Last year Republicans persuaded a majority of Americans that Obamacare should be “repealed and replaced.” Even Americans who voted for Hillary Clinton expected that President Donald Trump and Republican congressional leaders would promptly offer a viable alternative to Obamacare. The president’s chief of staff rightly acknowledged that “it’s time for the party to start governing,” and an April 4 Kaiser Family Foundation poll about the Affordable Care Act (ACA) confirms that a significant majority of Americans believe that “President Trump and Republicans in Congress . . . are now responsible for any problems with the ACA moving forward.”
Republicans badly disappointed the public with their first effort at “repeal and replace,” and they are paying a price that will continue to go up. Recent polls show that support for Obamacare is rising and that the disarray surrounding “repeal and replace” is shaking public confidence in Republicans.
After the failed first effort to roll back Obamacare, the initial reaction of many Republican leaders was to walk away and move on to other issues. Such a response might make sense if Obamacare were a small or a stable program, but it is neither. Tens of millions of Americans are at risk of having their health care disrupted by the ongoing collapse of Obamacare—lives are literally at risk. Less obviously, more chaos in the health care insurance markets will cause dysfunctional decisions that could damage the Trump administration’s efforts to create more and better jobs.
We are careening toward just such chaos. Humana has pulled entirely out of Obamacare. Aetna lost $450 million last year by participating in Obamacare and has pulled out of all but four states. Aetna CEO Mark Bertolini claims Obamacare is in a “death spiral” due to fundamental problems in its funding and premium model. The phrase “death spiral” has technical connotations that are not fully justifiable, but the term “meltdown” is apt.
The dwindling number of insurance companies participating in Obamacare’s health exchanges creates an increasing number of monopolies and an environment ripe for collusion that, in turn, creates problems of cost, choice, and quality. Costs will rise unnecessarily, purchased policies will fail to fit the needs of the purchasers, and people will suffer and die unnecessarily.
Five states (Alabama, Alaska, Oklahoma, South Carolina, and Wyoming) are down to one insurer in their health exchanges, and twelve states are down to two—and many of those remaining insurers are threatening to join the Obamacare exodus. Much of this exodus stems from uncertainty about whether insurance companies will continue to receive payments for subsidized policies, although the nuclear bomb of a sudden court decision seems safely in its silo for now. The May 2016 district court decision in House of Representatives v. Burwell held that the Department of Health and Human Services (HHS) unconstitutionally paid billions of dollars to insurance companies to subsidize policies for lower-income Americans. After the election an undoubtedly relieved appeals court placed the case on indefinite hold—under the guise of giving the parties time to work out their differences.
By stretching its authority in order to prop up Obamacare temporarily, the court of appeals bought time for elected officials to fix the problems on their own. Republican leaders now have one last opportunity to deliver on their promises and to demonstrate their competence. Failure to take advantage of that opportunity will lead to a cascade of disasters and drive voters toward single-payer health care proposals that would be run by the same HHS cabal that bungled and lied about Obamacare.
If Republicans are going to take advantage of their last chance, though, they will have to abandon the cherished fantasy that there is a quick and easy “replace” option for Obamacare. Aside from the inherent complexity of Obamacare’s 2,000 pages, its architects anticipated an eventual Republican backlash and left scores of landmines in the bill to protect their legacy. Moreover, insurance companies are already setting premiums for 2018 (enrollment is six months away)—so there is nothing fundamental that Republicans can put in place that will create major change before 2019.
Another reality Republicans will have to accept is that they have sent HHS secretary Tom Price into a street fight with water pistols. Obama’s HHS secretaries, Kathleen Sebelius and Sylvia Burwell, turned the top layer of their department’s civil servants, historically apolitical to vaguely left-leaning, into hardened Obamaites—ideologues who blurred the lines between HHS “navigators” recruiting people into Obamacare and the Obama grassroots political organization, and who were willing to retaliate against organizations that resisted the blurring. Those people are still running most of the agency, and the slow transition has prevented Price from adding anywhere near the number of political appointees necessary to shape and support any “repeal and replace” legislation.
Ideas consistent with the Trump administration’s pledges will not come from HHS. President Trump needs to take (along with other top advisers) Mike Pence, Mitch McConnell, Paul Ryan, Tom Price, Mick Mulvaney, and Mark Meadows offsite (Camp David?) for several days with a handful of the top conservative health care minds. In that spare and isolated setting they could develop a short-term agenda of incremental changes that are worthy in and of themselves, and that would lay a foundation for broader reform.
Credit the Trump administration for making a few of these changes already. They eliminated the corrupt “navigator” program and loosened some of the actuarial requirements that were driving insurers away, but there is much more they can do without action by Congress. For instance, HHS can shut down its shadowy MIDAS database, which has promiscuously shared sensitive personal information about tens of millions of Americans with scores of outside groups.
There are important, if not fundamental, reforms that Republicans in Congress could pass quickly. They could reduce costs by passing malpractice legislation they have championed in the past. They could attract disgruntled millennials by eliminating the bronze/silver/gold rating system and simply allow Americans to avoid fines by purchasing catastrophic insurance. They could allow insurance companies to sell their products across state lines; while not a panacea, this reform could boost rural states with noncompetitive health insurance markets. They could try to reduce the preexisting condition problem by encouraging states to experiment with ways to extend the length of contracts between employers and insurance companies.
Before long President Trump would need to call the key actors back to Camp David to draft specifications for broader “replace” legislation that could pass both houses of Congress. All of the participants need to accept the reality that Americans are willing to let other Americans choose to be uninsured, but they are unwilling to let those who want insurance go without it. That reality puts the responsibility on Republicans to design and subsidize high-risk pools in each state for Americans with preexisting health conditions. If Republicans could build a consensus behind a solution to fixing that market failure, other issues would be comparatively simpler to resolve.
Michael Astrue served in senior roles at HHS, the Social Security Administration, and the White House in four administrations.
