Trumpcare is dead. But is Obamacare safe?

Trumpcare Is Dead. But Is Obamacare Safe?

Trumpcare Is Dead. But Is Obamacare Safe?

Moneybox
A blog about business and economics.
July 18 2017 6:51 PM

Trumpcare Is Dead. But Is Obamacare Safe?

USPOLITICSTRUMPHEALTH-CARE
Trump doing Alec Baldwin doing Trump.

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Now that the Republican effort to repeal Obamacare appears to have crashed, you’re probably wondering whether the health law is finally safe for good. After all, conservatives have spent the past seven years hunting it like a pack of would-be Captain Ahabs, only to find themselves swimming amid the political wreckage of their efforts. The GOP couldn't possibly want any more of this punishment, could it?

Jordan Weissmann Jordan Weissmann

Jordan Weissmann is Slate’s senior business and economics correspondent.

Well, Donald Trump might.

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On Tuesday, the president reiterated his opinion that Republicans should allow Obamacare to collapse and try to pin the blame on Democrats. “Let Obamacare fail,” he said. "It’ll be a lot easier, and I think we’re probably in that position where we’ll just let Obamacare fail. We’re not going to own it. I’m not going to own it. I can tell you the Republicans are not going to own it.”

When Trump says he's ready to “let Obamacare fail,” the man may really mean that he's getting ready to smother it. Our president has spent months not-so-subtly sabotaging the law's insurance exchanges by publicly suggesting he might not pay crucial subsidies or fully enforce the individual mandate. The uncertainty has already taken a toll: Worried insurers are asking for yet another round of large premium increases that could leave millions of Americans paying more for their coverage. But if Trump finally followed through on some of his threats, he still might be able to send the market into a violent collapse.

As always, the gravest threat is that Trump will finally cut off the cost-sharing reduction payments—subisidies that insurers are supposed to receive under Obamacare in return for curbing out-of-pocket expenses for low-income customers. Some insurers, such as Blue Cross Blue Shield of North Carolina, have already raised their premiums in anticipation that the funding, which is worth billions to the industry, could dry up. But others haven't. And if Trump, who must decide whether to continue appealing a lawsuit brought by House Republicans aimed at stopping the payments, decides to simply pull the plug, many carriers may finally bail on the market rather than continue to absorb big losses. “If insurers perceived that ending the cost sharing subsidy payments was part of an overall strategy of undermining the marketplaces, then they would see little reason to stick around,” the Kaiser Family Foundation's Larry Levitt told me.

Of course, that's the worst-case scenario. There are other, more subtle ways the exchanges could run into trouble. Again, many insurers have already been asking to raise their premiums out of concern that Trump might relax the individual mandate's requirement that all Americans buy insurance coverage, as well as fears about the CSRs. Those hikes could convince more Americans to skip buying insurance, further weakening the markets—especially if Trump loosens up the mandate. It seems unlikely that we'd see a nationwide death spiral, where high prices drive out a critical mass of customers and insurers decide to jump ship. But it's possible that more sparsely populated parts of the country could be left without carriers. Already, 38 counties in three states are at risk of being left with zero coverage options next year. It's a tragic but thankfully small-scale policy failure. Nobody wants to see it grow.

Unlike Trump, some Republicans are talking about taking constructive steps to stabilize Obamacare's insurance exchanges. But it's unclear how many in the party would sign on to such an effort, especially if repeal was no longer an option. Meanwhile, Trump has more power than anybody to determine the future of the Affordable Care Act. He might just keep trying to harpoon it.