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Trump’s Plot to Kill Obamacare

After a Republican push to revamp health care came up short of Senate support earlier this month, President Donald Trump announced his new health care strategy. He was going to “let Obamacare fail” and then give us all really great health care.

The second part of this claim is, of course, absurd. The health care Republicans are proposing would be a disaster for tens of millions of people. This is the reason Trump and Republican congressional leadership are having such a hard time getting adequate support.

But the first part of Trump’s strategy is also clearly wrong. Obamacare is not failing; if it collapses, it will be because Trump and his Republican allies killed it.

The claim that Obamacare is failing rests largely on the number of insurers that have left the health care exchanges set up under Obamacare. Trump and the Republicans are continually pointing out that more than 1,300 counties only have a single insurer operating in their exchanges, meaning that there is no competition.

While Trump is predicting the situation will continue to deteriorate, with more counties with one or no insurer left in the exchanges, the experts who study the issue actually find the opposite.

The assessment of the Congressional Budget Office, the Kaiser Family Foundation and others is that the health care exchanges have largely stabilized and insurers are now able to operate profitably.

Contrary to the stories of a death spiral, the number of people getting insurance through the exchanges is actually increasing.

It is also important to realize that the lack of competition in the exchanges is primarily a problem for people who live in states controlled by Republicans.

More than 20 percent of the people who live in states with Republican governors only have one insurer in their exchange. Only 2 percent of the people who live in states with Democratic governors live in a county with a single insurer. This figure excludes North Carolina, where a Democratic governor just took over in January.

This gap is due to the fact that most Republican governors did not want Obamacare to succeed, while most Democrats did.

First and foremost, many Republican governors did not expand Medicaid. This expansion helped the exchanges by pulling out many of the less-healthy people from the patient pools in the exchange.

These governors also were not aggressive in promoting the exchanges. As a result, fewer healthy people signed up for insurance, making the exchange population less healthy than in states controlled by Democrats trying to make the ACA work.

In the story of Obamacare dying, Trump apparently plans to build on the success of Republican governors and undermine the exchanges in the states controlled by Democrats. And, he does have tools to do it.

The first tool is the reimbursements the government makes to insurers for covering out-of-pocket costs for low-income people. If insurers did not cover these expenses, insurance would be unaffordable for many low-income people. And, the insurers won’t cover the costs if the government is not picking up the tab.

More importantly, Trump could refuse to enforce the individual mandate. This is an essential part of the system, since insurers are prohibited from discriminating against people based on their health. Without the mandate, many healthy people will opt not to buy insurance until they develop a serious health problem.

This is a sure path to a death spiral. In this scenario, insurers raise rates because of their less healthy pool. The higher rates discourage more healthy people from getting insurance, further worsening the health of the average insure. This cycle continues until the pool only includes the least healthy and most expensive patients.

Through these and other mechanisms, President Trump certainly can kill Obamacare. But this is not letting the program die.

This column originally appeared in the Sacramento Bee.

More articles by:

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

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