By John C. Goodman
Originally posted at Forbes, December 2016
Republicans have been predicting (sometimes even gleefully) that Obamacare will end in a death spiral. As it turns out, the election of Donald Trump makes that unhappy ending more likely. But here is the irony: If Obamacare does crash and burn, Trump and the Republicans are likely to get the full blame for any suffering and misery that follows.
President Obama is already preparing the Democratic narrative. He’s on the stump asking voters to save Obamacare from the Republicans. Once the Republicans pass any legislation that is signed into law by President Trump, they will own the dysfunctional health care system the Democrats have left them. If things get worse after that, the GOP will be blamed – no matter what they say or do.
And things are likely to get worse. Picture a world in which insurers with large financial losses continue to leave the health insurance exchanges – never to return. In county after county, the individual market is being dominated by a single monopoly insurer and in many places, there is no insurer at all. As networks get narrower, deductibles get higher and premiums soar, the healthy continue to leave the market and the losses continue to mount for the few insurers that are left.
What can Republicans do about that? If they do nothing they will lose all credibility with their own base. If they do something, odds are they will only make the situation worse. Obamacare has hung over the heads of Democrats like the Sword of Damocles for the last three elections. Republicans are about change places with them going forward.
There are four immutable imperatives that create a four-directional vice from which Republicans seem unable to extricate themselves.
Repeal. It’s been almost seven years since the passage of the Affordable Care Act and for all that time Republicans have dutifully promised to repeal it, given the chance. In the House of Representatives there have been 60 some odd occasions when Republicans have voted to partially or fully repeal Obamacare. But of course, members knew that none of these votes mattered, because whatever they passed would be stopped in the Senate.
Then, last year, both the House and the Senate voted to defund Obamacare, using a procedure that did not require any Democratic votes. But, again, everyone knew this legislation would face a White House veto.
What would it mean to repeal Obamacare? In Mitch McConnell’s state of Kentucky, 231,000 people would lose their health insurance. Nationwide, roughly 20 million would lose coverage. Donald Trump has said that is unacceptable. Republican leaders in Congress have said the same thing. That leads us to the next imperative.
Delay. What Republicans are now proposing is to repeal Obamacare with a delay of up to three years. That would give them time, they say, to come up with an alternative. But, they have had seven years to propose an alternative; and if they don’t have one by now, why would anyone expect they would have one in three years?
No one does expect that, least of all the insurance companies. Insurance industry consultant Robert Laszewski predicts that a “repeal and delay” bill would create enormous uncertainly and could by itself throw the exchanges into a death spiral. That’s why the next imperative is so important.
No Bailout. Many insurers in the market today have remained only because of political pressure. A number hoped that Hillary Clinton would become president and somehow fix things. With all three branches of government likely to be hostile to Obamacare, insurance executives will be increasingly likely to cut their losses and run.
Laszewski thinks the only way to stabilize the market is to reintroduce the insurance industry subsidies that were originally planned for the first three years of Obamacare. The problem there is that Republicans voted in Congress to stop these payments and they are fighting the Obama administration in court to enforce that decision.
“No insurance industry bailout” is a Republican talking point these days.
No exit. Donald Trump has said there should not even be a single day’s delay between the repeal of Obamacare and its replacement. But the final imperative is the Republican refusal to use Obamacare revenues to fund the replacement. If all of Obamacare goes away, including its funding sources, where does the money come from to continue the insurance for the 20 million newly insured under the Affordable Care Act?
Several Republican replacement proposals envision a new tax – a Republican version of the Cadillac plan tax – to fund a health insurance tax credit in the individual market. But virtually every Republican in the House is on record as opposing a Cadillac tax. Even Hillary Clinton is opposed to a Cadillac tax.
A way out. Republicans must recognize that the replacement plan needs the ACA revenues. They must use those revenues to create an alternative that could phase in over three years – plenty of time to make corrections if they are needed.
A replacement plan by Sen. Bill Cassidy (R- LA) has 12 Senate co-sponsors — more than for any other Senate health reform proposal. Companion proposals by Sen. Cassidy and Rep. Pete Sessions (R-TX) would go further — solving virtually all of Obamacare’s problems and reaching its unachieved goals of universal coverage, cost control and real protection for those with pre-existing conditions. They are summarized by yours truly at the Health Affairs Blog and at Forbes.
These bills would create a universal tax credit and would bring about far more reform than what was attempted by Obamacare.
They would also get Republicans out of the trap.