After the ugly collapse of the Republican push to repeal Obamacare, Senate Minority Leader Chuck Schumer called for bipartisan cooperation to improve the law. “We never said it was perfect,” he said. House Minority Leader Nancy Pelosi also said Democrats are open to working with President Donald Trump and congressional Republicans to stabilize the existing system, as long as they stop trying to dismantle it. “We’re willing to listen,” she said. Meanwhile, House Speaker Paul Ryan has acknowledged that Obamacare will be around “for the foreseeable future,” and Trump aides have suggested they’re now open to bipartisan fixes.
This unusual convergence raises two questions: Are there policy fixes that could plausibly improve Obamacare and attract bipartisan support? And could a broken political system produce those fixes in this toxic partisan moment?
The answers are yes and maybe, if Trump and his aides decide to try to save the system rather than sabotage it. The president keeps suggesting on Twitter and in speeches that he can benefit politically by letting Obamacare implode, blaming Democrats, and forcing them to accept a new version of repeal. But that would be a precarious path—not only for the millions of Americans who could lose coverage or see their premiums skyrocket, but for the Republicans who control Washington and might struggle to duck responsibility for the chaos on their watch. At the same time, Ryan suggested today that Republicans could still take another shot at a party-line repeal, a path with political risks of its own after last week’s humiliating defeat.
There is a reasonably realistic alternative path. Democrats aren’t going to accept Obamacare repeal, huge Medicaid cuts, or a system centered on private health savings accounts. Republicans won’t go along with Medicare for All or a government-run “public option” in the private insurance markets. And neither party seems likely to embrace a shift away from America’s heavy dependence on tax-preferred employer-sponsored health coverage, even though many experts support it. But there are several constructive tweaks to Obamacare both parties could conceivably support—a few were even in the GOP repeal bill—if Trump decides he would rather be a savior than a saboteur.
Most of the potential fixes share one common goal: They would help insurance companies. Specifically, they would make it more attractive for insurers to offer plans on Obamacare’s exchanges, the marketplaces serving the 6 percent of Americans who don’t get covered through Medicaid, Medicare or their employers. Obamacare affects everyone in the health care system, but the exchanges—the marketplaces where people without employer coverage or government coverage can buy private coverage—are the epicenter for Obamacare’s problems, and also for the debate over how to fix it.
The Affordable Care Act has done good things for most consumers—expanding coverage to the uninsured, improving coverage for the insured, reducing costs, and improving care—but its main problem right now is that many insurers have been jacking up premiums on those exchanges, and a few have abandoned them altogether. Obamacare passed amid a flurry of Democratic rhetoric bashing insurers, but the future of its exchanges depends on making them work for insurers. Individuals in the private market won’t be able to buy insurance, even government-subsidized insurance, if nobody is willing to sell it to them.
In the past, Republicans have enjoyed close ties to insurers—but that didn’t stop them from undermining the industry when they were crusading to kill Obamacare. In 2014, Senator Marco Rubio and other Republicans weakened the exchanges by blocking Obamacare’s “risk corridor payments,” which were supposed to compensate insurers who covered sicker-than-expected patients. The GOP-controlled House also sued to try to stop “cost-sharing” reimbursements to insurers that help them serve lower-income customers on the exchanges. And Trump has continued to scramble the industry’s financial calculations through subtle and unsubtle sabotage. His administration cancelled an ad campaign designed to recruit healthier customers to the exchanges, while signaling that it won’t enforce the mandate that forces healthy customers to buy insurance. The more insurers have to rely on sicker consumers, the more they have to charge to cover their costs, and the less attractive their plans become to healthier consumers. Meanwhile, Trump’s incendiary rhetoric about Obamacare’s inevitable demise has forced even enthusiastic insurers to rethink their commitments to the exchanges.
But now that the push to obliterate Obamacare seems to be on hold, political incentives could change. “At some point, there has to be a realization that this is about real people and real lives,” says Jon Allison, a former Republican staffer who is now executive vice president for the non-profit insurer CareSource. “You have to hope this administration isn’t going to let this thing crash and burn.”
Pelosi sent a letter to her caucus today asking for suggestions to improve the Affordable Care Act. If Trump and congressional Republicans are also interested in pursuing reform instead of repeal, here are a few things they could do.
Defuse the Crisis. The leading enemy of stability is uncertainty, and for insurers who must decide what to do about the exchanges by June, the leading source of uncertainty before last Friday was the Republican repeal push itself. That threat has apparently subsided, but the House lawsuit over cost-sharing subsidies could still blow up the exchanges. The House put the suit on hold after Trump’s election, anticipating Obamacare’s repeal, but if the Republicans want to avoid a major mess, they need to make the suit go away and make sure the subsidies keep flowing.
The lawsuit aims to block subsidies that reduce out-of-pocket costs for more than 6 million customers on the exchanges with incomes below 250 percent of the poverty line, or about $60,000 for a family of four. Insurers say it would be almost impossible to make their numbers work without those subsidies. Centene CEO Michael Neidorff, whose Fortune 500 company covers 1 million customers on the exchanges, says it’s “absolutely critical” for Trump and Congress to send a clear signal they’ll continue. “If they do that, we’ll stick with this,” Neidorff says. “I’m an eternal optimist. I don’t think they want to see millions of people lose insurance.”
On the other hand, if Trump and congressional Republicans decide to kill the cost-sharing subsidies, or even if their fate remains unclear, insurers of all types will be reluctant to risk another year on the exchanges. “Without clarity, it’s going to be very difficult for even the most committed non-profit to stay in that business,” says Ceci Connolly, president of the Alliance of Community Health Plans.
If Congress wanted to go even further to stabilize the exchanges, it could increase the cost-sharing subsidies, or for that matter Obamacare’s other subsidies and tax credits designed to ease the cost of insurance. Republicans have balked at spending more money to expand coverage, but their bill did boost aid to the young and the middle class; if they were willing to support those provisions without the bill’s cuts to the elderly and the poor, they could make insurance more attractive to more people, which could make the exchanges more attractive to more insurers.
“I don’t know of insurers who see the exchanges as a big profit center,” says Marilyn Tavenner, a former Obama administration health official who now runs America’s Health Insurance Plans. “They just want to avoid big losses. We would love to send a message that stability is here, that you can stay in this market.”
Insure the Insurers: The Democratic push for health reform in 2010 relied on what The Washington Post described as “the near-daily demonization of the insurance industry.” Obama routinely attacked “insurance company bureaucrats who raise premiums and deny care.” Pelosi called them “villains.” And Obamacare included tough new rules that prohibited them from discriminating against customers with pre-existing conditions or capping how much they could spend on any customer.
Now that insurers have to cover sick people, and keep paying their bills no matter how long their sicknesses last, the insurance business has gotten a lot riskier. Many health care experts see the obvious solution—aside from insurers ratcheting up premiums and alienating their customers—as extending the reinsurance program that protected the ACA health plans from 2014-16. Or the states could take that on. For example, the Republican-controlled state of Alaska set up a $64 million reinsurance fund to help insurers cover the highest-cost cases that can scramble their financial calculations; one Alaskan insurer had spent about one-fourth of its claims money on just 37 patients. For all its faults—and there were many—the GOP’s American Health Care Act did include a $10 billion-a-year “stability fund” designed for states to use on things like reinsurance and other approaches for the highest-cost, highest-risk consumers.
Again, many Republicans are reluctant to pour more cash into Obamacare. And many Democrats are reluctant to funnel more cash to insurers. But the exchanges won’t work without insurers, and this year 32 percent of America’s counties had only one insurer on their exchange, up from just 7 percent last year. The Congressional Budget Office and other independent analysts have concluded that Obamacare is not in a “death spiral”—a vicious cycle where fleeing insurers and higher premiums drive out younger and healthier customers, which in turn prompts more insurers to flee or raise premiums—but death spirals could happen if more insurers start to see the exchanges as hopeless money pits.
A financial backstop could help prevent that. CareSource started providing coverage on the Ohio exchange, and it now covers more than 150,000 consumers on exchanges in four states. As a non-profit with a mission of serving low-income families, it would like to continue to expand; it sees the exchanges as a natural outgrowth of its work with Medicaid enrollees. But at a time when the president seems to be discouraging healthy customers from signing up, it’s treading carefully.
“We’re not looking to get out. We’re looking to stay in,” says CareSource’s Allison. “But at some point in time, you have to make business decisions.”
Relax the Rules: The best evidence so far that the Trump administration hopes to prevent the kind of implosion the president keeps predicting is a new set of rules his Department of Health and Human Services recently proposed for the exchanges. The rules involve fairly modest adjustments for the 2018 enrollment, giving insurers more flexibility to offer slightly more generous plans while closing loopholes the insurers thought consumers were using to game the system. But they amount to an insurer wish list, which suggests a desire to keep insurers happy on the exchanges.
“We appreciate what they did,” says Tavenner, the insurance industry representative. “It will help keep premiums lower, which is what we think about.”
It’s possible to imagine the Trump administration and Congress giving insurers even more flexibility, although the political sensitivity is so high that even Tavenner said she doesn’t want to discuss it before insurers finish their pricing for 2018. For example, HHS considered tweaking an Obamacare provision that bans insurers from charging older consumers more than three times as much as younger ones to 3.49 times as much. The idea was discarded after the legal justification—that 3.49 rounds down to 3—was ridiculed, but some health care wonks believe it could have helped stabilize the exchanges. The GOP repeal bill proposed a 5:1 ratio, which was politically radioactive for the hit it would impose on older voters, but something higher than 3:1 could be plausible.
Republicans also took a lot of flak for their last-minute proposal to get rid of Obamacare’s requirement that all insurance plan cover certain “essential benefits,” including maternity care, mental health, and prescription drugs. There’s no way Democrats would ever go along with that. But the Trump administration will have some leeway to redefine what’s included in those benefits, and while narrowing which drugs or autism treatments have to be reimbursed could hurt some consumers, it could also allow insurers to offer lower-priced plans to healthy consumers. And attracting healthy consumers will be key to stabilizing the exchanges.
“We’d love more flexibility to tailor our benefit packages, but you have to balance that with what gets left on the cutting-room floor,” says CareSource’s Allison. “It’s a very, very tough balance to strike.”
A Drug Deal: Obamacare has helped reduce the overall growth of health care costs to the lowest rate in half a century, but prescription drug prices have continued to soar. The cost of six brand-name diabetes medications rose more than 150 percent over the last six years. Multiple sclerosis drugs now cost more than $5,000 a month, increasing more than fivefold since 2001. Connolly says the non-profit plans she represents now spend more on drugs than hospitalization. “That’s mind-boggling,” she says. “There’s no rhyme or reason to it, and it’s driving up premiums.”
This is one area where Trump—who has complained that the drug industry is “getting away with murder”—has suggested that a bipartisan deal to bring down costs could be possible. Conservatives in his administration have sent mixed signals about his campaign proposals to allow the importation of cheaper drugs from abroad and let Medicare negotiate lower prices with pharmaceutical companies, and the rest of the Republican Party tends to align with the industry. But it’s a rare issue where leading Democrats have expressed interest in working with him, so even if the politics of a bipartisan deal would be daunting, they might not be impossible.
For all the apocalyptic rhetoric about Obamacare, most of it has worked pretty well since its website crashed in 2013. It has extended coverage to 20 million Americans who didn’t have it before. It’s provided popular new protections for the 160 million Americans who get insurance through their jobs, and even most consumers on the exchanges say they’re satisfied with their coverage. Its delivery reforms, designed to reward quality rather than quantity of care, have helped rein in costs throughout the system, extending the solvency of Medicare by more than a decade. The bill itself has cost less than one third what the CBO predicted when it passed, and its tax hikes on the wealthy have helped reduce the deficit overall.
The exchanges only serve a population the size of Ohio’s—and if you subtract the 85 percent of those consumers whose subsidies protect them from premium hikes, the population facing the most serious problems is only the size of Idaho’s. And those problems are eminently solvable. But they’re real problems. And when the president tweets, as he did today, that his supporters shouldn’t worry, because “the Democrats will make a deal with me on healthcare as soon as Obamacare folds,” he sounds like he intends to exploit them rather than solve them.
He keeps saying that his ideal political move would be to let Obamacare collapse, and he could easily do that, especially if he decides not to fight the House lawsuit over subsidies. But deflecting the blame for such a collapse could be much harder. Obamacare’s problems have been manageable so far; if they become unmanageable now that Republicans control Washington, that might become a problem for Republicans. Larry Levitt, a policy expert at the Kaiser Family Fund, points out that even if the public blamed Obama and the Democrats for the fiasco, the resulting bedlam in the insurance markets would force health care back to the top of the Washington agenda. “I’m not sure they want to keep talking about it,” Levitt says.
Trump did invite the CEOs of several leading insurers to the White House last month, and he did say he intended to work with them “to save Americans from Obamacare.” Now he has to decide whether he intends to work with them to save Obamacare itself. Whatever he decides, he already warned them what will happen if the public doesn’t like the results.
“If things aren’t working out, I’m blaming you,” Trump quipped.
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