Trump Just Reneged on His Campaign Promise to Repeal Obamacare

trump-repeal-obamacare-quoteSeventeen days before the election, Donald Trump issued his “Contract with the American Voter.” Three days after winning that election, abandoning one big item in that contract.

In his contract, Trump promised that within the first 100 days of his administration he’d push for legislation that “fully repeals ObamaCare and replaces it with Health Savings Accounts, the ability to purchase health insurance across state lines and lets states manage Medicaid funds.”

That’s pretty straightforward, and it is clearly a priority with Trump’s voters, 74% of whom listed repealing ObamaCare as a top issue, the highest of any issue listed, including building a border wall (just 30% of GOP voters listed that as a top issue).

But in an interview with the Wall Street Journal on Friday, Trump said he was open to keeping two pieces of ObamaCare — the provision that lets children stay on their parents’ plan until age 26, and ObamaCare’s ban on insurers’ denying coverage for pre-existing conditions on the individual market.

“I like those very much,” Trump said.

Later in the interview, Trump said that “either ObamaCare will be amended, or repealed and replaced.”

To those who’ve been advocating for an all-out repeal of ObamaCare for six years, this is a troubling development.

Most GOP plans would keep the provision lettings kids stay on their parents’ plan. That one is completely uncontroversial.

However, Trump’s promise to keep ObamaCare’s ban on pre-existing-condition restrictions — called “guaranteed issue” — would make it impossible to repeal ObamaCare, or even amend it, because “guaranteed issue” is ObamaCare.

All of ObamaCare’s market regulations, subsidies and insurance bailout programs exist to support that guaranteed-issue requirement. You can’t have one without the other.

The reason is simple. What guaranteed issue means is that insurance companies cannot deny anyone insurance — or charge them more — because of a pre-existing condition.

That sounds like a nice idea, at first. Except that it creates huge perverse incentives for both consumers and the insurance industry.

Under guaranteed issue, consumers now have an incentive to forgo insurance until they get sick, then sign up for comprehensive coverage, and then drop insurance once all their medical bills are paid for.

Meanwhile, guaranteed issue gives insurers a powerful incentive to enroll only healthy people. Since they can’t charge sick people more than healthy people, insurers that are best able to avoid the sick will win out.

To minimize the perverse incentives for consumers, ObamaCare’s designers created the individual mandate, the insurance subsidies and the limited open-enrollment periods.

To minimize the perverse incentives for insurers, it created a huge backdoor cross-subsidy scheme where insurers that end up with healthier-than-average enrollees subsidize those with sicker-than-average pools.

Even with all this machinery, the individual market is still failing under ObamaCare.

Despite the individual mandate — and the stiff tax penalty for not complying — the young and healthy aren’t buying coverage. The restrictions on enrolling outside open enrollment haven’t stopped consumers from gaming the system. And ObamaCare’s cross-subsidy program hasn’t prevented massive across-the-board industry losses and huge rate hikes.

All of these problems — all of them — stem from the guaranteed-issue provision that Trump now says he likes “very much.” (It’s worth noting that several states tried guaranteed-issue reforms in the 1990s, only to suffer the same problems ObamaCare is now experiencing.)

This is why Republican plans that replace ObamaCare do away with its guaranteed-issue provision and instead employ smarter, more effective means to help those with pre-existing conditions.

First, the GOP plans would protect those who maintain coverage from insurance denials when they change or renew plans. Unlike ObamaCare, this creates an incentive for the young and healthy to buy and keep insurance.

What’s more, the GOP’s replacement plans would resuscitate the state-run high-risk pools that ObamaCare eliminated. These provided subsidized coverage for the truly uninsurable.

Even with a Republican president and a Republican Congress, repealing ObamaCare will be a difficult challenge. Trump’s comments over the weekend didn’t make that job any easier.

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