Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance > Health Insurance

Single-Payer Mania Is Helping Republicans

Your article was successfully shared with the contacts you provided.

President Donald Trump’s two-step gutting of the Affordable Care Act, ending cost-sharing for insurance companies, and allowing them to cover fewer medical conditions should be a political nightmare for Republicans.

That’s because the White House has miscalculated, apparently falling for the fantasy that it can sabotage Obamacare and then successfully pin the political blame for lost coverage on President Barack Obama and the Democratic Party. Trump and some other Republicans have developed “Obamacare is imploding” as a talking point, trying to persuade Americans that the Affordable Care Act is collapsing under its own weight.

(Related: Math Geniuses Size Up 5 ACA Change Ideas)

This is nonsense, as the Trump administration is fully aware. It’s also hopeless as a political strategy, because repeated failed Republican efforts to pass an alternative health care plan have left the party powerless to credibly claim that it’s fixing a broken system.

Only Democrats could bail Republicans out of this political fix, and they may just be doing it with their growing push to back a single-payer health care system. If single-payer Democrats succeed in getting their party to commit itself to a national system in which all medical care is paid for by the government, think of the way it would change the terms of the political debate.

Today, Democrats are saying that Trump and the Republicans are disrupting the health-insurance market, throwing people off the insurance rolls, hitting some middle class families with hefty cost increases, diluting protections for people with preexisting conditions and adding almost $200 billion to the federal deficit.

Tomorrow, Republicans would be able to counter with this: The single-payer Democrats want to take away the employer-provided health insurance of 170 million Americans, many of whom are satisfied with their plans, then turn everything over to the federal government and pay for it with a huge tax increase.

Both arguments are largely correct, which is why the Democratic left, increasingly embracing the single-payer scheme introduced in Congress by Sen. Bernie Sanders, is giving the Republicans a gift. It neutralizes an issue where the Democrats currently enjoy a big and growing advantage.

“We Republicans control the House, the Senate and the White House,” Rep. Charlie Dent, a Pennsylvania Republican who’s retiring, said in a National Public radio interview late last week. “If there are problems we will likely own them.”

Tangle (Image: Allison Bell/TA)

(Image: Allison Bell/TA)

There will be much to own. The cost-sharing money that the federal government pays to insurance companies goes to subsidize deductibles and co-payments for uninsured lower-middle-income people for whom health insurance would otherwise be unaffordable. With Trump ending these payments, the companies will probably either pull out of the individual market or raise premiums for middle-income people. That would bring unstable markets, less choice and higher costs.

Trump’s order would also usher in more bargain-rate plans with less coverage, and would especially diminish protections for people with preexisting medical conditions. The American Cancer Society said the Trump change will “return cancer patients, survivors, and anyone with a serious illness to an underfunded high-risk pool.”

Trump has boasted that undermining the system will force Democrats to bargain on his terms, yet another example of his ignorance of health care politics and policy. Polls already show disapproval of the president’s actions, and the more the public learns the worse it will get. Democrats have the stronger bargaining hand.

That’s why Democratic leaders are troubled by a rush of colleagues, including potential 2020 presidential aspirants like Senators Cory Booker of New Jersey and Kamala Harris of California and many 2018 congressional candidates, to rally behind the Sanders single-payer proposal. Some Democratic activists are pushing to turn support for single-payer health care into a litmus test for party candidates.

Even beyond the perilous politics of taking away existing employer-based coverage, the challenges of transitioning to single-payer coverage would dwarf the impact of the adjustments to Obamacare. Paying for government-run health care would require huge tax increases, by some estimates raising the top individual tax rate by a third and more than doubling the capital-gains rate. That would be a tough sell even for people who think the wealthy should pay more.

Liberals should also realize that these huge costs — the Urban Institute concluded that a single-payer plan could cost as much as $32 trillion over a decade — would crowd out resources for other priorities like education, infrastructure and medical research.

There are changes to Obamacare that Democrats can offer without giving Republicans the political upper hand, though most would have to wait for Trump to depart. A government-sponsored public health-insurance option could be added; more signups could be encouraged by offering enrollment in individual plans year-round, as in Massachusetts; better cost and quality controls could be imposed and subsidies could be improved.

Trump and the ill-prepared Republicans have given the Democrats credibility on health care. To embrace single-payer coverage would be to snatch defeat from the jaws of victory.

—-Read 3 Weird Ways an ACA Subsidy Cut Could Help You on ThinkAdvisor.

— Connect with ThinkAdvisor’s Life/Health channel on Facebook and Twitter.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.