Apparently President Trump was just getting started with his Thursday executive order to relax ObamaCare mandates on "essential benefits." Overnight, he issued a new order that strikes at the heart of the law's unsustainable economic model - mostly ending the practice by which the government subsidizes insurers for their heavy losses on high-utilization (i.e. sick all the time) patients who are not allowed to be charged a higher premium under provisions of ObamaCare.
This is bringing shrieks that the move will destablize insurance markets, but actually the markets are already unstable. What this does is end the practice of case-by-case taxpayer bailouts to hide the fact that the market is unstable, and that it's the ObamaCare mandates that cause the instability:
The fate of the payments, which allow insurers to offset subsidies to low-income consumers, has been the subject of intense speculation among insurers and in the health-care industry more generally.
Insurers have said they may exit the ACA exchanges, or marketplaces, in 2019 if the payments are discontinued, or possibly raise premiums further.
The payments have been made on a month-to-month basis, with the next distribution expected around Oct. 21.
A number of insurers have said they were worried that Mr. Trump would end the payments this month because a Republican effort in Congress to repeal much of the ACA and replace it with a more conservative approach recently collapsed.
Mr. Trump’s interest in the bipartisan talks reflects his desire to make changes to health care that appeal to both parties, people familiar with his thinking said. The president has also reached out to Mr. Schumer about a bipartisan path forward on health care.
A federal judge in 2016 ruled the cost-sharing payments were improper after House Republicans filed a lawsuit in 2014 to block them, arguing that they hadn’t been approved by Congress as necessary. The case has been in a holding pattern, with regular updates to the court every three months.
Mr. Trump had warned the payments would be halted after Republicans in the Senate failed in their attempts to overturn the ACA.
Thursday’s developments put further pressure on Democrats to make progress on the bipartisan talks, which some Republicans have also backed as a way to help shore up the individual insurance markets and give states more flexibility in the ACA’s implementation.
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Trump has no choice but to make these moves
There is clearly some political gamesmanship going on here. Trump seems to recognize that the Republican majority can't hold itself together to accommplish a legislative fix to ObamaCare, and that any change in the law is going to require Democrat votes in the Senate. You can thank frauds John McCain, Lisa Murkowski, Susan Collins and Rand Paul for that.
Now usually when you need Democrat votes, the only way to get them is to give Chuck Schumer and Nancy Pelosi everything they want and expect nothing whatsoever in return. Otherwise they'll be happy to sit back and watch things descend into utter chaos and blame you for it. In this case, Trump seems to have recognized that the Republicans need some leverage, and the executive orders of the past 24 hours put Democrats in a much weaker negotiating position than they would have been had Trump simply kept executing the law as it was.
It's true that this may cause some insurers to exit the ObamaCare exchanges, but that's hardly an earth-shattering development. Insurers are already existing the exchanges left and right because the ObamaCare economic model is insane and they can't make any money in them. The subsidies are merely a way to paper over this reality and make the taxpayers pick up the tab for it.
This is what happens when you pass a law that requires insurance companies to provide a service, while also forbidding them from structuring the service or the pricing in ways that recognize the basic reality of insurance markets. That's ObamaCare in a nutshell, and that's why the markets created by the law are collapsing. Republicans should have repealed it months ago, but thanks to the detestable four listed above, the did not.
Trump has no choice but to make these moves.
