The one thing that’s certain about the Alternative Fact of the Week is that President Donald Trump uttered it in explanation of his position on the bi-partisan deal crafted by Sens. Lamar Alexander and Patty Murray to undo the damage he wrought last week by announcing the end of cost sharing subsidy payments under the Affordable Care Act. But which explanation is untrue?
Was it his initial reaction, that the legislation was an appropriate measure to “get us over this intermediate hump” and ensure that “we don’t have this very dangerous little period” (that he caused)?
Or maybe his claim to the Heritage Foundation that he opposed it and wanted Congress to “find a solution to the Obamacare mess” (that Republicans have worked for years to manufacture) “instead of providing bailouts to insurance companies”?
Perhaps the untrue bit was his tweet Wednesday that “I am supportive of Lamar as a person & also of the process, but I can never support bailing out ins co's who have made a fortune w/ O'Care”?
Or maybe he was lying in a phone conversation with Mr. Alexander when he sought to be “encouraging about the bipartisan agreement that Senator Murray and I announced yesterday,” according to the Tennessee Republican?
All of the above?
There are a couple of actual facts that are worth noting. The first is that the payments in question cannot by any rational definition be considered “bailouts” for the insurance industry. You could call the Troubled Asset Relief Program enacted to stave off the financial crisis of 2008 a bailout of investment banks that had behaved badly. You could call the government’s rescue of General Motors and Chrysler a bailout for their prior failures. But the cost sharing reduction payments don't fit the bill.
The ACA limited the out of pocket expenses like deductibles and copays that low-income consumers could be required to pay under insurance plans in the Obamacare marketplaces. The law required the insurance companies to pick up the tab instead, and it included a mechanism for the federal government to reimburse those costs. In other words, the government required insurance companies to incur a new expense, and it promised to reimburse them for it.
Health insurance is a highly regulated business, and it was long before the ACA came around. The reason is that the government has an interest in making sure the companies will have the reserves and cash flow necessary to pay their policyholders claims. If something causes a company’s expenses to go up or its revenues to go down, insurance regulators in Maryland and elsewhere have a responsibility to increase their rates to compensate. States are now in the process of doing so as a result of Mr. Trump’s decision to stop the cost sharing payments, and even if the Alexander/Murray bill passes, it will almost certainly be too late to affect the rates offered in the ACA open enrollment period, which begins in November.
(An interesting side note, according to the New York Times, is that many states are jacking up the price of the silver plans on which federal subsidy calculations are based, which could have the effect of allowing many consumers to purchase other sorts of plans, maybe even more comprehensive ones, for less money. It will, of course, wind up costing the federal government billions more per year than if it had kept the cost-sharing payments in the first place.)
As for Mr. Trump’s contention that the insurance companies “have made a fortune w/O'care," that's false, too. It’s not that the insurance companies that are hurting; their profits overall are way up. But that’s in spite of Obamacare, not because of it. The big for-profit insurers have continued to lose millions in the Obamacare exchanges, but they have made up for it with growth in other parts of their business.
If there’s one true thing that can be said about President Trump’s Obamacare musings of the week it’s that they reflect his utter inability to articulate a consistent position or a clear understanding of the policy choices involved. Whether it’s Obamacare cost sharing reductions, the Iran nuclear deal, a continuing resolution on government spending and an increase in the debt limit or protections for immigrants brought to the U.S. illegally as young children, he appears willing to say whatever he thinks his audience wants to hear. Sometimes that’s the Heritage Foundation, sometimes it’s Chuck and Nancy. He’ll mean it, too — right up until some other idea pops into his head.
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