The Problems at Spirit Airlines Are So Bad They Threw the Fort Lauderdale Airport Into Chaos
A noisy brawl broke out between airline passengers and police at the Fort Lauderdale-Hollywood International Airport after Spirit Airlines abruptly canceled nine flights on Monday night, stranding hundreds of travelers.
Dramatic cell phone video of the confrontation, captured by several eyewitnesses and posted to Twitter, shows an angry crowd of reportedly 500 passengers screaming at and scuffling with about 15 uniformed police officers and airline employees at the front ticket counter. According to CBS Miami, the dispute broke out after the airline’s unexpected cancelations left passengers waiting at their gates—and others already seated on their plane—in the lurch. Among them was Spirit Flight 710, bound for LaGuardia. One passenger, 18-year-old Brionka Halbert, told NBC News that airport attendants informed passengers that they would have 28 minutes to board or the flight would be canceled. But 20 minutes later Spirit canceled the flight and directed passengers en masse to the front desk.
If Trumpcare Becomes Law, Living in a Blue State Won’t Save You
House Republicans only managed to pass their Obamacare repeal bill last week after negotiating a compromise that would allow party moderates to pretend that they weren't stripping popular consumer protections from their own constituents. The deal, known as the MacArthur amendment, lets states decide whether to drop many of the Affordable Care Act's key insurance market regulations—including rules that require carriers to cover certain essential medical benefits or prevent them from charging customers higher premiums because of their bad health.
This was meant to bridge the positions of hard-line conservatives, who wanted to scrap virtually all of Obamacare's major market rules, and members from blue states who worried about the backlash they'd get for killing off safeguards that voters broadly like. Mississippi and Arizona could apply for waivers to opt out. Illinois and New York could leave well enough alone.
Or, to put it another way, Republicans have promised that if you like your consumer protections, you can keep them.
But while technically true, this is pretty much an empty promise. As Kaiser Health News points out in a useful piece this week, there are plenty of reasons to think that if the American Health Care Act (or something similar) ever becomes law, legislators in liberal redoubts like New York and California will eventually have to weaken or abandon the consumer protections at the heart of Obamacare in order to keep insurance premiums from becoming unaffordable, especially for lower-income families.
The problem is that Obamacare's market rules likely won't work well without its coverage subsidies, which Republicans would slash for many families. Requiring insurers to cover a wide array of basic services makes insurance more expensive, and forcing them to charge sick customers the same rates as everybody else drives up the cost for healthier men and women. The ACA makes up for all of this (or tries to, anyway) by offering tax credits that are more generous for people with lower incomes or who live in places where coverage tends to be more expensive. But the GOP's bill offers much skimpier financial support to the young and relatively poor, likely pricing them out of Obamacare-style plans.
Making matters worse, the House plan would kill off the individual mandate's requirement that all Americans buy health insurance, which could lead more young and healthy men and women to go without. That would likely drive up prices for remaining customers, also making it hard for states to justify keeping Obamacare's regulations in place.
Some large states like New York or California could theoretically offer their own subsidies or pass a state-level individual mandate, just as Massachusetts did under Romneycare. But state budgets are already tight, and legislators will already have to grapple with the cuts to Medicaid that the GOP is planning. Will pols in Albany or Sacramento be willing to raise taxes to preserve the Obamacare status quo? I wouldn't necessarily count on it. And if not, their only other choice may be to apply for a waiver.
The American Health Care Act passed the House with the help of New York, New Jersey, and California legislators who will claim they protected their own voters' interests. It is a completely dishonest premise.
Uber’s Year of Completely Avoidable Disasters Now Includes an Apparent Federal Criminal Investigation
The U.S. Department of Justice has apparently opened a criminal investigation into Uber following reports that the ride-hailing company used secret technology to hide its vehicles from authorities in certain cities.
The DOJ probe, first reported by Reuters on Thursday, follows a March New York Times report that revealed the existence of the offending software, referred to within the company as “Grayball.” According to the Times, Grayball “uses data collected from the Uber app and other techniques to identify and circumvent officials who were trying to clamp down on the ride-hailing service” in cities and countries it wasn’t yet licensed to operate in or from which it had been explicitly banned. Those places included Boston, Paris, Las Vegas, Australia, China, and South Korea. According to Reuters, Grayball “helped Uber tag some users,” including law enforcement agents and city regulators, “so that they saw a different version of its standard app.” Uber acknowledged Grayball’s existence and prohibited its use shortly after the Times published its account.
After All That, Paul Ryan Got the Cruel, Radical Health Reform Bill He’s Always Wanted
If there is a single comforting thing about the American Health Care Act, which House Republicans passed Wednesday after a bewildering week of negotiations, it’s the possibility that the bill may never have been meant to become law. In order to keep the gears of Capitol Hill turning, the generous interpretation goes, House Speaker Paul Ryan had to move some sort of Obamacare replacement up to the Senate, where it is sure to be rewritten. At least a couple of rank-and-file members have suggested as much while trying to explain their own votes. “This thing is going to go to the United States Senate. It’s going to change in my view,” Oklahoma Rep. Tom Cole told NPR. “At some point you just have to move, and we think this is it. This will create some momentum.”
The Senate GOP seems to agree. The Washington Examiner reports that the chamber's Republicans aren't planning to vote on the House bill. Instead, they've created a working group to craft from scratch their own legislation, which may incorporate some of the AHCA. "It was kind of a moot issue if the House wasn't going to be able to pass a bill and now they have and I'm proud of them for doing it," Senate Majority Whip John Cornyn told the Examiner. "Now it's up to us to pass a bill 51 senators can agree to." As of this moment there's no deadline.
It's relieving to think that the AHCA was never truly intended to land on President Trump's desk, because every aspect of the bill is repugnant, from the farcical process through which it was crafted to its cruel and sometimes incoherent mix of policies. The president appears to have no idea what's actually in the legislation he celebrated this afternoon in the White House Rose Garden; just this week, he told Bloomberg it would let Americans buy insurance across state lines, which, no, it would not. Meanwhile, House Republicans can't say what it might do, because the Congressional Budget Office never got a chance to score their final bill. We do know that their original legislation would have financed roughly $600 billion in tax cuts—overwhelmingly targeted at the wealthy—with almost $1 trillion in cuts to health programs, and eventually left 24 million additional Americans uninsured. It was, and still largely is, a tax giveaway to the rich masquerading as health policy.
So the Potemkin bill theory is pretty appealing. How many people would actually want a bill like this to become law?
Well, Paul Ryan, for one. Last summer, the speaker and his fellow House leaders released their own outline of an ideal Obamacare replacement as part of their Better Way series of white papers. And as it turns out, the monstrosity that just passed the House isn’t all that different from what they sketched out back then.
Consider: The Better Way plan was designed to bring down the cost of insurance for younger, healthier Americans by letting insurers charge more to the sick and old, while offering Americans universal tax credits to buy coverage. (I’m sure there’s a Bible verse that justifies this approach to health policy, somewhere). It would have eliminated the Affordable Care Act’s individual mandate to buy insurance and its market regulations, such as the rules that required plans to cover certain essential medical services and barred insurers from charging more to patients with pre-existing conditions. It offered two bits of consolation to the sick: First, they would be protected from discrimination as long as they maintained their coverage (unfortunately, Americans end up dropping their insurance all the time). Second, the government would fund high-risk pools of subsidized insurance to cover those otherwise shut out of the individual market (unfortunately, high-risk pools have a terrible track record, as they tend to be underfunded).
Meanwhile, Ryan would have put a cap on Medicaid spending and slowly throttled the program, while slashing taxes.
And what does the American Health Care Act do?
Well, it lets insurers charge older customers more relative to the young than they can currently, while offering not-quite-universal, age-based tax credits to help Americans buy coverage (poorer Americans will get less help now, while some higher-income Americans will get more). It lets states opt out of the Affordable Care Act’s individual mandate to buy insurance and its market regulations regarding essential benefits and pre-existing conditions. In those states, it offers protection to sick people if they can maintain continuous coverage or tosses them into a (probably) underfunded high-risk pool. It caps Medicaid while slashing its funding by more than $800 billion over a decade. And it torches a bunch of taxes. Unlike the Better Way outline, it doesn’t let Americans buy coverage across state lines—a concession to letting states pick their regulatory schemes. But that’s relatively small potatoes
What’s remarkable is that it took the intransigence of the Freedom Caucus, which scuttled the first version of the AHCA, for Ryan to more or less get the House to pass his ideal bill. The original AHCA contained a number of compromises meant to win over moderates, which left it looking like a more dysfunctional version of Obamacare. Those conciliations mostly fell by the wayside during negotiations. Of course, rushing the bill to passage left it laden with bizarre inconsistencies and set the stage for some awful unintended consequences. Parts of it encourage Americans to keep continuous coverage, while others do the opposite. Its tax credits are structured so that, in states that waive Obamacare's market regulations, insurers might be able to scam money from the government by offering customers “free” coverage that doesn't really cover anything. Because of how its rules interact with a previous Obama-era regulation, the law may allow employers to offer worse coverage than before. The list goes on. But the outcome is ultimately a fairly pure expression of Ryan’s extreme ideological preferences.
Unlike Ryan, who couches his policy goals in gauzy language about individual choice and improving “access to care,” the Freedom Caucus members have been pleasingly blunt and upfront about their ultimate aim of making cancer survivors and heart patients pay more for their care. “The fundamental idea is that marginally sick people would pay the risk associated with their coverage,” Freedom Caucus Chairman Mark Meadows said. Alabama Rep. Mo Brooks, perhaps the most horrifyingly forthright man in Washington, said he hoped to to reduce costs for people “who lead good lives”—which presumably does not include people with childhood leukemia or who have rheumatoid arthritis.
Even if the American Health Care Act disappears into the Senate mists, I fear it could still do damage. The American Health Care Act has set such a low bar for compassion and competence that the media and public may give Senate Republicans credit for writing an even marginally better bill. Senators from Ohio or West Virginia could wring credit from cable-news pundits by negotiating a compromise that cuts Medicaid by $400 billion instead of $800 billion or by creating a subsidy structure that prioritizes the poor but still cuts their aid. If the House's bill becomes an anchor on the public’s expectations and sets the stage for something just slightly less grotesque to pass, that would be almost as much of a tragedy as this thing actually getting signed. And it would all be thanks to Paul Ryan, who stumbled his way toward the cold, cruel bill he’s always desired.
The GOP Says AHCA Protects People With Pre-Existing Conditions. This Analysis Says It Falls Perilously Short.
House Republicans might not be waiting around for the Congressional Budget Office to tell them what the latest version of the American Health Care Act will actually do, but that hasn't stopped outside experts from trying to illustrate what an unruly mess the legislation will be. (Update, 2:35 p.m.: The bill passed the House on a 217–213 vote.) The health industry consultants at Avalere estimated how many Americans with pre-existing conditions could be covered by the $130 billion GOP lawmakers initially set aside to potentially fund high-risk pools, which would provide subsidized coverage for sick people priced out of the normal private market. The answer: about 600,000 Americans, out of 2.2 million people currently in the individual market with pre-existing conditions. Here's the key bit:
New research from Avalere finds that the funding ($23 billion) specifically allocated in the American Health Care Act (AHCA) to assist individuals with pre-existing conditions will only cover approximately 110,000 individuals with a pre-existing chronic condition. If states were to allocate all the other funds in the Patient and State Stability Fund ($100 billion) toward providing insurance to people with pre-existing conditions, in addition to the funding described above (total of $123 billion), 600,000 individuals with pre-existing chronic conditions could be covered.
Approximately 2.2 million enrollees in the individual market today have some form of pre-existing chronic condition.
Some might object that not every state will need to establish high-risk pools, because liberal lawmakers in places like California and New York aren't likely to waive Obamacare's protections for pre-existing conditions. But blue states will still get their shares of the $100 billion patient stability fund, which provides the bulk of potential high-risk pool funding (it can be used for other purposes as well, like keeping the wider individual market steady through reinsurance and such). That means conservative states will still likely face big funding shortfalls in their high-risk pools.
But hey, that extra $8 billion from the Upton amendment should fix everything, right?
The Republican Health Care Bill Might Ruin Employer-Based Health Coverage, Too
You knew that the American Health Care Act would turn the individual insurance market back into a bombed-out hellscape for the sick and old. But did you realize it could also ruin employer-based health insurance, at least for people whose companies worry more about cutting costs than attracting top-notch talent?
So reports the Wall Street Journal. The House GOP's legislation—which seems likely to pass Wednesday (Update, 2:25 p.m.: The bill passed on a 217–213 vote)—would allow states to opt out from many of Obamacare's insurance market regulations, such as those requiring carriers to cover a set of essential services or banning lifetime and annual caps on coverage. But even if states like New York and California don't waive those rules, businesses operating in them effectively could for their own workers. That's because the Obama administration released guidance in 2011 saying that employers could choose which state's law they wanted to operate under when it came to required benefits packages. At the time, it didn't matter much, since the Affordable Care Act created a single set of national standards. But now, per the WSJ:
Under the House bill, large employers could choose the benefit requirements from any state—including those that are allowed to lower their benchmarks under a waiver, health analysts said. By choosing a waiver state, employers looking to lower their costs could impose lifetime limits and eliminate the out-of-pocket cost cap from their plans under the GOP legislation.
The Journal cautions that some companies may be hesitant to slash their employees' benefits, since they use them to recruit talent, and notes that most big employers didn't impose coverage caps prior to Obamacare. “Even if self-insured health plans are no longer banned from imposing annual or lifetime limits, they’re unlikely to attempt to squeeze the toothpaste back into the tube,” one industry expert told the paper. “The benefits of reimposing limits are questionable.”
But if you haven't noticed, companies are doing everything in their power these days to shave health care costs (how are you doing on your employee wellness goals?). It seems perfectly reasonable to worry that, without the ACA's protections, employer-based coverage will revert to something worse than the old status quo.
Ideally, we wouldn't be talking about this for the first time just hours before a congressional vote. But public debate is apparently only for Democrats, these days.
How Can We Make College Affordable? Some States Have It Down Better Than Others.
The crisis of college affordability is in the air. The agony of the 2017 college admissions cycle just came to an end; many students and families just spent a harrowing weekend figuring out how they will afford the bills. And New York State’s recently passed Excelsior Scholarship, which provides free in-state tuition at public universities to those with family incomes under $125,000, has received considerable attention and criticism. It’s an imperfect plan because it doesn’t help students with costs beyond tuition—but what would a perfect plan to reduce the cost of college even look like? Good models are out there that can help—with a little work.
I’ll start out with a simple premise—those with very low incomes should pay low amounts, those with high incomes should pay more, and those in between should pay according to their greater ability to pay. It seems reasonable to me that all pricing systems should be held to that standard. It’s called equity. Yet this simple premise isn’t always satisfied.
Let’s start with the University of Virginia. UVA is said to “meet full need” of its students. For Virginia residents, the school lists a price of $30,000 including room and board to attend, but discounts that amount based on its determination of the amount a student’s family can “afford,” which comes from a formula created by the College Board. The school’s approach is consistent with this standard (recognizing that calculating how much a family can afford is not an exact science). Other public institutions, like the University of North Carolina, the University of Michigan, and the College of William and Mary, use a similar approach.
In contrast to UVA, Ohio State University lists a price of $26,000. It does not meet full need. Instead, it has a series of ad-hoc programs that offer set dollar amounts to students based on their financial situation (and SAT Scores, in some cases). They do not abide by a determination of what a family can afford. Most public universities use similar systems; it is inconsistent with the standard I laid out.
To demonstrate the difference, look at this chart showing the relationship between price and family income at the two schools. For these calculations, I used Ohio State’s net price calculator, making several plausible assumptions along the way (family of four, married parents, one child in college, federal income taxes paid equal to the average of those at that income level, SAT score of 1300, and so on.) It was not a simple process. For UVA, I used MyinTuition, a simple cost calculator I created for it and 14 other schools. MyinTuition is designed to simply estimate college costs after factoring in financial aid, based on family income, home value, mortgage balance, cash in the bank, and retirement, and nonretirement savings. It is based on the principle that greater price transparency is a virtue in and of itself—and may point the way toward a better system of communicating to students the availability of financial aid and whether they can afford college.
At UVA, families with incomes of $25,000 are expected to come up with around $6,100. Of this amount, the student is expected to earn $1,600 from a summer job and take out a loan of $4,500—the parents aren’t expected to pay anything. The same student at Ohio State is expected to pay more than twice this amount: $13,500. That family would need to come up with an additional $7,400, a very difficult hurdle for them.
As incomes rise, costs rise at both institutions, albeit somewhat more steeply at UVA and to a higher level. But students at UVA continue to pay less than at Ohio State until around $75,000 in family income. At both institutions, families don’t have to pay maximum tuition until they are earning $100,000. And on that score, it is useful to recognize that the maximum tuition at both institutions is far below what states spend on educating, housing, and feeding their students. That amount surpasses $50,000 at these two schools. Even at full price, students are receiving a sizable subsidy.
One critical difference between UVA’s policy of meeting full need and Ohio State’s hodge-podge of grants is the impact of tuition increases. To be extreme, suppose both states increased their list prices by $10,000. Everyone in Ohio would have to pay that increase—the entire line would simply shift up by that amount. In Virginia, only those with incomes above $125,000 would pay the full amount—the upward sloping portion of the line would simply extend to the right.
This chart also shows the impact that free tuition would have in Ohio if it adopted a policy like the Excelsior Plan. Lower-income households would not be helped at all. Mainly those between $75,000 and $125,000 would be helped. That certainly violates principles of equity.
There are downsides to Virginia’s approach, mostly associated with communicating the school’s pricing strategy. The process of applying for financial aid and of forecasting an aid award is a nightmare. If students don’t know what college is going to cost, how can they incorporate it effectively into their decision-making? The work that is left to be done should focus on addressing these problems—simplifying the financial aid system and helping students do a better job of anticipating the true cost of attendance. Clarifying college costs through simple-to-use tools is a first step in that direction, but more work needs to be done.
The free tuition movement signals that there is at least some public support for devoting greater resources towards lowering the cost of college. Those resources would be better spent on a pricing policy that adopts basic principles of equity, instead of a flawed approach that focuses only on tuition. Meeting the full demonstrated need of students needing financial aid would provide more help to those who need it the most.
iPhone Sales Hit a Big Roadblock in China Because of an App That Does Just About Everything
Shares in Apple convulsed earlier this week when the technology behemoth posted lower-than-anticipated iPhone sales in the second quarter. Revenue for Apple’s marquee product is expected to pick up once its newest version, the iPhone 8, debuts in September. But until then, and maybe beyond, there’s something standing in the path of Apple’s ongoing quest for smartphone supremacy. It’s called WeChat, it renders indefensible the high cost of buying an iPhone, and Chinese consumers love it.
Hailed by the Economist as “social media’s future,” WeChat is a messaging app-cum-mobile operating system developed in 2011 by the China-based Tencent Holdings Ltd. As a Chinese product, the app enjoys a home-field advantage (courtesy, in part, of the Chinese government). It also boasts a bazaar of services few competitors can match. As Ben Thompson writes on Stratechery Wednesday, “every aspect of a typical Chinese person’s life, not just online but also offline, is conducted through a single app (and, to the extent other apps are used, they are often games promoted through WeChat).” The app’s perks include cashless and credit-card-free payments made through WeChat Wallet; one-stop shopping for taxis, takeout, tickets, vacations, and even doctor’s visits; a business-oriented chat feature similar to Slack; and a peer-to-peer one similar to WhatsApp. Each user receives a WeChat QR code that can be scanned through a smartphone camera, which has increasingly supplanted business cards as a way to exchange contact information. That makes WeChat something of Frankenstein, a hybrid service cobbling together components from apps like Uber, Slack, Venmo, and WhatsApp, and more. By April 2016, it had rocketed past 700 million monthly active users.
Those numbers present a problem for Apple. The company has long been able to tout the technical quality of its proprietary iOS operating system. But WeChat has become something of a gatekeeper for China’s mobile communications market, the barrier to entry for any smartphone looking to make its mark. Although iPhones support WeChat—indeed, it’s become one of its most popular third-party apps and has even begun to challenge the Apple App Store for supremacy—they do so no better than Google’s Android, the iPhone’s chief rival, which generally runs on cheaper devices. As a result, Chinese consumers have little incentive not to switch to a less expensive option.
That dynamic has taken a real bite out of Apple’s bottom line. As Thompson observed, Apple’s share of the Chinese market has declined precipitously over the past year. The company saw 26 percent of its revenues in the second quarter of 2016 evaporate, and it posted a 14 percent loss this year despite a strong showing in the rest of the Asia Pacific. And while most iPhone users tend to stick with the smartphone as newer versions get released, Apple has found it harder to retain customers and stave off the competition, with only half of iPhone users in 2015 choosing to purchase a new one in 2016.
How worried should Apple be about WeChat cutting into its sales? It depends. The app has failed to gain much purchase outside China, and its GPS features have raised concerns among dissidents that a censorious Chinese government may be watching both its domestic and international users. Nevertheless, Tencent’s brainchild still holds the keys to China’s smartphone market, and Apple has taken notice. As Thompson points out, iOS and Apple’s signature design aesthetic remains a luxury-branded lure for many smartphone users, including in China. As Thompson wrote in 2013, “in China it’s Apple’s brand that is, by far, the biggest allure of the iPhone. Apps are free (piracy is mainstream), larger screens are preferred, and specs and customization move the needle with the mainstream far more than they do in the U.S.”
Nevertheless, WeChat is creating headaches in other ways. Even if Apple successfully courts its legions of users, the app’s soaring popularity has given Chinese competitors including Oppo, Huawei, and Vivo the courage to challenge it. As a result, Apple’s total share of the Chinese smartphone market amounted to less than 10 percent last year. Moreover, WeChat’s virtual stranglehold on messaging and other service apps in China is reportedly making other Silicon Valley firms wary. Facebook’s Messenger has long been a leader, boasting more than 1 billion active users every month. WeChat broke 889 million in April.
Moderate Republicans Just Struck a Really Cynical Deal to Support Trumpcare
Trumpcare II seemed to be spiraling toward its demise on Tuesday, after Rep. Fred Upton announced his opposition to the legislation on the grounds that it didn't do enough to protect Americans with pre-existing conditions. As a former chairman of the House Energy and Commerce Committee, the relatively moderate congressman from Michigan (emphasis on relatively) is considered a key voice on health care issues—in fact, he’s written a number of Obamacare repeal bills himself. If Upton were a no, it would seem unlikely that Republican leaders would be able to find 216 votes for their unloved Frankenlaw.
On Wednesday, however, Trumpcare got a fresh jolt of life. Both Upton and Missouri Rep. Billy Long, a Trump ally who surprised many when he voiced his own opposition on Monday, announced that they now supported the bill thanks to an amendment Upton negotiated that will provide $8 billion over five years to help those with pre-existing health problems afford insurance.
While House leaders have not released any legislative text for the Upton amendment, all signs suggest that it is just the latest in the long line of cynical, nonsensical policy compromises that have shaped Trumpcare—a bill that would ultimately cut about $1 trillion from health spending in order to finance tax cuts for the wealthy. The $8 billion is an essentially insignificant sum of money that would do little to help sick Americans afford coverage, yet could still destabilize the individual insurance market. It's a political fig leaf for nervous Republicans worried about angry constituents, and not much more.
GOP moderates have been balking at Trumpcare because it would allow states to opt out of the rules that currently prevent insurers from discriminating against customers with pre-existing medical conditions. Carriers would not be allowed to deny customers coverage outright based on their health status. But companies could charge sick Americans more if they failed to stay continuously enrolled in a health plan. So, for instance, if someone with a heart condition lost their job and had to go uninsured for a while, they'd risk being completely priced out of the individual market going forward. Trumpcare would require states to create high risk pools of subsidized insurance for the sick before they could obtain an opt-out waiver. But the bill only provides $130 billion for the pools over 10 years, which is probably not enough money to adequately fund them. Years ago, conservative wonks suggested that a national high risk pool would require $15 billion to $20 billion annually to function; the Center for American Progress says it would take another $200 billion on top of what the GOP has offered up.
Into this gap steps Fred Upton. According to Axios, his $8 billion amendment would create “a fund to pay the penalty for not being previously insured for those who get priced out from the market based on health status.” So apparently it's not more money for high risk pools, but rather a separate jar of cash to pay insurance premiums on the individual market.
The first, most obvious problem with this plan is it entails a pitifully small sum of money that would run out quickly. Nobody who thought that $130 billion was insufficient to help people with pre-existing conditions could seriously believe that adding another $8 billion over half a decade would solve the problem. It's an empty gesture, a way for Republicans to claim they aren't just tossing sick people into something ominously called a “high risk pool.”
While it might not help the sick, the Upton amendment could still create some nasty distortions in the insurance market. Again, reports so far suggest that the money would somehow be used to pay the extra premiums insurers charge people with pre-existing conditions who don't stay continuously enrolled in coverage. As Democratic Sen. Ron Wyden quickly pointed out on Twitter, that just invites carriers to charge sky-high prices for the customers, knowing the government will pick up the tab. It would give Aetna a license to fleece taxpayers.
The Upton amendment encourages insurance companies to charge sick people with high premiums because they’ll be bailed out with taxpayer $$— Ron Wyden (@RonWyden) May 3, 2017
Meanwhile, conservative health care writer and Reason editor Peter Suderman suggests the Upton amendment could also discourage people from buying insurance until they get sick, since the government would supposedly have a fund waiting around to pay for the extra cost of their coverage. That would likely keep some healthy Americans out of the individual market—setting insurers up for a destabilizing adverse selection issue.
If the new GOP health amendment helps pay a surcharge for going uninsured, then it will encourage people to wait until sick to buy coverage.— Peter Suderman (@petersuderman) May 3, 2017
Again, we have yet to see any legislative text yet. But at this point, the Upton amendment mostly appears to be a hollow political prop with little policy rationale or chance of doing much good for the vulnerable Americans who could be priced out of health insurance under Trumpcare. The change is useful in only one respect: It shows how little it takes to get some “moderate” Republicans to vote for an absolutely vicious bill.
Donald Trump Still Has No Idea What’s in His Own Health Care Bill
One very important reason that the first Republican effort to repeal and replace Obamacare failed so spectacularly was that President Donald Trump appeared to have no idea what was actually in his party's bill. Lacking any evident command of policy detail, he was unable to negotiate a compromise that would satisfy the various House GOP factions. That may have been an impossible task for any leader, but Trump—who dismissed fundamental issues dividing lawmakers as “little shit”—was entirely unequipped to even truly try.
This week, Republicans leaders are again struggling to pass health care legislation in the House. With the defection of former Energy and Commerce Committee Chair Fred Upton this morning, the effort may well be dead. And while there are of course fundamental, ideological reasons why Republicans are having continued difficulty reaching an agreement, I'm guessing one problem is that the president still has absolutely no clue what's in the legislation.
This was evident at several points during his interview with Bloomberg News published Monday. When a reporter brought up the make-or-break issue of how Americans with pre-existing conditions would be protected under Trumpcare, he muttered the following:
TRUMP: Yeah, we’re having pre-existing conditions. That’s it. Plus, we’re having the pool, we’re doing a lot of things.
And the best thing that is happening with the health care is premiums will come down. We’ll have tremendous competition; you know, we’re getting rid of the border state lines, and we’re going to have tremendous competition.
This is surreal. Having muttered a nonanswer about pre-existing condition protections—the GOP bill would in fact gut them by letting states opt out of Obamacare's rules—Trump suggests that the American Health Care Act will bring down health insurance prices by allowing carriers to sell across state lines. As Bloomerg's Sahil Kapur noted, the legislation does no such thing. It's not part of the bill. In fact, the entire deal hinges on the idea that states will be allowed to pick and choose which Obamacare regulations they want to keep within their borders. That compromise would be fatally undermined by letting people shop for coverage in any part of the country they wanted.
Having demonstrated that he still has no concept of how his own health care bill works, Trump continued emitting garbled noise about protecting Americans with pre-existing conditions. “Well, I want it to be good for sick people, Jen. Well, you know it’s not in its final form right now,” he said. Pressed a bit more, he added: “I’ll be looking into that.”
For what it's worth, Trump may experiencing some of his own doubts about the effects of his legislation. Axios reports Tuesday that, “During a recent phone conversation about the evolving health-reform bill, President Trump asked a simplistic but apparently sincere question: ‘Is what we are going to do going to take care of people?’” The House member he was speaking with apparently said that, yes, the bill would take care of folks.
This is not typically a question a president would have to ask a member of Congress—about a bill, by the way, that’s been on his radar for months. Instead, his own staffers would have looked into the legislation, analyzed it, and briefed him about its likely effects. A particularly ambitious chief executive might even have read parts of the bill himself, or consulted with outside experts about the subject. Trump, instead, is asking a House GOP member a pointless and vague question. What supporter of this bill would ever say: “No, Mr. President, this bill we're actively trying to pass does not take care of people, whatever you mean by that.”
Not only does Trump know nothing, he has no idea how to learn.