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Obamacare Will Survive

Issue of the Week

Mar. 7, 2017
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Last week, Trump said that dealing with creating a replacement for Obamacare is really difficult. No kidding. He appears to be slowly learning that it is a lot easier making promises along the campaign trail than actually crafting solid public policy. His Republican allies in Congress are no better. After having six years of calling Obamacare a disaster, they have been unable to even develop a halfway realistic alternative to the Affordable Care Act (ACA).

Trump also promised, over and over, that he will have a health care plan that would insure more people, provide a better scope of care and make it more affordable. There is no way he can do that. His advisors must be explaining that to him now because he started using weasel words similar to Speaker Paul Ryan when he talks about providing access to insurance, but not providing insurance. Provision of insurance is real and access is aspirational. We all have access to buying a multi-million dollar home on Lake Drive if we only had millions of dollars.

However, there is one way to actually fulfill Trump’s promises and that is to expand Medicare to the entire population. Health care providers and hospitals would continue to compete in the marketplace and Medicare would pay the bills. Medicare’s administrative costs are much lower than private insurance companies and expanding Medicare might be the only realistic way to control costs. Obviously, Ryan would never support this since the insurance industry is one of his largest campaign contributors. 

Despite the fact the Republicans cannot craft a replacement plan for Obamacare that comes even close to fulfilling Trump’s promises, that won’t stop Ryan from pushing to repeal Obamacare at the expense of his constituents, many of whom have health insurance for the first time in their lives. Ryan is fixated on repealing rather than modifying Obamacare because he wants to eliminate the taxes in the Obamacare legislation. To help cover the subsidies needed to help make it affordable, the ACA created a tax on parts of the medical industry and also on the very wealthy. Again, the wealthy and the special interests are the people who Ryan tries to serve. Once the Obamacare taxes are repealed, it certainly won’t be replaced with a new tax as long as the Republicans are in control.

So where we stand today is, unless Trump wants to walk back his promises on how he will replace Obamacare, it is probably a pretty good bet that Obamacare will survive. There are no reasonable and feasible replacements that meet Trump’s promises unless you expand Medicare, which would put the private health insurance industry essentially out of business. Also, many of the major interest groups, like hospitals, have adjusted to the ACA and have benefitted from the fact that fewer people are coming to the hospitals uninsured, which raises their revenues and lowers the cost of their charity care.

At present, the drug manufacturers are also doing very well. Paul Ryan’s rather naïve free market solutions using tax credits will definitely not insure more people and will probably not even lower costs, so we would end up with fewer people insured at a higher cost, but we will have more profitable health insurance companies. Obamacare needs to be improved, but not replaced unless we want to expand Medicare to all.

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