Trump Health Plan Recycles GOP Staples And Adds A Populist Wrinkle
Republican front-runner Donald Trump released a seven-point plan to change the country's health care system that includes several familiar GOP proposals and one that puts him in agreement with, believe it or not, Democratic hopeful Bernie Sanders.
Right off the bat, Trump calls for the elimination of the Affordable Care Act, ringing the repeal bell that has been popular among a wide swath of Republicans and that has fueled dozens of votes to overturn Obamacare in Congress, including another failed attempt when lawmakers reconvened first thing in January.
The prime target is the individual mandate, the requirement that almost every American have or buy health insurance — or pay a penalty. "No person should be required to buy insurance unless he or she wants to," the Trump proposal declares.
Obamacare relies on the mandate to make sure it isn't just the sick and people at high risk of getting sick who buy coverage, driving up insurance costs.
While Trump decries the mandate, the idea has Republican roots. The mandate was seen as a market-friendly alternative to a national health system or a strict requirement on employers to provide coverage.
Still, the mandate and its associated tax penalties for people who don't comply have become a lightning rod for people dissatisfied with the ACA. In 2014, the first year that the fine for lack of coverage was in place, about 7.5 million Americans paid an average penalty of $200 for not having insurance according to the IRS. In 2015, the potential penalties rose to the greater of 2 percent of annual income or $325 per adult. And this year they rise again to the greater of 2.5 percent of income or $695 per adult.
In a second plank, Trump calls for the sale of health insurance plans across state lines to bolster competition by increasing the number of policies being sold. Health insurance is regulated largely at the state level. And critics of the multistate approach, a favorite of the GOP for years, say it would erode consumer protections.
Trump hedges his call for multistate plans by saying they would have to comply with regulations in each state where they are offered. It's hard to see how, if states continue to regulate insurance differently, the theoretical benefits he touts could be achieved in practice. In fact, over the years six states, including Georgia, enacted laws to encourage insurance sales across their borders, and a Georgetown University analysis found that they failed to attract new plans into their markets.
Some Trump proposals would change the tax treatment of health coverage.
One would let individuals who buy insurance deduct its cost, as employers do for coverage they make available to workers. Many health economists argue that the opposite tack — eliminating the employer deduction — would be more beneficial. The employer tax break obscures the cost of health coverage and thereby contributes to health cost inflation. The benefits from the break also tend to accrue to more highly paid people. Under Obamacare, people with low-to-moderate incomes can get a tax credit to help defray the cost of insurance purchased on marketplaces.
The second proposal argues in favor of letting individuals take advantage of Health Savings Accounts, or HSAs. But that's something that is already possible, and the accounts are quite popular. Right now, those accounts are tied to high-deductible health plans.
"Is Trump calling for every American to have access to an HSA, not just those in high-deductible health plans (HDHPs)?" asks a post on Forbes.com by Ryan Ellis, an adviser on tax policy for the Conservative Reform Network. "That would seem to be undermined by his statement about how young people should want to enroll in high-deductible plans–why mention them at all?"
Then there's the chicken-in-every-pot plank that would require providers of health care to disclose prices. "Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure," the Trump proposal says. Not many people disagree with the intent. But it's difficult to pull off in a way that helps the average person shop. Health care prices are negotiated between insurers and providers, and people's coverage and copays vary depending on their networks and insurance particulars.
Trump also argues for a change in financing Medicaid, the joint federal and state health insurance program for the poor and disabled. His plan calls for block grants, or lump-sum payments, to the states that they could spend as they wish. The idea has been popular with Republicans going back to President Reagan, has been revived more recently by GOP governors as a way to cut costs and has been part of Republican proposals to repeal and replace Obamacare. Critics say block grants would reduce the number of people covered by Medicaid and by shifting responsibilities to the states would ultimately saddle them with greater financial burdens.
Finally, Trump throws his support behind the importation of drugs to cut costs. "Allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers," the proposal says. This is the one where Trump and Sanders have common ground. Sanders supports the importation of drugs from Canada and his website boasts about a 1999 bus trip that took a group of Americans up north to get better deals.
The Food and Drug Administration, under both Republican and Democratic presidents, has opposed drug importation on safety grounds. And drugmakers restricted supplies of medicines going to drug distributors in Canada to combat a rise in online pharmacy sales to Americans more than a decade ago.
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