President Trump spoke at length with the New York Times last week. In Adam’s post he finished up with this task and charge:
There’s a lot more at the link, including some stuff about health care associations that doesn’t make a lot of sense. Perhaps Dave will eventually try to make sense of it for us.
So let’s find this particular piece of word salad:
TRUMP: Wait, wait, let me just tell you. … Also, beyond the individual mandate, but also [inaudible] associations. You understand what the associations are. …[Cross talk.]
TRUMP: So now I have associations, I have private insurance companies coming and will sell private health care plans to people through associations. That’s gonna be millions and millions of people. People have no idea how big that is. And by the way, and for that, we’ve ended across state lines. So we have competition. You know for that I’m allowed to [inaudible] state lines. So that’s all done.
Now I’ve ended the individual mandate. And the other thing I wish you’d tell people. So when I do this, and we’ve got health care…….
I’ll tell you something [inaudible]. … Put me on the defense, I was a great student and all this stuff. Oh, he doesn’t know the details, these are sick people.
There is a charitable read and there is the read one has after going through It’s A Small World four times in a forty eight hour period.
The charitable read is the president is overclaiming credit for actions that have not yet occurred but are in the pipeline to occur.
The October executive order on healthcare has the federal government making rules redefining what an association must be in order for that association to be able to buy insurance for its members as a self-contained pool. Association health plans are common already for small business and certain clusters of self-employed individuals. The executive order has the Department of Labor looking at how to rewrite rules to expand the definition of an association.
Association health plans are able to save money in three ways over the ACA. First, they are regulated by the 1974 Employee Retirement Income Security Act (ERISA). ERISA has much lighter regulations on required benefits than the ACA. Secondly, association plans are allowed to control and underwrite their membership. They can kick out the family with a trio of hemophiliac sons who have had multiple million dollar years. Finally, they are far more lightly regulated on financial reserves and the capacity to absorb actuarial risk so when they get hit with big claims, they can easily fold and leave people in the lurch.
From this background, the claim that the President could be making is that more people who are subsidy ineligible will be able to get underwritten insurance at a lower price. And that claim is true, the bottom 50% of the spending distribution drives 3% of the total claims costs. So if an association can cherry pick the cheapest and most likely to be healthy individuals and families, those people will have dirt cheap premiums.
The people who make too much for ACA subsidies and who have any significant medical history are screwed.
That is the most charitable reading of the statement.
The less charitable reading is that the President sounded a lot like my three year old niece as we waited in line to see Elsa and she was two hours overdue for a nap.