Trumpcare Would Make U.S. Healthcare Even More Dysfunctional
Dean Baker, Co-Director of the Center for Economic and Policy, discusses the fight over Trumpcare and the problems with the existing healthcare system that the GOP wants to gut even further
Aaron Maté: It’s the Real News, I’m Aaron Maté. Senate Republicans have delayed their vote to repeal the Affordable Care Act, strip millions of health coverage and hand a new tax cut to the wealthy. But even if Trump Care is defeated, the U.S. healthcare debacle is far from solved. Under the current system, about 28 million people are uninsured and many who have coverage face soaring premiums and plans that can barely be used. Joining me is Dean Baker, co-director of the Center for Economic and Policy Research. Welcome, Dean.
Dean Baker: Thanks for having me in.
Aaron Maté: Thank you for joining us. Before we get to the big picture here, I wondered if you wanted to comment on where Trump Care is at right now and the problems Republicans are facing in getting it through.
Dean Baker: Well, to start with, they’re trying to maneuver, of course, using reconciliation of process that means they only need 50 votes in the Senate rather 60 to cut off a debate to end [inaudible 00:01:02], but they have a hard time getting it. Of course, they have 52 Republicans they could lose to and still get through with the Vice President Pence’s vote, but they seem to have lost, at this point at least five of … basically two on the right and three, I’d hate to say on the left, but somewhat more modern Republicans, so they don’t have the votes right now and they’re putting this off till after the July Fourth recess. They were trying their best not to do that because needless to say, a lot of people are very angry about this, members will go back to their districts, their states, over the July Fourth recess, and they’re getting an earful from constituents that are going to be very upset about losing their healthcare.
For the moment, at least, they don’t have the votes they need to pass it, but they are not giving up. They’re still trying. They want very much to give this big tax break to rich people, and that’s really the core issue here for them. I think, the cutting back off healthcare is secondary, but they’re not about to give up on that.
Aaron Maté: Can you comment on the magnitude of this effort here in terms of trying to take away people’s coverage and hand that money over to the wealthy, as you say?
Dean Baker: Yeah. Well, basically, the tax cut that they’re looking at is $700 billion over the span of a decade, so it’s roughly $70 billion a year, it’s about half of 1% of GDP. It’s a chunk of change, and almost all of that goes to the wealthy, the top 1% to 2% of the population. There’s some other small taxes there. That’s the tax cut side.
On the healthcare side, the Congressional Budget Office estimates 22 million fewer people would have coverage by 2026, the last year in their estimates. Huge cut back in Medicaid, the Medicaid is cut 10% over the course of a decade, the cuts gets larger year by year, so in 2026 the cut is over 25%. You’re talking about massive cuts, people losing coverage, basically, people being thrown out of nursing homes. On top of that, insurance policies will be much less affordable. The Congressional Office Budget, their estimate of middle income person who’s 64, they’re going to be looking at a policy that will cost over $20,000 a year. That’s not even a particularly good policy. That’s going to be very hard for a lot of … as I say, even middle income people, a lot of lower income people, of course, will be all together, unaffordable for. But, $20,000 for someone making, $50,000 $55,000 a year is pretty hard to play.
Aaron Maté: I want to play you, in the issues of Medicaid, the comments of Kellyanne Conway, the White House Advisor. This is what she earlier this week about people who are currently on Medicaid.
Kellyanne Conway: If you are currently in Medicaid, if you became a Medicaid recipient through the Obama Care expansion, you are grandfathered in. We’re talking about in the future. Obama Care took Medicaid, which was designed to help poor, the needy, the elderly, the sick, disabled, also children and pregnant women, it took it and it went way above the poverty line, opened it up to many able-bodied Americans who should probably find other … should at least see if there are other options for them. If they’re able-bodied and they want to work, then they’ll have employer or sponsor benefits like you and I do.
Aaron Maté: Dean, that’s Kellyanne Conway saying that, basically many people who receive Medicaid under the Obama Care expansion of it, are able-bodied and if they want healthcare they should just go find a job.
Dean Baker: Yeah. It’s an incredible statement. It’s one of those things you started scratching your head, does she not know how ill-founded that is or is she just lying? I guess, is the term I should say.
Roughly, one third of jobs don’t have healthcare benefits, and the vast majority of people getting Medicaid today are in fact working. I mentioned before, seniors in nursing home, they’re not working, I’ll grant that, but the vast majority of younger people, people below Medicare age who are getting Medicaid are in fact working today. They’re working at jobs that don’t provide healthcare insurance, so we could say, maybe all jobs should provide health insurance, but the reality that we face is they don’t go. Telling these people that they should go out and get a job, well, that’s kind of silly. Should they get a job that gives them healthcare insurance? I’m sure they would love to, but there aren’t a lot of those out there waiting for people to fill.
Aaron Maté: Yeah. In turn what she said there about those who generally deserve Medicaid are grandfathered in, if it’s true that the poorest people will still be receiving their coverage, is it fair to say that working-class people who, even those who can afford some kind of plan, are being the ones here who are expected to shoulder the cost because their premiums are not protected, and of course, many of them are losing coverage under Republican designs?
Dean Baker: Well, two points here, first off, the grandfathering, again, this is to some extent a joke. The way the world works is people go on and off Medicaid, so exactly the point that she was making that people get jobs that do provide coverage so the people who are on today … If we look who’s on the program or, better yet, let’s go back five years, who was getting the benefits five years ago? Most those people are no longer getting it. Their situations has changed and no longer getting it, and so grandfathering it is kind of a joke. After two, three, four years of people on it today, most of those people will be off, so that really doesn’t help much.
The other part, yeah, you’re cutting back benefits. The reality, we can’t really say who will be hit because they’re block granting it. The plan is to give states a fixed sum of money. Currently, Medicaid is a program with a basket of benefits. If you’re below income cutoffs, you get a basket of benefits set by the federal government. There’s discretion on the state’s part to add to that but they have to give that minimum basket. The Republicans are proposing to block grant this, so they’ll hand a chunk of money to the states and they’ll say, “Do what you want.” It may end up being the case that they’ll cover the lowest income people, the poor, and tell the working poor, moderate-income people, “You’re on your own. You’re out of luck.” Or, maybe they’ll go the other way and say, “Okay, if you’re working, we’ll give you some subsidy,” but the real poor won’t get benefits. You really can’t say it’ll be up to those states.
The history we’ve seen with this … The recent history was of course the welfare reform in ’96, they block granted the program and we saw a lot of people lost benefits altogether, including the poorest of the poor. You really can’t say what the states will do when they’re just handed a pot of money and said, “Do what you feel like.”
Aaron Maté: One other thing that Kellyanne Conway said this week is that Medicaid is unsustainable.
Dean Baker: This is, again, one of these jokes that … My ideology that I use for this is if you’re driving west in the state of New Jersey, that’s unsustainable because if you keep driving west, you’re going to end up in the Pacific Ocean and you’ll drown. That’s unsustainable.
Medicaid spending is growing more rapidly than the economy, that’s been true for a long time, it could be true for a long time. It’s true. If anything is growing at a more rapid rate than the economy, at some point, that can’t keep going, but it’s really kind of silly. It’s like telling someone you can’t keep driving west you’re in New Jersey and in another 3,000 miles you’ll be in the Pacific Ocean. It’s just silly. We have projections of the growth rate, we could afford over the next decade, the next two decades, especially if we don’t give these huge tax cuts to rich people. It’s really incredible saying, “This is unsustainable. We can afford it, but we’re handing $700 billion to the richest people in the country.” Hard to take.
Aaron Maté: Dean, I’m wondering if you could comment on the current system as it is and what happens if Trump Care is defeated in terms of what we’re still left. As I said earlier, we have 28 million people who are still uninsured, many of those who have insurance face huge premiums or plans that they can barely use because of the high deductibles or just a skimpy coverage, can you comment on … Especially, this market basis that we have where you see … Part of the confusion right now is because of all the disarray over healthcare, you have some insurers are leaving healthy exchanges or others are seeking to raise premiums by huge rates. Here in Maryland for example, [inaudible 00:09:14] have asked for something like a 40% increase in premiums.
Dean Baker: Well, the current system is very, very much a mixed bag, we did increase coverage by some of [inaudible 00:09:23] 25 million, which is a huge deal. People feel much more comfortable in their coverage. We see that because the willingness … the number of people who opt to work part-time jobs has increased by 2 million since the exchanges went to effect. I think that’s a very clear result of the Affordable Care Act that people no longer depended on their job for insurance. Many of those people were free to take part-time jobs where previously they needed full-time jobs.
Same time, you do have a lot of problems, and a lot of that is states have deliberately decided to basically screw the exchanges. The worst problems are in states that you have Republican governors, Republican legislators and they’ve done everything they can to make the program not work. They’re smart enough to do that. In the states where you’ve had people supportive of Obama care, it’s generally work reasonably well. Be great if the premiums were lower deductibles, were lower, but in fact if you look at the projections from the Congressional Budget Office back in 2010, we’re pretty much right in line with those.
Now, you’d like to see them get those costs down further. I would love to see us do a lot of things to contain costs in a healthcare system where doctors get paid twice as much as doctors in other rich countries, we pay twice as much for drugs, drugs would be cheap if we didn’t give drug companies patent monopolies, medical equipment, same story. If we got those costs down, we could go a long way towards making healthcare much more affordable for everyone. But again, I think the Affordable Care Act was a huge step forward.
Aaron Maté: Let me ask you about the states. There was an uproar last week in California when Anthony Rendon, the speaker of the California Assembly, shelved a measure that would install single-payer, but my question is that even if that measure had gone through, our states on their own, in the absence of a federal single-payer system, able to sustain the cost that it would take and just the effort to take to cover everyone in their state? Is it sustainable for states to take this go-alone approach in the absence of a national plan?
Dean Baker: I think it’d be difficult, particularly if you didn’t have a cooperative administration in Washington, which I don’t think you can count on at this point because you have a lot of money that comes from the federal government that the states would be counting on and having access to, particularly what I’m talking about is Medicaid, Medicare spending. In principle, there is no reason federal government shunt give that to a state that was running its own single-payer type plan. But again, I wouldn’t count on the Trump administration’s cooperation in that respect. That would be difficult.
There certainly are many other issues, if you talk about going from the system we have today, most people having employer-based insurance, some number getting individual insurance through the exchanges or on their own, that would be a huge transition. I would certainly be worried about doing that overnight, but I don’t think it’s impossible. But again, absent cooperation from Washington, I think, would be very close to impossible.
Aaron Maté: Well, Dean, let’s end on that. There is momentum now, again, for single-payer … Senator Elizabeth Warren has just come out in favor of it, joining Bernie Sanders who’s been backing it for a long time and is set to introduce a measure along those lines. If Democrats don’t embrace single-payer, do you think that they’re setting us up to keep seeing these fights over and over and over where they’re trying to stop Republicans from taking advantage of the problems that do exist inside the market-based system?
Dean Baker: Well, I guess I’d say there’s two stories about the Affordable Care Act, one is, how much could you have accomplished at the time, 2010, given the opposition of, certainly, the industry groups, not just the insurance industry but the pharmaceutical industry and the other major industry groups, the doctors? How much more could you have accomplished? Probably somewhat more than they did-
Aaron Maté: Especially with Democrats like Joe Lieberman who blocked the public option.
Dean Baker: Absolutely, that was just even a public option. Here, we’re just giving people an option to buy-in, and they couldn’t get that through. I think you may have been able to get a little more than what they got, but that was the politics of the time. There’s not much more could President Obama push for. Again, I think somewhat more, but probably not hugely more.
The other part is the on-for steer. They made a decision to have this, they went for the idea of skin in the game so this was that patients had to have co-pays, they had deductibles that give them a disincentive, discourage them from getting excessive care. The extent to which this has cost savings, I think, is very questionable. There may well be some, but I think the cost to people in terms of harassment … I realize there probably are some people out there that abuse the healthcare system in terms of getting care they don’t really need. I don’t know them. I can’t imagine like, “What do you want to, Dad?” “Well, I want to go see a doctor.” Never in a million years would that occur to me, but whatever. I’m sure there’s some people like that, but for the most part, this is harassment. You end up with a situation where … I’ll refer to my own experiences, my wife and myself just about every single claim is wrong, we both are PhD’s in economics so we can deal with forms, deal with bureaucracy, but we have to run through hoops just to get claims that should be paid paid. At the end of the day, I’m saying should be paid because they do pay them. I’m sure they wouldn’t pay them if they didn’t have to, but that’s not something you want to subject people to do.
That’s what I’d say is an unforced air. That was a really foolish decision that they were policy people that thought this was clever, it wasn’t. It was foolish and it meant that people that disliked Obama care, in this case, for good reason and for not necessary reason. You didn’t save money or you saved very little money with this sort of harassment.
Aaron Maté: Dean Baker, co-director of the Center for Economic Policy Research. Dean, thanks.
Dean Baker: Thanks for having me in.
Aaron Maté: Thank you for joining us on the Real News.