Repeal + Replace

Is Trumpcare Dead?
Was It Ever Really Alive?

Senators Mike Lee and Jerry Moran said yesterday that they would not vote for the Better Care Reconciliation Act, effectively killing the legislation.  As anybody who has been following this story would have predicted, President Trump reacted publicly on Twitter on Tuesday morning, vowing to let the ACA marketplace collapse and then rewrite the plan later.

Senate Majority leader Mitch McConnell attempted a quick punt this morning, calling for an immediate Senate vote on the House bill, a trick card that if it worked, would give Republicans two years to work things out.

Unfortunately for McConnell, it probably won’t.

The White House sees the failure as saying more about the political establishment in Washington than itself, which shouldn’t be all that surprising. Caught up in the drama of the Watergate-Russia emails-Trump family narrative, major media outlets like the Washington Post and the New York Times see a historic defeat rather than a temporary setback. That may or may not turn out to be true. Predictably, conservative commentators and the alt-right believe the defeat says more about the mainstream media and the Deep State than it does about the Trump Presidency. For their part, Democrats clearly think they have found their issue and can be expected to continue to exploit it using legislative Viet Cong tactics (attack on social media, melt into the jungle, lob snarky public Molotov cocktails) to punish Republicans and keep the story on the front page.

One thing is clear. Instead of repealing and replacing Obamacare, the GOP now has to rewrite and replace its own plan. Doing that would be difficult under the best of circumstances, but in the current climate in Washington it is difficult to see how it would be possible without a major shift in the political landscape.

All of this is bad news for hospitals and health plans and a frightening development for consumers, although not the really bad news some had feared. The President’s threat to let the insurance marketplace die and then “figure it out” sounds good as a rallying cry to the troops on social media, but is not the kind of thing that investors and CEOs like to hear.  Realistically though, at this point everybody knew that the uncertainty would likely continue through the year (best case) or a year or longer (worst case) as the gridlock in Washington plays out. As depressing and frustrating as it is that the uncertainty will continue, by this point the industry is used to it. Insiders will continue to look for ways to minimize risk and for business opportunities to capitalize on the uncertainty.

Trump’s plan to allow the insurance exchanges to collapse is the kind of confrontational talk Trump and his advisors relish. In theory, the idea could work. There are in fact signs that it already is, as major insurers leave the marketplace and consumers hesitate before committing to expensive insurance policies.  In reality, however, the collapsing exchanges will create a political crisis that is even worse than the current one for the administration, with news cycle after news cycle dominated by stories of terminally ill cancer patients and parents with children with horrible diseases and no insurance coverage. At this point, it will be difficult for the party doing the collapsing to point at the other side and say “It was them. They did it!”

Moderates see some sort of brilliantly crafted compromise as the obvious solution. In any place and time other than Washington in the year 2017 that would probably be the case. Unfortunately, despite what you’re hearing, it probably isn’t going to happen. Extremists on both sides are unlikely to accept anything less than complete and total victory.  With the President on hand to reliably blow up negotiations with ill considered tweets and taunts, all of the pieces are in place to ensure that the  healthcare reform story continues season after season.

If you are a person with a serious pre-existing condition or somebody facing a life threatening health condition, you can be forgiven for feeling extremely unwell right about now. Will you be able to pay for your drug prescriptions next year? Will you even be able to buy insurance coverage next year?  If you are able to buy insurance, will that insurance coverage be worth the paper it is printed on? If by some miracle, you are in fact able to buy insurance coverage, will some insane person take it away from you at some later date in time?

John Irvine is the editor of the Health Care Blog. He can be followed on Twitter at @thcbstaff. He can be reached by email at john@thehealthcareblog.com

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32 replies »

  1. President Obama gambled when he made the ACA his top priority upon entering office, and won.

    President Trump gambled when he made the AHCA his top priority upon entering office, and lost bigly.

  2. I was talking mostly about the quality of the insurance product in this case. I suspect costs will be lowered by not covering a lot of care. In the case of most government controlled plans, the quality of the coverage is about the same as that under our Medicare. And for much less as you note.

    Steve

  3. “The chance of a pivot to a bipartisan effort to stabilize the exchanges is increasing, though perhaps still low.”

    Yes, so low it’s impossible. Any Republican who attempts to do bipartisanship will get killed in their primary where they’re rewarded for behaving badly. The center for Republicans no longer exists as it’s been purged over the years.

  4. The chance of a pivot to a bipartisan effort to stabilize the exchanges is increasing, though perhaps still low. Depends on how votes go this week and next. Below is a slightly modified portion of a THCB post by me from earlier this month, with what ought to be considered in any bipartisan approach:

    (1) An 5% or so increase for 2018 in premium tax credits (via the formula) for low-income people
    (2) A commitment to enforce the individual mandate while a comprehensive study is conducted of viable alternatives over the next year.
    (3) Inducements to insurers to expand into, or come back to, states they have abandoned and to underserved markets. For example: exemption from the ACA insurer tax.
    (4) $15 to $25 billion a year for 2 years to states to subsidize insurers for expensive claims, attract new insurers in poorly served areas, and expand enrollment of healthy young and middle aged people.
    (5) At least 2 years of funding for the cost saving reduction (CSR) payments—deductible and co-pay help–at $7 to $10 billion per year.
    (6) A reinsurance program with a clear fed-state funding formula. A reinsurance program was in the ACA and operated from 2014 to 2016. It defrayed insurers’ costs for outlier claims and reduced premiums by 5% to 10% a year. The temporary program’s termination was one factor in the average 22 percent increase in premiums across the country in 2017. CMS approved Alaska’s waiver for a reinsurance plan this month. A batch of other states are expected to apply. The process should be expedited.
    (7) $20 to $30 billion per year for at least 3 years to states to ramp up opioid addiction and substance abuse/mental health treatment.
    (8) Additional funding for the nationwide network of community health centers. With a history of bipartisan support, the 1,300 centers serve the medical needs of about 25 million low-income people. Under current law, they will receive about $4 billion in federal funds in 2017. The Senate bill increased that by $422 million. The centers should get double that in each of the next two years.
    (9) Revisions to section 1332 of the ACA to make it easier for states to experiment with their insurance systems as long as those experiments are consistent with the ACA’s insurance rules on consumer protections and do not increase the number of people without coverage nor cost the federal government more money. If California, Vermont or Massachusetts want to enact a single payer system with their own money, let them do it. And if some red states want to try some innovative market-based solutions, those should be allowed to go forward.

  5. The smarmy HHS Secretary Tom Price the other day cracked that we should just do “Repeal” and go back to the good old days pre-Obamacare — insurance denials, rescissions, lifetime caps, no regulation of costs.

    BUT, he’ll keep his 70% taxpayer-subsidized FEHB coverage, thank you very much.

  6. Indeed, there should now be no doubt that DT does not understand much about the health insurance market and has made no effort to be come fully informed. Maybe Putin can explain it to him next dinner they have

  7. I haven’t found Trump knows anything of value on any policy he’s wants. He certainly has nothing to offer.

    I hope the ACA is repealed without replacement. Then we’ll see who regrets voting for Trump.

  8. PRESIDENTIAL LEADERSHIP:

    “President Donald Trump’s interview with The New York Times generated plenty of headline-making comments. But his remarks on health insurance, the biggest topic of the week, suggested he didn’t know how it works or how much it costs.

    He said:

    “So pre-existing conditions are a tough deal. Because you are basically saying from the moment the insurance, you’re 21 years old, you start working and you’re paying $12 a year for insurance, and by the time you’re 70, you get a nice plan.”

    The notion of paying $12 a year for health insurance is even less than the $15 per month number Trump floated in an interview with the Economist earlier this year.

    “Insurance is, you’re 20 years old, you just graduated from college, and you start paying $15 a month for the rest of your life and by the time you’re 70, and you really need it, you’re still paying the same amount and that’s really insurance,” he said in the May interview.

    The average premium for a single person who gets health benefits from an employer last year was $536 a month, with employees paying an average of 18 percent of the cost while employers pick up the rest, according to data from the Henry J. Kaiser Family Foundation and the Health Research and Education Trust.

    Prices are different in the market for people who don’t get health benefits from an employer or a government program ― including those who purchase policies directly, through a broker or a health insurance exchange. For consumers in this health insurance market, the average monthly unsubsidized premium a mid-level “Silver” plan ranges from $364.91 for a 30-year-old to $872.01 for a 60-year-old, according to data compiled by HealthPocket.

    All of those numbers, of course, are significantly higher than either figure suggested by the president. This prompted a number of observers to wonder if Trump was confusing health insurance with the life insurance ads that air in heavy rotation on cable news…”
    __

    Priceless.

    http://www.huffingtonpost.com/entry/trump-health-insurance-cost_us_597042f3e4b062ea5f8f2430?ncid=inblnkushpmg00000009

  9. Steve, you’re going to have to define “quality”. Under government controlled systems which do it for about half the cost, is their quality half?

  10. Lowering costs is easy. Lowering costs while maintaining quality? Difficult. I predict that they will lower costs by reducing quality, then marketing it as a success focusing only on costs.

    I don’t have a barber, but I do talk a lot about this particular issue with the couple who run the soup kitchen at our church. They are concerned that deductibles will go even higher, and that a lot of care will no longer be covered.

    Steve

  11. Hi JOHN IRVINE,
    Insurance feeds the pay off of Ponzi scheme with high cost marginal care. Fascinating system but little to do – or at least less than it could do- for helping sick people while feeding frenzy for well people. It is nuts to think of system as fixable; need new not old thoughts

  12. CBO on Zombie McConnellCare / “Trumpcare”:

    “The Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) have completed an estimate of the direct spending and revenue effects of the Obamacare Repeal Reconciliation Act of 2017, an amendment in the nature of a substitute to H.R. 1628, which would repeal many provisions of the Affordable Care Act (ACA).

    According to the agencies’ analysis, enacting the legislation would decrease deficits by $473 billion over the 2017-2026 period (see Figure 1).

    CBO and JCT estimate that enacting the legislation would affect insurance coverage and premiums primarily in these ways:

    • The number of people who are uninsured would increase by 17 million in 2018, compared with the number under current law. That number would increase to 27 million in 2020, after the elimination of the ACA’s expansion of eligibility for Medicaid and the elimination of subsidies for insurance purchased through the marketplaces established by the ACA, and then to 32 million in 2026.

    • Average premiums in the nongroup market (for individual policies purchased through the marketplaces or directly from insurers) would increase by roughly 25 percent—relative to projections under current law—in 2018. The increase would reach about 50 percent in 2020, and premiums would about double by 2026.

    In CBO and JCT’s estimation, under this legislation, about half of the nation’s population would live in areas having no insurer participating in the nongroup market in 2020 because of downward pressure on enrollment and upward pressure on premiums. That share would continue to increase, extending to about three-quarters of the population by 2026…”

  13. Trump’s latest to Dean Heller: “Nice little Senate seat ya got there. Be a shame if something bad happened to it.”

  14. What we are learning is, it is easier to give than to take away even when the gift is only perceived in the mind and is not a reality.

    The only solution is to figure out a way to lower costs so that we would be giving to all and not taking anything away. That means lower costs which means less government control, not more. It means cost constraint with subtle charity. It means less rent seekers. . …And finally it means that individuals learn to take charge of their own lives.

  15. Well, yeah, no amount of calling dubious-value-add, for-profit 3rd-party intermediated pre-payment schemes “insurance” will make them so. And (speaking just of adults) UTIL risk is roughly a SIXTY year proposition, highly (hockey stick) correlated with age. Yet we insist on selling “coverage” in one-year chunks.

  16. No it was never really alive. The GOP Congress has zero interest in repealing Obamacare. For two reasons.

    One is that they don’t want to displease their donors, those who support the primary job of any member of Congress, reelection. They fear their big donors (insurance, pharma, hospitals, chamber of commerce, etc) far more than they fear their constituents. Donor class wants Obamacare, so it stays.

    Two is that many member of Congress hate Trump and want to see him and his agenda fail. Trump is a threat to the establishment, the status quo. Anything to discredit him. Just observe how few, if any, Republicans are defending Trump on the unending Russian collusion stories.

    I expect a repeat performance on tax cuts/reform. Trump’s biggest political opponent is not the Democrats but instead the establishment which is Dems, Repubs, media, Hollywood, academia etc.

    Healthcare is playing out in a very predictable way. Only way out, other than letting Obamacare implode, which it is doing, is a two tiered system. Medicaid for all catastrophic coverage as one tier and a totally free market system for self pay and insurance as the other tier.

  17. Michel! Love your comments. We have a Ponzi scheme of unprecedented size. David, correct on some minor level only, in my view. Insurance feeds the pay off of Ponzi scheme with high cost marginal care. Fascinating system but little to do – or at least less than it could do- for helping sick people while feeding frenzy for well people. It is nuts to think of system as fixable; need new not old thoughts.

  18. While my book on workplace wellbeing seems to be taking longer to write than healthcare is to reform, self-directed wellbeing IS the key. However, that will take time, and we need to stabilize our sick care in some radical fashion to get us into the wellbeing space. All of this requires centralized strategic planning, something that does not exist in the health and healthcare arenas today. Today we are limited to responding to stimuli.

    It does seem that access to healthcare is seen as a “right” even though it is not effectively legislated yet (which is what “rights” usually are). As with education, eventually it will be, and it seems we are on an inevitable path toward single payor universal coverage. Those of you who know my background realize how difficult that is to say, but the alternatives are just not there, and Congress can’t get anything done that is more nuanced. I’ve wondered whether a single payor could effectively manage care, but then again, perhaps the better approach is for payor(s) to get out of that game entirely and force providers to manage their own provision of care via better payment models. Then there is rationing, de facto or explicit. That probably won’t work in America.

    Of course we are spending our healthcare dollars in the wrong places. Of course we need a hugely invigorated primary care plus extenders infrastructure. Yes, we must take more of our own care into our own hands via technology, and start self-directing.

    Can anything like this be done absent some command and control (somehow insulated from politics)? Are there models such as the SEC or the Fed that might work? As much as I hate how that sounds, I’m not sure what the alternatives are.

  19. I agree with Adrian. And speaking of pretending to be in control of traditional roles, I published an analysis piece last week in the BMJ whose key takeaway is that no matter how “patient-centered” you are as a provider, the care system is losing the power to control the conversation and the interactions. We need a new vocabulary to talk about this that takes into account both the power of the Internet and the “real world” demands of the social determinants of health. I propose collaborative health as an umbrella term not for the health care system but describe the reality it cannot control.

  20. Agreed with Daniel’s point. The Republicans seem intent on creating narrower and narrower risk pools that disproportionately benefit upper class voters, namely those most able to access preventative and quality healthcare anyway. From a public policy standpoint, this spells disaster for wide swaths of Americans and is unsustainable.

    When even insurance companies oppose such an approach, Republican leadership should think twice.

    By the way, the craziness with how these health bills are being written, introduced and defeated are having negative effects on foreign investor and US consumer confidence. Not sure how many more attempts the US economy can weather.

  21. The real purpose of insurance is not to pay for services used but to cover the risk. Just because the vast majority of people don’t have a fire at their home doesn’t mean if they should pay virtually nothing for home insurance

    Unfortunately there’s no getting around the fact that cheap insurance does not cover expensive services. Neither Trump or anyone else can escape that fact

    With the standard benefit plan at least people can know what they’re getting without being a benefits expert. The Republican notion of lower premiums is really just benefit roulette in disguise. You pick a skinny plan and then hope you don’t get something it’s not covered. That’s really not how insurance should work.

  22. Thanks John and Saurabh. If one doesn’t know where they are going they usually stay lost. For much of what medicine does it should be dirt cheap. Wrong debate all along; much better ideas will rise, party free. Maybe we are finally at break point?

  23. My barber, a blue-collared lad from South Philadelphia, who just about makes ends meet, is no more concerned about Medicaid expansion and contraction than black holes. He voted for Trump to afford health insurance. If the GOP can make insurance cheaper for the likes of him, they’ll be voted in again, and again.

    A government which robs (healthy) Peter to pay for (sick) Paul loses the vote of Peter, and loses the election if Peter >> Paul. This is the political economy of community rating in an excessively high priced system.

    If Trump administration lowers healthcare costs/ insurance premiums they’ll be invincible.

  24. i’d say the GOP just dodged a self-inflicted gsw to the head. not sure how the democrats can’t take the blame for ACA. Fear not! Bi-partisan (taxpayer) bailouts are on the way!

  25. The substantive changes that are about to happen in US healthcare will be driven by technology (artificial intelligence, telemedicine, blockchain identity, longitudinal health records), not politics.

    Our institutions have little choice but to pretend they are still in control of their traditional roles. Congress may be the most obvious example today, but insurers, employers, and hospitals are also lost in the ether. None of these institutions is pitching a solution.

    To stabilize healthcare in the face of massive technological change start with the tech, not the incumbents.

  26. It is too late. The act of observing healthcare changed it and caused its wave function to collapse.” See: “The Quantum Theory of Health Care”

    The Republicans are going to be blamed even if they do nothing and there is marketplace collapse (or any other bad news about healthcare). “You made the insurers jumpy and they had to raise premiums to cover the uncertainty in projected costs.” And “Providers had to raise prices to cover this tentative future.”

  27. I hear your pain – another missed opportunity to reform the costs. But the GOP has realized, just as the Democrats once did, nothing meaningful can be achieved without bipartisanship. It’s a good take away lesson

  28. This is really surprising. I was sure the GOP would pass something, and wouldn’t rule out a last minute passage of something. But, if this holds, I will be especially surprised at the passivity of POTUS with this bill. I am not a Trump fan, but I thought that if he had any positives, it was in the realm of being able to sell stuff. PR and promotion. If he had used his considerable skills of persuasion I find it hard to believe that he would not have been able to move public opinion on this bill. If he had, that would have given Senators incentives to back the bill. Instead, he went golfing. Go figure. Of course, there weren’t all that many Senators or Congresspeople making a really hard sell either.

    Steve

  29. Nice quick analysis John! I largely concur. It can’t quite be pronounced dead yet. Could become zombie health care bill.
    From interviews with DC think-tankers over the last few days, and based on comments at an Altarum Institute symposium in DC today, including by Republican stalwart Gail Wilensky and Obama’s White House health policy lead, Jeanne Lambrew, now a Senior Fellow at at the Century Foundation, Senate rules allow for many amendments to alter the bill–even in substantial ways. That could still yield a bill that wins 50 votes, with Pence breaking tie.
    This outcome is doubtful, though, because positions are becoming entrenched. And Senators on both sides of the intra-party debate are disgusted with the bad process that McConnell launched.
    Related, Alexander announced plans today to hold hearings, before Aug recess, on ways to stabilize the marketplaces for 2018 and 2019.
    As you say, many moderates hope some sort of legislative con premise can be reached that will do this.
    And related to that, the attorneys general of 17 states yesterday filed a reply in court in support of their motion to intervene in House v Price, the House Republican’s lawsuit that enjoined the Obama administration from reimbursing insurers for reducing cost sharing for low income exchange enrollees until Congress adopts a specific appropriation for the cost sharing reduction payments (CSRs). Under the radar amid attention to Senate bill, attorneys for the House Rs and the Trump administration had filed briefs opposing the intervention request on July 10.
    The states reiterate their argument, according to ACA legal analyst Tim Jost, that the “House and administration are engaged in a collusive strategy to undermine rather than to clarify or implement the current law, and that the House and administration are taking advantage of the court’s willingness to hold the litigation in abeyance to accomplish this scheme.”
    Indeed, Trump again tweeted today to “let ObamaCare fail” and then “come together to do a great healthcare plan.” (Exasperating!)
    The latest version of the Senate bill funded CSR payments for 2 years.
    Said Lambrew: “They have to run the exchanges” whether they like it or not.
    Opined Wilensky: At best, the administration takes a “benign neglect” approach.
    And from Joe Antos, a conservative health policy wonk last week: “Forget about anything bipartisan. Why at this point would the Democrats help the Republicans pass anything on health care that allows them [Republicans] to declare a partial victory.”
    Others disagreed. John Rother, president and CEO of the National Coalition on Heath Care, a left of center advocacy group told me: “I think the Republicans have to do something. Otherwise they will get hammered politically. And I think it’s feasible they could get to 60 votes in the Senate to stabilize the marketplaces.”

    Obviously, the course of events is now unpredictable. There are legislative process complexities on top of the policy issues in play. Getting to some bipartisan narrowly focused bill is feasible but a steep hill to climb.
    One possibility is that Rs punt for now and attach CSR funding and a reinsurance/high- cost-patient fund to the reauthorization of the Children’s Health Insurance Program (CHIP), which has to pass by the end of September. There are budget bills coming up then too. Meantime, insurers are left with a very shaky situation. There could be further drop-outs unless R leadership signals it WILL do something before end of September.
    Repeal without replace is a terrible idea and as of right now does not have the votes to pass.
    The trauma and drama continue, a very broken process. As our eloquent President might say: “SAD”

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