the national interest

How Democrats Can Save Obamacare and Trump Can Save His Presidency

Donald Trump and Nancy Pelosi. Destiny has brought them together. Photo: J. Scott Applewhite - Pool/Getty Images

Donald Trump’s approach to health care has been that of a man who is trying to cram a part into a space it won’t fit, and who just keeps cramming harder. He has tried demanding the House vote on his plan even in the face of clear opposition, and then sending Reince Priebus to yell at House leaders before they go on recess. Even if they can overpower the qualms of House Republicans, they’re nowhere close to assembling a majority in the Senate. (Indeed, just as a baseball player who can barely make a minor league roster stands no chance of making a major league one, a bill that struggles to pass the House will never make it through the Senate.) Cramming harder is not going to produce a law — certainly not in time for insurers to finalize their plans on the exchanges in June. The only way for Trump to avert complete catastrophe on health care is to give up on repeal and make a deal with Democrats to fix Obamacare.

To be sure, from Trump’s perspective, a bipartisan health-care deal is hardly a perfect solution. He promised to repeal Obamacare, and he would have to abandon that promise. On the other hand, Trump also promised repeatedly to provide universal coverage and not to cut Medicaid. Any Republican-only health-care plan will eliminate a trillion dollars in taxes on the rich, and thus take a trillion dollars out of insurance subsidies, cut Medicaid, and leave people with coverage far short of the “terrific” plans that would take care of everybody that Trump has pledged. If Trump makes a deal with Democrats, he can keep at least some of his promises, and claim that whatever patched-up version of the law is a “replacement” for Obamacare. (They could even “repeal” the law and replace it with something 90 percent the same.) Persisting in the current course, which will dead-end in either the House or the Senate, means failing to deliver on all his promises: no repeal, no terrific new plan that takes care of everybody. A new S&P analysis out Friday found, “we are seeing the first signs in 2016 that this market could be manageable for most health insurers… the ACA individual market is not in a ‘death spiral.’”

The alternative to passing legislation that Trump has proposed is that Obamacare will expire of its own volition shortly, at which point Democrats will come crawling to him for a deal to replace it. Trump may well believe this. Conservatives have been predicting the state-based insurance exchanges created by the Affordable Care Act were heading into an actuarial death spiral since before they opened up in 2014. It hasn’t happened. Insurers set their initial premiums well below the levels predicted by the Congressional Budget Office, and they have corrected the prices, which are now at almost exactly the predicted levels. Conservatives like Paul Ryan have insisted over and over that the exchanges are finally headed into a death spiral, but the CBO and private analysts have both concluded that insurers have found a stable price point.

A death spiral is an actuarial phenomenon in which higher premiums cause the healthiest consumers to flee, making the risk pool sicker and more expensive, leading to even higher premiums. Jason Furman, the former chair of the Obama-era Council of Economic Advisers, has persuasively shown that this is not happening:

That is not to say the exchanges are indestructible. Insurers obviously cannot design and sell plans in an environment where the rules might be radically changed at any moment. Insurers have frantically warned that political uncertainty will fatally risk their ability to serve customers, so Trump could potentially wound or even kill the markets simply by keeping alive the chance of repealing Obamacare or harming it administratively.

But such a course of action would subject Trump to a giant backlash. A recent poll found that 75 percent of the public wants Trump and Congress to “Do what they can to make the law work” rather than “Do what they can to make the law fail so they can replace it later.” Likewise, 61 percent believe Trump and Republicans in Congress, rather than President Obama and the Democrats who passed it, are “responsible for any problems with it moving forward.” The premise that Trump might successfully blame his predecessor for the collapse of Obamacare’s exchanges is fanciful. Voters judge presidents and their parties for outcomes during their tenure, regardless of whether they’re responsible for them.

What’s more, improving the law would be a relatively simple matter. Almost every major social legislation in modern history before Obama came into office was later subjected to technical changes in follow-up laws. Congress could never fix Obamacare, since Republicans declared a fatwa against the law and took every opportunity to sabotage its implementation. Marco Rubio has boasted that a rider he and other Republicans inserted into a bill cut off reimbursements for insurance companies that serve sicker-than-expected customers, saving $2.5 billion for taxpayers. (The 2003 Medicare law passed by Republicans incorporated a similar feature.) Rubio’s boasts that this provision killed Obamacare may have been exaggerated, but if such a trivial sum of money could have remotely as large an impact as Rubio says, it would imply that restoring that funding could do a great deal to draw insurers back into the markets that have too few of them.

Relatively small outlays of money could alleviate the premium increases that have hit rural markets. It would also reduce premiums on the exchanges if Republican states drop their boycott and accept the Medicaid expansion. There are other easy steps that experts have outlined.

Bipartisan deals have grown rare because politics has mostly devolved into a zero-sum contest, in which the opposition party grasps that anything it does to improve conditions will help the president’s party and hurt theirs. Health care is a rare issue in which a real trading space can be found. Republicans would gain the political victory of avoiding a policy debacle that might lead to a wave election against them in 2018. Democrats would trade away some of their potential midterm gains in order to secure Obamacare. Democrats would probably supply most of the votes in Congress, but Trump would stand to gain the most, as a failure to pass something he can say amounts to a fix for Obamacare would hurt his reelection chances badly. It actually makes sense for Democrats to trade politics for policy, and Republicans the reverse, since the evidence clearly suggests that on this issue, Democrats care far more about the policy than Republicans do.

Working with Democrats is Trump’s only viable health-care play. Whether he is smart enough to realize that is another story.

How Democrats Can Save Obamacare and Trump Can Save Himself