In case you missed it, this week saw the debut of Trumpcare.
There was no new legislation, and the previous health-care system, Obamacare, wasn’t repealed. It was re-accommodated, United Airlines-style: bloodied, knocked silly and heaved aside.
What has replaced it — a system of confusion and retreat — is entirely the doing of one Donald J. Trump.
President Trump this week threatened not to pay $7 billion to insurers in annual subsidies for giving discounted coverage to low-income Americans. If he follows through, it ends Obamacare as we know it. But even if he’s bluffing, the threat itself is outright sabotage and goes a long way toward dismantling the Affordable Care Act.
In the coming weeks, insurers participating in the individual-market exchanges must set premiums for next year — and they’d have to be daredevils to re-up with Trump’s sword of Damocles over them. The prudent move would be either to quit the exchanges or to impose huge premium increases to offset the risk that the subsidies will disappear — enough to deter people from signing up.
“The evidence is strong that the ACA is not dying of natural causes, but with the president’s recent comments it’s clear that it could die of suspicious causes,” says Larry Levitt, a senior vice president at the Kaiser Family Foundation, a nonpartisan outfit that studies health care. In the current environment, insurers “are just not going to stick around and take big risks,” Levitt tells me. “They’ll just take their marbles and invest elsewhere. It would be a very rational decision.”
The health-care system Trump is now destroying was healthy. A report this month by Standard & Poor’s, the credit-rating agency, found “marked improvement” in the individual market for most Blue Cross Blue Shield insurers, the largest players in the market. They were forecast to be “close to break-even margins” in 2017. The “ACA individual market is not in a ‘death spiral,’ ” S&P reported.
However, the agency said, “every time something new (and potentially disruptive) is thrown into the works, it impedes the individual market’s path to stability.” Specifically citing the threat to subsidies, S&P warned: “If insurers are uneasy regarding the future of the market, they may have to decide between adding an ‘uncertainty buffer’ to their pricing or — worst case — exiting the exchanges altogether.”
Five days later, Trump — right on cue — threatened to yank the subsidies, which he can do easily by refusing to defend them in current legal proceedings. “Obamacare is dead next month if it doesn’t get that money,” Trump told the Wall Street Journal on Wednesday, predicting his threat to kill the subsidies would bring Democrats to the table. Insurers have to submit their proposals for 2018 by June 21, which means they have to make their decisions in this atmosphere of uncertainty. To protect themselves from the threatened loss of subsidies, they’d have to increase premiums by about an extra 20 percent in 2018.
Trump isn’t fooling many people about his intentions. “The longer I’m behind this desk and you have Obamacare, the more I would own it,” he said to the Journal. But that time is now. A Kaiser poll this month found that 61 percent of the public say Trump and Republicans are responsible for any problems with the ACA from now on, compared with 31 percent who would blame former president Barack Obama and Democrats. I asked Levitt if he thought it fair to call the current system “Trumpcare.” His reply: “Absolutely.”
The administration, as I noted last month, had already sabotaged Obamacare by pulling some advertising for enrollment in the crucial period before the sign-up deadline, by signaling, through the IRS, that it would not enforce the individual mandate to buy health insurance and by announcing repeatedly that the ACA was variously imploding, exploding or collapsing.
Not surprisingly, insurers are spooked. Wellmark Blue Cross and Blue Shield announced on April 3 it is pulling out of the Iowa exchanges, saying a lack of clarity “makes it difficult to establish plans for 2018.” Aetna followed a few days later.
Anthem has told securities analysts that it is likely to pull back in 2018, according to Bloomberg News. And Humana on Feb. 14 said it wouldn’t participate in any exchanges in 2018, in a statement also noting the current environment “creates uncertainty for Humana’s businesses.” That could leave 16 Tennessee counties with no ACA insurers.
Trump, if his recent statements are to be believed, is preparing to jettison campaign positions on NATO, China, the Fed, the deficit and more. While he’s at it, he would do well to embrace Obamacare and rebrand it as his own. Trumpcare, as it now stands, is a loser.