The Future of Health Care Under a Trump Administration

An interesting thing happened in America on November 9th, 2016. The day after the votes cast in our presidential election were tallied and it was determined that Donald Trump had carried the electoral college, 100,000 people rushed Healthcare.gov to buy insurance for themselves and for their families. The website, whose rocky grand-opening just a couple of years earlier was ridiculed as an example of government incompetence, is now looking more like a precarious lifeline for thousands of people who see it as their last chance to buy into a health insurance plan before the new Republican administration of Donald Trump rides into town on a promise to blow the whole system up.

The Successes of the Affordable Care Act

And make no mistake. The Affordable Care Act –reviled by critics on the right as an example of government overreach and criticized by some on the left for relying on private, profit oriented insurers to offer coverage– has nonetheless been a godsend for many, leading to a sharp, marked decrease in the rate of the uninsured and reversing a nearly 40 year trend in the opposite direction:

According to the department of Health and Human Services, some 20 million people now have health insurance that otherwise would not.

These are big numbers… game changing numbers, even. They are numbers that cannot simply by ignored by a newly elected president intent on revamping the nation’s insurance market. Today, even as we write this blog post, crowds have gathered around the country to protest the results of an election that favored the electoral college over the popular will. What will happen in the coming months when 20 million newly insured find their health insurance ripped out from under them? Concerns like these are no doubt in the back of Donald Trumps’ mind and are likely responsible for the recent floating of ideas that would seem to back-track from many of the slash-and-burn promises the New York real-estate mogul made on the campaign trail. The Washington Post reports today for instance that Trump seems to want to keep key pieces of the Affordable Care Act in place even after he repeals the current president’s singular legislative achievement:

On President Obama’s health-care law, for example, Trump said in an interview with the Wall Street Journal on Friday that he would like to keep some parts of the law intact and may seek to amend the statute rather than repeal it. Trump said he came to the conclusion after Obama, during Trump’s Oval Office visit Thursday, suggested areas of the law that should be preserved.

Trump suggested provisions that prevent insurers from refusing coverage for preexisting conditions and which allow children to stay on their parents’ health plans until age 26 should stay. “I like those very much,” he said.

Trump’s more conciliatory tone contrasts markedly with the plans of some in the GOP leadership. Paul Ryan for instance is already trying to leverage the results of the election to get the ball rolling on the GOP’s fifty year effort to repeal Medicare:

“When Obamacare became Obamacare, Obamacare rewrote Medicare, rewrote Medicaid, so if you’re going to repeal and replace Obamacare, you have to address those issues as well,” he said in a Fox News Channel interview. “What people don’t realize is that Medicare is going broke, that Medicare is going to have price controls. Because of Obamacare, Medicaid is in fiscal straits. So you have to deal with those issues if you’re going to repeal and replace Obamacare. Medicare has got some serious problems because of Obamacare. Those things are part of our plan to replace Obamacare.”

Ryan’s intentions couldn’t be clearer. Despite the fact that Obama’s changes to Medicare actually extended the program’s solvency by over a decade, the Speaker of the House hopes to leverage dissatisfaction with the Affordable Care Act and the Republican rank and file’s hatred of the president to kill the popular health care program for seniors and plant the murder weapon on the person of the current occupant of the White House.

So what does all this mean for the future of health insurance and health care in Donald Trump’s America? That’s the $64,000 question, and unfortunately, the answer is not altogether clear. Partly this is because the mind of Donald Trump can often seem ineffable, if not downright chaotic. His core political beliefs (assuming he has any) can seem at times impossible to tease out, especially since he is given to making contradictory pronouncements on a regular basis. Let us not forget, for instance, that during the GOP primary campaign, Trump went so far as to praise the Canadian  and Scottish socialized medical systems, suggesting that such a system might have once been a plausible solution to America’s health care woes:

“As far as single payer, it works in Canada,” Trump replied. “It works incredibly well in Scotland. It could have worked in a different age, which is the age you’re talking about here.”

Those aren’t the words of a man who is fundamentally and ideologically opposed to government run health systems. Those aren’t the words of a free market fundamentalist. They don’t strike us as the words of a man conniving with Paul Ryan to privatize Medicare and leave millions of poor seniors in the lurch.

So let us take Donald Trump at his word. Let us accept that he wants to repeal the Affordable Care Act, as he promised to do during the election and that he intends to replace it with a system that retains the ability of parents to keep their children on their health care policies until the ripe old age of 26 and prevents insurance companies from denying people coverage on the basis of a pre-existing condition. Where does the man go from here?

A Pre-existing Conundrum

The idea of parents keeping their kids on their plan up to the age of 26 isn’t difficult to legislate and has little actual effect on the economics of health care, so we’ll take that as a given. The second promise, however, is far more complicated one to keep. That’s because what is probably the most beloved element of the Affordable Care Act depends entirely upon the most hated provision of Obamacare. You can’t prevent insurance companies from denying people coverage for pre-existing conditions without a mandate on coverage that levies a fine for people who choose not to carry insurance. The reason for this is quite simple, but frustratingly difficult to explain to an electorate that doesn’t seem to be able to look more than one move ahead on the chessboard. One needs the mandate because if we were to allow people to wait until they become sick before buying insurance, then a significant number of people would do exactly that. They wouldn’t spend a dime on health insurance until doing so means they get 20 cents worth of medical care back in return. And no insurance company can stay in business operating at a loss. The reasoning behind the mandate can’t be explained in simpler terms than that. But there’s one more thing: if you’re going to require people to carry insurance you need to make it affordable for them to do so. That means subsidizing the cost for people who can’t afford it on their own. So in summary: to make the (a) pre-existing condition thing work you also need (b) an insurance mandate and (c) subsidies. In other words, what you need is the three legged stool of the Affordable Care Act, aka Obamacare.

So what are Trump’s options here? Well, as I see it, he really only has two:

1) He amends the Affordable Care Act in only superficial ways, re-names it “Trumpcare” and calls it a day.

2) He guts the Affordable Care Act and replaces it with a system that provides only the illusion of substantially similar coverage

Let’s look at number 2, because given that Trump is working with a highly ideological Republican Congress, that’s probably the more realistic scenario.

How does Donald Trump keep the prohibition against insurance companies from denying coverage to people with pre-existing conditions? As it turns out, Mitt Romney provided a blueprint for this during the 2012 elections when Romney promised a repeal of the Affordable Care Act that would, nonetheless prevent insurance companies from denying people coverage on the basis of a pre-existing condition. The promise was a bold one, but also one that seemed to defy economic reality. The underlying mechanism of Romney’s plan only came into clear focus after a long and tortured back and for between the candidate and the press and numerous “clarifying” statements by spokespeople for his campaign. Factcheck.org has a good summary of Romney’s “evolving” positions on the matter, but the long and short of it is: Romney’s plan didn’t actually prevent insurance companies from denying coverage to people with pre-existing conditions. Rather it prevented them from denying coverage to people who had pre-existing conditions and were already covered by a health insurance plan. So Romney’s approach was to go out and tell people that insurance companies wouldn’t be able to deny people with pre-existing conditions coverage under his plan, while in fact offering a plan that didn’t really do that. Another way of putting it is that you simply lie about it and hope that not enough people notice to raise a stink.

A second option Trump has is to pass a law preventing insurance companies from excluding customers with pre-existing conditions, but giving these same companies a free hand to charge whatever they want for coverage. Insurance companies will then charge these customers enough to cover their costs, thus rendering the coverage meaningless while allowing Trump to say (rather disingenuously) that he kept his promise.

So, despite promises to the contrary, all in all, it’s very likely that the first victim of Trump’s promise to repeal the Affordable Care Act will be the pre-existing condition exclusion. If you have one, or fear developing an illness in the future (say, for instance, your family medical history shows a tendency to develop breast cancer) it would probably be a smart thing for you to join the 100,000 we spoke of earlier and buy coverage while it is still guaranteed. Doing so might just save your life.

Whither the 20 Million?

The Affordable Care Act has provided the American people with many tangible benefits, and beside the pre-existing condition exclusion, the most notable is probably the sharp drop in the numbers of the uninsured. If Donald Trump is going to repeal the ACA without risking civil turmoil or a backlash from his supporters who have gained coverage under the law he’ll have to do so in a way that does not cause all 20 million to lose health insurance coverage. So how does he accomplish that feat?

Let’s begin with the Medicaid expansion. To be frank, the expansion will almost certainly be rolled-back under Trump and the GOP congress. Studies suggest that somewhere on the order of 11 million people gained coverage this way, yet Medicaid, being a single-payer health care system for the poor, is probably the one feature of the Affordable Care Act that conservative ideologues oppose the most. It’s hard to see how the Medicaid expansion survives a Trump presidency. Moreover, conservatives like Ryan don’t just oppose the ACA Medicaid expansion, they oppose the program in principle and have expressed a desire to replace the program with a system of fixed “block grants” to the states, thus reducing budgetary exposure to local as well as systemic economic fluctuations. The long and the short of it is, it’s very difficult to see how a Trump presidency doesn’t increase the ranks of the uninsured by at least 11 million, and potentially significantly more.

But what about the millions more who bought insurance coverage on the exchanges? What about working-class families who took advantage of ACA subsidies to buy health insurance plans that previously they could not afford? Before passage of Affordable Care Act there was a very pronounced trend toward loss of coverage and growth among the ranks of the uninsured. Will that trend continue, or even accelerate if Trump repeals the ACA?

At first the answer may seem to be an obvious “of course, we’re going back to the system we had before!” But things aren’t really as simple as that. Donald Trump has made one promise with the potential to decrease insurance costs and allow more people to pay for coverage on their own (even without subsidies). Trump has embraced an oft promoted and very popular Republican position by promising to allow consumers to buy health insurance across state lines. This and the “magic of the marketplace” will drive costs down significantly, we are assured. But is this plausible and if so, how would it work?

State Lines and the Magic of the Marketplace

To understand how the old reliable “allow insurers to sell insurance across state lines” plan works you’ve got to know a little something about the history of credit cards and what insurance –not just health insurance, but all types of insurance— really is. Let’s begin with the second question.

Insurance, at its most basic level, is essentially a system of cost sharing. You buy into an insurance plan under the assumption that you’re at a certain risk of experiencing a life-changing event whose costs are so high that you couldn’t possibly pay them yourself. Other people buy into the system under the same assumption. And as long as these life-changing events are rare, and costs aren’t astronomical, insurance remains relatively affordable. The cost of insurance is calculated by weighing both risks and potential liabilities. In the USA health insurance is as expensive as it is in large part because health care costs are so high. Procedures can easily costs ten times as much here are abroad and because of this, there are really only two ways to lower the price of insurance: (a) one can introduce cost controls (b) one can offer coverage only to those individuals who are least likely to require it. The first of these paths is largely out of the hands of health insurers. They can and do use their membership base and market power to negotiate lower prices for medicines and procedures, but they don’t have the power of law to set price ceilings as do governments that run socialized health systems. The second method is one they have more control over. By raising rates on clients who are at an increased risk of developing an illness, or simply refusing to cover some people or some conditions entirely, the company can reduce its risk profile and keep prices relatively low.

Studies have shown that in health care costs (as in everything else, it seems) the magical 80/20 rule tends to apply. What this means is that 20% of the population is responsible for 80% of the costs. As a result, an insurance company could significantly reduce its risk profile and keep plan costs low by excluding the sickest 20% of the population. The Affordable Care Act, being an attempt to extend insurance coverage universally, does not now allow insurers to do this, and even before the Affordable Care Act state regulations limited the extent to which insurers could engage in discriminatory practices, raise rates and drop members who developed costly, chronic conditions.

This is where the GOP’s obsession with allowing insurance companies to sell policies across state lines comes in. For while the plan is sold as a way of broadening markets to increase efficiency and drive down prices, what is really at stake here is a move to circumvent state regulation of the insurance industry. The plan is to do for health insurance what the Supreme Court did for credit cards with the 1978 Marquette decision. Up to that moment, most states had usury laws on the books that prevented lenders from charging overly high rates for their loans and most credit card companies complied with those laws. In 1978, however a Nebraska based bank sought an injunction against an Omaha based bank that was offering credit cards with interest rates in excess of those permitted by state law. The Supreme Court, however, ended up siding with the Omaha bank, ruling that the states did not have jurisdiction to regulate credit cards issues from states other than their own. As a result, credit card companies quickly relocated to states with lax or no usury laws, and began issuing cards with interest rates that routinely top 20% per annum or more. A similar state of affairs for health insurance, ultimately, is the real goal of GOP legislative efforts to allow companies to sell policies across state lines. By relocating to the a state with minimal regulation and enforcement, an insurance company can have a free hand in deciding who it will and won’t cover, what conditions it will and will not cover, under what circumstances it will drop customers, and how rapidly it wishes to raise rates. The end result of this could very well be a plethora of very inexpensive health insurance plans that are all but impossible to sign up for if you are not already in good health or aren’t free of genetic markers that predispose you to developing diseases in the future. In addition, with such lax regulation we would likely also see a resurgence of faux medical insurance plans whose wording is carefully crafted to imply benefits and coverage that, when the rubber hits the road, simply aren’t there when the policy holder falls ill. These fake policies abounded prior to the ACA, and the act was crafted to specifically exclude them from qualifying as coverate under the insurance mandate.

Why This Last Approach “Works”

The picture we have painted above of a lightly regulated insurance market where a majority of the population is covered under cheap but skimpy “window dressing” policies while a significant portion of the population cannot get coverage at all might seem like a nightmare scenario in a country in which no one would want to live. So in what sense can this approach be said to “work?”

The plan works because the ultimate goal of a Republican health insurance reform plan isn’t universal coverage. The goal isn’t fairness and it isn’t to better the lives of their fellow citizens. The goal of a Republican health care plan is to cost the 1% as little as possible in terms of wealth re-distribution while ensuring that the party isn’t tossed out on its ass at the polls. The goal of every piece of GOP legislation is to do as little for the 99% as possible while still maintaining its grip on the levers of power. A plan that provides 80% of the people with extremely cheap health insurance while leaving the other 20% to fend for themselves could potentially increase coverage rates versus the low baseline that existed prior to the ACA. More importantly, though, it is also a plan that potentially satisfies 80% of voters. And let’s face it: you don’t need 80% of the vote to win the presidency. You don’t need 51% either. Heck, you don’t even need to get more votes than your opponent. You just need enough votes to win the electoral college, and that, at last count, is about 25% of eligible voters.

A Post-mortem for the American Dream

So is our future really that bleak? Are we actually on the cusp of a medical system in this country whose closest analogue might be the practice of Spartan parents tossing their weakling newborns off high cliffs to prevent them from becoming a burden on the polis? The answer to that question really depends on how much we worry about the fate of our fellow citizens. It depends on how much we care about the plight of the less fortunate. It depends on whether we, as a society, can summon the solidarity to express outrage at the injustices that are visited on people who look different from us, people think differently from us, people who live far away from us (or just on the other side of the tracks from us), people who speak a different language, worship a different god, or love a different way. The future of America depends on whether enough people can summon the courage and the fortitude to resist the machinations of those whose sole and overriding concern is to amass as much power and wealth as their guile, their a-morality and Machiavellan designs will allow them to. So yes, the future looks bleak right now, but it doesn’t have to be bleak. The good fight must go on. There has never been a moment in the history of this nation when the fight for social justice could be said to have been won. There have been moments of light and long periods of darkness. We may very well be entering a long dark stretch. We cannot stop fighting because of that fact.