Donald Trump – Will His Healthcare Reform Plan Work?
Donald Trump has released his healthcare reform plan on his campaign web site. He calls on Congress to make seven specific changes in the laws that he will presumably sign if he is elected the next President. What are the proposals? What do they really mean for the marketplace and the consumer? Will his healthcare reform plan work?
1. Completely Repeal Obamacare Including the Individual Mandate
Donald Trump calls for the repeal of Obamacare in general and specifically the Individual Mandate. The Individual Mandate is the requirement under the Affordable Care Act that almost everyone must either demonstrate that they have health insurance or face a penalty when they file their taxes. The Individual Mandate is certainly one of the least popular features of the Affordable Care Act, but what else would happen if the Individual Mandate went away?
If the Affordable Care Act were to be repealed and the Individual Mandate as well, the insurance market would have to return to much the same state it was before the implementation of the law. Insurance companies would once again ask medical questions of their applicants. People could be denied coverage or charged higher premiums because of their medical conditions. Pre-existing conditions could be excluded. Affordability would once again be a major concern as insurance premiums would be no lower than 2013 levels and the tax credits under the Affordable Care Act would go away.
If most of the Affordable Care Act were to remain intact but the Individual Mandate were to be removed, then insurance companies would be faced with leaving the market altogether for inability to stay solvent or further increase premiums to make up for the fact that healthy people formerly purchasing insurance and paying premiums would no longer keep their policies.
2. Modify Existing Law that Inhibits the Sale of Insurance Across State Lines
Donald Trump wants laws modified that interfere with selling insurance across multiple states. The theory that gives rise to this suggestion is that state regulation of insurance interferes with competition in the marketplace resulting in fewer choices for the consumer and higher prices. If insurance companies do not have to deal with each state department of insurance, the belief is that there will be greater competition, more choices, and lower premiums.
There are two problems with this specific proposal by Donald Trump. The first is that the laws that regulate the sale of insurance within a state are state laws. Congress and the President can’t rewrite state laws. If he is proposing federal law that overrides state regulation, then he is proposing a system that will either lack the consumer protections that the states have enacted or an even bigger federal role in health insurance than even the Affordable Care Act represents.
The second problem with this specific proposal is that it is contradictory. The proposal states “As long as the plan purchased complies with state requirements, any vendor ought to be able to offer insurance in any state.” Do we want state regulation or not? And how is this second part of the proposal any different from the current state of affairs where the states set requirements and any company who wishes to comply can compete in the state?
3. Allow individuals to fully deduct health insurance premium payments from their tax returns.
Donald Trump wants individual health insurance premiums to be a tax deduction just like group health insurance premiums are for employers. Under the current tax code, employees who receive their health insurance through an employer are receiving a tax advantage that is not available to employees who have to purchase their own health insurance. Under a group health plan, the employee contribution can be made with dollars that are not taxed. The employer contribution is not taxable income to the employee and it is a business expense to the employer. Making individual health insurance premiums a tax deduction would level that playing field. The only negative would be the loss of tax revenue to the government.
4. Allow individuals to use Health Savings Accounts (HSAs).
Donald Trump wants to encourage the use of Health Savings Accounts. Health Savings Accounts have been around for years and are a valuable tool in helping people make the best use of their healthcare dollars. For most people, it makes sense to purchase a less expensive policy where office visits and prescriptions are paid by the policy owner and credited toward the policy deductible. The policy owner can then open up a tax-favored savings account that allows them to pay their out-of-pocket expenses with dollars on which they do not have to pay income tax. The only new wrinkle that this proposal seems to add is that the accounts would not be subject to inheritance tax which would benefit very few people.
5. Require price transparency from all healthcare providers
Donald Trump wants doctors, clinics, and hospitals to disclose their pricing. This is presumably to allow people to price shop for their medical care. The first question is just how much of a person’s healthcare are they either willing or able to access based on price. If someone needs to schedule a lab test or some diagnostic imaging that they will pay for out of pocket, it is certainly possible to imagine calling multiple providers for prices. If someone is ill and needs to see a physician, are they price-shopping for the cost of an office visit or are they trying to get an appointment with their primary care physician? If you need open-heart surgery, are you price-shopping to save the insurance company money or are you trying to find the most skilled surgeon possible?
The second question is why a physician’s or hospital’s pricing should be any more public than the provider chooses to make them. Shouldn’t a provider be free to negotiate pricing as they choose? Shouldn’t a provider be free to negotiate a better price and keep their reimbursements private from an insurance company that brings them a high volume of patients and pays promptly in preference over another insurance company with fewer patients to offer and slow reimbursements?
6. Block-grant Medicaid to the states.
Donald Trump wants states to manage Medicaid to provide better care and to reduce fraud, waste, and abuse. The states already do manage Medicaid with most of the money coming from the federal government.
7. Remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products.
Donald Trump wants American consumers to have “access to imported, safe and dependable drugs from overseas.” The first question is who it is that will determine whether the drugs from another country are safe and reliable. Does this proposal mean that drugs from other countries still have to meet the standards of the Food and Drug Administration? Does a drug just have to be approved for use in some country somewhere for it to be legal to import into the United States?
The second question has to do with how it is that a drug from another country is less expensive than a drug in the United States. Certainly, a pharmaceutical company in another country may simply have a competitive advantage over a U.S. company and be able to produce the medicine for less. What about cases where the government in another country is subsidizing the drug maker and creating an unfair advantage for the U.S. company?
Is this the type of plan for Healthcare Reform that will make America great again? I’ll let the reader draw their own conclusion. I do hope that I have provided some helpful perspective on these proposals. Let me know if you have any questions.