The Brilliance of Buy-in: The Private Market and States Won't Let Obamacare Collapse

When Donald Trump lost the popular vote by the biggest margin of anyone who'd ever won the presidency, his assent to the White House with a unified Republican Congress was seen as doomsday for their primary and first target: the Affordable Care Act. I was worried. Everyone I know was worried. The news of a unified right wing government in Washington was not - and still is not - good news for health care.

But one person who had never had much patience for the dramatics said he thought Obamacare would survive. That man was, in fact, President Obama.

Once Donald Trump took over the oval office and began to immediately diminish it, efforts to undo Obamacare began in the GOP-dominated Congress. Republican leaders in Congress sought to undo the most consequential expansion of the social safety net since the enactment of Medicare. They shut out Democrats and embarked on a process behind closed doors. After an initial failure, the House passed a bill that would rob 24 million people of health care, and the House GOP celebrated on the lawn of the White House with Trump. But the first quarter celebration did not save the Republican effort to undo Obamacare from its ultimate and humiliating fate: failure. The Senate tried multiple versions of repeal, and the last of it, 'skinny repeal', failed in a dramatic vote where GOP Sens. Collins, Murkowski, and McCain joined all Democrats to defeat the Republican leadership's efforts.

Each time Trump was faced with the failure of Obamacare repeal, he comes back to the old refrain: some version of "Obamacare is collapsing, we'll let it collapse, and then come back and force Democrats to compromise on repeal!"

That Obamacare-is-collapsing argument, backed nearly universally by national Republicans, is dependent on a singular factor: that many health insurers are now refusing to offer any plans at all in the ACA exchanges for many (mostly rural) counties. Setting aside the fact that this is primarily a phenomenon faced by states originally (and in many cases, still) resistant to Obamacare, the entire basis behind that argument has now, well, collapsed.

There is now just one county - with 334 private exchange enrollees - left without an insurer.

You read that right. Not 80 counties, not 50 counties, just one. And even that county might end up being covered by the time open enrollment starts in November.

That's right. Insurers are jumping in to cover previously uncovered counties as state officials spring into action to make it happen for their constituents. As a result, as of now, all but one of the 81 counties that were at risk of losing all ACA private insurance options now have them.

The reason they are doing so is even more detrimental to Republican narrative of a collapsing Obamacare market: it's profitable. The CEO of Centene, the company that signed up more than half of the "bare" counties, had this to say in an investor call: "For 2018, we intend to grow this profitable segment of our business."

Granted, much of that profitability comes from the fact that the vast majority of those buying insurance through an exchange are eligible for subsidies. But that is also where one part of the real brilliance and resilience of Obamacare lies: buy-ins.

When President Obama and Democratic leaders devised the Affordable Care Act, they did not set out a create a perfect, inviolable system. They set out to create a system where everyone would have a stake: superior patient protections for everybody, the ability to stay on their parents' plans for young adults, massive expansion of Medicaid for the poor, prescription drug price discounts for Medicare beneficiaries, the ability to create pools for consumers (the exchanges), subsidies to help people afford insurance as well as to create an incentive for insurance companies to stay or enter the market.

The Medicaid part of this has turned into a runaway success, despite the fact that Republicans in 19 states are still keeping their working poor from access to care. It is notable that the of three Republicans who ultimately doomed the Senate's final attempt at killing Obamacare, two came from states that had expanded Medicaid (McCain of Arizona and Murkowski of Alaska). While Susan Collins' state Maine has been unable to expand Medicaid due to vetos from its confederate governor, a ballot initiative to do just that has qualified for the November 2017 ballot. The Medicaid expansion's 84% support in public polls no doubt played a significant role in derailing Republican efforts to kill the Affordable Care Act.

But the oft-unsung brilliance of the ACA lies in the way it structured the individual markets, or exchanges. The structure of subsidies, coupled with the individual responsibility to purchase health insurance subject to affordability, ensured two things: first, that consumers would be shielded from sudden price hikes (as the government would pick up the cost in form of a subsidy), and second, that shielding coupled with the individual responsibility provision would keep consumers from dropping insurance (or waiting until they are sick to get), making the market work for insurers.

That basic bargain, ensured by Obamacare, has come under withering attacks from those who would like to send us back to the devastation of no protection and no insurance. But it has shown remarkable resiliency. Some big insurers may have left some markets not profitable enough for them, but other companies are now moving in to fill that vacuum. What's more, these companies, now even more determined to succeed in these markets, are advertising for Obamacare and telling people about the subsidies they are entitled to, even though the Trump administration won't.

I have said that Barack Obama's biggest contribution to the environment is that he created the conditions necessary for the market forces for clean energy to compete coal out of the market. A key legacy of President Obama's on health care is now turning out to be the designing of the private marketplace that could withstand harsh challenges because of the basic bargain that underlies the marketplace.

The danger posed by Donald Trump and Republicans against health insurance for Americans is by no means over. Trump has been threatening for a while to withdraw funding that helps people of modest means pay part of their copays and deductibles.

But that may not turn out to be simple, or even possible. Senate GOP leader Mitch McConnell conceded in June that should Republican efforts to repeal (and umm..."replace") Obamacare falter, they will have no choice but to shore up the individual markets, i.e. protect them from an administrative threat of destabilization by the means of withdrawing co-pay and deductible reductions for those who need it.

There are already bipartisan legislation to do just that, and the Republican chair of the Senate Health Committee has already announced that he will hold hearings to consider such legislation the wake of the GOP's embarrassing defeat. The hearings will start in September in the Senate, and Chairman Alexander has publicly called for Trump not to pull the cost-sharing subsidies in the mean time. When legislation on that takes shape, it is likely to have veto-proof support, especially now that Republicans are particularly eager to prove their independence from a president on the side of the Nazis.

With Obamacare thus settled as the law of the land surviving every challenge thrown at it, more states may finally take the hint and expand Medicaid, which in turn will further stabilize the marketplace as uncompensated care will drop in those states.

When all is said and done, it may in fact turn out that the Republican effort to dismantle Obamacare backfired so badly that they will have no choice but to strengthen Obamacare, even over the object (or even veto) of their own president.

And all of that can be credited to the brilliance of buy-in: the resiliency of a system where everyone is a stakeholder.

Thanks, Obama!

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