Health Care Revision Strategies for President-Elect Trump

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Pablo Martinez Monsivais / AP
December 7, 2016

In this second part of a three-piece series on the Affordable Care Act, Renya Wasson explores President-elect Trump's available pathways toward further healthcare reform. See Renya's first piece examining President Obama's negotiation strategies and the bill's successful passage.

President Obama successfully shepherded the Affordable Care Act (ACA), aka Obamacare, into law, but he was not able to find a way to let Republicans save face. Republican legislators are still furious that a major program was instituted without bipartisan input or support. Critics question whether the nation can afford the ACA and whether businesses and citizens can afford the mandated health insurance policies. Opponents of the ACA are particularly incensed by the IRS fines imposed on individuals who don’t buy health insurance. President-elect Trump and many of the Republican legislators now in charge of both houses of Congress campaigned on the promise to repeal Obamacare.

It is unclear what Obama could have done to garner Republican support. Republicans had little to gain by supporting a controversial law and helping Obama secure a major victory. Obama’s publicity campaign for the ACA was hamstrung by the poor rollout of the sign-up website. Support for the ACA was further diminished by the necessity of after-the-fact workarounds to overcome flaws in the law. As time passed and weaknesses became more glaring, neither side had an interest in addressing them. Republicans benefited most if Obamacare failed, and Obama feared reopening the bill to Congressional vote.

In the end, Obama followed the best strategy available to him: win a second term so that the ACA would be in effect long enough for the public to get used to its popular provisions and campaign for a Democratic successor. Barring all else, Obama could try to sway his Republican successor.

The latter strategy is now Obama’s best chance to save critical parts of the ACA. At Trump’s and Obama’s first meeting at the White House, Obama may have convinced Trump to reconsider his position. Trump has since expressed a willingness to keep two popular provisions of the ACA. One of these provisions, allowing children to stay on their parents’ policies up until the age of 26, is fairly straightforward to retain. The other provision, banning insurance companies from denying coverage for pre-existing conditions, is much trickier. If Trump maintains this position, he may have a hard time winning over Republican legislators. 

The challenge with banning insurance companies from denying coverage for pre-existing conditions is that this provision is closely linked to the unpopular mandate that everyone purchase health insurance. Without that mandate, many people who are healthy might choose not to purchase health insurance, but all people at high risk of serious medical expenses would choose to purchase health insurance. To cover costs for this risky pool, insurance companies would be forced to charge higher rates. This would create a vicious cycle driving healthy people out of the insurance market and driving up insurance rates until the market ceases to exist. It will be exceedingly difficult to replace the ACA with a plan that retains affordable coverage for pre-existing conditions but that does not incorporate a mandate in some form.

So What Are Trump’s Options?

Repealing without a replacement is politically dangerous, even if Trump gives Congress a one or two-year cushion to pass a new plan before the repeal goes into effect. For his replacement plan, he could try an incremental approach, keeping only the most popular provisions that are easiest to enact - such as coverage for young adult children. He could focus on topics at the edges of the ACA that might reduce costs - such as enforcing a uniform system of medical codes across all insurers.

Trump could also model the US health care system after other highly regarded systems. Germany provides universal health care coverage without the government acting either as single-payer or as single-provider. With the exception of public health initiatives and university hospitals, the German government has a limited role in the provision of health care services. In addition to universal coverage, the German health care system is noted for high-quality care and short wait times. Nonetheless, Germany spends 6% less of GDP on health care than the United States (11.3% vs. 17.1% ). Germany’s secret for cost control is negotiated pricing at the local level. This approach has not worked perfectly; health care costs per capita are higher in Germany than in countries like England in which the government is a major service provider. 

Trump could also try something radical. While campaigning, Trump expressed support for Medicare. Expanding and reforming Medicare (which serves seniors) along with Medicaid (which serves the poor) could potentially address many of the weaknesses in the ACA. The health plan produced by House Speaker Paul Ryan, R-Wis, incorporates these provisions along with taxation of “Cadillac” plans, and tax credits. Trump’s controversial pick for Health Secretary, Tom Price, has voiced support for replacing Medicare with vouchers for private insurance. If Trump was truly bold, he could separate health insurance from employment altogether - after all, employer provided health care is merely an artifact of wage controls placed in WW II to stop inflation

Generating alternative solutions could expand the set of possibilities so that both Republicans and Democrats get more of what they want. Making a genuine, and heavily publicized, effort to reach across the aisle to Democrats would increase the chances that whatever changes Republicans make now are not overturned if Democrats regain legislative control. As long as the new law has a name like the “Private Care Act” and is nicknamed “Trumpcare”, it might have a chance of passage in the current environment, even if it contains many elements of the ACA.

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