Like so much of what President Trump says, the words he chooses to speak don’t tell the whole story. Who could oppose more “choice” in health care coverage, especially when it’s better care and comes at lower cost, as the president proposes? The executive order that Trump signed Thursday promises voters the moon, or at least a down payment on the great health care he touted during the campaign. But if implemented, it would further undermine the Affordable Care Act, which is the law of the land.
“The EO is sabotage plain and simple,” says Sam Berger, senior health policy adviser with the Center for American Progress, a liberal think tank. “It would take us back to the bad old days when people who needed health insurance couldn’t get it,” and costs were so high that health care bills were the leading cause of bankruptcy.
Trump’s executive order would circumvent Obamacare to allow people to form loosely knit associations to bargain for lower prices, and would allow insurance companies to sell health policies across state lines. Republican Sen. Rand Paul was in the Roosevelt Room at the White House to praise Trump for signing what the Kentucky senator called “the biggest free-market reform in a generation.”
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On the face of it, this newfound market freedom appears harmless until you remember where we came from as a country. Market forces had failed in health care, with insurance companies refusing to cover people with pre-existing conditions, and premiums rising beyond the reach of many people.
The ACA, or Obamacare, ended all that with legislation that requires insurance companies to cover people regardless of the state of their health, and to provide “essential health benefits” like preventive care, maternity coverage, and mental health coverage.
Trump wants to get rid of all that Obamacare regulation, and he made clear in his remarks that his EO is another step in the administration’s ongoing campaign to repeal and replace Obamacare. He couldn’t do it legislatively, so now he’s doing it by EO, with more measures on the way to drain Obamacare of the resources it needs to deliver care to the many millions who’ve signed on to the program.
Larry Levitt, a senior vice president with the Kaiser Family Foundation, a non-partisan health policy research organization, tweeted in advance of Trump’s signing ceremony that “anything that creates a parallel insurance market for healthy people will lead to unaffordable coverage for sick people,” a simple enough declaration that prompted me to check further with the Kaiser folks, where vice president Gary Claxton walked me through the making of what is known as a “death spiral.”
Under the Obamacare exchanges, insurers are required to accept all comers during open enrollment, which begins on Nov. 1 and goes through Dec. 15. Insurers charge everybody the same rate regardless of pre-existing conditions, and provide a package of health benefits that score a Ten, top of the line.
If Trump gets his way, there would be a “free market” option that can offer fewer benefits and make it harder for sick people to enroll by denying them outright or charging them more money. Sound familiar? It’s just like the good old pre-Obamacare days. “They (Trump administration) will say it’s to offer less expensive coverage to people who are having a hard time affording coverage under Obamacare,” says Claxton.
The way the Trump EO would work, these new plans would attract healthy people because of the lower premium, and because they’re healthy, they won’t mind the lower benefits, figuring they won’t need them. And if they get sick, with no rules in place, they could move over to Obamacare and a more expansive plan at the end of the year during open enrollment. Fine for these individuals for whom the gamble pays off, but the larger community, or risk pool, gets sabotaged.
“It puts insurers in a difficult spot as they watch their risk pool get smaller and sicker, so they have to raise premiums,” says Claxton. “Only the sicker people will stay, so they’re always losing money.” This is what’s known in the health care industry as the death spiral.
“You can bet this executive order will get challenged in court, but it could also create lots of confusion going into open enrollment,” Levitt tweeted.
Open enrollment starts in November, and if there’s a belief that there really would be an alternative for healthy people, that may scare insurers who already have contracts. “I don’t know if they could back out, but they would be very worried about more healthy people leaving their risk pool and leaving them with a smaller, sicker group than they already have,” says Claxton.
It’s hard for most Americans to muster sympathy for insurance companies, but they’ve been stalwarts throughout this tumultuous process, first under President Obama and now, standing by their commitments as Trump actively tries to make it costlier for them to do so. “It is to a point where the market is pretty fragile,” says Claxton. Add this to Trump’s ongoing threats not to pay the cost-sharing subsidies promised under Obamacare, the administration’s pulling of advertising to promote open enrollment, and worries that the IRS will not enforce the individual mandate to buy health insurance.
“All these things continue to bang away at the foundation (of Obamacare). At some point insurers will ask: Why do this anymore? They know Congress will come back and change the rules at some point. It’s hard to imagine how this plays out for the next three years with even benign neglect,” says Claxton.
Benign neglect is the best-case option. Trump’s EO is much more insidious. The belief in selling policies across state lines is really a race to deregulate, or a race to the bottom in terms of health benefits. If one state approves a policy or a provision, it would be approved everywhere under Trump’s order. “Some say it’s taking power back to state regulators. It’s just the opposite,” says Claxton. “It says any stupid thing another state does can take effect in your state and you can’t do anything about it. It’s an odd concept of federalism.”
Trump promises more to come, including short-term coverage policies, which are meant for people transitioning between jobs, and are limited to three months. Trump is expected to call for expanding them to 12 months, which would encourage healthy people to buy them. They are cheaper and they don’t have to meet Obamacare rules. They’re “medically underwritten,” which means sick people can’t buy them, says Claxton.
Of all the divisions in the country that Trump has provoked and exploited, dividing the healthy from the sick in the name of allegedly expanding choice, and intentionally driving up health care costs for sick people because they’re benefiting from the hated Obamacare, has got to be among the most cynical.
