Trouble on the Horizon for the Trump Administration – Part 3: Obamacare

I wish I had a dollar for every time Trump said on the campaign trail that he was going to repeal Obamacare and replace it with something “much better”. Of course he never really got around to outlining a workable plan for replacing the Affordable Care Act as it is officially known.  Republicans in the House of Representatives have voted to repeal Obamacare 60 times, but not once have they brought a bill before the House to replace it.  There’s a reason for that – replacing Obamacare while sticking to the Republican core principle of breaking down the social safety net is virtually impossible.

The Affordable Care Act is primarily a vehicle for insuring the working poor while encouraging those who can afford health insurance coverage, but previously choose not buy it, to become insured.  According to government statistics 85% of those participating in the ACA exchanges are receiving government assistance in paying for their insurance premiums.  And let’s not forget the additional millions of citizens who are now covered in the 30 states which have extended Medicaid to more of the working poor under the Affordable Care Act.

Now that the Republicans control both houses of Congress and the White House, they finally have to get serious about the “replace” half of their “repeal and replace” promise. Again that isn’t easy considering that words “government aid” and “subsidies” are not part or their political vocabulary.  However, according to an article in The Atlantic – Republicans Offer a Plan to Replace Obamacare – House Republicans have come up with a replacement plan – well not really a plan really, but more of a framework because it offers no details.  Of course it includes keeping the aspects of Obamacare that everyone seems to like, such as coverage of pre-existing conditions and allowing adult children to remain on their parent’s insurance plan until they are 26.  Other parts of their plan are right out of the Republican playbook.

It includes expanding health savings accounts, offering tax credits for the purchase of private health insurance, reducing the tax exclusions for employer paid insurance, allowing the purchase of insurance across state lines, and setting up funding for high risk pools over a ten year period.  In addition they propose pushing Medicaid off on the states using block grants and partially privatizing Medicare.  Surprise – they want to get the Federal Government out of the health insurance business and reduce the incentive for companies to supply health insurance to their employees.

Of course, the Republican plan is all generalities and no specifics.  According to the Atlantic article, The plan is more like an Impressionist painting: The closer you look, the fuzzier it appears. There’s no estimate for how much it would cost, how generous the tax credits would be, how many people it would cover, or how many people would be forced off of Medicaid or their Obamacare exchange policies.”  

One thing that is clear to me is that the Republican plan offers little to no help for the working poor.  Both health savings accounts (which make personal payments for medical expenses tax deductible) and tax credits for paying for private insurance would help those who earn enough to pay taxes, but not the working poor.  According to the Tax Policy Center Briefing Book, “only 11.3 percent of households in the bottom income quintile (bottom 20% of all taxpayers) paid federal income tax in 2015”.  If you don’t pay taxes a tax credit is useless to you. So unless the Republicans are feeling especially generous and allow people to receive these tax credits as federal government payments if they owe no taxes (yea, that’s going to happen), these measures will not help the working poor.

In theory allowing insurance companies to sell health insurance across state lines is supposed to reduce the cost of premiums by creating more competition, but in the real world it doesn’t work very well because it is difficult for insurance companies to get set up to sell policies in a new state. (Think of the work that goes into setting up new networks for instance.)  Six states have passed laws to allow insurance companies licensed in other states to sell policies to their citizens, but not one company as taken them up on their offer.  In addition, if the proposition ever caught on, states would lose their ability to regulate bad insurance practices because insurance companies would have incentives to set up in states with the fewest regulations. Again, if you are poor and can’t afford health insurance, this proposal won’t help you.

As for setting up high risk pools, that doesn’t help the working poor with normal health expenses that they incur every day.  And as stated before, the remaining proposals are aimed at getting the federal government and companies out of the health insurance business which certainly appears to be a net negative for everyone.

In addition, notice that the Republican plan contains no incentive, such as tax penalties, to encourage everyone to buy health insurance.  This is understandable because it is one of the provisions of Obamacare which the Republicans have been carping about. This will mean that the younger people who think they are immortal (until that perception lands them in a major accident) will have a tendency go without. Not only will the insurance pool be deprived of some of the healthiest individuals, when their reckless lands them in the hospital, it you and I who will ultimately pay their medical bills one way or the other.

Since the Republicans obviously can’t bring themselves to address the needs of the working poor for health insurance, they face grave political risks if they try to dismantle Obamacare.  This has always been the case once a key element of the social safety net is well established.  (Try telling an old Tea Party guy wearing a tri-cornered hat and the “Don’t Tread on Me” sign that you intend to take away his social security checks.)

Many millions now depend on their Obamacare policies to cover them when unexpected illnesses and accidents strike and protect them against financial ruin.  In addition, US health care cost increases, which have began to slow as expected due to Obamacare, will begin again begin to dramatically increase.  According to Gary Claxton, Vice President of the Kaiser Family Foundation of a study his organization recently completed: “Each year we see spending going up 3 percent, 2 percent, whatever, and not 5 percent, and because that stuff compounds, when it continues to go up more slowly … it starts to really add up.” The reason is simple, when the uninsured use doctor and hospital services and they can’t pay, the rates of those who have insurance and can pay will go up. If millions lose their health insurance, health care costs in this country will again start to rise dramatically and health insurance costs for the rest of us will increase dramatically to compensate.

Even as Trump and the Congressional Republicans vow to abolish Obamacare, many more people are signing up.   3.5 million previously uninsured are expected to enroll through the exchanges for the first time for 2017 coverage while approximately 1.1 million more are expected to switch their coverage from private insurance to Obamacare plans.  That’s in addition to the 9.2 million who are expected to re-enroll.  In addition we can’t disregard the millions that are now covered by the expansion of the Medicaid and CHIP (Children’s Health Insurance Program) which the Affordable Care Act made possible.  Those programs now cover an additional 15 million people.

Now try to imagine what would happen if a large percentage of those millions of people covered by one aspect of Obamacare or another lose their insurance coverage.  People whose diseases might have been cured or controlled in the early stages will grow grievously ill, and even die.  The families of those of reasonable means will be devastated by the medical costs of unexpected accidents or illnesses.  Soon after the repeal of Obamacare goes into affect to be replaced by an inadequate Republican plan, the news media and the internet will be filled with horror stories and Trump and the Republicans will be blamed.  Day after day, Trump and Congressional Republicans would take a beating until they will wish they had never said a word about repealing and replacing the Affordable Care Act.

Fortunately for Trump and his partners in crime, Senate Democrats will save them (and the rest of the country) from Republican stupidity and crassness.  Remember, due to Senate closure rules, it requires 60 Senators to bring a bill up for a vote in the Senate, and currently the Republicans have only 52 Senate members.  True to their nature, the Republicans in the House will yet again try to repeal Obamacare and even replace it with some half baked plan of their own, but the Senate is where such legislation will go to die.  Trump can stomp his foot and wear off his finger prints Tweeting his rage, but nothing is likely to change that situation.

The repeal and replacement of Obamacare will be just one more of his campaign promises that Trump will not be able to keep.  His most faithful followers will forgive him if all of those many promises are not kept, but as his big losses continue to mount, even their patience will have its limits.

According to Gallop polls, Trump already has the lowest favorability ratings of any President-elect in recent memory – 42% favorable, 55% unfavorable (-13%).  Even those ratings have increased substantially from the exceedingly low ratings he had on election day as Republicans have reluctantly come on board.  However, Trump’s current numbers are dismal compare to the most recent Presidents before taking residence in the White House:  Bill Clinton – 1992 – 58% favorable, 35% unfavorable (+23%), George W. Bush – 2000 – 59% favorable, 35% unfavorable (+23) and Barack Obama – 2008 – 68% favorable, 27% unfavorable (+41%).  Imagine how low Trump’s favorability ratings could go if even his most ardent followers start to lose faith in him.  Trump’s inability to repeal Obamacare as repeatedly promised will be yet another big nail in his coffin.

Cajun    12/19/2016

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