Editorial: Trump’s one-two punch on the Obamacare exchanges will injure consumers — and taxpayers

After delivering yet another malicious blow to the Affordable Care Act, President Trump took to Twitter (of course) on Friday to tell Democrats that they “should call me to fix” the law he’s sabotaging.

It sounded like the sort of thing you’d hear in a mobster movie: “Nice insurance business you’ve got here. I’d sure hate to see anything bad happen to it.”

The fact is, a handful of Republicans and Democrats have been trying to work out a compromise on how to address the most problematic aspect of the ACA: the state exchanges where private insurers sell policies to people not covered by group health plans. Competition has been dwindling and premiums rising fast in a number of states, particularly in less populous counties.

But even if Trump actually agrees to negotiate, there seems little chance of a deal. He and many other Republicans envision a healthcare system that’s fundamentally different from the one enshrined by Democrats in the ACA. Instead of having Americans share health risks and costs broadly, with the healthy picking up some of the insurance tab for the ill and injured, the president and congressional Republicans want to let people avoid the costs imposed by others with risks or maladies they don’t share.

We tried the latter approach before, and it left tens of millions of people uninsured while saddling sicker Americans with double-digit premium increases and steadily growing deductibles throughout the early 2000s. The ACA moved the country away from that unworkable system — until Thursday, when Trump took two steps to push the country back in that old, failed direction.

The first was an executive order calling on federal agencies to help the roughly 20 million people not covered by large group plans shop outside the state exchanges for policies that aren’t governed by the ACA’s insurance requirements. The new rules and guidelines, which will take months to develop, aim to promote thinner policies that cover fewer risks but carry lower premiums. That trade-off would be especially appealing to younger, healthier consumers who don’t see the need for comprehensive insurance.

Encouraging people to leave the exchanges, though, defeats the main purpose of these marketplaces: to create big regional risk pools to hold down premiums by spreading healthcare costs broadly. And the likely consequence is that the state exchanges will be left serving only those people who do need comprehensive coverage – those in dangerous lines of work or with preexisting conditions that might be excluded from thinner plans. And the insurers that serve them will wind up charging even higher premiums to cover the higher cost per enrollee. In short, pulling healthier people out of the state exchanges will only exacerbate the problem of rising premiums that Republicans claim to want to fix.

Granted, many Republicans chafe at the idea of requiring people to buy comprehensive policies. Why should those who don’t use drugs have to carry coverage for substance abuse treatment, for instance? Why should men have to pay for maternity coverage? Or to put it more bluntly, why shouldn’t individuals be responsible for their own problems?

That’s like car insurance: Good drivers pay lower premiums. But public opinion polls show that Americans strongly favor a different model for health insurance, one that doesn’t penalize people for having gotten sick or injured.

The way to improve the state exchanges is to bring more people into them, not fewer, so that costs and risks can be spread across a bigger base. That’s the lesson from California, where aggressive marketing has helped boost enrollment of younger, healthier consumers and hold down premium increases.

Which brings us to the other, even more dramatic step Trump took Thursday: the White House’s late-night announcement that it would no longer reimburse insurers for the cost of reducing the deductibles, co-pays and other out-of-pocket expenses incurred by their lowest-income customers.

The ACA not only compels insurers to make these “cost-sharing reductions,” it requires the federal government to reimburse them. Yet Congress has declined to do so. So the Obama and Trump administrations have paid the reimbursements out of the funds the ACA provided for premium subsidies, prompting a legal battle with the House GOP leadership. The administration said Thursday that the House was right, and ended the payments effective immediately.

The move will cost insurers about $7 billion a year, but that cost will still largely be passed on to federal taxpayers. To make up for the lost reimbursements, most states plan to let insurers charge higher premiums in the exchanges next year, assuming the insurers continue to do business there — which may not be a safe assumption. Because the vast majority of those buying policies in the exchange have their premiums subsidized by the federal government, the higher premiums will result in higher subsidy payments. So the pain of Trump’s decision will be felt by the U.S. Treasury.

Still, the higher premiums in the exchanges will likely drive off some younger, healthier customers, who’ll choose to go uninsured in 2018 instead. The shrinking pool will then raise premiums even more, leading to yet higher subsidies, further raising the bill for taxpayers — who at some point will recognize just whose fortunes the president is sabotaging.

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