If Obamacare fails, it’ll be bad news for Trump

Rick Newman
Columnist

The Affordable Care Act is in trouble. Long-time critics of the law are gloating. That’s a mistake.

Insurance companies are increasingly deciding that participating in the ACA is too much trouble, and pulling out. The latest notable move came when Anthem said it would stop offering ACA policies in Ohio next year. If no other insurer steps in, that could leave several hundred thousand Ohioans with no ACA plans to choose from.

This trend is intensifying, causing concern that the ACA, also known as Obamacare, is falling into a “death spiral” from which it can’t recover. In 2015, an average of 6 insurers per state offered policies under Obamacare. That has fallen to 4.3 and is likely to fall further in 2018. There was only 1 state with 1 insurer in 2015. Now there are 5. Fewer issuers generally equate with higher prices, and next year could be the first time significant portions of the country have no ACA coverage available.

Obamacare is such a white-hot political issue that perspective is crucial. In some states–New York, Wisconsin, California–the program seems to be working fine. And for all the attention Obamacare gets, it only covers about 6% of the population. Most working-age Americans get coverage through employer-sponsored plans unaffected by the ACA, and Medicare covers most seniors. People who lose coverage under the ACA can still purchase insurance in the private market, though they can’t get the subsidies Obamacare provides and might find coverage unaffordable.

Obamacare has slashed the uninsured portion of the population, however, one reason its demise would be explosively controversial. And President Trump is now America’s Obamacare basher-in-chief, repeatedly calling the law a disaster and predicting its failure.

Trump’s hand in weakening of Obamacare

To some extent, Trump is contributing to that failure. Anthem, for instance, said uncertainty relating to government policy was one of the factors leading to its withdrawal from Ohio. The biggest concern for insurers right now is the status of subsidies the government pays to insurers to reimburse them for cutting costs for lower-income subscribers. Trump can kill those subsidies outright if he wants to, and has suggested he might. Since the fate of those subsidies directly affects insurer profitability, it’s no wonder some firms don’t want to wait and see what Trump decides.

Some ACA critics—virtually all of them Republican—seem to delight at the prospect of Obamacare crumbling one county at a time, perhaps obviating the need to pass legislation that would formally repeal it. But this seems remarkably short-sighted. Trump’s attacks on the ACA, and the real prospect of repeal under Republican-controlled government, have pushed public approval of the law to the highest levels ever. Americans disapprove of Republican plans to roll back the ACA and particularly dislike proposed cuts to Medicaid. So Republicans are now threatening programs Americans more or less like.

As the 2018 midterm elections draw near, it seems likely that Obamacare will be in worse shape than it is now—either repealed or neglected, with coverage declining and the uninsured rate going up. How in the world will this benefit incumbent Republicans? Scare stories about people who might get harmed by the GOP healthcare plan are already going viral, with Trump increasingly catching blame for sabotaging Obamacare. As more people lose coverage, tales of cancer patients denied coverage and working people enduring medical bankruptcy are sure to multiply all across the media spectrum.

The demise of Obamacare would also expose a myth the law’s critics have cleverly exploited: That the ACA is somehow responsible for the soaring medical costs everybody feels. Healthcare costs have been rising far faster than ordinary inflation since the 1980s, with the gap widening during the last 15 years or so. This has almost no connection with Obamacare, which wasn’t passed until 2010, didn’t go into effect until 2014, and didn’t really change anything for most people with insurance. But Obamacare critics have conflated rising costs with the advent of the law, and the US health system is so opaque and complex that it sounds reasonable to a lot of ordinary people.

Republicans seem to think voters will blame Barack Obama (or maybe Hillary Clinton) in 2018 if the ACA is crumbling, more Americans are losing coverage and everybody’s costs are going up, as usual. As feckless as Democrats have been in the era of Trump, this seems implausible. Republicans used Obamacare as a bogeyman when Democrats were in power, but now that they’re in power, they control Obamacare. The bogeyman is gone.

It’s also possible, down the road, that continued do-nothingness on the real healthcare problem—rising costs for everybody—could lead to surprising consequences. California, for instance, has begun to explore a single-payer healthcare system, with the state government footing the bill. Sure, it’s wacky California, but many serious people recognize that the United States is the only advanced economy without such a system, which provides massive scale and the real ability to control costs. Famed capitalist Warren Buffett favors the idea, and even the CEO of insurance firm Aetna has said it’s worth debating. If Obamacare fails, the case for a single-payer system will get stronger, not weaker.

Confidential tip line: rickjnewman@yahoo.com

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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman

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