Killing the mandate doesn’t gut the health care law. Most likely, it will muddle along, because the rest of it is broadly popular.
In July and again in September, Republicans narrowly failed to repeal the Affordable Care Act. But their newly passed tax legislation included a provision getting rid of Obamacare’s mandate requiring Americans to buy insurance, and President Donald Trump immediately declared victory in the partisan health care wars. “When the individual mandate is being repealed, that means Obamacare is being repealed,” he crowed at a Cabinet meeting on Wednesday. “We have essentially repealed Obamacare.”
Well, no. The individual mandate is only part of Obamacare. It wasn’t even included in the original health care plan that Barack Obama unveiled during the 2008 campaign. The mandate did become an important element of Obamacare, and the only specific element that a majority of the public opposed. But the more generous elements of the program—like a major expansion of Medicaid, significant government subsidies for private insurance premiums, and strict protections for pre-existing conditions—are still popular, and still the law of the land.
“The death of Obamacare has been exaggerated,” says Larry Levitt, who oversees health reform studies at the Kaiser Family Foundation. “Eliminating the mandate creates uncertainty, but all the benefits for people remain in place.”
The Republican ecstasy and Democratic gloom over the death of the mandate reflects the most consistent misperception over the seven-plus years of Affordable Care Act debates, the incorrect assumption that the “Obamacare exchanges,” where Americans can buy private insurance, are synonymous with Obamacare. The vast majority of Americans who get their coverage through Medicare, Medicaid or their employers shouldn’t be affected. Yes, killing the mandate could cause problems for the remaining 6 percent of Americans who have to buy insurance on the open market, but nearly half will remain eligible for subsidies that would insulate them from any premium hikes.
Repealing the tax penalties for Americans who don’t buy insurance would not repeal Obamacare’s perks for Americans who do—like the ban on annual and lifetime caps that insurers previously used to cut off coverage for their sickest customers, or the provision allowing parents to keep their children on their plans until they turn 26. And it would not repeal Obamacare’s “delivery reforms” that are quietly transforming the financial incentives in the medical system, gradually shifting reimbursements to reward the quality rather than quantity of care. The growth of U.S. health care costs has slowed dramatically since the launch of Obamacare, and the elimination of the mandate should not significantly affect that trend.
In fact, during the 2008 campaign, Obama was the only Democratic candidate whose health plan did not include a mandate, because he was the only Democratic candidate who thought the main problem with health care was its cost. “It’s just too expensive,” he explained at an Iowa event in May 2007. Insurance premiums had almost doubled during the George W. Bush era, and Obama believed that was the reason so many Americans were uninsured. He doubted it would be worth the political heartburn to try to force people to buy insurance they couldn’t afford.
But Obama eventually embraced the argument that a mandate was necessary to ensure that young and healthy Americans bought insurance. The fear was that otherwise, insurance markets dominated by the old and sick (who would enjoy the law’s new protections for pre-existing conditions) would have produced even higher premiums, and might scare insurers away from serving Americans who don’t get coverage through their jobs or the government. Killing the mandate will be a step in that direction, boosting Trump’s heighten-the-contradictions effort to sabotage the functioning of Obamacare to build support for a more sweeping repeal.
That effort has already produced some damaging results for the exchanges. Insurers have increased their premiums for 2018, repeatedly citing uncertainty over Trump’s efforts to blow up Obamacare as well as his decision to cut off promised payments to insurers who cover lower-income families. Several insurers left the exchanges even before the elimination of the mandate, and others could follow.
But the widespread warnings that wide swaths of America would have no insurers on the exchanges were wrong; there are zero “bare counties” with no insurers for 2018. And a Kaiser review found the exchanges have gotten more profitable for insurers this year,despite Trump’s efforts to damage them. This year’s enrollment period appears to have gone fairly well even though the Trump administration shortened it by half and slashed its promotional budget.
The fear is that eliminating the mandate could produce a “death spiral” for the exchanges, where higher premiums scare away healthier customers, leading to even higher premiums and even sicker customers—until eventually,the insurers decide to bail. It could also encourage insurers to try to lure healthier customers with cheaper but skimpier plans that don’t provide protections for pre-existing conditions, since those customers would no longer have to pay a tax penalty.
But it is also possible that younger and healthier customers who initially bought insurance because they were required to do so will now buy insurance because they want to; surveys show that more than 75 five percent of Americans covered on the exchanges are happy with their coverage. And as a political matter, repealing the unpopular mandate could make it even harder for Republicans to pass legislation repealing insurance protections, Medicaid expansions and the rest of Obamacare, because the rest of Obamacare is popular. It’s not surprising that Republicans managed to kill the law’s vegetables, but it won’t be as easy to kill dessert.
Trump thinks congressional Democrats will soon be begging him to come up with a replacement for Obamacare, and even many Republicans who don’t embrace that fantasy believe the demise of the mandate will ratchet up pressure for a permanent solution to a seven-year political war. It could happen. But there hasn’t been a lot of bipartisanship in Washington lately, and after the Doug Jones upset in Alabama, it seems unlikely that a Senate with one fewer Republican will be more amenable to a Republican-only repeal bill.
The most likely outcome seems to be at least a few more years of Obamacare muddling through, and at least a few more years of Obamacare political warfare.
As President Donald Trump completes his first year in office, Americans are increasingly concerned about health care, and their faith that government can fix it has fallen.
A new poll by The Associated Press-NORC Center for Public Affairs Research finds that 48 percent named health care as a top problem for the government to focus on in the next year, up 17 points in the last two years.
The poll allows Americans to name up to five priorities and found a wide range of top concerns, including taxes, immigration and the environment. But aside from health care, no single issue was named by more than 31 percent.
And 7 in 10 of those who named health care as a top problem said they had little to no confidence that government can improve matters. The public was less pessimistic in last year’s edition of the poll, when just over half said they lacked confidence in the problem-solving ability of lawmakers and government institutions.
“We are way up there on the cost, and as far as giving good health care, we are way down,” said Rebekah Bustamante of San Antonio, a retired medical imaging technician. “Now in health care, you’re a number.”
Bustamante said she voted for Trump, but “he’s learning on the job, and he’s got a long way to go.”
Trump initially promised his own plan that would deliver “insurance for everybody” and “great” health care, “much less expensive and much better.” But the White House never released a health care proposal from the president.
GOP legislation to repeal and replace former President Barack Obama’s health care law failed in Congress, although the tax bill scraps the Obama requirement that most people get health insurance. Bloodied on both sides, Republicans and Democrats seem to have battled to an uneasy draw on health care.
Meanwhile, conflicting policy signals from Washington, including an abrupt White House decision to cancel insurer subsidies, roiled insurance markets. Premiums on health plans purchased by individuals jumped by double digits. Progress reducing the number of uninsured stalled, and one major survey found an uptick this year.
“There is zero bipartisanship, and it’s frustrating,” said Eric Staab, a high school teacher from Topeka, Kansas. “It seems like we have thrown everything at this dartboard, and nothing is improving the coverage.”
Rumblings of discontent have political repercussions for next year’s midterm elections and the presidential contest in 2020, said Robert Blendon, a professor at the Harvard T.H. Chan School of Public Health, who follows opinion trends on health care.
“It’s the issue that won’t go away,” said Blendon. “Given the news cycle, taxes should be first, the economy should be second, and this health care thing should be buried.”
Three in 10 Americans listed taxes among their top priorities, about double the percentage who said that last year. About a quarter mentioned immigration, and just under 2 in 10 mentioned environmental issues and education. Meanwhile, concerns about unemployment plunged to 14 percent, about half the mentions as last year.
Health care was by far the top issue mentioned by Democrats and independents. Republicans were about equally likely to mention immigration, health care and taxes.
Democrats were more likely than Republicans to say they have little to no confidence that the government will make progress on health care, 84 percent to 57 percent.
The reason health care doesn’t fade away is that costs aren’t getting any more manageable, said some people who took part in the AP-NORC survey.
Bustamante said she is planning a trip to Mexico for some dental work, because she can obtain quality service for much less there. “Thank God I live in Texas, where getting to Mexico isn’t that far away,” she said. “But everybody doesn’t have that option.”
ShyJuan Clemons of Merrillville, Indiana, said he’s currently uninsured because his previous health plan was costing too much money for the benefit he got from it. He faced his insurance plan’s annual deductible when he went to the doctor, so he’d wind up paying out-of-pocket for visits, on top of premiums.
“You are not constantly worried about taxes, but you are constantly worried about health care — be it major or minor,” said Clemons, a personal care attendant who works with disabled people. “You catch a cold, and you just think about it in passing — ‘I hope it doesn’t develop into a problem.'”
Clemons, a Democrat, said he’s disappointed that Trump and Republicans in Congress seem to be trying to tear down “Obamacare” instead of building on it. “I would like to see them make the thing run smoothly so we can do better, instead of just trying to cripple it,” he said.
The lack of confidence in the ability of government to find pragmatic solutions extended to other problems in the AP-NORC poll, including climate change, immigration, and terrorism.
Just 23 percent said that Trump has kept the promises he made while running for president, while 30 percent said he’s tried and failed, and 45 percent said he has not kept his promises at all.
Nearly 2 in 3 said they were pessimistic about the state of politics in the U.S. About half were downbeat about the nation’s system of government, and 55 percent said America’s best days are behind.
Earlier this month, the Senate passed legislation that would overhaul the tax code, make dramatic changes to federal health care policy, and undermine the budgets of Medicaid and Medicare, two pillars of the American health care system. The House and Senate are now trying to reconcile their two tax bills. Each passed the legislation on a party-line vote, with one Republican voting against the bill in the Senate.
Congress is now one step away from passing a tax bill that will have a profound effect on the health and well-being of Americans for a generation. No one should forget that, to get this close, the Senate rushed to approve a deeply unpopular proposal with little transparency and due diligence — and no bipartisanship. Left unchecked, these actions will harm millions of Americans — and American democracy itself.
Even though the legislation has been framed as a tax bill, it is very much a health care bill. The Senate bill would eliminate the Affordable Care Act’s individual health insurance mandate, which would lead to the destabilization of the individual health insurance market. The Congressional Budget Office (CBO) projects that this change alone would increase individual premiums by 10% a year and cause as many as 13 million Americans to join the ranks of the uninsured by the end of the next decade. In California, the uninsured population would grow by 1.7 million people. Congress may still pass separate legislation to restore some stability to the individual market, but the leading proposals are too modest to prevent much damage.
On its own, the language in the tax bills would trigger a major earthquake in the health care system, and the aftershocks of this tax bill would be just as dangerous. By eliminating more than $1 trillion of federal revenue, the administration and congressional leaders are manufacturing a budget crisis that would likely lead to automatic cuts to Medicare under federal rules. The CBO, which examined the House bill, has estimated that those cuts could be around $25 billion a year. Republican leaders have also indicated they intend to use the revenue shortfall that they are engineering with this tax bill to seek deep cuts in safety-net programs, starting with Medicaid.
This isn’t merely about what the legislation will do to health care, because it also would exacerbate inequality and worsen health disparities in this country. Under both the House and Senate bills, low- and middle-income families would pay more in taxes and have a harder time paying not just for health care, but also for food, housing, child care, education, and other basic needs. When people struggle so much to make ends meet, they suffer more from illness and die younger. And if inequality keeps getting worse, it will undermine the economic, social, and political stability upon which our nation depends.
The burden on Californians would be particularly heavy. Our families would no longer be able to deduct what they pay in state and local taxes on their federal tax returns. This change alone would take more than $112 billion a year out of the pockets of hardworking Californians — more than any other state. The fact that Californians would be paying more in federal taxes would inevitably put new pressure on our state and municipal governments to reduce their taxes. Under that scenario, it is not hard to imagine a new wave of painful state and local budget cuts.
The irony is that California actually has the power to stop this runaway train. If the entire California congressional delegation worked together to protect their constituents, and if they were united and strong, they could prevent many — if not all — of the worst provisions in the tax bills from becoming law.
This moment is a test of leadership. Nothing less than the health of our people — and our democracy — are at stake.
U.S. health care spending increased to $3.3 trillion in 2016, with out-of-pocket health care costs borne directly by consumers rising 3.9 percent — the fastest rate of growth since 2007.
The findings, published Wednesday by Health Affairs, are considered the authoritative breakdown of American health care spending and are prepared each year by the Centers for Medicare and Medicaid Services.
The overall rate of increase in health care spending experienced a slight slowdown over the previous year, driven in part by the expected moderation in growth after the expansion of insurance coverage through the Affordable Care Act. There was also a sharp decrease in the growth of prescription drug expenditures, as hepatitis C treatment costs have declined and fewer patients are receiving them.
The slowdown in spending growth — a 4.3 percent increase in 2016, following a 5.8 percent growth the previous year — stemmed from changes in a broad array of health care sectors.
That ranged from slower growth in Medicaid spending after the surge in enrollment caused by the Affordable Care Act expansion, to a marked slowdown in prescription drug spending growth that had been pushed higher by the approval of a new, expensive treatment for hepatitis C in 2013.
A shift toward insurance plans that transfer more of the burden of health care costs onto patients helped fuel the rise in out-of-pocket costs. In 2016, 29 percent of people who receive insurance through employers were enrolled in high-deductible plans, up from 20 percent in 2014. The size of the deductibles also increased over this time period, a 12 percent increase in 2016 for individual plans, compared with a 7 percent increase in 2014.
Out-of-pocket spending grew the most on medical equipment and supplies and decreased slightly for prescription drugs, according to the analysis.
The most noticeable change was a big slowdown in prescription drug spending growth, which made up 10 percent of the total spending, or $328.6 billion. (That spending number does not include drugs administered by physicians or hospitals.)
That decrease highlights the effect that expensive new treatments used by large numbers of people can have on national spending. A new generation of expensive hepatitis C drugs drove national drug spending 12.4 percent higher in 2014 and 8.9 percent higher in 2015. In 2016, the prescription drug spending increased by 1.3 percent, closer to the rates in the years before the new drugs were approved.
The authors of the report attributed that trend not just to hepatitis C drugs. There were also fewer new, brand name drugs approved in 2016 — 22 new drugs, compared with 45 the previous year. Another factor was a slowdown in the growth of spending on insulin, a lifesaving drug for people with diabetes, in Medicare.
Insulin prices have been under intense scrutiny as drugmakers have increased the list prices of insulin while claiming the true cost to patients has remained flat due to discounts and rebates
Health care spending has been buffeted by unusual changes during the past decade. There was a historic slowdown in growth due to the Great Recession, and then the Affordable Care Act’s expansion of health insurance coverage fueled spending.
The authors said this year’s trend of slower growth could be a sign that things were returning to normal.
“Future health expenditure trends are expected to be mostly influenced by changes in economic conditions and demographics, as has historically been the case,” the authors wrote.
Healthcare lobbyists are scrambling to win changes in congressional Republican tax legislation, as Senate and House GOP leaders race to merge their separate bills into something both chambers can pass on a party-line vote this month.
But provider, insurer and patient advocacy groups doubt they can convince Republicans to remove or soften the provisions they find most objectionable. They say GOP leaders are moving too fast and providing too little opportunity for healthcare stakeholders to provide input.
“It’s a madhouse,” said Julius Hobson, a veteran healthcare lobbyist with the Polsinelli law firm. “What you worry about is this will get done behind closed doors, even before they start the conference committee process.”
One factor that could slow the rush to pass the Tax Cuts and Jobs Act is the need to pass a continuing resolution this week to fund the federal government and prevent a shutdown. Unlike with the tax bill, Republicans need Democratic support for that, and it’s not clear they’ll make the concessions Democrats are demanding.
Industry lobbyists are particularly targeting provisions in the House and Senate tax bills limiting tax-exempt financing for not-for-profit hospitals and other organizations; repealing the Affordable Care Act’s tax penalty for not buying health insurance; ending corporate tax credits for the cost of clinical trials of orphan drugs; and taxing not-for-profit executive compensation exceeding $1 million.
If the ACA’s insurance mandate is repealed, “our plans will have to evaluate whether they can stay in the individual market or not based on what it does to enrollment and the risk profile of people who choose to stay,” said Margaret Murray, CEO of the Association for Community Affiliated Plans, which represents safety net insurers.
AARP and other consumer lobbying groups are fighting to save the household deduction for high healthcare costs, which the House version of the Tax Cuts and Jobs Act would abolish.
Healthcare lobbyists also are warning lawmakers that capping or ending the federal tax deduction for state and local taxes will force many states to cut Medicaid. Beyond that, they say slashing taxes and increasing the federal deficit will trigger immediate Medicare budget sequestration cuts that would hurt providers and patients, particularly in rural and low-income areas.
“One in three rural hospitals are at financial risk of closure, and sequestration would be devastating for them,” said Maggie Elehwany, vice president of government affairs for the National Rural Health Association. “I’d love to say our message is getting through. But Congress is completely tone-deaf on how troubling the situation in rural America is.”
Hospital groups, led by the American Hospital Association, are battling to preserve tax-exempt bond financing for not-for-profit organizations, which the House bill would zero out. While the Senate bill would keep the tax exemption for interest income on new municipal private activity bonds, both the Senate and House bills would prohibit advance re-funding of prior tax-exempt bond issues.
Hospitals say ending or limiting tax-exempt bond financing would jack up their borrowing costs and hurt their ability to make capital improvements, particularly for smaller and midsize hospital systems. The Wisconsin Hospital Association projected that ending tax-exempt bond financing would increase financing costs by about 25% every year.
According to Merritt Research Services, outstanding end-of-year hospital debt totaled nearly $301 billion in long-term bonds and nearly $21 billion in short-term debt. Nearly all of that debt was issued as tax-exempt bonds.
Suggesting a possible compromise, Rep. Kevin Brady (R-Texas), chairman of the House Ways and Means Committee, said Tuesday that he saw “a good path going forward” to preserve tax-exempt private activity bonds “that help build and enhance the national infrastructure.”
But Hobson raised questions about Brady’s comments. “What is his definition of infrastructure?” he asked. “It suggests they may move away from a blanket repeal, but it doesn’t tell me where they’re going.”
If Republicans decided not to repeal the tax exemption for municipal bond interest income, however, they would have to scale back some of their pet tax cuts for corporations and wealthy families, even as they feel pressure to ease unpopular provisions such as ending the deductibility of state and local taxes. That could make it hard for hospital lobbyists to gain traction on this issue.
“There are a lot of giveaways in the bills that don’t leave a lot of room to recoup the money you lose,” Hobson said.
Some lobbyists hold out a faint hope that the Republicans’ tax cut effort could collapse as a result of intra-party differences, as did their drive to repeal and replace the Affordable Care Act.
One possibility is that Maine Sen. Susan Collins flips and votes no on the tax cut bill emerging from the conference committee if congressional Republicans fail to pass two bipartisan bills she favors to stabilize the individual insurance market.
Collins said she’s received strong assurances from Senate Majority Leader Mitch McConnell and President Donald Trump that they will support the bills to restore the ACA’s cost-sharing reduction payments to insurers and establish a new federal reinsurance program that would lower premiums.
But the fate of those bills is in doubt, given that House Speaker Paul Ryan (R-Wis.) was noncommittal this week, while House ultraconservatives have come out strongly against them.
Collins conceivably could be joined by Alaska Sen. Lisa Murkowski, who also said she wants to see the market stabilization bills passed. If Tennessee Sen. Bob Corker, who voted no on the tax cut bill over deficit concerns, remains opposed, those three GOP senators could sink the tax bill.
“We’d all like to see Collins pull her vote,” Hobson said. “It was always clear that the deal she cut with McConnell won’t fly on the House side.”
One healthcare lobbyist who didn’t want to be named said there may be a deal in the works for House conservatives to support market-stabilization legislation in exchange for lifting budget sequestration caps on military spending.
But healthcare lobbyists are not holding their breath on winning major changes or seeing the tax bill collapse.
“There are chances they won’t reach a deal,” said Robert Atlas, president of EBG Advisors, which is affiliated with the healthcare law firm Epstein Becker Green. “By the same token, Republicans are so determined to pass something that they might just come together.”
House Speaker Paul Ryan (R-Wis.) on Wednesday said House Republicans will aim to cut spending on Medicare, Medicaid and welfare programs next year as a way to trim the federal deficit.
“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said during an interview on Ross Kaminsky’s talk radio show.
Health-care entitlements such as Medicare and Medicaid “are the big drivers of debt,” Ryan said, “so we spend more time on the health-care entitlements, because that’s really where the problem lies, fiscally speaking.”
Ryan said he’s been speaking privately with President Trump, who is beginning to warm to the idea of slowing the spending growth in entitlements.
During his campaign, Trump repeatedly promised not to cut Medicare, Medicaid or Social Security.
“I think the president is understanding choice and competition works everywhere, especially in Medicare,” Ryan said.
House and Senate Republicans are currently working on their plans for tax reform, which are estimated to add more than $1 trillion to the deficit. Democrats have voiced concerns that the legislation could lead to cuts to the social safety net.
Ryan is one of a growing number of GOP leaders who have mentioned the need for Congress to cut entitlement spending next year.
Last week, House Ways and Means Committee Chairman Kevin Brady (R-Texas) said that once the tax bill was done, “welfare reform” was up next.
Sen. Marco Rubio (R-Fla.), last week, said “instituting structural changes to Social Security and Medicare for the future” will be the best way to reduce spending and generate economic growth.
Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, told Bloomberg TV that “the most important thing we can do with respect to the national debt, what we need to do, is obviously reform current entitlement programs for future generations.”
Ryan also mentioned that he wants to work on changing the welfare system, and Republicans have in the past expressed a desire to add work requirements to programs such as food stamps.
Speaking on the Senate floor while debating the tax bill last week, Senate Finance Committee Chairman Orrin Hatch (R-Utah) said he had a “rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything.”
His comments were echoed by Ryan.
“We have a welfare system that’s trapping people in poverty and effectively paying people not to work,” Ryan said Wednesday. “We’ve got to work on that.”