The Outlook For Stabilizing Obamacare In 2018 And The President Who Can't Shoot Straight

The Alexander-Murray bipartisan effort to stabilize the Obamacare individual insurance markets will not pass the Congress on its own. 

The only chance it now has is to be added to a must-pass legislative deal, such as the one needed to fund the government by the December 8th deadline in order to avoid a government shutdown.

Also sitting in the queue, and certain to pass at some time, is the Children's Health Insurance Program (CHIP) reauthorization bill. The Congress is currently struggling over the pay-fors for this reauthorization but there is wide bipartisan agreement that it must be funded before the states start running out of money, which will begin in a few weeks. CHIP now covers nine million kids.

Conservative Republicans are adamant that they do not want to pass an “insurance company bailout” bill like Alexander-Murray. Particularly in the House, where Republicans were able to pass a "repeal and replace" bill, these members have already taken a controversial vote to cut Medicaid and insurance subsidy support and after that tough vote don't now want to have to explain why they have backtracked to "bail out" Obamacare with the Alexander-Murray short-term patch bill.
Tuesday, Trump pulled his initial support for the bill. That he would first support it and then abandon it just speaks to how little he understands the health issue and how essentially worthless his presidential leadership is toward getting a solution for Obamacare. This Trump flip-flopping just proves that there is only one place health care gets decided—in the Congress and a very divided Congress at that.

On health care, if leading conservative organizations told Trump to sign a ham sandwich he would do it and declare it, “A Marvelous victory, really a very marvelous victory.” 

If you want a description of a President who can't shoot straight, look at Trump’s citing the stock price gains among the big managed care companies as justification for his killing the cost sharing subsidies (CSRs) for low-income people in the insurance exchanges. 

Hasn’t anyone told Trump that almost all of those big publicly traded health insurers he's been railing against for their big stock price appreciation since Obamacare launched––Aetna, United, Humana, and Anthem–– have bailed, or are in the process of bailing, on all or most of their insurance exchange business and won’t be hurt by his action? It’s the not-for-profits that have largely stayed in the exchanges, not his intended targets!

There is no hope of the Republican caucus in either the House or the Senate advancing anything in the coming months—repeal and replace or a short-term patch––on their own. We saw them exhaust all of their policy ideas over the past four months. They claim they will again try to advance a Graham-Cassidy-like bill focusing on state block grants but until they can reconcile the cuts to Medicaid and the insurance subsidies the conservatives want with the cuts the moderates don’t want, they aren't going to pass anything.

That leaves us with the Democrats. The Dems don’t have a majority in either house. But there are must-pass bills on the table—such as funding the government by December 8th to avoid a shutdown and the reauthorization of CHIP before the states run out of money to continue health insurance for nine million kids. The most likely vehicle for them to exert their leverage will be on the shutdown bill. It will take 60 Senate votes to avert a government shutdown just before the Congressional holiday break (never underestimate an ideologues desire to get his holiday vacation). Look for the Dems to try to take the December 8th funding bill hostage toward getting something like Alexander-Murray. 

Of course, it they are successful, any short-term help for the insurance exchanges will be too late for 2018 since next year's open enrollment is scheduled to end on December 15th.

Gop's Obamacare Tax Scheme Will Create An Insurance Nightmare For The Middle Class

Senate Republicans just announced that the repeal of the individual mandate (in the form of reducing the penalty tax to zero) will be in the Senate Finance Committee's version of tax reform.

The individual mandate has never been successful toward the objective of attracting people to the program. There are much better ways to do that.

But killing the mandate while simultaneously opening up the market to cheaper stripped down alternatives would combine to create unintended consequences the Republicans haven't appeared to comprehend.
Recently, President Trump encouraged his administration to craft regulations that would enable insurance companies to sell short-term medical policies with a duration of 12 months.

These short-term medical policies would not have to comply with the Obamacare benefit mandates. They could exclude people with pre-existing conditions.

Today, buying one of these policies would trigger the individual mandate tax penalty because a person had not purchased qualified coverage.

But, if the individual mandate tax penalty is repealed as part of the Republican tax bill there would be no such penalty to buy one of these policies.

I could easily see the individual health insurance market bifurcated into a sick and healthy pool because of these changes:

• The sickest taking advantage of the guarantee issue protections in the Obamacare compliant market.
• The healthiest buying a succession of these "short-term" 12 month policies while guaranteed to be able to opt back into the Obamacare market when they got sick. In fact, I could see these "short-term" policies sold on a calendar year basis so those prohibited from renewing, because of a recently acquired condition, would be able to conveniently opt into the Obamacare guaranteed insurability market when their short-term coverage expired right in line with the annual open enrollment.

I can envision these "short-term" policies offering a fairly comprehensive medical and hospital benefit set even though they did not cover all of the mandated benefits. These policies could also be much cheaper by excluding things like pregnancy and mental health and substance abuse coverage.

I could easily see these policies costing half of what the Obamacare compliant policies cost.

So, the healthy would have the best of both worlds––cheap and even arguably attractive coverage while still being guaranteed to be able to opt into a much more comprehensive Obamacare policy every January 1st if they got sick.

It's not hard to see what would happen. We would have two risk pools:

• The very expensive Obamacare compliant risk pool with only the very sickest left in it, and
• The very cheap "short-term" policy risk pool with the healthiest people.

And, the unsubsidized cost for those who acquired a pre-existing condition and were forced to opt back into the Obamacare compliant market, would be simply astronomical. Remember, 40% of those in the individual health insurance market make too much to qualify for a premium subsidy.

In other words, this scheme works much better than what we have today––until you get sick. And, everyone ultimately acquires a pre-existing condition.

A health insurance system that works only while you are healthy is not a health insurance system.

Obamacare is a disaster because it only works best for the sickest and those with the lowest incomes. As a result, the healthy have disproportionately stayed away driving the costs up to unaffordable levels for those who don't get the big subsidies. And, only 40% of those who are subsidy eligible are now participating.

This Republican scheme would work best for the healthiest. It would also work well for the poor because the premium subsidy system would protect them from the even higher costs inside of Obamacare.

But the Republican scheme would be devastating for those in the unsubsidized middle class who would not be able to afford coverage once they got sick.

Ironically, the people the Republican scheme would hurt the most would be those in the middle class (the unsubsidized) that have been most vocal in calling on the Republicans to fix the system.