Will Trump’s sabotage wreck your health care?

October 23, 2017

Christopher Baum explains what Trump's executive orders on health care will mean--and why no one should settle for the Democrats' bipartisan "compromise."

"OBAMACARE IS finished," Donald Trump told reporters on October 16. "It's dead. It's gone. You shouldn't even mention it. It's gone. There is no such thing as Obamacare anymore."

Just saying the same thing over and over doesn't make it true. But Trump has certainly been busy trying to turn these words into reality.

This summer, Senate Republicans failed three times to "repeal and replace" the Obama administration's Affordable Care Act (ACA), thus denying Trump the victory he's been promising to his right-wing base since last year's election campaign.

But Trump has the power to do a lot of harm on his own, without any help from Congress. In October, he kicked his sabotage efforts into high gear--first by dismantling the ACA's contraceptive mandate and then with a pair of orders that threaten to undermine the insurance markets established under the ACA.

A bipartisan pair of senators, Lamar Alexander of Tennessee and Patty Murray of Washington, are proposing a bill that they say will stop the Obamacare system from crashing because of Trump's unaccountable orders.

Donald Trump signs an executive order on health care
Donald Trump signs an executive order on health care (Andrea Hanks | WhiteHouse.gov)

But predictably, the bill is tailored to the concerns of the insurance companies threatened with a loss of federal government money to cover premium subsidies for poor and working-class Americans, rather than the problems so many millions of people face because of the ACA--and there's no guarantee that Trump will support the bipartisan deal, or that the GOP-controlled House will pass it, anyway.

So Trump's executive actions do represent a further threat to access to health care for millions of people. But even if Trump accepts the bipartisan "compromise" to temporarily prop up one aspect of Obamacare, the ACA status quo is breaking down as a result of a wider crisis, which includes sabotage on the part of the insurance industry itself.

We need to oppose the right-wing assault on our health care in any form--whether the outright "repeal and replace" proposals that would demolish the government's Medicaid health care system for the poor or Trump's whittling away at the ACA provisions that help ordinary people.

But the grassroots uprising that helped defeat Trumpcare this summer can't be diverted by Democrats claiming their bipartisan compromises are enough to solve the worst of the problems.

The health care status quo built on Obamacare won't do. We need a whole new system: a single-payer system that guarantees free comprehensive health care for all.

TRUMP'S LATEST wave of attacks came in a one-two punch on October 12.

First, Trump issued an executive order directing his administration to "consider proposing regulations or revising guidance" in some key areas regarding the ACA.

These include association health plans (AHPs), which essentially allow small businesses to band together and thereby obtain more favorable pricing from insurers; and short-term limited duration insurance (STLDI), which provides limited coverage for a defined period for people who are in between jobs or otherwise need "gap" coverage while looking for a more permanent solution.

In both these areas, Trump called for expanded access and availability--which in effect means deregulation.

AHPs, for instance, offer tantalizing prospects to those who find Obamacare's regulations on what health insurance policies must cover excessive.

The ACA essentially recognizes three types of insurance plans: individual plans, small group plans (covering two to 50 employees), and large group plans (covering 51 or more employees).

Some of the most important protections under Obamacare--such as the requirement that all plans cover a defined list of essential health benefits--apply only to individual and small group plans.

Large group plans can, for example, "avoid covering essential services like mental health care and substance use disorder treatment and, although they technically are not supposed to exclude pre-existing conditions or charge higher rates to people with them, they are in fact less constrained in doing so," Timothy Jost wrote at the HealthAffairsBlog.com.

Trump's idea, then, is to find ways to allow small groups--and perhaps even individuals--to band together into AHPs and get the same exemptions as large groups. As Jost goes on to write:

If association health plans could market health coverage claiming to be self-insured large group plans...they could be free from state regulation and could market plans with skimpy benefits and find it easier to cherry pick healthy enrollees and avoid unhealthy ones.

As for the short-term policies known as STLDI, Trump's order instructs federal agencies to consider lengthening the coverage period and making the policies renewable--meaning that people could choose STLDI, as a more or less permanent option for health care coverage.

This appeals to the Trump administration because, as the executive order notes, STLDI is "exempt from the onerous and expensive insurance mandates and regulations" of Obamacare. Freed from the requirement that such policies be temporary, STLDI could be offered cheaply to young, healthy people who don't anticipate having significant health care expenses.

Thus, Trump's objective is clearly to expand the availability of insurance plans that aren't subject to the full scope of the ACA's patient protection requirements. As Jonathan Cohn wrote at Huffington Post, the order could allow "a proliferation of cheaper, less comprehensive plans that would undermine rules about who and what insurers must cover."

TRUMP'S SECOND order would end reimbursements to insurance companies for the cost-saving reductions (CSRs) they are required by law to make for low-income policyholders. These payments are estimated to total $7 billion in 2017.

Trump and Republicans have deceptively characterized these payments as "handouts" to the insurance industry. But CSR payments are the means that the Obama administration came up with to provide help for low-income consumers who have to purchase health insurance under the ACA rules.

Under the ACA, individuals and families with incomes up to 250 percent of the federal poverty line who buy insurance through state or federal markets are eligible for a reduction in premium payments and out-of-pocket costs. The ACA also requires that the federal government pay insurers to offset this reduction.

But because the law doesn't explicitly require the government to appropriate funds to cover the CSR payments--and Congress didn't pass a separate measure to fund them--the Republicans claimed that the CSR violated the constitution because the administration was making the payments without the sanction of Congress.

In 2016, a federal judge ruled in favor of the GOP in a lawsuit against the Obama administration, but immediately stayed her order blocking the payments in order to let the appeals process play out.

Ever since Trump took office, his administration has been threatening to use the court decision as a pretext for cutting off CSR payments.

The requirement that insurance companies continue to offer rate reductions to lower-income people remains in effect, whether or not they get CSR payments from the Feds. So the question is how the insurers will respond.

One danger is that more insurance companies will abandon the state and federal marketplaces for selling policies under the ACA--a trend that has been accelerating already over the last several years. Others might use the cutoff as an excuse to stop offering reduced rates as required, and wait to see how the Trump administration responds.

For insurers that remain in the ACA marketplace, another approach would be to raise premiums to offset the lost reimbursement from the federal government.

In August, the Congressional Budget Office (CBO) studied this possible outcome and concluded that most of the negative effects arising from higher premiums would be offset by corresponding increases in the premium tax credit (PTC), another Obamacare subsidy. In other words, the tax credit would increase for people paying higher premiums.

But this conclusion relies on the rather massive assumption that the PTC itself will remain intact.

The CBO estimates that with CSR payments to insurers eliminated, the cost of increased PTCs over the next 10 years in reduced tax revenue to the federal government would be a net of $247 billion.

Republicans in Congress have already demonstrated with every health care proposal they've tried to pass this year that they believe too much is being spent on subsidizing health care for the needy. What are they odds they'll stand for such an increase?

TO THE extent that a rise in premiums isn't offset by tax credits or other means, the result will be higher costs, fewer plan options and reduced access to health care. And if enough insurers decide to exit the market, many people may find themselves with no health insurance options whatsoever.

But this--or at least the threat of this--is precisely what Trump wants.

"Now, we're going to get the health care done," Trump told reporters on October 16. "In my opinion, what's happening is, as we meet--Republicans are meeting with Democrats because of what I did with the CSR, because I cut off the gravy train. If I didn't cut the CSRs, they wouldn't be meeting."

As we have seen, the CSR is no "gravy train." And however much Trump may flatter himself that his destructive behavior is just a clever maneuver, the only thing he's truly demonstrated is his willingness to destroy anything or anybody to get what he wants.

Whether he is threatening health care subsidies desperately needed by millions of low-income people, or using the possibility of deportation for nearly a million DACA participants as a bargaining chip to get his beloved border wall, Trump's message is the same: I'm going to get my way, or I'll blow the whole thing up.

So it's anybody's guess whether Trump will support the deal worked out by Sens. Lamar Alexander and Patty Murray, which would fund CSR payments to insurers through 2019.

Although the response from congressional Republicans was lukewarm at best, Democrats were, of course, enthusiastic. Speaking to the press last week, Senate Minority Leader Chuck Schumer spoke of the "growing consensus that in the short term we need stability in the markets," and praised the Alexander-Murray proposal for providing that--along with "some very significant anti-sabotage provisions," although he didn't elaborate on what these might be.

This was in keeping with the Democratic talking points that legislation is needed to "stabilize markets and lower premiums," as Schumer said last month--and then Obamacare will be just fine.

But insurance markets won't be "stable" unless they are profitable for insurance companies. If the insurers aren't happy, they can simply leave.

This is why, for all their talk of serving the health care needs of ordinary people, the Democrats are only willing to pursue this goal to the extent that it is compatible with keeping the insurers happy.

Trump didn't create this problem. Major insurers were leaving the ACA marketplaces, or threatening to do so, long before he took office. UnitedHealth, for instance, made the decision to exit in mid-2016--not because the insurance giant was losing money, but because profit margins weren't high enough for its liking.

THE REAL problem with Obamacare is that it depends on the voluntary participation of for-profit insurance companies--and as a result, it's at the mercy of those companies.

No "anti-sabotage measures" are going to change this. If insurers decide they aren't making enough money or if they're unhappy for any other reason, they can simply take their ball and go home.

This must be kept in mind when considering the other major element that Democratic leaders claim they want to address. It's fine to talk about lowering premiums, but again, the market must remain profitable for insurers. The usual tradeoff is between premiums and deductibles: the lower the one, the higher the other.

If you truly want to talk about "affordable health care," both numbers need to be brought down. Otherwise, consumers may have a lower monthly payment--but if they actually need care, they will find themselves paying a ruinously high portion of the bill out of their own pocket before any insurance kicks in.

But the truth is that "affordable health care" is simply the wrong goal. As long as the objective is "affordability," access to health care will remain a matter not of what people need, but of what they can afford.

The consequences of this are all around us: people who are sick and can't pay for medication; people who are bankrupted by their medical bills, even though they have insurance; people who don't get care because the cheap policy they bought doesn't cover the treatment they need; and on and on.

There is only one way out of this--by providing comprehensive health care to all people, free of charge, without the for-profit insurance companies involved.

What we need, in other words, is a universal single-payer health care system.

As with all the Republicans' earlier attacks on the ACA, this latest assault must be opposed--but we can't stop there. No one should be lulled into thinking that all we need to do is tweak Obamacare here and there. Obamacare isn't just broken; in its reliance on for-profit insurance companies, it is fatally flawed. It can never be the health care solution that every person living in this country needs and deserves.

We must demand single-payer, and fight for it with everything we have. The stakes are too high to settle for anything less.

Further Reading

From the archives