Health+Benefits the Jan/Feb 2017 issue

Trump’s Rx

When I listen to Donald Trump, I hear my father.
By Mike Turpin Posted on January 30, 2017

Our dining room table was his bully pulpit, and fact-checking was an act of sedition, prohibited when he was on a roll. On occasion, a courageous teen would put his college education to work to question my father’s draconian position on the war in Vietnam (“Bomb the NVA back into the Stone Age”) or social protest (“America, love it or leave it”). My father would listen incredulously and then ruthlessly suffocate the nascent rebellion like a banana republic dictator.

My father is no Archie Bunker. At 86, he’s lost a step and repeats himself, but he still understands Keynesian economics. He’s a tried-and-true carnivore capitalist who borders on being libertarian. He has an IQ of 170, and in his heyday he was the regional CEO of a large ad agency. But he has major blind spots and a black-and-white view of the world. His reptilian brain is in fear mode thanks to Fox News and a world that has been reduced to a dozen meds and 3,000 square feet. Before the election, he was angry—always interpreting any action by Obama as a sign of a decline in the values and ethic that made America great. His contradictions would come fast and furious.

“No, I don’t want immigrants. Oh, yes, I do love my immigrant caregivers.”

“I hate socialized medicine, but I love Medicare and don’t want to pay more for it.”

“Bush Jr. was an idiot, but Obama is worse.”

When I listen to Donald Trump, I hear my father. Trump is a manifestation of my dad and a social movement. Trump is perhaps the missing link between my father and a generation of conservatives who could no longer tolerate the hard edges of their own party. They had no clubhouse and were pissed off. When I look at Trump, I don’t see a disgruntled Austrian paperhanger bent on a millennium of Aryan superiority. I do see a POTUS who will be applying his politically incorrect, self-declared pragmatism to a world my father felt had swung too far left, leaving many feeling left out.

T-Rex Healthcare?

Trump favors repeal and replace. He’s got repeal down cold but seems fuzzy on replace. Repeal and replace will consume the new administration, but cooler heads are likely to prevail as the age-old problem of tearing up the tracks of any entitlement becomes an obvious third rail to a reinvented GOP hell-bent on maintaining power. The budget reconciliation process, which does not require a super majority, will be used to slowly emasculate

Obama’s signature legislation, subjecting it to a humiliating death by a thousand cuts. Popular elements of the legislation will be maintained and, in doing so, will continue to confound those who believe reform and affordable, private, market-based healthcare are compatible bedfellows.

Many in Congress and the new president believe only privatization can fix the system and that competition can create an elasticity of demand among payers, consumers and providers that ameliorates an estimated $700 billion of waste, fraud and abuse. However, Trump’s signature multipoint healthcare prescription plan was anchored by solutions that either are flawed or have been tried and tested and have failed.

Interstate competition sounds great, but unless an insurer has critical mass of existing membership in a competing state, it won’t be able to offer competitive insured products against deeply entrenched for-profits and not-for-profits that offer better rates anchored by better provider discounts. My experience is that shareholders get impatient at losses. On the heels of failed exchanges, don’t expect a land rush of new insurers to enter markets even when promised the backstop of local reinsurance pools. Reinsurance pools exist in more than 30 states with minimal impact on loss mitigation. There are no cornerstone ideas in Trump’s Rx for making coverage more affordable that don’t require appropriations to fund subsidies or a cost shift to the middle class in the form of means testing to cap the deductibility of healthcare.

There are no cornerstone ideas in Trump’s Rx for making coverage more affordable that don’t require appropriations to fund subsidies or a cost shift to the middle class in the form of means testing to cap the deductibility of healthcare.

Both sides of the political aisle have their sights set on the revenue to be gained from capping the deductibility of employer-paid benefits. Look for a possible horse trade with employers should the corporate tax rate drop, perhaps resulting in a compromise cap on deductibility of benefit costs. Ironically, we may see some form of a Cadillac Tax resurrected, possibly with an emphasis on imputing the value of benefits above a certain breakpoint to those making above a certain salary level.

Who Wins?

The wind just shifted heavily in favor of insurers. Goldman recently declared fair skies and calm seas for payers as they contemplate the next four years, which are likely to bring less regulation, reduced risk of Medicare introduced as a public option, and the expansion of rating bands to encourage younger consumers to purchase coverage.

The eventual revocation of medical device, research and excise taxes will lead to an Affordable Care Act that is essentially incapable of financing its own deliverables. Any Trump replacement plan will focus on the lowest common denominator of needs and will rely on market-based incentives and tax credits to achieve coverage for the uninsured and underinsured. No GOP replacement proposal tendered to date comes close to replicating the current number of subsidized ACA enrollees. We may see the ranks of uninsured rise as high as 8%.

A market driven and influenced by those who favor Medicare privatization, high deductibles, individual policies and block grants for states to administer Medicaid as they see fit portends a continuation of the age-old conflicts of trying to meet a voter/consumer demand for open access, low out-of-pocket cost and affordable premiums. Medicare remains the third rail. Touch it and you die.

Getting any T-Rex to change his declared course requires patience. You don’t interrupt T-Rex when he’s on a roll, and you never question his alpha status in public or on Twitter. You take him aside later on and present facts to him and give him options to save face. A T-Rex once made it clear to me: “If you’ve got facts, let me see them. If we’re talking about feelings, we’re going with mine.”

Employers are likely to continue cost shifting and celebrate what they hope is a slow diminishment of the role of the Department of Health and Human Services and the IRS in regulating health plans and eligibility. As profits increase from a recovering economy and potentially lower taxes, per capita healthcare costs as a percentage of per capita healthcare spending will decline. This is one-time evidence that will be used to shout down those who might advocate a single-payer push toward Medicare for all.

The Paleozoic Period

As for Trump, my guess is he will move slowly, and the private insurance industry is likely to benefit from deregulation. Yet it’s a temporary Indian summer for the industry. We all have a role to play. We have to educate those in power and introduce fiscal pragmatism and social empathy into the discussion. We can’t act totally out of self-interest or we set ourselves up for more draconian solutions down the road when the proverbial pendulum swings back to the other side—and it will.

Perhaps Trump’s legacy will be that he moved the GOP more to the left and thus saved it from irrelevance. Rather ironic that a T-Rex would save the other dinosaurs from extinction.

Turpin is author of several books, including 53 Is the New 38; Tales of Indignity and Middle Age. He also happens to be EVP of USI.

Mike Turpin EVP & Managing Consultant, USI Insurance Services Read More

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