Choose Your Own Health Insurance Apocalypse

Joseph Fishkin

443,000; 454,000; 379,000.  Those are the estimated number of people in, respectively, Michigan, Ohio, and Pennsylvania who currently have health insurance through the Medicaid expansion component of Obamacare.  That’s the part that the Supreme Court gave states the power to opt out of, but which nonetheless has managed to get more people health insurance than the better-known exchanges-with-subsidies component of the system.  31 states now participate in the Medicaid expansion and that includes every Great Lakes state except Scott Walker’s Wisconsin.  How many of the people currently receiving expanded-Medicaid coverage were Trump voters?  A back-of-the-envelope estimate* is roughly 200,000 actual votes for Trump, in those three states alone. (Note that the outcome in Michigan was decided by fewer than 12,000 votes.)  So, simple question: Does Donald Trump want to begin his presidency by kicking all those people off their health insurance?  Or does he want to keep this major component of Obamacare, or some version of it, in place?

That’s just one of a series of crucial and politically challenging health policy questions Trump now faces as his transition team lurches toward taking the reins of government and implementing his priorities.  Few of those priorities are more explicit than the pledge to “repeal and replace” Obamacare.  “Repeal and replace” has been a point of apparent unity between Trump and his Republican allies in Congress: Paul Ryan and other Republicans in Congress have campaigned aggressively on this idea and slogan for years before Trump adopted it during the campaign.  But Republicans did not spell out a plan for the “replace” part; when pressed they’d tend to offer a thin soup of pre-ACA talking points that were barely relevant to the main choices at hand.  On those big choices they were silent.  That silence now seems ominous—not only for Americans who badly need to keep their health insurance, but also for Republicans who badly need to keep their new majority coalition from combusting.

Staying quiet about the actual policy choices involved in choosing any replacement for Obamacare has so far made political sense for Republicans.  In reality, almost any non-trivial tweak to health policy, let alone an overhaul, will produce intense pain for one or more groups of people, businesses, insurers, governments, or interest groups that are part of the Republican coalition.  When you’re up against Obama’s veto pen anyway, and you’re fighting for votes, why open yourself up to the criticism that an actual plan would attract?  But now Republicans are set to control the entire federal government.  That means they have to govern, for better and definitely for worse.  So they have some big choices to make.  Here are six of the biggest (after the jump):


A. “Repeal” it or “Reform” it?  This one is purely stylistic.  The answer may seem obvious.  “Repeal and replace” has been a central Republican campaign pledge for the better part of a decade, and reneging on it now would produce extreme political blowback within the Republican coalition.  Republicans have assiduously taught their constituents that Obamacare is both a disaster and an unconstitutional violation of liberty; any reform package therefore surely needs to call itself a “repeal” of the hated law.  But there is a counter-argument.  If you say you merely “reformed” (or “amended”) Obamacare, this helps make it more plausible to continue to blame that dastardly Obama for many things that people do not like about the American health insurance system—things that are not going away, such as premium increases and various obnoxious forms of cost-sharing.  If you say you “repealed and replaced” Obamacare, then after a couple of years, all that stuff is squarely, politically, on you.  You “replace” it, you own it.  So this stylistic choice is fraught with future political peril.

B. Kill the Medicaid Expansion or Keep It?  This is the one I started with.  Keep the expansion, and the activist right will howl that you’ve chosen to leave the single largest component of Obamacare in place.  (And they’ll be right.)  Kill it, and you knock millions of your own voters off of their health insurance across the country, in a high-profile way that will be hard to blame on Obama (not impossible perhaps, but very challenging).  You’ll also, incidentally, blow a massive hole in the budgets of many states, including many Republican states.

C. Three options: (1) Kill the Pre-Existing Conditions Ban and the Individual Mandate; (2) Keep Both of Them; or (3) Keep the Pre-Existing Conditions Ban but kill the Individual Mandate?  It’s no secret that the ban on insurers discriminating on the basis of pre-existing conditions is very popular—it's one of the most popular elements of Obamacare, meaning there is strong political reason to keep it in place—while the individual mandate is perhaps the least popular element of the whole statute.  Particularly among Republicans, it is extremely unpopular.**  The problem is that these two moving parts are linked.  Behind door number one (repeal both), we have literally millions of highly sympathetic Americans—cancer survivors, diabetics, basically anybody not in perfect health—becoming uninsurable overnight.  They will likely be very angry and for good reason.  Behind door number two (keep both), you have Paul Ryan, the Tea Party, and most of the Republican media world apoplectic about the failure to repeal the most high-profile moving parts of Obamacare, including the individual mandate, which is probably the part they hate most.  And finally, door number three (keep the ban, repeal the mandate) has a warning label that reads: “When only sick people buy insurance, insurance gets expensive; when insurance gets expensive, only sick people buy insurance.”  In other words, behind door number three is the much-anticipated but not-yet-seen-in-reality premium-skyrocketing insurance death spiral.  This is why President Obama, whom you may remember ran for President in 2008 on a plan that included no individual mandate, had to reverse himself in office and include it in Obamacare, at great political cost.

D. Leave Benefits Alone or Gut Them?  Assuming something like the current insurance market survives, the Republicans will face not one but a whole series of specific choices about whether to keep or gut the various sets of requirements about what insurance in each state actually covers.  (HHS gave states the primary role in deciding the specifics of the “essential health benefits” that plans must cover, within broad parameters set in the statute.  HHS also defines a lower threshold of “minimum essential coverage,” which is how much coverage a person needs in order to not pay the tax penalty.)  Because there is no free lunch, if you want premiums to get cheaper—or at least, to rise more slowly—the simplest way is to cover less.  So what goes?  With either a new statute, or with creative use of §1332 waivers for states, Republicans could kill off entire statutory categories of essential health benefits—mental health, say, or pregnancy and maternity coverage (needless to say, getting rid of either of these would be a very bad idea for lots of reasons).  On a smaller scale, getting rid of the birth control mandate might score political points with far-right “pro-life” groups who either do not understand or choose not to acknowledge that less birth control coverage will predictably lead to more abortions.  But it won’t save much money.  The problem with getting rid of almost any single specific category of benefit—especially ones large enough to make an appreciable dent in premiums—is that the community of people who need that specific benefit are likely to notice that you are the one who did this to them.  You are likely to create concentrated, angry losers and diffuse, unknowing winners—which any political scientist will tell you is a dangerous move.  You can fuzz this up with federalism—that is, make it appear that the states, rather than the Republicans in Washington, are the ones cutting benefits—but at best this just shifts anger toward Republicans in state government.

E. Privatize Medicare or Leave it Be?  This one might seem to be coming out of right field, since Medicare long predates Obamacare.  But the two are not completely separate; Obamacare contained some important reforms and improvements to Medicare (for instance, it got rid of the prescription drug “donut hole”).  Paul Ryan has long signaled his intention to privatize Medicare, phasing out the current program and moving to a privatized system of premium support, meaning public subsidies for individuals to go buy insurance from insurance companies—a system that oddly very much resembles the Obamacare exchanges Republicans now detest.  In fact, Republicans have voted for this privatization/phaseout as part of the House budget for several years running; Ryan recently suggested it should be “part of our plan to replace Obamacare.” Obviously Republicans will try to style this as “saving” Medicare.  However, the AARP and a whole lot of elderly voters will probably not buy this, as they have not in the past.  Trump will have to decide if he would like to anger another huge block of his own voters.

F. Now or later (or maybe never)?  The timing question.  Repeal and replace now, so that voters will actually see the consequences before the next election?  Likely disastrous.  But kicking the can down the road can also be hazardous.  Your own side will get restless; demand will grow for interim tweaks that might undercut the “repeal” itself; and at some point Congress starts to looks like it can’t do much if it can’t execute on such a top priority.  Come fall 2018, blaming Obama because a fully Republican Congress and a Trump administration couldn’t manage to get one of their first priorities out the door is not the strongest possible political position.

But, weirdly, it might be the best of a bunch of bad political alternatives!  In that case, Obamacare will stumble onward in a kind of zombie state, denounced by the new President and by Republican majorities in both houses of Congress, likely suffering from an increasing overhang of deferred maintenance from a hostile department of HHS—and yet at the same time, unkillable, perhaps for years, because opponents dead set on repeal cannot locate any plausible silver bullet replacement.

I’m not offering a prediction that this is what will happen.  But I think it is a real possibility.  The “do nothing” option makes no political sense, but all of the options here are crazy in terms of politics, policy, or both.  The underlying problem is that when you’ve sold your voters a narrative built on a complex array of falsehoods about what a disaster Obamacare is, it’s hard to then turn around and help them face the reality that it’s going to be hard, maybe impossible, for them to do better.

Next to “do nothing,” we have what I’d call the “do-as-little-harm-as-possible” scenario.  I don’t think this scenario is likely to happen, but if I were a Republican health policy strategist I’d be doing my best to game out any method by which the party could plausibly make it happen:  A. “Repeal” Obamacare; yes.  Replace it with something similar, rebranded perhaps as Trumpcare.  B. Keep the Medicaid expansion (just call that part “Medicaid,” not “Obamacare”).  C. Keep the Pre-Existing Conditions Ban AND the individual mandate, but take a page from the Supreme Court and repeal the language actually “mandating” that Americans buy health insurance.  This repeal is what you can cite to support the idea that you repealed Obamacare.  Keep the tax penalty in place, or if you really want to fuzz it up, rebrand the tax penalty as a tax credit for those who do buy insurance, instead of a penalty for those who don’t.  They’re functionally the same anyway.  So, this way, no more mandate talk, no more penalty talk, but keep the substance basically the same.  D. Don’t mess too much with benefits in any high-salience way that could cause a wide backlash.  E. For heaven’s sake, leave Medicare alone.  F. Slow-walk even these modest changes.  That way Obama can be blamed as much as possible for the parts of the system people dislike.  You can tack onto this some of those barely-relevant pre-ACA talking points we are still hearing so much about from Trump and others.  For instance, personal health savings accounts are fine (this is about shifting some costs for routine stuff from insurance to individuals).  Buying insurance across state lines is a bit dicier; this erodes state regulators’ power and might devolve into a race-to-the-bottom scenario where we’ll all go buy insurance from national insurance companies registered in the least-regulated state, kind of like all the corporations incorporate in Delaware.  But how big of a deal this is depends on just how deregulated the least-regulated state is allowed to get; if it remains pretty regulated, this could be ok.  Meanwhile I didn’t even mention it above but you can certainly keep the provision that says kids stay on their parents’ insurance until 26, which is one of the most popular components of Obamacare for middle-class households and is relatively cheap.  Easy.  So that was the do-as-little-harm-as-possible scenario.  The only problem is the political monster that the long-running Republican assault on Obamacare has unleashed.

At the other end of the spectrum, there is the “hard Brexit” of Obamacare repeals: straight up repeal, with the “replace” part limited to those tired old pre-ACA talking points—buying insurance across state lines, reviving “high risk pools,” health savings accounts, and that’s about it.  This is very near to the maximum-harm scenario.  I think it would certainly merit the term “health insurance apocalypse.”  Millions of Americans will lose their insurance; some will be unable to treat their medical conditions; and some will die.  Hospitals will be swamped with a substantially larger number of uninsured patients.  I am confident that Trump does not go in preferring this scenario.  But here’s the scary part: I’m not confident that he has enough control over the political logic his victory has unleashed to prevent it.  Come January, we may be a nation ruled by an insurgent opposition party that is internally and externally constrained to behave as though its own false propaganda were true.  There’s no way to sugarcoat that—it’s just bad.



* Back of envelope methodology: I guesstimate a turnout of 45% of poor people (I have not yet seen a good estimate of this for 2016).  I figure a Trump vote share of 35%, since an exit poll number for a group including these people and somewhat less poor people as well was 41%.  443k + 454k + 379k * 45% * 35% = about 200k actual votes for Trump in these three states from people who currently get their health insurance from the Obamacare Medicaid expansion.

** It is actually something of an epistemic challenge to estimate how popular or unpopular Obamacare is, in whole or in part, because the answers people give pollsters are so deeply linked with partisanship.  For instance, for some time the Affordable Care Act has been more popular than "Obamacare."  Presumably a "Trumpcare" rebrand would make the partisan skew less intense, but it is hard to predict the net effect: some more Democrats would find things to grumble about, while some more Republicans would find things to like.  My hunch is that the net effect on approval of both the law as a whole and pieces like the individual mandate would be net positive but that is just a hunch.
Posted 12:26 PM by Joseph Fishkin [link]