GOP Fiddles, ACA Burns, And Democrats Need To Hold GOP Responsible

The other day the Freedom Caucus laid down its marker on Obamacare and it pretty much closes off any avenue for Republicans to “repair” Obamacare and complicates any effort to “repeal and replace”. Even Trump has said that whatever happens with Obamacare may not be finished until 2018 but even that may not satisfy those in the Freedom Caucus.

On Monday night, that group of around 50 Freedom Caucus members of the House vote to only accept a repeal bill that was at least as restrictive of the repeal bill they passed in 2015. That bill eliminated Medicaid expansion as well as the individual and employer mandates and the subsidies and taxes that helped pay for Obamacare. Without those items, there really is nothing left of the Affordable Care Act.

This position just exacerbates the war within the GOP over Obamacare. The Medicaid expansion is largely popular even in the red states that have adopted it. Charlie Dent, a Republican who passes as a “moderate” these days, says, “A lot of Republicans who represent expansion states are going to handle this Medicaid issue very delicately, and they’re not going to be taking an ideological doctrinaire position”, a pretty direct swipe at the Freedom Caucus repeal. And there is no Republican plan that will ever cover the same number of people that Obamacare did for a similar amount of money. Some in the GOP apparently still believe that they can drag a few Democrats along in a piecemeal replacement that cover far fewer people that Obamacare and will cost individuals far more. With the passion in the Democratic base these days, that is never going to happen.

On the other hand, the Trump administration came out with their ideas to temporarily “repair” the ACA yesterday. The plan includes shortening the enrollment period and putting more restrictions on any special enrollments The special enrollments allow people who lose their employer-based insurance, get married, or have a baby to enroll outside the regular window. Insurers claim they spend significantly more on these people than regular enrollees. Of course, it is easy to see that having a baby will significantly increase an enrollees cost to the insurers, so it is not all about “cheating” the system as some insurers imply. In addition, a couple of technical changes that would reduce subsidies by around $300 per family per year and that changed the mandated level of service in the Silver plans that will force many enrollees to either pay higher premiums or accept a lower level of service. It also appears that the IRS is going to stop enforcing the individual mandate. The Trump administration hopes that these moves will keep the ACA on life support while the GOP figures out what to do.

And now Paul Ryan has come out with his own sketch of a plan to repeal and replace the ACA, calling it a BetterWay. As usual with every Ryan plan, it provides no details on how this will be paid for and how many people it will cover. The basics are that it will repeal the ACA and replace it with the usual GOP tropes. There will be a tax credit for people to buy insurance, incentives to set up Medical savings accounts, the ability to purchase health insurance across state lines, and the creation of high risk pools. The amount of the tax credit was not detailed but it would surely be much less than any subsidies are now. It must be that way if the GOP is to use the money saved by repealing Obamacare for their tax cuts. In addition, the tax credit will be scaled based on age rather than income, basically shifting costs from younger to older people. Lastly, it provides no details on whether or how it would mandate that pre-existing conditions be covered without the cost of insurance skyrocketing.

The Ryan plan also envisions eliminating Medicaid as we know it. Instead, Medicaid would be turned into either a block grant or a fixed amount per beneficiary in each state. That payments would be indexed to some inflation indicator but the plan did not detail which one, implying that the states would end up picking up a greater and greater share of the costs or cutting benefits over time. As it is, some of the largest Medicaid beneficiaries would see the federal share of Medicaid go from 90% to 50%. The fact that those are mainly blue states is probably a feature rather than a bug. In addition, it appears that the plan also puts a cap on the per-capita Medicaid funding, meaning that it may not cover the full cost of the service provided. As Charlie Dent made clear above, even Republicans governors are not happy with this plan and even some GOP Senators seem skeptical.

Ryan’s plan will make any real coverage unaffordable, providing only catastrophic plans with deductibles in the $10,000-$12,000 range. It will also end up covering far fewer people than Obamacare did. But that’s not really the point. This plan is purely designed for House members to go back to their districts and say they have a plan to replace the ACA and assure their constituents they will still be able to get coverage.

Meanwhile, insurers continue to exit the market as they are unwilling to deal with the uncertainty that the GOP is creating for the exchanges next year. Ryan’s plan only adds to that. The other day Humana announced that they are pulling out of the exchanges in 2018. Fortunately, the company is not a big player in the health insurance market, covering less than 200,000 people, but their withdrawal will leave certain areas in the South with just one or two providers.

As an aside, the day before this announcement from Humana, the company and Aetna announced that they are abandoning their merger, after deciding not to appeal a judge’s ruling that the merger violated antitrust concerns. Aetna will now pay Humana $1 billion for the trouble. You may remember Aetna for its blatant attempt to blackmail the DOJ into letting this merger proceed by threatening to pull out of the Obamacare exchanges if the merger was blocked. The DOJ held firm and Aetna proceeded to publicly announce its withdrawal from certain states, in some of which it was quite profitable. The lesson for Democrats in this is to make sure there is a public option otherwise the government will always be subject to blackmail and extortion by the health insurers, as Aetna has proved.

The Republicans immediately jumped on this news of Humana’s withdrawal to promote their meme of a failing ACA, just as they did when Aetna withdrew. At the same time, Aetna again declared it was losing money and may pull out of the exchanges entirely, as did another smaller insurer called Molina Healthcare who also stood to profit from the Aetna-Humana merger because they would have picked up some of Aetna’s Medicare Advantage business. Both Aetna and Molina have reported profitability in the exchanges prior to this, so this is clearly a power play expressing their displeasure with the failure of their merger and probably a strong signal for Trump to somehow intervene. (Aetna’s CEO certainly has been carrying the water for the GOP on the ACA. Perhaps his days are numbered after this failed merger and he is looking to jump ship to the Trump administration.) In any case, Trump tweeted, “Obamacare continues to fail. Humana to pull out in 2018. Will repeal, replace & save healthcare for ALL Americans” while Paul Ryan said, “More #Obamacare failures have surfaced over the past 24 hours — but Republicans are working on a #BetterWay”.

Democrats need to fight these plans with one voice and with a strong counter-meme which should say the “GOP-created uncertainty is driving insurers out of ACA!”. As I’ve written many times, the ACA will collapse on its own without a Republican vote if Democrats allow the uncertainty that “repeal and whatever” creates to force insurers out of the market in 2018. The insurance industry has been remarkably quiet since Trump’s election. They would only be too happy to pull out of the ACA by blaming uncertainty, while the GOP points to their withdrawal as Obamacare collapsing on its own. In that case, they both win, Republicans see the ACA destroyed without a vote and the insurance companies know that anything that comes after will make them even more money, such as Ryan’s BetterWay, despite covering far less people. Democrats seem to be unaware or unable to respond forcefully to this scenario. To do so, requires building the proper story line now. The insurers need to decide in May whether they will participate in the exchanges next year. If the insurers withdraw en masse then, it will be too late for the Democrats to win the battle of public opinion. They have to start now.

Right now, the chances of any action in Congress this year about Obamacare still looks relatively remote. There is still a huge amount of disagreement with the Republican party about how to move forward. But that does not mean the ACA could not die a death by stealth. Democrats need to make the people aware of this possibility and put the blame exactly where it belongs, on Republicans and the uncertainty they have created.

[I’ve also written about this and other issues on my personal blog at]

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