President-elect Donald Trump said Wednesday that repeal and replacement of the Affordable Care Act should occur “essentially simultaneously,” perhaps even within “hours” of each other.
Like a lot of Republicans, Trump seems to have realized the political hazards that would result from “repeal and delay,” the proposed strategy of passing a quick repeal of the Affordable Care Act but delaying the effectiveness of that repeal for years to give lawmakers time to come up with “something terrific” to replace it with.
The problem for Trump and congressional Republicans is that similar political hazards will arise with nearly any approach they take to healthcare policy – unless they can get Democrats to take part of the responsibility for the new changes and deliver on Trump’s very elusive promise to make healthcare “far less expensive and far better.”
This is a very tall order.
But on Wednesday, Trump took one step in this direction: reiterating his support for using the federal government’s negotiating power to push down the prices of prescription drugs, a cost-control policy usually supported by Democrats and opposed by Republicans.
Making health policy is like sticking your finger in an electrical socket
American healthcare is very expensive. This holds back the economy as a whole. Of more political importance, the high cost of healthcare imposes painful burdens on individual consumers.
The Affordable Care Act, the healthcare law also known as Obamacare, has affected individuals’ costs at the margin, sometimes downward and sometimes upward. But mostly, excessive cost is a problem that predated the ACA, and that is hard to do much about within the constraints that exist on American policymaking.
As Democrats have painfully learned, voters tend to place an inordinate share of the blame for problems with healthcare on whoever enacted the latest big change to healthcare policy.
Unfortunately for Republicans, they were just elected on a promise to make big changes to healthcare policy.
High premiums and high deductibles – the things, aside from the individual mandate, that people seem to hate most about the ACA – are natural consequences of high costs. They can be expected to persist after any Republican-driven changes. The main change will be that Republicans take the blame for them.
Republicans can’t keep all their promises in a big overhaul
Republicans have been able to have it both ways on Obamacare for years. They have attacked the law for being too expensive to taxpayers and requiring insurance that is too comprehensive – and also for the fact that plans sold under the law have high deductibles and limited provider networks.
These complaints are in tension: If you want low deductibles and the most popular doctors, you need higher premiums to cover the cost of all the healthcare the plans will end up paying for. If you want lower premiums, you need plans that are stingier about what they will cover.
The only ways to address all the major complaints about Obamacare – to deliver better insurance at a lower cost to the insured – would be to throw a lot more government subsidies at the program (increasing costs to taxpayers) or to find some way to greatly reduce the actual cost of healthcare.
Cost control has mostly eluded policymakers for decades – and a successful effort to control costs would greatly upset the lobbies for hospitals and doctors, since the main way you make a unit of healthcare cheaper is by paying them less.
Once Republicans have to take ownership of healthcare policies and make choices among their stated goals, they’re bound to upset someone.
Republicans have been intermittently pledging that their plans won’t throw millions of people off of health insurance – but the math will not work on this pledge without spending an amount similar to what is spent under the ACA, unless the quality of the insurance offered is significantly reduced, for example by excluding coverage for important services like maternity care.
And if Republicans make good on their rhetoric about the nature of health insurance – if they shift more people toward “catastrophic” plans that cover only very large medical bills and expect individuals to pay for their own healthcare through money they deposit in Health Savings Accounts – their replacement plan is likely to be even less popular than the ACA.
Informative focus groups by the Kaiser Foundation, surveying Trump voters who are enrolled in Obamacare exchange plans, found many participants were jealous of the Medicaid coverage available to people with lower incomes.
Medicaid plans – which have limited provider networks but impose very limited out-of-pocket costs on the insured – are roughly the opposite of the preferred Republican approach to insurance.
- Joe Raedle
Making small changes and declaring victory won’t work
Given how mad people tend to get when you change their healthcare, one option that might tempt Republicans is to make a few, mostly symbolic changes to the ACA, declare that they have “repealed and replaced” it, and call it a day.
Certainly, this is the option a lot of liberals are hoping Republicans choose.
But I don’t think it would be likely to insulate Republicans politically, either.
That’s because, even if Republicans stopped demagoguing the ACA, the very real problems of high premiums, high deductibles, and limited networks would remain – and since the ACA would be gone, “repealed and replaced” by a nearly identical Republican alternative, Republicans would shoulder all the blame.
Indeed, you could expect Democrats to start making many of the same complaints about the “new” Republican health law that Republicans have been making for the past eight years.
Republicans are right to be wary about repeal-and-delay
All these political problems are a major reason Republicans never coalesced around a substitute for Obamacare, and they are a major reason they have flirted with repeal-and-delay, an approach that would be designed to buy Republicans several more years without committing to a plan that creates specific winners and losers.
The problem is, repeal-and-delay would be likely to wreak havoc in health-insurance markets.
Many insurers have already been exiting Obamacare insurance exchanges in various markets because they are losing money. If they expect the program to soon be repealed – and starved of financial support in the meantime – they will be even more likely to quit selling insurance at all.
Repeal-and-delay would especially cause problems if it included an immediate repeal of the individual mandate or if the Trump administration indicated it would not strictly enforce the unpopular mandate.
Insurers already suffer because many healthy people are reluctant to buy insurance plans under Obamacare that they view as expensive and low-quality. Healthy people would be even less inclined to buy if they knew they wouldn’t be penalized. And if they didn’t buy insurance, insurers would lose even more money – and would have to raise premiums even higher.
Plus, Republican governors of states that have expanded Medicaid are nervous about what uncertain changes to federal health policy could mean for their budgets, because hospitals depend heavily on Medicaid payments.
- Mark Wilson/Getty Images
The only way to survive healthcare reform 2.0 is to get Democrats to share the credit and blame
If I were Trump, I would try very hard to get Democrats in Congress to walk the plank with me on healthcare reforms that aim to reduce costs to both taxpayers and consumers.
By withholding any Republican support for the ACA, Republicans ensured that Democrats took all the blame on healthcare for eight years. Democrats are surely eager to turn the tables – but they won’t be able to if they’re party to the next set of changes.
Getting them on board would mean offering up a lot of policy concessions to the left, but Trump was never an ideologically committed conservative anyway.
Trump’s position on prescription drug prices is an obvious place to start. When Trump stressed his intention to negotiate drug prices down on Wednesday, saying pharmaceutical companies were “getting away with murder,” pharma stocks tanked.
But the largest chunk of healthcare expenditure does not go to pharmaceutical companies or insurers. It goes to providers of care like doctors, hospitals, and nursing homes, which charge much higher prices than they do in other countries.
Trump could take his theatrical approach toward large companies into the health sector, waving around hospital bills and demanding to know where a hospital and an insurer get off charging the patient for an out-of-network anesthesiologist, when the hospital itself is in the insurance network.
One possibility would be to move more exchange participants into Medicaid – using Medicaid’s negotiating leverage to hold down payments to doctors and hospitals and allowing more Americans to enjoy low deductibles, even if that means having a limited choice of providers.
We would see how much this would do about the actual problem of high costs, just as we will see how much stunts like the deal with Carrier do to change norms and get companies to create jobs in the US.
Certainly, healthcare provision is a sector that is deserving of some Trump-y public shaming over cost. It’s one where Democrats might be prepared to help him, even if it means sharing some of the credit and blame for what he does to healthcare.