Obamacare

No Obamacare Repeal, but Trump's New Rules Could Allow Cheaper Plans

Draft regulations would expand access to association health plans.

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Ron Sachs/SIPA/Newscom

If you take President Trump's word for it, Obamacare is going, going gone. Trump may believe this, or at least wish it were true, but it's not. The law's persistence poses an ongoing challenge for Republicans in Congress, who still have no consensus about how to respond to either the law's continued existence or its structural flaws. But new proposed rules issued by the Trump administration today intended to expand access to low-cost coverage may provide a workaround to the health law.

In October, as the 2017 open enrollment period was about to begin, Trump declared that "Obamacare is finished. It's dead. It's gone." After months of unsuccessful efforts by congressional Republicans to pass repeal legislation, Trump made a belated decision to end payment of the law's cost-sharing reduction (CSR) payments to insurers, which a federal judge had ruled were unconstitutional. He also slashed the promotional budget for the health law by 90 percent. Republicans in Congress may have failed, but Trump had single-handedly wiped Obamacare from the books. "There is no such thing as ObamaCare anymore," he said.

Two months later, congressional Republicans passed, and President Trump signed into law, tax legislation that repealed Obamacare's individual mandate starting in 2019. Once again, Trump responded by insisting that the law was done for. "When the individual mandate is being repealed, that means Obamacare is being repealed," Trump said. "We have essentially repealed Obamacare, and we will come up with something much better."

Like a real estate developer saying that a building is essentially finished when the site has barely been cleared, Trump is vastly exaggerating the effect of the GOP's recent actions.

Although the mandate was a central component of the law's policy scheme, in no sense has Obamacare been essentially repealed. On the contrary, its major spending provisions and insurance market regulations remain in place. About 8.7 million people signed up for coverage through the federally run insurance exchange system, which is nearly as many as in the previous year. (The impact of the advertising budget was often overstated, and the cuts appear to have had little effect.) Millions more are enrolled in state-based exchanges and the law's Medicaid expansion.

Premiums are up by an average of 34 percent for typical exchange plans this year, but the decision to cut off payments for CSR payments has resulted in cheaper out-of-pocket premium prices for many people who receive subsidies. Obamacare may be partially hobbled, but it is hardly finished, dead, or gone.

The question for Republicans, then, is what to do next. And the problem, as always, is that there is little agreement amongst GOP lawmakers about how to proceed.

One approach would be to attempt to stabilize the law the law in its current form by making payments to health insurers. That is the approach favored by Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), who have jointly proposed legislation funding the cost-sharing subsidies, which were called for in the statute of the law but never appropriated. The argument for this approach is that it would bring some certainty to the exchanges, helping to reduce premiums and, in the long run, according to Congressional Budget Office estimates, overall spending on the law, because the government would end up spending less on subsidies. It's hard to see this approach gaining much traction, however, because Democrats don't mind the status quo, which makes the consumer-share of premiums cheaper for most people who get subsidies, and because Republicans don't want to be seen propping up the exchanges.

Another way of overhauling law would be to convert its spending on both the exchange subsidies and the Medicaid expansion into a system of block grants to states. This is roughly the idea proposed by Sens. Lindsey Graham and Bill Cassidy, who argue that doing so would provide states with more flexibility to manage their health care programs as they see fit. But it's hard to see this proposal moving forward either, thanks to a variety of objections from Republican lawmakers. Sen. Rand Paul (R-Ky.) has argued that it doesn't constitute true repeal because it would retain most of Obamacare's spending, and would mostly serve to reallocate money from blue states that expanded Medicaid to red states that did not. Sen. John Kennedy (R-La.) worried that the proposal would make it easier for states to set up single-payer systems. Although the block grants probably wouldn't be large enough to fully fund single payer programs, other critics have similarly noted that the proposal, which limits how states can spend the money, is designed in a way that would encourage states to expand government-run insurance programs.

The main structural barrier to these ideas is that would require action from Republicans in Congress. But after spending the better part of last year struggling, and ultimately failing, to pass major health care legislation, GOP legislators may be wary of returning to the project. Senate Majority Leader Mitch McConnell said as much last month, noting that Republicans were, if anything, at a disadvantage relative to last year following the Alabama special election. "Well, we obviously were unable to completely repeal and replace with a 52-48 Senate," he said. "We'll have to take a look at what that looks like with a 51-49 Senate. But I think we'll probably move on to other issues."

The problem, in other words, is Congress. Yet even if Congressional Republicans are unable or unwilling to act, that does not mean that no action is possible.

Last year, President Trump signed an executive order calling for federal agencies to expand access to association health plans and limited-duration insurance coverage. And this morning, the administration released new rules governing association plans. The proposal would allow small businesses to band together to form purchasing groups, enabling them to either buy insurance that is not subject to Obamacare's essential health benefits rules or to self-insure. Basically, it means that a group of small employers can opt to be treated more like a single large employer.

This idea has been a favorite of Sen. Rand Paul's for years, and he has already issued tentative praise for the proposed rules. The primary goal is to make it easier to purchase inexpensive coverage that is exempt from Obamacare's benefit mandates. In the process, it may have the effect of unwinding Obamacare, at least a little, by drawing people out of the exchanges. The exchanges might not fully unravel, or even be affected much at all. This year's enrollment numbers suggest that demand is fairly inelastic. But this is, at least, a thread that can be pulled.

There are risks to this strategy, namely that letting the exchanges degrade could create political pressure for more significant policy interventions; dysfunctional government programs have a tendency to create demand for even bigger government responses. It's clear, at this point, that congressional Republicans do not currently have the ability to coherently respond to this sort of pressure, or to make any concerted legislative effort to address health policy at all. But that is just to say that it does not resolve the fundamental problem that Republicans have struggled with for a decade, which is a lack of consensus on health policy goals, and the resulting inability to rally around legislation to achieve them.

If Republicans truly want to move past Obamacare, they will need to figure out what they want from health policy at the federal level, how to sell it to the public, and how to package their ideas as legislation. Otherwise, they risk ceding the issue entirely to Democrats. (Some Republicans appear to have already accepted that outcome. As a senior White House aide recently said to The Daily Beast, "Taxes are our issue. Health care is theirs.") Until that happens, proposals like the one released today provide a temporary, imperfect escape valve from a law that, despite the president's pronouncements of death, stubbornly refuses to go away.

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58 responses to “No Obamacare Repeal, but Trump's New Rules Could Allow Cheaper Plans

  1. who still have no consensus about how to respond to either the law’s continued existence or its structural flaws.

    I’m honestly curious to know if Democrats have a response to the law’s continued existence and/or its structural flaws.

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    2. The response I’ve heard is that the Republicans are “sabotaging” the law by not bailing it out.

      1. Yeah. And the Demoncrap dumb asses will believe them.

    3. They still have to get around to reading it first.

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    5. Democrats have a response: Deny the structural flaws exist, and try to patch over the obvious problems with more of Other People’s Money.

      They just don’t have a _good_ response.

      1. Neither do Republicans, which is increasingly obvious.

        Left – Right = Zero

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  2. If you take President Trump’s word for it

    If you have ever smelled Unicorn farts, …

    If you have seen Bigfoot, …

    If you have voted libertarian and made a difference, …

    1. At least Trump is trying to get rid of it. Congressional republicans are little help, and the democrats are communist traitors.

      1. With the number of Republicans in office it is functionally impossible to repeal the ACA under current rules. Fact.

  3. There are risks to this strategy, namely that letting the exchanges degrade could create political pressure for more significant policy interventions; dysfunctional government programs have a tendency to create demand for even bigger government responses.

    This can’t be said enough. Obamacare (aka the ACA), for instance, was a an ‘even bigger’ government response to dysfunctional government programs.

    1. IDK, it still sounds like a poorly reasoned argument in favor of the status quo to me.

      1. It is. Basically it’s ‘we need to save the ACA so the left doesn’t do something even worse’ which is especially amusing because it doesn’t matter if the ACA dies or succeeds, the left will inevitably push single payer.

        1. I think this will be a common theme (single payer) leading up to the midterms.

          1. I think it’s an inevitability that we will go to single payer in this country because the simple argument of ‘look at this grandma you’re going to kill’ is 99.9% effective and people have bought the line that healthcare is a right. None of the facts matter to the general populace, and they certainly carry no weight with legislators. In fact, legislators are incentivized to do this because people think they want it.

            The costs, of course, are never discussed. If we think entitlement expenditures and taxes are too high now, just wait until everything’s ‘free’.

            1. Nuh uh! Single payer doesn’t waste money on profits to rich capitalists, which means it can pay for more care than free-market insurance! It will be super efficient, like the DMV!

              1. To be fair, the DMV is super efficient. Super efficient at giving the same crappy service to every person that walks in their doors.

            2. Currently we’re spending cost to 18% of our GDP on health care. The figures I’ve seen for the rest of the developed world about 2/3 rds of ours with universal coverage instead of the less than 90% we have now. About 10% of their costs are administrative with the other 90% going to patient care. Strict controls over malpractice help hold prices down.

              US hospitals have about as much administrative office staff as people doing patient care. Doctor offices seem to have more office staff than people doing actual health care. Remember too that insurance companies don’t actually do patient care so they too are just “administrative overhead” in the health care system.

              Excessive government regulation is the major driving force behind this.

  4. Like a real estate developer saying that a building is essentially finished when the site has barely been cleared, Trump is vastly exaggerating the effect of the GOP’s recent actions.

    I commend Suderman. For all of the actually completely detached stuff that Trump actually does say, he managed to take a reasonably cogent statement of purpose and intent and extrapolate it into a completely inaccurate portrayal.

  5. I hope it makes my premiums go down. Health insurance has eaten up all my raises for the last several years.

    1. That’s insane. I took a second job a couple of years ago to cover the difference. Of course the IRS said that meant that I made too much to receive the subsidy I did (a subsidy that still made the monthly premiums $300 more than what I was paying previously) and hit me with a nice little back payment.

      And now, even with them jacking the subsidies up (hello perverse incentives), any plan that doesn’t have you paying everything out of pocket up to $6500-$7500 is nearly as much as my rent.

      1. To be fair it’s not all going into the premiums. I’m putting a couple hundred a month into an HSA to cover the $10,000 deductible. It’s catastrophic insurance for double the cost of my old POS plan.

    2. Health insurance has been eating up the bulk of most working people’s raises for the last 20 years.

  6. If Republicans truly want to move past Obamacare, they will need to figure out what they want from health policy at the federal level, how to sell it to the public, and how to package their ideas as legislation. Otherwise, they risk ceding the issue entirely to Democrats.

    Exactly. And the same could be said for libertarians too. People will pick a bad plan over no plan every day of the week.

    1. Wrong. I have had no health insurance since the end of 2013. I refused to play their fuckijg faggot game.

    2. People will pick a bad plan over no plan every day of the week.

      One reason Obamacare is going to fail is precisely because this statement is false.

      1. I should have been more precise in my language. I meant that when voters are presented with a choice between one party offering a deeply flawed plan to fix problems, and another party offering no plan to fix problems but just bitching about all the flaws in the first party’s plan, they are likely to choose the flawed plan over no plan, because “hey, at least it’s something”.

    3. There are no-cost ways to reduce health care costs. All of them require deregulation of health care. All will also reduce the incomes of medical providers. That’s where the problem is with our almost totally corrupt government. They have a “lock” on access to medicine. Remove that lock and people can start taking care of their own health to the limits of their abilities. Take basic problems like high blood pressure, high cholesterol, $80 a year at Walmart to treat (cure doesn’t exist for these chronic conditions). Most of the cost of treatment come because doctors have a legal government enforced monopoly over access to the common generics used for treatment. So you end up paying $400-500 a year to get a prescription (must be renewed every year). The money goes for office visits and lab tests, both of which in a proper libertarian society likely would be a whole lot cheaper and only necessary one time if that. So everyone can actually afford to treat their chronic diseases so cheaply no insurance is needed if we repeal the laws that give doctors their extremely profitable monopoly. Even diabetes isn’t all that expensive without prescription laws. We can “thank” FDR for making health care much more expensive than it needs to be.

  7. It’s too bad pretty much no doctors accept marketplace plans now. So not only did they (democrats) fuck up the health insurance market, they’ve actually caused people to receive less medical care.

    1. Not necessarily unless you’re assuming that the providers themselves no longer see patients. If the Doctor’s are still seeing the same number of patients, nothing on the actual care side has changed.

      That said, only a Democrat or a retard could think that expanding the demand for Doctor’s without touching the supply would have good outcomes.

      1. My PCP closed her doors after ACA took effect. Two of my daughters pediatricians stopped accepting marketplace plans. I guess they could still be seeing the same number of patients, but I find that hard to believe since a lot of businesses have been cutting back, getting marketplace plans themselves, or completely eliminating insurance for some positions.

        1. A lot of Doctor’s that were on the verge of retirement anyway, when faced with taking a shit ton more Medicaid patients or shutting their doors anyway, chose to just shut the doors and/or sell the practice. There’s a general shortage of PCP’s on the U.S. anyway though, with roughly 250,000 servicing 320,000,000.

    2. There is no such thing as a marketplace plan with no providers. No state regulator would allow it.

  8. The proposal would allow small businesses to band together to form purchasing groups, enabling them to either buy insurance that is not subject to Obamacare’s essential health benefits rules or to self-insure.

    Wait, you mean a step toward letting people buy only the healthcare insurance they need, rather than what some political activist insist they have? I guess Nancy Pelosi is gonna have to find a word bigger than “Armageddon”.

  9. I don’t give a shit, Trump (nor any Executive branch official) should ever have the power to change the fucking law in this way.

    I don’t even give a shit if the end result is something I like. You rule by fiat, you die by fiat.

    1. I don’t see anything wrong with stopping payments that were unconsitutional to begin with. Or slashing the marketing budget of an executive agency (why the fuck do any governmental agencies have marketing budgets?).

      1. Your hammer touched the nail, but didn’t drive it home. The problem is that the Legislative branch and Judicial branch have both selectively gutted their own branches in favor of empowering the Executive. Sure, they bust out those powers when they need to score some quick political points but otherwise we have resigned ourselves to the rule of kings.

  10. That’s some fine alt-text there. There’s nothing more subtle than the unstated – but oh so obvious – difference in the size of Trump’s and Paul’s hands in that pic. 2 (tiny) thumbs up!

    1. There’s nothing more subtle than the unstated – but oh so obvious – difference in the size of Trump’s and Paul’s hands in that pic.

      Especially considering that Trump has got 6 inches and 80-100 lbs. on Paul.

      1. Especially considering that Trump has got 6 inches and 80-100 lbs. on Paul.

        Not where it counts.

      2. The photo was edited, to hide Rand kissing Donald’ ass again.

  11. Repeal of the mandate merely means that people are once again free to purchase the level of health insurance that is affordable for them.

    Nor is it hard to reduce US health care costs. You’d be surprised how much less we would have to pay for health care if prescription laws didn’t exist. Take control of your high blood pressure and high cholesterol. Two very common conditions that can be treated by medicines available at Walmart for $40 a year each, or $80 a year for both. These two medications reduce your risk of heart attacks and strokes. Since these diseases are “chronic”, that is they can be treated, but not “cured” as such, there is little if any reason that this class of medications can’t become OTC.

    The same is true for pills to cover high blood sugar and arthritis. Again these two meds are cheap and as long as the directions are followed, are as “safe” as aspirin. BTW adding a daily aspirin also reduces your chances of a heart attack.

  12. Where is Ken to tell us what he thinks on the issue?

  13. One approach would be to attempt to stabilize the law in its current form

    Another approach is to destabilize the law and allow people to sign up for deregulated private options where they can go when their subsidized and regulated plans fail.

  14. Libertarian ignorance on health care never fails to astound. Despite Rand Paul’s belching, association plans are no salvation for pre-existing conditions, since very sick people destroy any pool that is forbidden to charge them more.

    Association health plan have existed for over 50 years .. yes, across state lines (gasp). The National Federation of Independent Business is large enough to sponsor a choice of non-ACA plans, with annual dues of $195 per year. I created one myself in 1979, for a (local) entrepreneur association I founded. A few states ban them, but faux libertarians are only for state sovereignty when they are not.

  15. I liked this article.

    Insofar as it marks a transition to the Bargaining phase in the Kuhbler-Ross stages of grief over Trump’s election.

  16. Health insurance: my proposal: (It’s a long post, so I probably have to break it up.)

    1. Make all medical expenses and insurance tax deductible. Kill some other deductions to compensate. I suggest putting caps on the mortgage tax deduction, so it is no longer an incentive for the very rich to buy ridiculously bloated mansions, nor for the upper middle class to buy more house than they can afford and call it an investment. That is, I would limit this deduction both in absolute amount and as a percentage of income.

    2. As the main means of deducting medical expenses, make _everyone_ eligible for HSAs, whether or not they have insurance or an employer. Just like now, what you put into the HSA is non-taxable, as is any interest it earns. You can pay for your insurance through an HSA, as well as for all medical and dental treatments, devices, and drugs. Change the annual limit on contributions per individual to $5,000 plus all expenses paid through it – that is, encourage people to build up tax free savings in their HSA while they can afford more than they are spending.

    3. Insurance should be separate from employment.

    1. As the main means of deducting medical expenses, make _everyone_ eligible for HSAs, whether or not they have insurance or an employe

      That’s Cato’s screwup. Without an employer (funding the cash account) it’s just a

      1. That’s Cato’s screwup. Without an employer (funding the cash account) it’s just a high-deductible plan for people who’d almost never have any care. “You have cancer. Simply pay the first $6,000 to start your coverage.”
        Yeah, right.

        Where given a choice, only a minority of workers choose an HSA — because the odds are against them. If you get cancer, your HSA will NEVER cover the higher deductible … or else EVERYONE would be able to pay for cancer treatment … because insurance spreads risk throughout the entire pool (everyone pays a fraction of the actual treatment) … thus the SAVINGS are spread throughout the pool (everyone SAVES only a fraction of the treatment.)

        If you get a less higher deductible, say for the amount of routine care, the everyone gets … the amount that would be paid by current insurance. Trivial savings in paperwork,

  17. 4. Insurance should actually be _insurance_. That is, it should pay off only on large expenses due to unexpected events. You use the HSA for routine stuff. You should never lose coverage because of illness, even when the expenses go on for years. (Unlike the current so-called insurance plans, which are sometimes comparable to a fire insurance policy that only pays for rebuilding your house if you can get it done before they can cancel it at contract renewal time.) Get a serious condition that is only treatable, not curable, and your insurance company can neither get you off the books nor raise your rates.

    5. Insurance must be portable between states. You change jobs and move to another state, and you have the option of taking your insurance with you. If they don’t have “in network” providers in your new area, including any specialists you need, they’ll have to treat all the providers as “in network”. Insurance companies will have one out – they can negotiate with other insurers to transfer your policy to one with a better local presence, but coverage must be as good or better, and the premiums can go up only to the extent that the federal plan (“CrappyCare”, see below) rates the new location as a higher cost area.

  18. 6. Finally, what happens when the uninsured get sick (and don’t have enough in their HSA and bank accounts), and what happens to people that never make enough to cover their medical expenses? We’ll provide for them, but not generously:

    7. Emergency rooms are still required to provide care for anyone brought in with a medical emergency. Hey, if someone conks you over the head and steals your wallet, you want to be cared for until you wake up and can tell them how you’re going to pay. But they are no longer providing free care for the indigent and irresponsible, and no longer allowed to inflate the paying customers’ bills to make up for the deadbeats. Instead, unpaid charges can be sold to the IRS for collection, at a 10% discount. (Preferably this is tied to a tax code simplification, so the IRS can transfer staff rather than expand.) There are limits on the amount, and an appropriation to cover those debts that cannot be collected, but lets make it quite clear that misusing an emergency room for a “free” visit to the doctor’s office is going to cost you.

  19. 8. The ultimate fallback: CrappyCare (the federal healthplan, like an expanded Medicaid). Politicians will make a nicer name for it, but let’s be honest in these pages: government insurance either busts the budget by allowing providers to raise their rates and “do everything possible”, or it is crappy. Everyone is eligible, but there is a means-tested premium; it’s only free for the very poor. You can pay from an HSA or with a checkoff on your income tax return. Pre-existing conditions are covered, and you can even sign up in the emergency room and have that and other recent expenses covered, but if you were uninsured before, you owe premiums for the last three years. Once again, if you need treatment now, you get it (whatever CrappyCare will pay for), and can pay later, but you do have to pay it and the IRS is the debt collector.

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