Older, sicker Americans will foot the bill for Trump’s healthcare orders

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Activists hold signs during a Stop 'Trumpcare' rally May 4, 2017 in front of the Capitol in Washington, DC.

President Donald Trump signed health-care executive orders Thursday that he said would be "very good for a lot of people."

Trump was right.

And the orders, if eventually implemented, would be bad for other people, too.

The core idea behind Trump's action Thursday was allowing health insurance companies in certain circumstances to sell less expensive policies with fewer benefits than Obamacare has required for the last seven years. Customers for those plans tend to be younger adults who, so long as they remain healthy, don't need more than that.

In turn, however, that would increase costs for older, sicker customers who need the larger benefits that Obamacare policies provide. Removing healthier, cheaper customers from the Obamacare "risk pool" would make insurance companies raise rates to finance benefits for sicker, costlier ones.

That makes Trump's orders a regulatory means of achieving what Obamacare did in 2010: redistributing income from one group of Americans to another.

As American politics has become increasingly polarized, redistribution has become a dirty word. It delights those gaining benefits but enrages those who pay for them.

To avoiding inflaming political opponents, the Obama White House shunned the word. But redistribution is precisely what Obamacare did.

It taxed wealthy people to finance health coverage for the poor. That occurred largely through expansion of Medicaid coverage to 14 million Americans.

In the "individual market," where the small minority of Americans without government or employer coverage buy their insurance, Obamacare redistributed income through regulations and subsidies. They shifted health costs from women to men, from the old to the young, from the sick to the healthy, from the working-class to the affluent.

It was the distinctive losers from those shifts – perhaps 5 million people, disproportionately young, male, healthy, and middle-to-high income – whose complaints about premium increases have fueled the seven-year GOP war on Obamacare.

Trump and his party have tried to redistribute those costs in reverse through repeal of Obamacare. Resistance from the larger group of winners under Obamacare – more than 20 million gained coverage – helped block that effort in Congress.

But just as Barack Obama used his executive authority to act when thwarted by political opponents, Trump did so Thursday. The orders he signed aim to allow groups of businesses to offer cheaper "association health plans" providing fewer benefits, and expand the number of people permitted to buy "short-term" plans of the same type.

That will please some Americans who have felt stuck with the bills of Obamacare. It will cost some who have benefited, including those with expensive medical conditions previously unable to buy affordable coverage or buy any coverage at all.

That's redistribution, too – Trump-style.

CNBC

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