“Let Obamacare Fail”: Trump Halts BILLIONS In Health Insurance Payments

“I think we’re probably in that position where we’ll just let Obamacare fail. We’re not going to own it. I’m not going to own it. I can tell you, the Republicans are not going to own it. We’ll let Obamacare fail and then the Democrats are going to come to us.”

— President Donald Trump, July 18, 2017

No, this wasn’t a late-night tweet. This wasn’t a plan concocted in some smoke-filled back room, surrounded by GOP strategists on how to win the mid-term elections. This was spoken by the president, aloud and with confidence, in front of the media establishment, broadcast into the homes of citizens of the only industrialized first-world nation without a universal healthcare system. Now, according to a report from Politico, the plan of failure could be in effect.

On Saturday, the Trump administration reportedly halted billions of dollars in payments to private health insurers under the Affordable Care Act (Obamacare), saying they decided to suspend payments because of a February ruling from the Federal District Court in New Mexico.

The formula used to calculate payments was tossed out because it was deemed “flawed.” Politico reports this ruling will eventually be appealed, as another court in Massachusetts appears to have upheld the payments.

“We were disappointed by the court’s recent ruling,” Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma said in a statement. “As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold.”

From a CMS statement: “CMS is seeking a quick resolution to the legal issues raised and will inform stakeholders of any update to the status of collections or payments at an appropriate future date.”

These private health insurers rely on what’s known as “risk adjustment payments,” a redistributionist program under Obamacare where CMS collect money from the insurers themselves. These programs assess which companies have the highest-risk enrollees, allocating funds appropriately to insurance providers who end up with the most high-cost patients.

It basically acts as an insurance program for the insurance companies, protecting them from big losses and meaning they can safely cover the cost of the unhealthy patients who actually require their services, from chronic illnesses to other pre-existing conditions, without leaving these companies with the rather perverse incentive only to seek healthy customers they know will keep their company afloat. In 2017, the cost of keeping consumer prices low was around $10.4 billion.

“Any action to stop disbursements under the risk adjustment program will significantly increase 2019 premiums for millions of individuals and small business owners, and could result in far fewer health plan choices,” said Justine Handelman, a senior VP of the Blue Cross and Blue Shield Association, according to The New York Times. “It will undermine Americans’ access to affordable care, particularly for those who need medical care the most.”

What conservatives should note is their anti-big government values, assuming they’re principled, are coming into conflict with the administration’s actions. Given the president wields two contradictory rulings, for a process which has a precedent since the law was passed in 2010, how tied are the administration’s hands really? After all, it’s important to stress these risk adjustment payments — which isn’t collected through a tax — is now frozen and left in possession of the federal government, when it actually belongs to the insurers themselves.

Politico’s insurance sources say “even a temporary, uncertain pause” from unilateral government intervention is “damaging” to the average consumer moving forward. They particularly cited the trade group America’s Health Insurance Plans who stated this “new market disruption” would “create more [economic] uncertainty and drive up premiums for many health plans.”

This could be an electoral disaster for the Republicans moving into the 2018 mid-terms, especially if the Democrats frame the argument as the quote the president said above. If the judiciary and Congress don’t overturn the ruling or reform the formula as suggested by Dr. Martin E. Hickey, the founder of New Mexico Health Connections (the company that filed the lawsuit in that state) consumers could see their prices increase overnight.

“The risk adjustment formula was extremely biased in favor of large, established insurers and discriminated against new and small insurers, including co-ops like ours,” Dr. Hickey said in an interview on Saturday, according to The Times. “People spin the administration’s decision as Trump trying to do harm, but it’s exactly the opposite. It will allow more companies to get into the insurance market. That will increase competition, and competition will help keep prices down.”

Except this is nothing but a cliche. Under this invisible hand of right-wing libertarian idealism, there’s the assumption that restricting the company’s own insurance money will, in some way, help more companies get into the marketplace and keep prices down. Sounds great… if there was proof to back it up.

Insurance is the business of allocating pools of money. One could say it’s the only justifiable monopoly we can have. Everyone pays in, the weakest take out, the more people under one scheme results in less of a financial burden, thus lower prices on the members. Competitive insurance, where different pools of money are being collected, is harmful to the consumer. Inevitably, insurance members — from citizens to employers under the ACA — will have their prices increased to cover the cost of weakest, and companies that take the risk on the unhealthy will suffer more than those who don’t.

As if stripped right out of Ayn Rand’s novel “Atlas Shrugged,” the bible of both right-wing libertarian and objectivist philosophy, only the selfish succeed under this kind of capitalist competition. Only the consumers won’t have a nice new train to ride. It’ll be big, fat, burdensome premiums, in addition to the uninsured 3 million citizens under the government’s flawed healthcare half-measure. For a so-called populist president, set on “making America great again” while praising Australia for their healthcare system, the Trump administrations actions don’t exactly scream “great.”

Related News