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Trumpcare faces these 5 obstacles

Rick Newman
Columnist

President Trump recently discovered that “health care reform is “complicated.” He ain’t seen nuthin’ yet.

With Congressional Republicans finally outlining a replacement for President Obama’s Affordable Care Act (ACA), a huge battle over health care in America is now underway—again. Trump has repeatedly called the ACA a “disaster,” which overstates its flaws but wins points with voters fed up with intrusive, ineffective government. But there’s a reason Obamacare, as the ACA is known, turned out to be convoluted and controversial: Health reform is, well, enormously complicated. Whether you’re Trump or Obama.

As Trump and his GOP allies shepherd an ACA replacement through Congress, they are bound to encounter the same obstacles Obama and the Democrats did back in 2010, when the ACA became law. Here are a few of the biggest:

Americans profoundly disagree about health care. Is affordable access to health care a right or a privilege? The nation remains deeply divided on this fundamental question, which has been settled in most other advanced nations where health care is universally available. Even with Obamacare, which brought about 20 million uninsured adults into the health care system, there are still roughly 29 million Americans without coverage. The number of uninsured would most likely go back up under the Republican plan, known as the American Health Care Act, on account of cutbacks to Medicaid and smaller federal subsidies to help low-income Americans buy insurance. Public ambivalence about health care shows up in approval ratings for the ACA, which bottomed at 36% in early 2016, when the law seemed fully intact, but have since risen to 49%—the highest level ever—now that the ACA seems endangered. Americans don’t like what they have, but they don’t want anybody to take it away either. That has put Republicans in the unenviable position of repealing a program half the American public is okay with.

Health care is getting more expensive, no matter what. Many people mistakenly think Obamacare pushed up costs for everybody, even though it affected only a small portion of the insurance market. In reality, health care costs have been rising far faster than inflation since the mid 1980s, taking a bigger and bigger bite out of the ordinary family’s paycheck, as this chart showing inflation rates since 1980 shows:

Source: St. Louis Federal Reserve Bank

There are many reasons health care inflation is so onerous—an aging population, an opaque pricing system, incentives that lead to excessive use of care, multiple middlemen and on and on. Whatever the cause, the cost problem bedevils legislators, because the future costs of any plan are bound to run higher than the revenue that’s supposed to pay for it. Providing health care for people is flat-out expensive, and if you’re not willing to raise taxes to cover the costs, as Republicans aren’t, the only option is to slash coverage.

Everybody hates something. Expect intense lobbying for and against any provision that affects some industry’s profitability, which will basically amount to the entire Republican bill. Any real effort to reduce costs for consumers means less money for insurers or hospitals or drug firms that employ battalions of lobbyists in Washington, DC. The Democrats in 2010 got wary industry groups to support the ACA—along with provisions that included nettlesome new regulations and, in some cases, new taxes—by promising more paying customers who would boost revenue. That panned out, more or less. A GOP plan that cuts back on subsidies and coverage would seemingly create the opposite incentive. Industries that anticipate being harmed by the GOP plan won’t roll over. They’ll fight and possibly bollix up legislation for months.

Competition isn’t the answer. Everybody wishes free-market incentives would produce a more efficient, better-functioning system—even Obama, whose plan relied on competition among insurers to lower premiums. The problem is that the US health care system is uniquely uncompetitive by nature. Prices aren’t set by market forces but by arcane insurance-company algorithms that no normal person could understand. Middlemen abound and often have no direct contact with the actual customer. Unlike other products, urgent medical care—which tends to be the most expensive kind—isn’t something we can take a pass on if it seems too expensive. And costly regulation that might seem excessive in other industries becomes imperative when shoddy providers threaten lives. This is why virtually every other developed nation has thrown in the towel on competition and established government-provided health care that assures coverage for all, even if service is unsatisfactory. Competition certainly has a role to play, but overall it has rarely produced the desired result in health care.

It’s complicated. Trump’s belated realization carries huge political corollaries: Health care reform is difficult to explain to the public and easy to demagogue. This is why Obamacare turned out to be far more controversial than its overall impact on the health care system warranted; ceaseless attacks on the program led many people to believe that everything wrong with their own health care must have been the result of the ACA. Democrats and other Trump critics will undoubtedly do the same thing to the GOP plan, insisting it will leave sick people dying in the streets and bankrupt ordinary families. Trump is a master of propaganda, but he’s going to have to learn to parry it, too, because Trumpcare will end up as much of an albatross around his neck as Obamacare was around Obama’s.

Read more:

Why Trump’s tax cuts are looking iffy

Trump’s absurd claim about the US labor force

Trump now owns Obamacare

Confidential tip line: rickjnewman@yahoo.com

Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman