President Trump likely surprised many supporters when he told Bill O’Reilly in their Super Bowl interview that formulating a plan to replace the Affordable Care Act was “very complicated” and might not be finalized “until sometime into next year.”
That sounded very different than during the campaign, when Trump insisted he would quickly replace Obamacare with “something terrific.” Instead, Trump and congressional Republicans are discovering why health reform eluded every president until Barack Obama narrowly muscled through the ACA. The American medical system is an enormously complex mechanism deeply susceptible to the law of unintended consequences. Changes that benefit one group almost always hurt another. Every cure seems to seed a new disease.
Obamacare has produced an imperfect record. But Republicans are plainly struggling to develop a more palatable replacement. The core problem Republicans face, as I’ve written before, is that their alternatives lower costs on younger and healthier people, many of whom vote Democratic, while raising costs and increasing risk for older and less affluent people with greater health needs—most of whom vote Republican.
That’s partly because the ACA has radically reduced the uninsured rate for the blue-collar whites central to Trump’s electoral coalition, from 20 percent to 12 percent. Even more important, the ACA reforms that reshaped the individual insurance market systematically encouraged the pooling of risk: The law asked the young and healthy to pay more so that those who are older and sicker could pay less. Under the ACA, young people are also paying more now to reduce their own costs when they are older.
Conservatives view the many ACA provisions that promote risk sharing—from the mandate on individuals to buy coverage to limits on how much insurers can vary premiums based on age—as forms of government coercion that raise prices. In response, the principal Republican alternatives would all unravel that risk sharing. Many younger, healthier people might gain in that process. But even some conservative analysts agree the big losers would be older, working-age people not yet eligible for Medicare. That age group is predominantly white and now solidly Republican. Whites older than 45 provided most of Trump’s votes, and almost three-fifths of House Republicans represent districts where the median age exceeds the national average.
Each of the Republican plans shift costs from young to old first by repealing the ACA’s individual mandate. The mandate, though widely disliked, underpins the law’s more popular requirement that insurers sell coverage to all consumers at comparable prices, regardless of prior health conditions. Without the mandate, people could wait until they are ill to buy coverage, knowing that insurers would have to sell to them. That would produce unsustainable losses for insurers. Only by requiring people to buy insurance when they are healthy can the law guarantee it will be available when they are sick. Through the mandate, the young stitch the safety net for the old.
To maintain the requirement on insurers to sell, while eliminating the mandate on individuals to buy, the leading GOP plans instead create a “continuous coverage” rule. The rule says insurers must sell, at comparable prices, to anyone who has maintained insurance without a break in coverage, regardless of their health status. By advantaging patients who maintain coverage, the rule is intended to incentivize people to purchase insurance without the mandate’s absolute requirement.
The problem is that the Republican plans eliminate the ACA’s requirement that all insurance policies provide robust minimum benefits like hospitalization and maternity care. Under a continuous-coverage system, that means healthy people could buy inexpensive skeleton plans and only shift to more inclusive coverage when they get sick, knowing that insurers must sell it to them. Christine Eibner, a senior Rand Corporation economist, said that scenario may prevent insurers from offering comprehensive plans to anyone on the individual market, because the only people buying them would be those with greater health needs. “You have a significant risk that this [entire] insurance market becomes bare bones,” she said.
That risk is compounded by another key GOP proposal: allowing any insurance policy approved in one state to be sold in any state. The ACA already allows interstate sale when all the affected states agree. But no insurer or state has pursued such cross-border sales, largely because out-of-state companies can’t easily compete with local insurers in building an affordable network of doctors and hospitals.
By eliminating minimum benefit requirements, though, the GOP proposals change the equation. The GOP plans would allow an insurer from a lightly regulated state to offer a low-benefit, low-cost plan that peels away younger and healthier consumers in states that require more complete coverage. If only those with greater health needs were left to buy the comprehensive coverage in more regulated states, medical costs would skyrocket—again raising the risk that no insurer would even sell such comprehensive coverage.
Health-savings accounts, another GOP mainstay, would further unravel risk sharing. Those tax-free accounts, which consumers can use to pay medical costs directly, appeal most to healthy people with fewer bills. If healthy people abandoned comprehensive insurance for such accounts, the families with greater needs left behind would again face rising costs and diminished availability of adequate coverage. GOP proposals to allow greater age variation in premium rates push in the same direction.
Reflecting the parties’ larger philosophical divide, the Republican plans prize choice and autonomy while the ACA stresses solidarity. But the practical effect of the GOP alternatives is to advantage the young and healthy over the old and sick. That’s an uncomfortable equation for a Republican Party now preponderantly reliant on the votes of older whites. In health reform, the toughest challenge for Republicans may be upholding the Hippocratic oath—first, do no harm—for their own voters.
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