.
In sum, Trump’s venture back into the health-care wars will pull him and the rest of his agenda under. Moving on to corporate tax reform and a payroll tax cut would gain bipartisan support, take the wind out of critics’ sails and make economic sense. Trump’s new favorite senior adviser, Gary Cohn, could cement his position as the president’s most trusted adviser by championing a tax plan that defies party labels.