(Bloomberg Gadfly) — Another day, another refusal to admit that GOP efforts to repeal and replace the Affordable Care Act are dead.
In an interview with Fox Business that aired on Wednesday, President Donald Trump said it's been "misreported" that his administration has failed in its efforts reform health care. He suggested that his party's reforms will result in $900 billion in government savings, and that an ACA repeal will come before an attempt at tax reform.
— (Related on ThinkAdvisor: Trump Threatens Health Subsidies to Poor to Force Talks)
Hospitals and Medicaid insurers, stocks that are most exposed to changes to the ACA, saw shares fall once again yesterday. A repeal is still unlikely, despite the president's continuing optimism. But continuing to tilt at that windmill doesn't enable tax reform, it renders it more distant and difficult to count on. That's a bigger issue than repeal for much of the health care sector.
It's hard to tell exactly what President Trump meant by citing $900 billion in savings. Deficit reduction seems most likely, he suggests using "savings" to pay for tax cuts in the interview. But the initial version of the American Health Care Act (AHCA) —-the GOP's proposed replacement for the ACA — would have reduced deficits by only $337 billion. Last minute changes during the GOP's failed attempt to salvage enough votes to pass the bill reduced the savings to $150 billion.
It's unclear where any further deficit reduction might come from. The two versions of the bill already cut more than a trillion dollars from federal spending, mostly from Medicaid, and use the majority of those savings it to fund tax cuts. Any further cuts would likely increase the number of Americans expected to be lose health insurance under the changed law, currently pegged at 24 million.
GOP "negotiations" on the future of health care, which President Trump refers to in the interview, seem more likely to decrease savings from any replacement plan. Changes suggested in the weeks after the initial bill's failure, including funding high risk pools for Americans with pre-existing conditions and "invisible" risk sharing payments, would add to the cost of the bill.
