A reader emailed this morning asking for a really basic primer on Obamacare and the repeal effort. Judging from some of the stuff I've read, this sounds like a good idea. What follows is really basic, so skip it if you already know this stuff.

1. The insurance market

Most of us get our health insurance either from our employer or from Medicare. Neither Obamacare nor the Republican health care bill affect either one except in a few minor ways. They deal solely with two other parts of the health insurance market: Medicaid and individual insurance. Everything you hear about exchanges, premium increases, death spirals, and so forth applies to individual insurance only, which is a tiny piece of the entire market. It's the little yellow box on the far right:

Yesterday the New York Times ran a piece saying that recent premium increases had affected "only" 3 percent of Americans. Technically that's true, but it's pretty misleading. That's half the individual market.

2. How is Obamacare working out?

The main goal of Obamacare was to reduce the number of people who are uninsured. It did this two ways. First, it expanded Medicaid, which now covers about 10 million more people than before. Second, it set up the exchanges, where private insurers could sell individual coverage. This also covered about 10 million additional people. Altogether, Obamacare has substantially reduced the number of Americans who lack health insurance:

This isn't to say that Obamacare has been perfect. Insurers misjudged pricing early on, which led to large premium increases last year as they finally caught up. The individual mandate wasn't strong enough, so lots of young, healthy people have avoided insurance altogether, which makes the total pool covered by the exchanges older and sicker than originally predicted. As a result, several insurers have left the market, and there are lots of counties where only one insurance company is still selling in the exchanges.

3. How does Obamacare work?

Medicaid is simple: Obamacare simply allocates more money to cover more people. However, states can decline the expansion, and many red states have.

The exchanges are a little more complex and rest on three pillars. First, no one can be turned down for insurance because of pre-existing conditions. However, this means the number of sick people in the insurance pool will increase, and that needs to be balanced with healthy people. So the second part of Obamacare is the individual mandate, which requires everyone to buy insurance. If they don't, they have to pay a tax penalty. But you can't very well require poor people to buy something they can't afford, so the third part of Obamacare is subsidies, which help reduce the cost of insurance for the poor and working poor.

4. How is Obamacare paid for?

Basically, by some modest taxes on the rich along with some taxes on corporations. Here's the CBO's latest estimate:

Overall, Obamacare helps the deficit because its taxes are a bit higher than its outlays, which have been less than projected. The Republican bill has no revenue sources yet. We don't know how much it would cost, but whatever it is, the number will go straight onto the deficit.

5. Can Republicans repeal Obamacare?

This is tricky. Democrats can filibuster any repeal bill, and Republicans don't have 60 votes in the Senate to overcome a filibuster. That means they have to repeal Obamacare via reconciliation, which requires only a simple majority in the Senate.

But there's a big problem with reconciliation: it can be used only on things that directly affect the federal budget. Subsidies affect the budget, so Republicans can repeal the subsidies. Medicaid expansion affects the budget, so they can repeal that. The individual mandate affects the budget, so they can repeal that.

But there's something missing here: the pre-existing conditions provision. That affects only insurance companies. It has no effect on the federal budget, so the pre-existing conditions ban can't be repealed. Besides, the ban is extremely popular, so it would be political suicide to repeal it. This is a big problem: if insurers are required to insure everyone, even people with expensive pre-existing conditions, they'll go bankrupt unless healthy people also sign up. But with skimpy subsidies and no individual mandate, the number of healthy people is going to plummet. This is going to leave insurers with a pool of people whose premiums are far lower than the cost of their medical care, and that in turn means insurers will lose tons of money. It's a disaster waiting to happen.

6. So what will Republicans do?

Your guess is as good as mine. One option is that they just bull ahead without worrying about the consequences, and the individual market will implode. Another is that a few Republican senators see reason, and the repeal effort fails. A third possibility is that the repeal bill passes, and then Republicans count on Democrats helping them out with subsequent bills to fix things, because Democrats don't want to see the entire individual market go up in smoke. Finally, a fourth option—which is very unlikely—is that Republicans increase the subsidies and tighten up the mandate, which will keep the individual market in decent shape.

The American economy added 235,000 new jobs last month, 90,000 of which were needed to keep up with population growth. This means that net job growth clocked in at 145,000 jobs—nearly all of it in the private sector. The headline unemployment rate stayed steady at 4.7 percent. That's not bad, and behind the scenes the news was even more positive. The labor force participation rate ticked up to 63 percent; the number of unemployed dropped by 107,000; 176,000 people joined the labor force; and the ranks of the employed went up by nearly half a million.

But how about wages? Hourly earnings of production and nonsupervisory employees went up at an annual rate of about 2.3 percent. That's about even with the inflation rate last month, which means the real increase was close to zero. That's disappointing given recent signs that wages were starting to make gains.

I got a new camera yesterday. You all know what that means, don't you? Lotsa photos! More on that tomorrow, but in the meantime, enjoy the Great Lizard Hunt of 2017, courtesy of the new camera's burst mode.

Seriously, folks, WTF is going on with the State Department?

The press is not happy:

D.C. bureau chiefs from major news organizations, including The New York Times, The Washington Post, The Wall Street Journal, the wire services, Fox News and CNN sent a letter to the State Department earlier this week protesting Secretary of State Rex Tillerson's decision to ditch reporters on his upcoming trip to Asia.

...."Not only does this situation leave the public narrative of the meetings up to the Chinese foreign ministry as well as Korea’s and Japan’s, but it gives the American people no window whatsoever into the views and actions of the nation’s leaders."

The American public will get the official narrative, and that's it. The odds are also slim that Tillerson himself will have anything to say about his meetings. He literally hasn't spoken with the press in—what? Weeks? Months? Since the day he was confirmed? A few reporters have gotten desperate to find out what's going on. Here's NBC's Andrea Mitchell several days ago trying to get a few words out of Tillerson:

Here she is trying again a few days later:

Tillerson has fired a big chunk of his management staff. He has no deputy. He won't talk to the press and he won't take them along on foreign trips. He failed to show up for the annual release of the human rights report. He's apparently happy to accept a budget that slashes both the State Department and foreign aid by more than a third. He doesn't get invited to President Trump's meetings with foreign leaders. Hell, the State Department doesn't even know they're happening:

The entire State Department is completely adrift. If it were Trump pulling a stunt like this, we'd chalk it up to some kind of bizarre revenge fantasy festering in his brain. But why is Tillerson doing this? Is he under orders from the White House? Is he too scared to talk to reporters? What the hell is going on here?

Senate Majority Leader Mitch McConnell in an interview this morning about the border wall:

Brookings has done an analysis of RepubliCare and estimates that it will reduce coverage by at least 15 million people compared to Obamacare, and probably more. Their estimate is based on previous CBO forecasts of the effects of provisions that are in the Republican bill.

My own guess is closer to 20 million. I figure I might as well put my money where my mouth is, so here's how I think the CBO forecast will turn out:

I'm actually being generous here since this forecast assumes the individual insurance market won't implode completely. Will CBO have the guts to make a forecast like this? We'll see next week.

Oh, and premiums will go up a lot too. But that's an estimate for another day.

Wesley Smith has a question about the Republican health care plan:

I am wondering why opponents haven't conceded a big point Speaker Ryan has asserted in defending his three-stage approach: A full repeal would require 60 votes in the Senate because it would be subject to the filibuster…Hence, understanding that the contents of the first phase can be debated, if Obamacare is going to be defanged, doesn't Ryan's three-stage approach make complete sense?

Of course Ryan is right. Everyone should concede that. So why haven't they?

Answer: Because for seven years Republicans have been telling everyone who will listen that if they get into power they'll repeal Obamacare, full stop. They never said "most of it" or "just the parts we can repeal via reconciliation." Just the opposite: They used the most thunderous, uncompromising language possible. Obamacare was a cancer that needed to be fully excised. And they'd do it.

Something on the order of 1 percent of voters understand filibusters and reconciliation, and Republicans were very careful never to mention those things. So that means 99 percent of Republican voters think Obamacare can be fully repealed if only the GOP leadership has the guts to do it. This is now causing problems for Ryan, but he has only himself to blame. He said he'd repeal Obamacare, and now the Republican base wants him to do it. All this yakking about reconciliation and three-phase plans sounds like nothing more than yet another sellout.

Megan McArdle is no fan of Obamacare, but she understands what will happen if Republicans demolish it without putting anything of substance in its place:

The base may rejoice when they hear that Obamacare has been "repealed" (sort of). But their cries of glee will be drowned out by their wailing when they find that they cannot buy individual insurance at all.

That's why I don't understand what Republicans are trying to do with this bill. What do they think will happen after they proudly proclaim that they've repealed Obamacare—followed in short order by the complete implosion of the individual market? Do they really imagine that they will be allowed to leave the rubble-filled lot there and proclaim that they've undone President Obama's mistake? Or that, having watched them destroy the individual market, voters will be eager to let Republicans touch any of the other structures cluttering up America's health-care policy landscape?

I am puzzled by this. As you all know, I agree entirely with McArdle. If you keep the regulations on preexisting conditions—and Republicans have no choice about that—but cripple both the individual mandate and the subsidies, the result is catastrophe. What happens is simple:

  1. Young, healthy people leave the market because they're no longer required to get insurance.
  2. Poor people of good or average health leave the market because they can't afford coverage with only skimpy subsidies.
  3. Even if they have to beg, borrow, or scrimp, sick people will all sign up and insurance companies will be forced to accept them.
  4. With a pool full of expensive, sick people, and not much of anyone else, insurers will lose massive amounts of money.

This is no secret. It's obvious to everyone. And yet, I hear very few people talking about it. Why? Shouldn't insurance companies be yelling at the tops of their lungs? If the Republican bill passes, they'll have only two choices: lose lots of money or abandon the individual market altogether. I'm guessing the latter. Legally, the only way they can avoid having to insure the very sick is to simply stop selling individual coverage. Hell, a public company would probably be opening itself up to lawsuits for breach of fiduciary duty if it didn't abandon the market.

Am I missing something here? Why isn't this the biggest thing people are talking about? Why isn't it on cable news 24/7? Why aren't insurance companies screaming bloody murder? Why is this destruction of the individual market getting so little attention?

UPDATE: Paul Ryan is on TV suggesting that not only is this not a problem, but his bill will make things better. People with preexisting conditions will all be covered by high-risk pools, while everyone else will buy ordinary insurance. This is ridiculous. First, the funding for the high-risk pools is far too small to cover everyone who would need it. Second, how do you force people to use high-risk pools? You can't. Sick people can legally buy from anyone who sells coverage, and they will.

With that taken care of, now Ryan is trying to pretend that advanceable tax credits are different from Obamacare subsidies. What a hack.

DHS Secretary John Kelly announced yesterday that illegal border crossings have plummeted in the past few months:

From January to February, the flow of illegal border crossings as measured by apprehensions and the prevention of inadmissible persons at our southern border dropped by 40 percent. The drop in apprehensions shows a marked change in trends. Since the Administration’s implementation of Executive Orders to enforce immigration laws, apprehensions and inadmissible activity is trending toward the lowest monthly total in at least the last five years.

....This is encouraging news as in the period from Oct 1, 2016 to the Presidential inauguration, U.S. Customs and Border Protection reported 157,000 apprehensions of illegal immigrants — a 35 percent increase over the previous fiscal year, with family units increasing by more than 100 percent. However, since President Trump took office on January 20, we have seen a dramatic drop in numbers.

That's a remarkably partisan statement, but perhaps it's not all that out of the ordinary? In any case, here's a more readable chart than the one CBP provides:

Most of President Trump's routine boasting is groundless, but this is one case where I think he really has had an effect. His policy changes haven't had much impact yet, but the mere fact of his boasting, and of CBP's highly publicized raids, has probably scared a lot of potential border crossers away. This is a case where fear works.

But will it work for long? The problem with amping up the bluster is that eventually it becomes the new normal and no longer has much effect. By that time, you really need to have an effective policy in place, and it's not yet clear if Trump has the attention span or political skills to make that happen. We'll see.

Here are a few miscellaneous things from my afternoon trawl of the news:

Thing the first:

Kansas Gov. Sam Brownback is in talks with President Donald Trump’s administration about taking an ambassadorship position, according to sources close to the governor. No offer has been extended yet, according to The Star’s sources, but the governor has discussed the possibility of taking a position as the U.S. ambassador to the United Nations for food and agriculture, a position that would move the Midwestern governor to Rome.

The ambassador for what? There are two takeaways from this: (a) Trump really doesn't want Brownback in his administration, and (b) Brownback really wants to get out of Kansas. His tenure as governor has been a nonstop trainwreck, highlighted by his huge tax cuts for the rich that have tanked the state's economy. There's really no way to fix things without raising taxes, so Brownback just wants to hightail it out of the governor's mansion and leave the problem to somebody else. And hey, Rome is a nice place for an exile.

Thing the second:

Check out this picture of Trump holding a conference in the Oval Office:

Trump is apparently so insecure that he holds every conference from behind his desk, even when it involves seven people. Who does that? In all the pictures I've seen before of presidents, they're out from behind the desk sitting on a chair or a sofa on equal terms with everyone else. But Trump seems to need the desk to remind himself that he's in charge.

Thing the third:

This is just a bit of a ramble that's on my mind. I've been trying to figure out how to respond to the Republican health care plan, but nothing seems quite right. I've written plenty about the details, and so have others, but none of this really gets the true story across.

Here's the thing: anyone with even a cursory knowledge of health care knows that the Republican plan isn't serious. Paul Ryan knows it. Mitch McConnell knows it. Mike Pence knows it. Mick Mulvaney knows it. Everyone knows it. It's just a cynical joke. It will cover virtually no one, and will quite possibly destroy the individual insurance market in the process. Its only purpose is to repeal about $600 billion in taxes on the rich.

This is not really controversial or even very partisan. The plan just doesn't do much of anything for anybody except the rich. But we're all expected to stroke our chins and pretend that it's a serious proposal that should be seriously analyzed. There's something badly wrong about this. Why do we all have to do this?