What to make of President Trump’s two actions regarding Obamacare this week?
Here is the perspective of the New York Times.
“President Trump’s decision to cut off critical payments to health insurance companies…could cause chaos in insurance markets, sending insurers fleeing from the Affordable Care Act’s marketplaces, raising the federal government’s costs and pricing out some consumers.
It came just hours after he signed an executive order that also undermined the health law by encouraging the development of lower-cost insurance policies not subject to the Affordable Care Act’s rigorous coverage standards.”
Fairly apocalyptic stuff.
But it is also a narrative that emphasizes effects, without referencing the original causes, which is at best half the story, and at worst a false understanding of the actions.
The Times is right that POTUS’ actions could cause disruption in the Obamacare insurance exchanges. But what the “Grey Lady” does not bother to state is that in ending subsidy payments to insurance companies, President Trump is actually following the Will of Congress in implementing Obamacare. The “critical payments” that the Times cites are actually illegal federal subsidies, begun under the Obama administration, to an industry that Democrats regularly demonize as a wellspring of greed and evil.
Note, these are not “undocumented subsidies,” they are illegal financial transfers from the government to insurance companies. That analysis doesn’t come from Breitbart, it comes from the US Constitution, and is supported by a decision by a federal judge and the US Court of Appeals.
Under the Constitution, Article I, Congress has sole responsibility for appropriating funds and directing the purposes for which those funds will be spent. It is illegal for the Executive branch to create an obligation to spend funds that were not specifically appropriated. (Anti-Deficiency Act).
However, in 2014, that is exactly what the Obama administration did.
Section 1402 of the horrendously misnamed “Affordable Care Act” authorizes the Secretary of HHS to reimburse insurers who offered reduced priced health insurance plans for those Americans who earn between 100-400% over the poverty line, on a dollar-for-dollar basis. The provision creates an obligation for taxpayers to keep insurance companies whole for offering actuarially unsound (money-losing) policies to lower-income Americans.
While the provision was authorized in the ACA in 2010, Congress never appropriated money for this provision, in part as it would rightly be seen as a taxpayer bailout/giveaway to the insurance industry, three years after Congress bailed out the banks after the 2008 panic and onset of the Great Recession. However, the subsidies were integral to the baling wire and bubble gum health insurance structure created by Democrats, which did everything possible to disguise taxes and wealth transfers in the bill.
Faced with a possible implosion of their embryonic health care exchanges, catalyzed by skyrocketing premiums for lower income Americans with subsidies to provider companies, the Obama administration began redirecting money from other accounts to paying insurance companies anyway, in direct violation of congressional intent. Those payments started in 2014, and have continued during the first months of the Trump administration, until the President’s announcement, Thursday.
While the hysterical Left believes that Trump is intentionally catalyzing a crisis to throw Obamacare into chaos, he’s simply following the law. The true culprit here is not Trump, but the architecture of Obamacare itself, which is premised on the belief that selective redistribution of wealth can neutralize actuarial realities of health care cost and demand, and with the hubris to plan for indefinite Democrat control of Congress. The results are plain to see.
From 2013 to 2017, average premiums for individual health insurance plans have doubled, increasing by $2,928 according to the Department of Health and Human Services. During this period, every State using www.healthcare.gov saw individual insurance premiums increase.
Americans are departing the Obamacare exchanges and choosing to pay the law’s penalty instead. 6.7 million Americans chose to pay the Obamacare penalty in 2015 rather than purchase insurance on the exchanges. 37% of penalized households made less than $25,000, and 79% of penalized households made less than $50,000, the very people the architects of Obamacare were targeting.
In 2018, more than 1,500 counties (nearly 50 percent of all counties) are projected to have only one option on their individual insurance exchanges, according to the Centers for Medicare and Medicaid Services.
This means 2.6 million Americans, or nearly 30 percent of exchange participants, will be left without a choice.
This is why President Trump’s second action of the week, an Executive Order to improve access, increase choice and lower costs for healthcare, is such good news. As with all EOs, the goals are more ambitious that the likely results, but the President’s action is a promising step to tangibly incentivize markets to offer products that health insurance customers both want, and can afford.
The EO empowers cabinet heads to consider expanded access to Association Health Plans (AHPs), allowing employers to form pools across state lines, to reduce costs. It also envisions allowing expanded coverage through Short-Term, Limited Duration Insurance (STLDI) policies, which are currently not subject to suffocating Obamacare mandates (making them 1/3rd cheaper than the lowest priced O-care exchange policy), from three months, to 12 months or more. The order also directs the Treasury to look at Health Reimbursement Arrangements (HRAs) – where employers reimburse employees for healthcare related expenses. HRAs are valuable to companies, as funds contributed by employers are not considered taxable income.
Far from undermining Obamacare as the Left screeches, the President’s modest announcement is a limited-purpose life-preserver for Americans, discouraged and angry at Congress’ inability to act, who are drowning in the health insurance morass that is Obamacare.
In the actions taken this week, President Trump is also sending a message.
The Left, which has been jubilant on the verge of smug over Republican failure to repeal Obamacare, has come to believe that it was in the driver’s seat on health care, in a position to dictate to the President and the GOP, with existing O-care as a baseline. Now, by following the law, the President has removed one of the key pillars of O-care.
The problem can be fixed rapidly of course, if Congress votes to appropriate the payments. But that will not happen without extensive concessions from the Democrats. Senators Lamar Alexander and Patty Murray are working on a bill the tackles exactly those two elements. It may be this that forms the basis of a compromise. However, Democrats seem in no mood for middle ground.
So who will get blamed?
The Left firmly believes that Trump and Republicans will suffer catastrophic consequences at the polls in the midterms because of these actions. But it might be too soon to draw concrete conclusions.
Do Democrats really want to stand up for subsidies to insurance companies? If the current ACA coverage has vaporized choice, is it really all that bad to offer alternatives?
In his commentary yesterday, the President firmly put himself on the side of consumers over Big Insurance, blamed Democrats for the suffering inflicted on Americans by the Obamacare quagmire for refusing to even broach cooperation on healthcare on any terms but their own, and put out an olive branch to work together.
Trump being reasonable and bipartisan to make health care affordable for the average American?
Democrats should be careful of over playing their hand.