The Trump administration is doing (virtually) everything in its power to make the Affordable Care Act more costly for the federal government; Obamacare’s plans more generous for the poor; and “market-based” approaches to universal health care more toxic within the Democratic Party.
Of course, the White House hasn’t been doing these things consciously. Rather, President Trump’s comprehensive sabotage of the conservative movement’s vision for health-care policy has been the accidental by-product of his haphazard sabotage of the Affordable Care Act.
To see why this is the case, we first need to review what the health-care debate in the United States is fundamentally about: Progressive Democrats (along with most other Americans) want to live in a country where nonaffluent people don’t routinely die or go bankrupt due to injury or illness. In order to achieve this end, the young, healthy, and rich must subsidize the medical costs of the old, unhealthy, and poor.
One way to do this is to have the government impose a (progressive) system of taxes to finance a universal, state-run health-insurance program. This works pretty well for many developed nations, including our neighbor to the north. But there are a lot of powerful people, industries, and interest groups that would stand to lose if America adopted such a system. And anyway, the Obama administration believed that a more market-based approach to health-care reform would be more likely to win bipartisan support — and thus, to survive long-term.
So, the Affordable Care Act aimed to deliver universal health care by heavily regulating — and subsidizing — the private insurance market, instead. Insurers on the ACA exchanges were required to include a set of essential health benefits in all of their plans — and were barred from charging people with preexisting conditions more than their ostensibly healthy peers. This forced the (temporarily) healthy to subsidize the sick in two ways: by making it impossible for them to opt for low-cost, skimpy insurance — and by forcing them to pay premiums that overpriced their actuarial risk, so as to allow for-profit insurers to underprice the risk of covering people with costly medical ailments.
This approach to universal coverage has had a lot of shortcomings in policy terms (not least, that it hasn’t come close to achieving universal coverage). But its most fatal flaws are political in nature: By pursuing market-centric reforms, Democrats did not earn themselves one iota of Republican support for the ACA — but they did make it easier for future Republican presidents to sabotage the law.
Unable to repeal Barack Obama’s signature achievement (beyond its individual mandate), Trump and his Cabinet have worked to undermine it administratively. Among other things, they have destabilized the law’s marketplaces by abruptly halting subsidies to insurers; cut funding for its outreach groups; slashed Obamacare’s advertising budget by 90 percent; spent a portion of the remaining ad budget on propaganda calling for the law’s repeal; cut the open-enrollment period by 45 days; described Obamacare as “a bad deal” that Americans “won’t be convinced to sign up for” in official public statements; and expanded access to skimpy, discriminatory insurance plans.
The White House’s latest act of sabotage falls into that last category. On Wednesday, the administration issued a final rule that will allow insurers to offer “short term” insurance plans that last for a full year — and can be renewed for up to three years.
These short-term plans are completely free from Obamacare’s regulatory requirements. They typically offer few services, and are designed for people who are just looking for financial protection from a medical calamity during a temporary period of unemployment.
Before the Affordable Care Act, Americans could remain on short-term health insurance for up to a year. But to prevent healthy people from using the plans to avoid subsidizing the sick on the individual market, the Obama administration brought that limit down to three months. This measure also helped to protect inattentive or reckless consumers from purchasing plans that wouldn’t actually protect them from financial ruin, in the event of a catastrophic accident or cancer diagnosis.
Trump’s rule still allows states to impose their own consumer protections on short-term plans. But many Republican-controlled states are unlikely to avail themselves of that option. Thus, the new policy — like most of Trump’s other acts of Obamacare sabotage — is all but certain to chase healthy people out of the ACA marketplaces. And that will force insurers to raise premiums on the (increasingly sick, and thus, expensive to cover) people who remain on the exchanges.
There was a time when Obamacare’s supporters feared that Trump’s assaults on the ACA would send it into a death spiral (healthy people exit the exchanges, which prompts insurers to raise premiums, which prompts more healthy people to leave the exchanges, which prompts more healthy people to leave the exchanges, etc.). But those fears have proven ill-founded.
Although the sticker price on Obamacare plans have skyrocketed, the amount the typical Obamacare enrollee actually pays has not. This is because the size of the ACA’s subsidies is tied to the price of benchmark, “silver” insurance plans (i.e., plans that provide more actuarial value than “bronze,” but less than “gold”). As Trump has driven up the cost of such plans, he’s also drastically increased the generosity of the law’s subsidies to poor and middle-income consumers.
The upshot of all this is roughly the opposite of what conservatives intended: The Republican president has made Obamacare a better program for low-income people (many of whom can now get “bronze” plans for free), and a worse program for the middle-income consumers who earn too much to qualify for subsidies (i.e., the very constituency that Republicans had promised to help by repealing the law) — all while making the ACA more expensive for the federal government.
What’s more, all of this has thoroughly discredited moderate Democrats’ preferred approach to health-care reform. In the Trump era, America’s “big government” health-care programs — Medicaid, Medicare, and CHIP — have held up fine. In fact, the Medicaid expansion is actually growing in size, as more red states warm to the idea of accepting federal “handouts” to prop up their ailing hospitals.
The resiliency of these programs partially reflects the popularity of these programs. But it also reflects the fact that they’re much harder to sabotage than market-centric programs like Obamacare, which rely on good-faith efforts from Executive branch regulators to function fully. The Affordable Care Act has survived in the Trump era, but only in the form of a less-cost-efficient, quasi-Medicaid program.
Many European countries have achieved universal health care (or something close to it) through heavily regulated private insurance markets. Before Trump, it was possible to imagine that Democrats would keep working toward that model, enhancing and expanding the ACA until universal coverage was achieved. But conservative parties in European countries do not typically try to deliberately break their nations’ health-care systems whenever they take power; the conservative party in the United States now does.
This reality has helped to shift the debate over health care within the Democratic Party leftward. Now, the “moderate” Democratic proposal is a strong public option, and “Medicare for All” is becoming increasingly mainstream. Of course, the Trump administration isn’t solely responsible for these developments. But in its malevolent incompetence, the White House has nonetheless brought the U.S. a bit closer to achieving socialized medicine.