MARY REICHARD, HOST: It’s Wednesday, the 17th of April, 2019. Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Mary Reichard.
NICK EICHER, HOST: And I’m Nick Eicher. First up today, Washington Wednesday.
Healthcare has been a leading political topic for the last decade. After running on healthcare, President Barack Obama signed his signature domestic achievement into law in 2010.
The Patient Protection and Affordable Care Act soon became known simply as Obamacare. And since its inception, the law has been the centerpiece of countless political campaigns, legislative fixes, and lawsuits from coast to coast.
While Republicans failed to repeal Obamacare in 2017, they have chipped away at it. Repealing the individual mandate as part of tax reform legislation was the biggest piece of that effort.
Senate Majority Leader Mitch McConnell explained the rationale.
MCCONNELL: In short, the goal is to repeal an unpopular tax from an unworkable law in order to provide more tax release to middle class families.
That legislative move sparked a lawsuit. Several red states argued that repealing the individual mandate invalidated the entire law.
In December, a district court judge agreed with him. He ruled all of the law unconstitutional.
Now, the Trump administration had defended Obamacare in court for two years. But the December decision changed that. Last month, Justice Department lawyers wrote to an appeals court affirming the lower court ruling against Obamacare.
That ruling doesn’t kill the law immediately, but it does ensure healthcare will remain a campaign issue into the 2020 election season.
Here now to talk about the latest is Joe Antos. He’s a resident scholar at the American Enterprise Institute. He specializes in healthcare policy.
Joe, good morning to you.
ANTOS: Thanks, Nick. It’s great to be here.
EICHER: OK, can you give us an idea of where things stand with Obamacare right now?
ANTOS: Well, as far as Obamacare is concerned, the health insurance exchanges are stable but not stable in a way that I think we would like.
Essentially what has happened is that people who are eligible for premium subsidies have remained with the program. However, lower-middle class people who are not eligible for subsidies, who were buying coverage on their own before, are faced with rapidly escalating premiums and have been largely pushed out of the market.
So, that really explains the Trump administration’s various initiatives to try to open the door to lower cost alternatives to these lower-middle class people who really don’t have any place else to turn. Because they don’t work for a big company, they don’t have the offer of employer coverage. They may work in agriculture or in rural areas where there aren’t any options other than buying your own coverage on the individual market.
EICHER: Let’s talk about what might happen legislatively, if anything. What does the White House exactly want to do from here? What do Republicans in Congress want to do? And I guess the big question is are they the same thing?
ANTOS: Well, it’s a little hard to speculate what the White House actually wants. It’s clear, however, that Republicans in Congress—in the Senate and in the House—are very uncomfortable with this issue. They would probably welcome some leadership in this area.
But the White House, I have to say, has largely fallen down on the job. Folks on the staff I know have been working on various plans, but they really haven’t seen the light of day.
So I don’t really see much happening for the next few years until after the 2020 election until, presumably, President Trump will be reelected—from the looks of things. And then Republican will have to, once again, actually get down to work on how to reshape Obamacare so that it promotes a more efficient healthcare system rather than continues to simply pour more money into the kind of system that we have today.
EICHER: Now, I know that the Democrats would probably take issue with the idea that President Trump is going to win reelection. And those Democrats have a different idea in mind completely for healthcare. They are moving en masse to support for Medicare for All, but that’ll take more power than they currently have. So where do you think Democrats will go in the short term?
ANTOS: Well, Nancy Pelosi was very clear about this. She is opposed to the Medicare for All movement and has basically said, “Go with what you have. Start with Obamacare and expand subsidies further up the ladder in terms of income.” Because even she recognizes that there are lots of people who were pushed out of the market, and if you’re a Democrat, you’d like to bring them into Obamacare, because by and large they’re healthy people.
So that’s her theme: why don’t we just expand coverage and spend more taxpayer dollars?
Republicans should not sit still for that, but they need to have an alternative, and right now they don’t.
EICHER: Now a huge part of healthcare, obviously, is prescription drugs to treat the health issues that are diagnosed. And nobody—Republican or Democrat—seems happy with how high those prices are. And maybe that seems like an area that could be a place for compromise. Do you think that’s possible?
ANTOS: I’m very pessimistic about that, and in a sense I may be optimistic, depends on what you’re looking for because of the politics.
If Democrats and Republicans agree on virtually anything in healthcare, then Donald Trump will say he got a win. And that will get under Nancy Pelosi’s skin, and I don’t think Mrs. Pelosi can handle that.
So, I think in the end they will play the game that has been played for a long time now, which is to talk big about what the policy should be and then find some reason to not reach agreement even on very reasonable, small steps.
EICHER: OK, so let’s just accept the idea that the politics is prohibitive. But I want to talk about an idea that’s been bandied about and that’s the idea of Medicare negotiating prices directly with the drug companies. Forget the politics. Do you think that, as a policy matter, that’s a viable policy?
ANTOS: Well, the problem that Medicare has is that if it’s really going to be an effective negotiator, it has to be willing to step away from buying some specific product. And politically that’s impossible.
And if you’re not prepared to say no, then you’re not going to be able to cut a very good deal, because the folks on the other side—the manufacturers—will know that you basically have to take a drug at a price that is acceptable to them. If you expect to get a big bargain, you’re not going to get it from the government.
Now, there’s the other practical issue, which is how do you know when you have a good price? The federal government is amazingly unable to determine whether they got a good price.
And there are lots of reasons for that, but I’ve spent quite a few years working in what is known was Center for Medicaid and Medicare Services. And I saw numerous occasions where Republican officials and Democratic officials both thought that they were negotiating a good deal either on price or on other terms of doing business with the Medicare program that would end up serving taxpayers and patients well. And they never lived up to the hype.
This is the reason why Medicare Part D was designed to operate through private plans. So, if you don’t like your plan, you can change.
And so that gives an individual private plan market power to say, well, if you don’t want to meet my price, then maybe we won’t cover your product. And that’s really the way negotiations are supposed to work. The federal government, if it’s negotiating on behalf of everyone, won’t be able to do that.
EICHER: Joe Antos is a resident scholar at the American Enterprise Institute. Joe, thank you for your insights.
ANTOS: Thank you very much.