Drew Altman, Kaiser Family Foundation
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Trump's dealmaking model doesn't fit health care policy

Kiichiro Sato / AP

President Trump's threat to withhold Affordable Care Act payments to insurers shows how he thinks of health care: Everything is negotiable, like it is in a real estate deal. In this case, it's his bargaining chip to get Democrats to negotiate on an ACA replacement plan. But in reality, it could panic insurers and crash the marketplaces.

The president doesn't have strong convictions himself about future directions for health care. But health policy is not like real estate. The partisan divide in health policy is grounded in deeply felt differences on both sides over policy and principle. It's hard to see Trump's approach to deal making working very often in health.

This was why Trump couldn't force a deal with the Freedom Caucus to pass the American Health Care Act in the House; the bill was not conservative enough for the caucus, and in their eyes, it violated their principles and political promises they had made. It is also why using Obamacare's marketplace cost sharing subsidies as a bargaining chip to try to force the Democrats to the table is unlikely to work.

Play that one out for a moment:

  • The subsidies are withheld, or a decision is delayed to the point where insurance companies withdraw.
  • The marketplaces collapse or falter in many states.
  • Some moderate Democrats want to come to the table to rescue the millions who would lose coverage, most likely in the Senate.
  • The right adds their demands as a condition of coming to the table. So does the left.
  • Negotiations quickly snowball, and the entire ACA is opened up for debate once again.
  • Stalemate follows.

There are other reasons why Democrats may not accede to Trump's threat on marketplace subsidies. They may calculate, for example, that the administration will own the fallout for a collapse in the marketplaces, as polls are starting to suggest they will.

Lawmakers are also hard to threaten because most come from safe political districts, as a recent Cook report featured in Axios showed, and they have been getting safer and more polarized.

So, Art of the Deal, meet health care. Whether it's bringing moderate Republicans together with conservatives ones, or Democrats together with Republicans, dealmaking in health care requires the hard, roll-up-your-sleeves work of developing policies that will bridge the partisan and ideological divide.

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A warning from the polls about letting Obamacare "explode"

President Trump has said the Democrats will take the fall politically if and when Obamacare "explodes." But new polling shows that the public will hold Trump and the GOP accountable for failing to address problems in the marketplaces, not the Democrats. That means they'll have to think twice about some of the moves they might make that could make the Affordable Care Act's problems worse.

Note: Neither of these/someone else is responsible, Both are equally responsible, and Don't know/Refused responses not shown; Data: Kaiser Family Foundation Health Tracking Poll (March 28 - April 3, 2017); Chart: Andrew Witherspoon / Axios

What's on the line: The polling has direct implications for some of the specific actions Republicans could take, or not take, in the months ahead:

  • Eliminating the $7 billion in federal cost sharing subsidies to insurers to compensate them for providing smaller deductibles to lower income enrollees.
  • No longer enforcing the individual mandate that helps get younger, healthier people into the insurance pools to lower premium costs.
  • No longer marketing the healthcare.gov plans to boost enrollment.

These steps would cause insurers to exit the non-group market, cause premiums to spike, and could leave millions without affordable coverage.

As the chart from our latest tracking poll shows, 62% of the public say Trump and the Republicans in Congress are in charge of the government and are responsible for problems with the ACA from now on; just 31% say President Obama and the Democrats are responsible. As is always the case with the ACA, there are party differences; 81% of Democrats and 65% of Independents said Trump and the Republicans "own it", but just 35% of Republicans feel that way.

Trump has also said that the collapse of the ACA would bring Democrats to the table to forge a new "deal" with him on health care. That's not impossible, but it seems unlikely: it's hard to think of a single major element of health reform where the Democrats agree with the president and the Republicans.

As we saw when the Freedom Caucus refused to support the American Health Care Act because it wasn't conservative enough for them, the substance and the details matter to policymakers far more than they appear to the President. He has suggested that he mostly wants a deal on health care.

Basic rules of politics seem to be holding up pretty well in the fights over the ACA. One rule, that benefits once conferred on the American people cannot be taken away, was a primary reason for the collapse of the GOP health care plan. The other: If severe problems develop in the marketplaces, or are caused by actions the administration takes to undermine the law, the party in charge gets the blame.

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Don't expect Medicaid work requirements to make a big difference

Liberals and conservatives have irreconcilable differences of policy and principle over the issue of Medicaid "work requirements." But their impact depends on how they are implemented and is likely to be very small — because most people on Medicaid who can work already are.

Data: Kaiser Family Foundation analysis of March 2016 Current Population Survey; Chart: Andrew Witherspoon / Axios

With Trumpcare dead for now, expect Republican governors to begin submitting waiver proposals to the Department of Health and Human Services to move their Medicaid programs in a more conservative direction. Medicaid "work requirements" are likely to be an element of many of those waiver requests, possibly from Republican-led states now looking to expand Medicaid under the Affordable Care Act.

During the Obama administration, HHS rejected mandatory work requirements as inconsistent with the purposes of the Medicaid statute, spurning requests from Arizona, Indiana, and Pennsylvania under a previous governor. Under the Trump presidency, HHS is expected to approve them.

Medicaid "work requirements" are not requirements to work in a literal sense. Generally, this is how states would define them:

  • Able-bodied beneficiaries — people who can work — would have to look for a job, participate in a job training program or go to school, or work full time or part time.
  • People who would be exempt: anyone who can document that they are too sick or disabled to work, have to take care of a sick child or family member, or do not have adequate child care.

Liberals find Medicaid work requirements repugnant because they believe that Medicaid beneficiaries want to work if they can, and that providing health coverage to people who cannot afford it is an obligation of any moral nation. Conservatives who favor work requirements see Medicaid coverage as another form of government welfare benefit, like cash assistance, requiring reciprocal obligations from beneficiaries, and a disincentive to work.

The reality, though, is that most Medicaid beneficiaries are working already, and the vast majority of those who are not working are likely to be exempted from all but the most draconian Medicaid work requirements when front-line caseworkers apply state rules.

As the chart shows:

  • 59% of all Medicaid beneficiaries who were not on Supplemental Security Income — the program for low-income people with disabilities — were working full time (41%) or part time (18%) in 2015.
  • That leaves 41% who were not working. Of those, the vast majority (89%) had reasons for not working, including that they were sick or had a disability (35%), were taking care of a family member (28%), or were in school (18%).
  • Another 8% said they could not find a job which, when documented, usually satisfies work requirements.
  • All told, just a tiny subset of Medicaid beneficiaries are-able bodied adults who do not have a reason for not working that would fail to pass muster with a state case worker.

Medicaid work requirements send signals conservatives like and liberals reject. As I learned a long time ago designing and implementing a leading welfare reform program as Commissioner of Human Services in New Jersey, the fight about policy and principle can get hot when it comes to work requirements, but their impact depends on how they are implemented.

With most beneficiaries working or with good reasons not to be, that impact will be small.

Drew Altman is president and CEO of the Kaiser Family Foundation in Menlo Park, Calif. and an Axios contributor.

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Why deductibles would rise under the GOP health care plan

Health care is complicated, as the president has discovered. But here is one thing that is not so complicated: if people have modest means and limited tax credits, and coverage is expensive, they will mostly buy health plans with lower premiums — and high deductibles.

This is what is likely to happen under the GOP health care bill, the American Health Care Act. Only people who need more health care will stretch for more generous coverage. If that happens, those health plans will draw too many sick people, causing insurance companies to stop offering them for fear of losing money. That would leave mostly the low-premium, high-deductible plans.

Data: Kaiser Family Foundation analysis; Chart: Andrew Witherspoon / Axios

As the chart shows, the average deductible for a typical plan in the non-group market under the GOP plan would be about $1,550 higher in 2017 than it would have been under the Affordable Care Act, based on our analysis for this column. Most of the debate has been about what would happen to premiums — but for consumers, it's total out-of-pocket costs that matter.

Under the Affordable Care Act, the low-premium, high-deductible health plans are called "bronze" plans — so think of this as the "bronzification" of the non-group market. The result: premiums may be lower in some cases, but deductibles will go up.

That is based on the Congressional Budget Office's conclusion that the AHCA will result in health plans covering a lower share of patients' medical expenses. They'd have an average actuarial value across plans of 65% — meaning insurers would cover 65% of medical expenses on average for its enrollees — compared with the current market under the ACA, which has an average actuarial value of 72%.

The drop would be due to consumers gravitating to lower premium plans, insurers increasingly offering only those plans, and the elimination of the cost sharing subsidies the ACA provided to insurers. That could change now that the House is adding a reserve fund of as much as $85 billion to beef up the tax credits for older customers, but it depends on what the Senate does with the money.

President Trump said his plan to replace Obamacare would have "lower numbers, [and] much lower deductibles." When advocates of the AHCA talk about expanding choice of lower cost plans, keep in mind that they are focusing on the premiums, not the overall costs to consumers.

But insurance market dynamics, the CBO, and now this new analysis suggest that those out-of-pocket costs will go up for many consumers buying their own insurance, particularly people who need more health care services.

Drew Altman is president and CEO of the Kaiser Family Foundation in Menlo Park, Calif. and an Axios contributor.