After the collapse of the Republican health-care bill, President Trump said he wanted to work with Democrats on a bipartisan deal to improve the Affordable Care Act. A historic deal is possible, one that would lower premiums and expand coverage — simply by extracting and passing just two parts of the GOP’s measure.
But first, Trump will have to build trust with Democrats and provide assurances that he will do everything in his power to make the markets work. Every time he tweets that “Obamacare will explode,” he’s rooting for the law’s failure and causing a self-fulfilling prophecy. Who wants to buy a product when the salesman says it’s about to break?
It’s also not true. As the nonpartisan Congressional Budget Office (CBO) recently affirmed, the markets will be stable in most areas. Independent analysts for S&P Global Ratings, analyzing data for Blue Cross Blue Shield plans, found that the financial performance of insurers bottomed out in 2015 and improved last year.
Republicans are also sending mixed signals about whether their discarded partisan repeal bill is still on the table. Before Trump can engage with Democrats, he must renounce repeal once and for all — Democrats will not negotiate with a gun to the head.
To make sure the administration bolsters the existing policy before Congress can improve it, Trump should convene insurers at the White House as soon as possible. He should reassure them that he will not weaken the individual mandate or stop funding subsidies for consumers’ deductibles and other cost-sharing. House Republicans had sued to stop this funding; they must drop their lawsuit or appropriate the money to provide certainty.
Insurers are in the business of assessing and evaluating risk — and a cloud of uncertainty will cause them to flee the markets or increase premiums to compensate for an unknowable amount of increased risk. The mere threat of repeal, or of actions or indifference that would sabotage the markets, is causing great uncertainty. There’s no time to lose to remove this cloud: In some states, insurers must file their plans for next year as early as this month.
Last, but not least, before any negotiations begin, Republicans must agree not to hold the Children’s Health Insurance Program hostage. Funding for the program is set to expire in September. If Republicans try to use this cliff as leverage, Democrats will walk away — and Republicans will be to blame for millions of children losing their coverage.
With agreement on all these preconditions, a bipartisan deal is possible. The solution is simple, at our fingertips and proven to work — in just two easy steps.
First, the House bill included a “Stability Fund” that provided $100 billion to states to reimburse insurers for high-cost enrollees. In Alaska, which is governed by Republicans, this type of stabilization lowered premium increases from 40 percent to under 10 percent for 2017.
We propose moving forward with a similar fund that provides $10 billion per year for 2018 and 2019. Subtracting these amounts from aggregate premiums, we calculate that this fund would lower premiums by 9 percent.
Second, the House bill included flat tax credits that were unrelated to income or the cost of a plan. On average, enrollees would have been worse off than under the ACA; lower-income people and older people would have been hit particularly hard. But some younger people with middle incomes would have fared better.
For young adults up to age 30, we propose that they be eligible for the ACA’s tax credit or the House bill’s $2,000 tax credit — whichever would give them more money. This would help younger middle-income adults without hurting anyone else and entice them to come into the pool — which would lower premiums across the board.
This would cost $40 billion over 10 years for current enrollees ages 19 to 30 with income below 400 percent of the poverty rate (which would amount to $98,400 for a family of four). If the policy enticed half a million additional young adults to buy plans, it would cost an additional $10 billion over 10 years.
So these two simple reforms would cost $70 billion over 10 years. How could Congress pay for that?
Trump has repeatedly promised to address the cost of prescription drugs. Here’s his chance.
When there’s a generic version of a drug, Medicare should eliminate beneficiary costs for the generic drug and increase costs for the brand drug. Congress should also speed up discounts for brand drugs for beneficiaries in the doughnut hole. These two policies alone would save $32 billion over 10 years, according to the CBO.
Next, let’s reform payment for health care to pay for value and quality. For instance, Health and Human Services Secretary Tom Price, when he was a member of Congress, sponsored legislation to reform Medicare payments for care after discharge from the hospital.
Under Price’s bill, Medicare would pay a fixed rate for a bundle of services over a period of time, allowing providers to share any savings. CBO estimates that such bundled payments for post-hospital care would save about $10 billion over 10 years.
In a deal that stabilizes insurance companies, they should pay their fair share. Insurers such as Aetna and Humana reap enormous, uncompetitive profits from the Medicare program — ripping off taxpayers. Trump should make a deal with them to rejoin the ACA markets.
Instead of being paid a government rate, insurers that serve Medicare should compete with one another to offer the best prices. CBO estimates that such competitive bidding would save $26 billion over 10 years.
If Republicans were serious about fixing the ACA’s problems, this deal would do it — but the politics on their side present a real barrier to moving forward. Overall, though, this package of reforms would be a big win for the American people. CBO would almost certainly find that it would lower premiums, expand coverage, reduce health-care costs and enhance market stability. What’s not to like?