Trump’s sabotage of the healthcare system could backfire

Since the U.S. Senate failed to pass the Republican-only Affordable Care Act (ACA) repeal bill, President Trump stepped up his not-so-veiled threats to stop certain of the law’s payments inaccurately labeled a bailout. While citing legal concerns, the President seems as interested in making his claim that ObamaCare is failing a self-fulfilling prophesy. Additionally, he suggests that this implosion will force the Senate to pass a partisan repeal-and-replace bill.

However, stopping these ACA payments could have the opposite effect on both fronts.

{mosads}To explain, the ACA requires Health Insurance Marketplace insurers to provide low-income enrollees with cost sharing reductions. These reductions lower deductibles and copays to ensure Americans on a limited budget can afford to fill prescriptions or see a doctor. Government payments for these cost sharing reductions are passed through health insurers to healthcare providers who use these funds to lower their bills for eligible patients.

A dispute arose several years ago over whether the ACA provides funding for these payments or whether Congress needs to do so. Despite this legal challenge, the current administration has made these monthly payments for the past seven months.  

Stopping cost sharing reduction payments, as foreshadowed by the Trump administration, would have three consequences.

First, insurers, which must continue to lower cost sharing amounts and pay providers for services rendered, would incur financial losses for doing so. In 2016, these payments totaled $7 billion.

Second, some insurers like Anthem, which is exiting the ObamaCare exchange in Nevada due to these losses, could potentially leave some consumers with no health plan options.

Third, insurers that stay in the Marketplace would dramatically raise their future premiums to fill the gap caused by these losing these payments. Independent experts agree that this action would increase the most common Marketplace premiums by nearly 20 percent.

Returning to the President’s objectives, would these negative consequences be blamed on ObamaCare?  Unlikely.

Data and analysis continue to show improvements in the Marketplaces. Insurance company profits are up and projected premiums are down — putting aside the Trump administration’s destabilization.

Moreover, by claiming this action as a choice, President Trump owns its consequence. A Kaiser Family Foundation survey found nearly two-thirds of people will blame Republicans and President Trump for any future problems with healthcare. As one insurance consultant put it, “The insurance industry should tattoo this on Trump’s forehead.”

And, will President Trump’s shock to the system reverse opposition to the Senate Republican ACA repeal bills?  Also unlikely.

Short-term premium increases caused by canceling cost sharing payments are roughly the same as those caused by the bills Republicans already rejected. Moreover, those bills would cap and cut Medicaid and cause at least 22 million Americans to lose their health coverage. Stopping cost sharing reduction payments would have a serious but less dramatic effect than those bills. As such, this action is unlikely to change any votes.

In fact, the opposite seems to be happening. The President’s flirting with sabotage is catalyzing interest in bipartisan action to “repair rather than repeal” the ACA. A bipartisan group of Representatives called the Problem Solvers include funding cost sharing reductions in its outline to improve the healthcare system. And Senators Alexander (R-Tenn.) and Murray (D-Wash.) launched a bipartisan effort to create a “2018 stabilization package” including these payments.

Following this trajectory — and putting the partisan process in the rear-view mirror — may result in bite-sized bills that bridge the partisan divide. A number of common-ground objectives exist, including covering more young people, supporting high-cost patients, and promoting state innovation while protecting coverage, affordability, and benefits. Landing on mutually acceptable combinations of policies is not just possible but probable.

Ironically, it could also achieve another of the President’s objectives: getting a healthcare bill to his desk to sign quickly. But sabotaging the system will neither vindicate the false claims nor revived the failed effort to repeal the ACA. It is time to move on.

Jeanne Lambrew, Former Deputy Assistant to President Obama for Health Policy and currently a Senior Fellow at The Century Foundation.

The views expressed by contributors are their own and not the views of The Hill.