President Donald Trump was showered in praise Wednesday when he unveiled an initiative to fix the country's wretched and ridiculously expensive system for dealing with kidney disease.
Only one problem. Trump's plan depends on the Affordable Care Act, which he is trying to kill.
The mismatch underscores the fundamental incoherence of Trump's health care policies, such as they are. He repeatedly states his intention to repeal the act and replace it with something better, but he has never put anything, much less anything "better," on the table.
He has eviscerated effective programs at the Department of Health and Human Services and replaced professional policy officials with ideology-driven hacks. His appointees at HHS have routinely approved state-level changes to Medicaid, the nation's most important healthcare program for low-income Americans, that deprive enrollees of coverage by thousands at a time.
Trump seems utterly unaware of how deeply provisions of the Affordable Care Act have worked their way into the American healthcare system. But his top healthcare officials, HHS Secretary Alex Azar and Medicare/Medicaid director Seema Verma, know. They stood by at a White House ceremony Wednesday announcing the kidney policy without letting on.
As my colleague Noam Levey has reported, the administration has both argued that the law is failing and hailed the stability of the insurance marketplaces it created.
Let's examine how this works.
There's no question that the nation's existing method of dealing with end-stage kidney disease is a mess. The most common treatment, dialysis, is so expensive -- running an average of $90,000 per year per patient -- that Congress in 1973 allowed advanced renal patients to enroll in Medicare at any age. The act effectively made end-stage renal disease the only condition subject to a single-payer program.
That helped turn dialysis into a hugely profitable business. About 10,000 patients were covered in 1973; today, more than 750,000 are. Federal spending through Medicare has soared to more than $34 billion a year from $1.1 billion (in current dollars) in 1973.
Two for-profit dialysis firms, Denver-based DaVita and German-owned Fresenius, now dominate the dialysis market, reporting pretax operating profits in the billions and margins of 18% to 19%. As we've reported, they've been accused of accumulating these riches by helping patients to shift from Medicare to private insurance, which pays them much more than the government program. (The stratagem became possible only after the Affordable Care Act barred private insurers from rejecting applicants for coverage because of their medical conditions.)
Two remedies for this situation have long been obvious. One is to increase the rate of kidney transplants, which sharply reduce the cost of treating kidney disease. But kidneys are hard to come by. More than 100,000 patients in the U.S. are on the waiting list, with only about 21,000 donor organs available per year. Kidney transplants cost an average of $32,000 and annual post-surgical care only about $25,000.
The other remedy is to perform more dialysis at home, where it's cheaper than at the dialysis centers operated by DaVita, Fresenius and other companies, and certainly more convenient for patients. But only about 12% of U.S. patients receive dialysis at home, far less than in many other developed countries.
Trump's proposal, embodied in an executive order signed Wednesday, aims to increase transplants by covering more of the costs for donors, including lost work time and child care expenses. The White House says that, along with other changes in the transplant system, would double the number of kidneys available for transplant by 2030.
The plan also aims to increase the share of patients receiving dialysis at home to 80%. This would be done in part by changing the incentives for providers so they steer more patients to home dialysis (assuming that's the right choice for them).
The rub is that such changes would require congressional authorization -- if it wasn't for the Affordable Care Act. The act established the Centers for Medicare and Medicaid Innovation, which allow the changes to be made administratively.
If the Trump administration succeeds in its latest effort to kill the ACA, the innovation centers would go out of business. That could happen if a federal appeals court in New Orleans upholds a Texas federal judge's ruling that the ACA is unconstitutional. The appeals court heard oral arguments in the case this week -- and many legal observers detected disquieting indications that the three-judge panel might rule against the ACA.
The case has been brought by Texas and 17 other red states. They argue that when Congress reduced the ACA penalty for not carrying insurance through the tax cut bill in 2017, which effectively eliminated the individual mandate, the entire law became unconstitutional. The argument has been dismissed by many legal experts, but it did garner the red states a favorable ruling from a federal district judge who has been openly hostile to the law.
The Trump administration withdrew its legal defense of the ACA in June 2018, effectively placing the entire law in constitutional limbo and leaving healthcare and legal experts aghast. The defense has been taken up by California and 15 other blue states, but their standing to conduct the defense is also in question.
At risk are not only the ACA's protections for patients with preexisting conditions and its system of premium subsidies for middle- and low-income consumers, but myriad other rules, regulations and programs written into the law as well. Many of these are almost invisible to ordinary Americans, but they have significant impacts on the entire U.S. healthcare sector.
It's unclear what would happen to the kidney program and other government initiatives dependent on the ACA if the law is struck down. Verma told Bloomberg on Wednesday that "If the court strikes down the law, we have a plan in place." But she did not give specifics.