Trump Adminstration Doubles Down on Efforts to Crapify the Entire Health Care System (Unless You’re Rich, of Course)

October 8, 2017

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By Lambert Strether of Corrente.

After the failure of Cassidy-Graham, the Republican Party’s fourth (!) attempt to repeal and replace ObamaCare, the Republicans appear to be doubling down and assaulting the entire heatlh care system, including not only ObamaCare, but Medicaid, and in fact all private health insurance, for which you’ve got to give them credit. I mean, at least they’re not weak[1]. I don’t pretend to be an expert on the internal dynamics of the Republican Party, but the Republicans did promise to repeal and replace ObamaCare, and if you as a voter bought into that, it’s entirely reasonable to experience righteous fury and demand they deliver. (I’ll make a brief comment on ideology at the end.) This emerging Republican strategy of crapification has three parts (first outlined in a tweetstorm by Andy Slavitt starting here):

1) Administratively, send ObamaCare into a death spiral by sabotaging it

2) Legislatively, gut Medicaid as part of the “tax refom” package in Congress

3) Through executive order, eliminate “essential health benefits” through “association health plans”

As a sidebar, it’s interesting to see that although this do-list is strategically and ideologically coherent — basically, your ability to access health care will be directly dependent on your ability to pay — it’s institutionally incoherent, a bizarre contraption screwed together out of legislation, regulations, and an Executive order. Of course, this incoherence mirrors to Rube Goldberg structure of ObamaCare itself, itself a bizarre contraption, especially when compared to the simple, rugged, and proven single payer system. (Everything Obama did with regulations and executive orders, Trump can undo, with new regulations and new executive orders. We might compare ObamaCare to a child born with no immune system, that could only have survived within the liberal bubble within which it was created; in the real world, it’s not surprising that it’s succumbing to opportunistic infections.[2])

Let’s look at each of the three parts of this Republican strategy in turn.

1. Sabotage ObamaCare

In passing, let me note that I don’t buy the neoliberal concept of equilibrium, and I especially don’t buy the notion that the ObamaCare marketplace can be “stabilized.” In fact, the ObamaCare marketplace has been continually tinkered with; it’s not like a Boeing 777 that’s aerodynamically stable, where you can take your hands off the controls and it doesn’t go into a nose-dive; rather, it’s like the F-117, which is aerodynamically unstable, and requires constant “fly-by-wire” adjustment to stay in the air at all (witness ObamaCare’s existence for eight years, and we’re still tinkering with it, even with quasi-good faith efforts like Alexander-Murray). All that said, for the first eight years of existence, ObamaCare wasn’t necessarily run by competent people — witness the launch debacle — but it was not run by malovents inimical to its goals, or even its existence as a program. Such is no longer the case, as shown by the follwing examples; the Republicans are, as it were, snipping the wires.

First, the Administration is sabotaging outreach and enrollment efforts. The Hill:

The administration has cut funding for advertising and outreach by 90 percent, raising the odds that fewer people will join the health-care exchanges during the fall enrollment period.

It has slashed funds by 41 percent for outside groups that help reach and enroll likely ObamaCare consumers..

The enrollment period has also been chopped in half, and the administration announced plans to take down the website for maintenance for hours at a time on several days during the sign-up period, two other steps likely to cut into enrollment..

All of these steps could lead fewer people to sign up for the law, which in turn might lead to higher premiums that could force others off the exchanges..

Healthy people are the most likely to drop coverage because of a lack of outreach, leaving a sicker group of enrollees that drives up costs for everyone else.

Showing the difference between the two parties: When the Democrats shut the site down, it’s because they butchered the launch due to a massive project managment #FAIL. When the Republicans shut the site down, it’s because they want to make sure people don’t enroll, sending ObamaCare into a death spiral (though, to be fair, the Democrats only want people to enroll through the marketplace, leaving tens of millions uncovered).

Second, the Administration is denying incremental, problem-solving state waivers. WaPo:

For months, officials in Republican-controlled Iowa had sought federal permission to revitalize their ailing health-insurance marketplace. Then President Trump read about the request in a newspaper story and called the federal director weighing the application.

Trump’s message in late August was clear, according to individuals who spoke on the condition of anonymity to discuss private conversations: Tell Iowa no.

Iowa is not the only red state to chafe at the administration’s unwillingness to allow more flexibility.

On Friday, Oklahoma sent a letter to Price and Treasury Secretary Steven Mnuchin saying it was withdrawing its federal waiver request because administration officials had not provided an answer “after months of development, negotiation, and near daily communication over the past six weeks.”

Minnesota applied to CMS for permission to establish a reinsurance program, which can lower premiums by giving insurers a guarantee that they will have limited financial exposure for customers with particularly high medical expenses. The agency informed Gov. Mark Dayton (D) on Sept. 22 that it would provide $323 million for the program since the lower premiums would mean savings to the federal government on subsidies to Minnesotans with ACA health plans.

But, Verma added, the federal government also would cut $369 million in funding for a separate program aimed at residents who earn between 138 percent and 200 percent of the federal poverty level and don’t qualify for the same subsidies.

Minnesota’s entire congressional delegation, Democrats and Republicans alike, issued a joint statement saying they were “disappointed that our state is facing a last-minute penalty” and “exploring possible paths forward.”

The obvious implication being that for the Administration, there is no “path forward.” And here again, it’s only the sickest people who will fight through the barriers placed in their way, again encouraging a death spiral.

Third, the Administration is creating political risks that lead insurance companies to raise rates (not that they ever needed an excuse). Marketplace:

Several states have announced rates for health insurance premiums on the Obamacare exchanges for 2018. Topping the list is Georgia, with rates that are 57 percent higher than last year, while Florida said some premiums will be 45 percent higher.

Among the reasons for these increases is the uncertainty about the future of the Affordable Care Act. President Donald Trump has vowed to repeal and replace the health care law, which was passed under his predecessor President Barack Obama. Congress had repeatedly tried and failed to deliver on President Trump’s promise.

Insurers are raising premiums in the face of repeated threats from President Trump to stop funding so-called cost-sharing reductions, payments to insurers that cover out-of-pocket costs for some low-income consumers. Trump previously referred to these payments as “bailouts” for insurance companies and threatened to stop making the payments so as to “let Obamacare implode.”

“This has been the most unstable and challenged health insurance market in my tenure as a public servant,” Dave Jones, California’s health insurance commissioner, told the Los Angeles Times earlier this week. “The degree of uncertainty and instability that the Trump administration has injected into the market this year cannot be understated.”

To set premiums, insurers estimate how many people they will cover and what that will cost. With the $7 billion in Obamacare subsidies up in the air, insurance companies struggle to do the math. They worry that without the subsidies, their policies could be too expensive and fewer people would buy them. If fewer people are expected to buy insurance, insurers will need to hike their premiums.</p</p>

The bottom line is that the Administration is taking every weak point in ObamaCare’s system design and amplifying them, with the effect of making the quality of ObamaCare’s risk pool lower and lower while increasing prices, which is what a death spiral looks like.

2. Gut Medicaid

While sending the ObamaCare individual marketplace into a death spiral, the Republicans also plan to assault Medicaid through the tax reform bill[3]. From The Intercept:

proposed fiscal 2018 budget resolution Senate Republicans announced last week would lead to a $1 trillion cut to Medicaid… over the next decade, along with slashing other programs low-income individuals rely on, according to a new report prepared by the Senate Budget Committee minority staff.

The GOP has not yet publicly outlined the details of its budget proposal, but the report, from Senate Budget Committee ranking member Sen. Bernie Sanders, I-Vt., warns the cuts would attack safety net[4] programs.

On top of giving massive tax breaks to the people “who need it the least,” the proposed budget resolution would result in $1 trillion in cuts to Medicaid, which “will throw 15 million people off of the health insurance they currently have,” Sanders said Tuesday to reporters on Capitol Hill.

Republicans on Capitol Hill say it’s unfair to call it a “cut,” because it is instead a reduction in the rate of growth. That slowed growth, however, will come as the population is rapidly aging.

Worse, the bill may end up being able to pass with a simple majority. Vanity Fair:

By narrowly passing a budget resolution in the House, lawmakers are now closer to being able to use the reconciliation process to pass tax reform with a simple majority in the Senate (the Senate Budget Committee passed its own budget on Thursday and is expected to send the resolution to the floor for a vote in two weeks). The proposed G.O.P. budget …The G.O.P. budget would cut … $5 trillion in spending over the next 10 years, with a trillion of those dollars coming from the Medicaid program.

(I haven’t done the math here, but it’s worth noting today’s post that shows — follow me closely, here — that access to health care reduces reduces mortality rates.)

3. Eliminate “Essential Health Benefits” with “Association Health Plans”

To be fair, “Association Health Plans” would be implemented by the Administration through an Executive Order that has not yet been released. Kaiser Health News wrote on CNN:

A day after the latest “repeal and replace” proposal ran out of steam last week, President Donald Trump told reporters that he would “probably be signing a very major executive order” on associations that could affect “millions of people.”

What did the president mean?

Kentucky Senator Rand Paul may know the answer. Earlier that day, he ignited a new round of health policy speculation by predicting, during a cable news interview, the Trump administration would take action on a longtime Republican go-to idea: association health plans.

“If [consumers] can join large groups, get protection and less expensive insurance … it will solve a lot of problems in the individual market,” Paul said last week on the NBC show “Morning Joe.”

Under association health plans, small businesses can join associations — based on certain types of professional, trade or interest groups — that offer insurance to members. Republicans for decades have favored such arrangements, seeing them as a way for small groups to get more clout with insurers.

Paul provided few details on what he thinks the administration will do, but some health care policy experts believe that he wants to free these association plans from state regulation. Instead, they’d be considered large group plans, which would be overseen by the federal government and not subject to many of Obamacare’s rules, such as offering coverage across 10 broad “essential” categories of care, including hospitalization, prescription drugs and emergency care.

(Trump has also championed selling insurance across state lines, a bad idea.) Sarah Kliff at Vox gives further detail on the scheme:

With a repeal bill off the table, the Trump administration has drafted an executive order that could blow a huge hole in the Affordable Care Act, according to a source with direct knowledge of the plan.

The order would, in effect, exempt many association health plans, groups of small businesses that pool together to buy health insurance, from core Obamacare requirements like the coverage of certain essential health benefits. It would potentially allow individuals to join these plans too, which would put individual insurance marketplaces in serious peril by drawing younger and healthier people away from them.

A group of bakeries, for example, might form a bakers association and purchase health coverage together. The most famous examples have been farm bureaus, which allowed independent farming businesses to band together and get insurance.

Before Obamacare, national associations could pick and choose which states’ insurance rules they wanted to follow and use those rules to guide the plans they offered nationwide.

The result was often health insurance that skirted state rules and was a better deal for businesses with young and healthy employees, who are likely to prefer skimpier health plans. The former insurance regulator described the situation prior to the ACA to Kliff as being “a race to the bottom, with some associations offering lower-cost plans that covered virtually nothing.”

Obamacare changed these rules. Association health plans were treated as small businesses and were therefore required to cover all of the law’s mandated benefits.

Essential health benefits, mandating that insurers cover everything from hospital care to prescription drugs to maternity care, are central to the ACA’s insurance protections: They prevent plans from crafting their coverage to attract mostly young and healthy customers at the expense of older and sicker people, which had been one of the primary problems with the association health plan model before the law.

The Trump executive order would treat association plans as large businesses — notice how ObamaCare’s insane complexity and dependence on executive rule-making is again being used as a weapon against it — which means, for whatever crazy reasons liberal technocrats had at the time, that they would not need to cover essential benefits. The effects:

“It will destroy the small-group market,” Tim Jost, a law professor at Washington and Lee University who generally supports Obamacare, told me. “We’ll be back to where we were before the Affordable Care Act.”

So, not only would the ObamaCare death spiral be steepened, as the young and healthy sign up for skimpy and cheap association plans, the small group market would be destroyed (as sabotage destroys the “individual market”, and “tax reform” destroys Medicaid). Such a great deal!


Setting party politics and venality aside — a big ask, I know — the ideology undergirding these changes is consistent:.

Sen. Ron Johnson (R-Wis.) spoke to a group of high-school students near Milwaukee on Friday morning, and he heard from one student who asked, “Do you personally consider health care as a privilege or a right?” The far-right senator replied:

“I think it’s probably more of a privilege. Do you consider food a right? Do you consider clothing a right? Do you consider shelter a right? What we have as rights is life, liberty, and the pursuit of happiness. Past that point, we have the right to freedom.[5] Past that point everything else is a limited resource that we have to use our opportunities given to us to afford those things.

Of course, liberal Democrats think health care is a privilege, too, and they want to make sure one of their own sits in judgment of whether you get it: That’s why ObamaCare surrounds access to health care with a complex apparatus of means-testing, co-pays, deductibles, narrow networks, a system of navigators to “help” you through the complexity, and all the rest of ObamaCare’s gatekeeping administrivia. So, there’s a certain refreshing simplicity to Johnson’s view of privilege: The less money you have, the more your health care should be crapified (and, of course, vice versa). And with Medicaid gutted, the individual markets in a death spiral, the small group market nuked, and a race to the bottom with “association plans,” Johnson’s vision looks much closer to being realized. Under neoliberalism, why not?


[1] Showing crude cunning in his footwork, Trump first reached out to Schumer: “I called Chuck Schumer yesterday to see if the Dems want to do a great HealthCare Bill. ObamaCare is badly broken, big premiums. Who knows!” Liberal Democrat Schumer naturally rejected the overture, referring Trump to the [genuflects] bipartisan Alexander-Murray negotiations, a weak-tea effort to “stabilize” the indvidual market, for which there were to be hearings in September, which haven’t happened, of course. Now there’s a hill to die on!

[2] Suppose today’s Sanders bill had been rammed through passed in 2009. In 2010, every child in America would have been covered. What about the children, eh? Would the Democrats really have experienced the 2010 debacle, and their subsequent reapportionment/gerrymandering debacles? I don’t think so.

[3] In retrospect, it seems obvious that the reactionary response to Medicaid’s success would be to attempt to destroy it.

[4] As readers know, I deprecate the term “safety net.” Why should life be a tightrope in the first place?

[5] Of course, if you know the Constitution, Johnson isn’t even wrong. I’m not sure I’m comfortable with rights-based discourse generally; frankly, I think it would be more useful to enquire into the notion of freedom. It seems to me that universal concrete material benefits, especially for the working class, make us all more free, not less. But that is a topic for another time.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered.
To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

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