Donald Trump has frequently touted his deal-making prowess. He has called deals his art form. In a December 29, 2014 tweet he said, “Other people paint beautifully or write poetry. I like making deals, preferably big deals.”
Trump’s business acumen is being tested on health care. The Republican Congress was unable to repeal and replace the Affordable Care Act, despite seven years of campaign promises. Trump, rather than let it slide, has used executive action to accelerate what may already have been a death spiral for Obamacare.
The President has cut off $7 billion in subsidies, known as cost-sharing reduction payments (CSR), to health insurance companies. They used those reimbursements to hold down out-of-pocket expenses for lower income individuals in the health insurance exchanges.
Nearly lost in the controversy is the issue of whether the taxpayer payments to insurance companies are legal. Congress refused to appropriate the money, but the Obama Administration made the payments anyway, prompting a court challenge.
In May, 2016, Judge Rosemary Collyer of the federal district court for the District of Columbia ruled that Obama exceeded his powers by appropriating the money without Congressional approval, but she stayed the order until Congress could address the issue.
Obviously that has not happened yet.
A number of insurance companies in the exchanges anticipated losing the subsidies and they planned their rates for next year accordingly. Highmark Blue Cross Blue Shield, which is in all 55 West Virginia counties, has been granted a 25.6 percent premium increase by the state Insurance Commission. Premiums for customers of CareSource, which is in 32 counties, are going up 19.6 percent.
“Had there been real confidence around the funding for CSR and a strong individual mandate, we would have been looking at increases that would have been more in line with what we’re seeing in the industry,” said Highmark President Jim Fawcett.
It’s not just the uncertainty and the end of the subsidies that are driving the spikes. West Virginia is an older, sicker state with an opioid crisis that creates an expensive high risk pool. Just five percent of the Highmark exchange members account for 50 percent of the payouts.
Trump’s termination of the subsidies, as well as an executive order clearing the way for less expensive insurance plans that don’t have to provide all the benefits of the ACA, are designed to create a sense of urgency on Capitol Hill, and it appears they did. Republican Senator Lamar Alexander and Democrat Senator Patty Murray have been working on a bill for several months and late yesterday they announced a compromise on a temporary fix.
Their plan would preseve the subsidies for two years and tweek ACA by expanding eligibility for low premium, high deductable insurance plans. The deal is a starting point, but there are no assurances that it can survive the intense partisanship of Washington.
Trump wrote in his 1987 book The Art of the Deal, “You can create excitement, you can do wonderful promotion and get all kinds of press, and you can throw in a little hyperbole, but if you don’t deliver the goods, people will eventually catch on.”
Trump promised repeatedly during the campaign that if elected he would immediately repeal and replace Obamacare with something much better. That may have been the hyperbole part of the equation. Now the President is counting on the skills he learned in business to try to craft a bipartisan solution.
By his own admission, if he can’t deliver the people will know.