GOP can’t handle the truth: millions to lose coverage under Trumpcare

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Steve’s Take:

Remember President Trump’s pre- and post-election promise, no, it sounded more like a guarantee, of “insurance for everybody?”

Then last week, the Trump-backed House bill, when finally unveiled after being held hostage somewhere in a secret basement in Congress, turned out to be labeled the American Health Care Act, instead of the Trading Health Care for the Poor for Tax Cuts for the Rich Act.

Steve's Take: #Trumpcare looks like another hollow promise. Click To Tweet

Another hollow promise?

Now the Congressional Budget Office report on Trumpcare (pdf) is out, and it’s frightening and demoralizing: 14 million people losing insurance in the first year, 24 million over time, with premiums soaring for older, lower-income Americans–in many cases, the very people who went strongly for President Trump. The CBO thinks it would reduce the deficit, but only marginally, around $30 billion a year in a $19 trillion economy.

Sobering? Yes. Unexpected…No.

Something like this was to be expected, says Paul Krugman for The New York Times. The CBO came in even worse on coverage than most predicted, but it was obvious that the news would be terrible because that’s what the logic of the situation told us.

Obamacare imposes a mandate to induce healthy people to sign up, offers means-tested subsidies to make insurance affordable and expands Medicaid to take care of people with really low incomes.

Trumpcare eliminates the mandate, slashes subsidies overall and redirects them to those who don’t need them and sharply cuts Medicaid. Of course that leads to a huge drop in coverage.

What were Republican leaders thinking? Something like this CBO score was a foregone conclusion; would it really have mattered much if it were 15 million losing insurance, not 24 million? How was this supposed to work out politically?

Looking back for much-needed context at this juncture, for three-quarters of a century, Americans have been debating whether the state should guarantee health coverage for all. With the passage of the Affordable Care Act, the “yes” side seemed at last to have prevailed, or nearly so.

Obamacare is not quite a universal healthcare program, but it shifted the U.S. closer to that outcome, David Frum at The Atlantic reminds us. For seven years, Republicans have vowed to shift it back.

Now the moment for reversal has arrived. If Paul Ryan’s version of healthcare reform prevails, the speaker will have accomplished something that Ronald Reagan and Margaret Thatcher never could: Repeal a fully operational social-insurance program.

But it looks increasingly unlikely that Ryan will prevail. The CBO report must be spreading panic among already nervous Republicans up for election in 2018 let alone for the presidential election in 2020, says Frum. Ryan, a true believer, accepts that toll as the price of principle. It seems doubtful that very many other Republican officeholders will long agree.

The basis of the Republican opposition to Obamacare has gradually shifted over the past seven years. Ryan’s position–let people go uninsured if they will not or cannot pay the price of insurance–has become increasingly rare, or at least increasingly rarely articulated. Donald Trump won the Republican nomination and the presidency by promising more coverage, not less.

Trump did it again at his healthcare photo op on Monday:

“You’ll see rates go down, down, down, and you’ll see plans go up, up, up,” he said. “You’ll have a lot of choices. You’ll have plans that nobody’s even thinking of today. They will have plans that today nobody has even thought about because the market’s going to import that with millions and millions of people wanting health care.”

A pair of Pew surveys in March 2016 and January 2017 found that Trump’s rhetoric has evoked a powerful response:

“The belief that the government has a responsibility to ensure health coverage has increased across many groups over the past year, but the rise has been particularly striking among lower- and middle-income Republicans.”

Thus, while most Republicans still reject the idea that government should ensure health coverage for all, 52% of Republicans with incomes below $30,000 now say that it should. Among middle-income Republicans–earning $30,000 to $75,000–the share who favor a government guarantee has jumped 20 points in less than 12 months, to 34%.

Post-Obamacare, as before, the United States remains an outlier (pdf) among advanced nations both in its absolute spending on health care and in that spending’s rate of growth. Even looking only at government expenditures, the US spends a larger share of income on health care than Switzerland and Canada.

That money does not buy better outcomes: if anything US healthcare outcomes are deteriorating.

What that money has bought is a huge and costly health sector. In 2015, Forbes rated heath technology as the single most profitable industry group in the nation, featuring a fat 21% margin.

Detesting a tussle with providers, Republicans have fixed their hopes for cost reduction on customers. “Patient-centered medicine” sought to transform the user of healthcare services as the system’s decisive cost-controller. Confronted with the full cost of medicine, the patient would consume care more prudently–or forgo it altogether.

Perversely, says Frum, the effort to keep government out of health care has empowered health care to consume more and more government dollars. Where government has been deployed more effectively than in the United States, health care has consumed less.

Despite all these “truths,” Bloomberg reports that House Speaker Paul Ryan isn’t planning to make any major changes to Republicans’ Obamacare-replacement plan despite a politically difficult estimate of its effect on health coverage, according to a GOP aide.

House Republican leaders and White House officials, who had been attacking the CBO even before it released its findings, immediately rejected the latest estimates. They said the legislation is only the first of three phases of their health-care plan.

Health Secretary Tom Price told reporters that the CBO didn’t analyze the entire plan for healthcare, including regulatory changes that can be made by HHS.

“We disagree strenuously with the report that was put out,” said Price, who was involved in picking the current CBO director in his previous role as House Budget chairman. “We believe that our plan will cover more individuals at a lower cost and give them the choices that they want, the coverage that they want for themselves and their families.”

But several Senate Republicans said the new estimate shouldn’t be dismissed.

“Rather than attacking the CBO as a way of moving forward, I think the prudent thing for the party to do is to look at the CBO report and see if we can address some of the concerns raised,” South Carolina’s Lindsey Graham said.

Then again, some believe the Trump quagmire and self-inflicted gridlock could bold a bonanza for the healthcare industry.

Max Nisen at Bloomberg says the bill’s growing set of bad reviews may actually be a bonus–it looks deader than ever in its current form.

The vote math was already tough for the replacement bill, which has been attacked from all along the political spectrum and by both providers and insurers.

Nisen likens the CBO report to throwing the GOP’s sinking bill an anchor.

The stock market may react to the CBO’s shocking numbers. But those same numbers may be enough to sink the GOP plan, says Nisen. That would leave in place the ACA–which has its own troubles. Trump has threatened to let the ACA die if the GOP replacement plan fails. But that death may be slow in coming.

Trump and his party could, in fact, sit back and watch the ACA flounder. But the political risk of that approach is they might end up taking all the blame for the suffering that would result. That may pressure them to make short-term fixes to keep insurers around, building on a market stabilization rule announced in February.

The most likely result is gridlock, minor changes to the ACA, and an internal GOP healthcare fight that could last for months, predicts Nisen. All of which would redound to the benefit of the healthcare industry, at least in the short term.

Bottom line:

With his widely followed, and positively reviewed, address to Congress, Trump showed how easy it could be to unite Washington around a big-budget centrist agenda on health care, immigration, taxes, infrastructure and the military.

But the continued accusations surrounding his campaign’s alleged Russian connections, and the President’s conspiratorial responses, have insured that the battle lines have only hardened, Peter Schiff notes via Euro Pacific Capital at Zero Hedge. If the House GOP’s mammoth bill could successfully navigate Congress, we would find ourselves stuck deeper in a deficit deluge than we can possibly imagine, Schiff argues.

The Republicans have taken what Schiff terms the “brave” political approach of keeping the parts that are popular (subsidized access, pre-existing conditions waivers, expansion of children’s coverage until age 26) and jettisoning those that are not (the mandates and the penalties).

The new plan pretends to offer a replacement to the Obamacare penalties by allowing insurance companies to charge a 30% increase to the premium for those who come back into the system after having previously allowed their coverage to lapse.

But the problem here is that the premium increase is far too small to force anyone healthy to buy insurance. In fact, it is so low that any healthy person currently insured may decide to drop coverage. The effect of this law, were it actually enacted, would be the death of the health insurance industry.

Then there’s the government’s extremely poor track record with containing the cost of a service when it gives consumers money to buy it, Schiff warns. Think student aid and college tuition. Plus the GOP plan is constructed in a way that makes it ripe for potential abuse.

Whenever the government is giving away money, people always game the system to get it. Think about the wide-spread fraud in welfare, food stamps, disability, and even cell phone credits. Trumpcare will be no different.

Parting shot:

White House budget director Mick Mulvaney dismissed CBO’s ability to analyze healthcare coverage and said the focus should not be on how many people are insured. “Coverage is not the end. People don’t get better with coverage, they get better with care,” he told MSNBC.

I can buy Mulvaney’s assertion wherein floating magical fairy doctors appear out of nowhere at your bedside where you’re deathly ill with a cold that’s progressed to pneumonia but you can’t afford health coverage. Remember, it’s the care that counts, not the coverage. Well, good luck with that, Mr. Mulvaney. I’m sure you would trade your healthcare coverage for that kind of “care.”

Just one more example of the Trump administration’s penchant for magical thinking about…everything.