Fact or Fiction? Scrutinizing Trump and Clinton on Obamacare

During the second presidential debate last Sunday, Donald Trump and Hillary Clinton offered up starkly contrasting views regarding Obamacare's effectiveness and its future. Do the candidates claims regarding the Affordable Care Act pass muster with fact-checkers?

In this episode of The Motley Fool's Industry Focus: Healthcare podcast, healthcare analyst Kristine Harjes and contributor Todd Campbell explain what the candidates said during the debate, why they said it, and whether their contentions are true or false.

A full transcript follows the video.

This podcast was recorded on Oct. 12, 2016.

Kristine Harjes: Welcome to Industry Focus, the podcast the dives into a different sector of the stock market every day. It's October 12th, Wednesday, and I'm your Healthcare show host, Kristine Harjes. I have Todd Campbell, one of The Motley Fool's healthcare writers, on the line. Todd, welcome to the show!

Todd Campbell: Thanks, Kristine! It's great to be here.

Harjes: On the heels of the presidential debate this past Sunday night, we wanted to do a little fact-checking around some of the healthcare-related statements that were made. As I always feel obligated to mention whenever we discuss anything even close to political on the show, The Motley Fool is not a partisan organization. Todd and I are going to do our best to provide a fair and honest review of candidates and their statements. With that being said, let's dive right in. The first thing we wanted to talk about was some of the statements that were made regarding the cost of health insurance. Specifically, Donald Trump claimed in the debate that health insurance is going up by numbers that are astronomical, 68%, 59%, 71%. Todd, is that true?

Campbell: Well, before I answer that question, I have a question for you.

Harjes: OK, let's hear it.

Campbell: Little bit of trivia here to start off the show -- what do you think had higher viewership? The debate or the Sunday night football game with the Packers?

Harjes: Just one game versus the debate?

Campbell: Yep, the debate head-to-head against the Sunday night football game. Which do you think people watched more?

Harjes: Probably the football game.

Campbell: You'd be wrong!

Harjes: Good! I think that's a good thing.

Campbell: It was the big game on Sunday night, by a pretty astronomical number. Do you want to hazard a guess as to how many millions of people tuned in to watch the debate, Kristine?

Harjes: I'm not even going to guess, because I've already been wrong once. (laughs) 

Campbell: (laughs) Maybe our listeners at home have some ideas. I'll give you a second to come up with it. I'll give you a hint -- it's more than 50 million and less than 100 million... it's 69 million people tuned into the debate. To put that in perspective, 16.6 million tuned in to watch the Packers' Sunday night football game. So, obviously, everybody is tuning in. They want to have some idea of what these candidates' plans are for various policies. We're a healthcare-oriented show, so we're going to stick to the healthcare side of things. Fortunately, we did get some insight into both of these candidates' positions in the debate. As you mentioned, one of the first statements that was made in the debate was Trump's assertion that premiums are rising by fairly dramatic numbers, 68%, 59%, 71%. Those are big increases.

Doing a little bit of fact-checking on this, there are some communities and specific plans within some communities where premiums are increasing by levels that are high, in the double digits. But those are very rare. Kaiser Family Foundation went through and did an analysis in July and they found that the average plan is going up by about 9%. Of course, that's far south of the numbers that Trump was mentioning. But there are some areas where premiums are increasing for specific plans. For example, in Nashville, Tennessee, increases are about 25% in 2017, versus 2016. So, while he is saying there's a really large increase, it's not really across the whole nation. It's for specific communities that are seeing large increases. So, that's where we come down on that.

Harjes: So, this is really a question of scale when it comes down to it. When you're talking about one specific circumstance, it is far more likely that you can get some sort of astronomical number, as opposed to when you look at the average in an area, and even more so when you look at the average nationwide.

Campbell: Yeah, and there's another observation here we have to remember. Although premiums are increasing, we also have to remember that the absolute out-of-pocket cost -- if you're at home and you have an Obamacare plan, don't start panicking. If you receive subsidies, the subsidies are adjusted. Most people who get Obamacare receive subsidies.

Harjes: Right, 82%.

Campbell: Yeah, 82%. And most people who get subsidies pay less than $100 a month for their insurance, which I think most people will agree is a pretty low price to pay for their healthcare insurance.

Harjes: And the subsidies get adjusted for these price increases, too.

Campbell: And the subsidies get adjusted upward based upon the cost of the plans. So, premiums are heading higher, but those higher premiums, the brunt is really borne by those people who -- like myself -- participate in the Obamacare exchanges but don't qualify for the subsidies.

Harjes: There's also another dilemma going on here. It's something that we've talked about on the show before. There's this issue between health insurers being so unprofitable on these exchanges that they're dropping out, possibly leading to lower competition, which you could imply would mean even higher prices, versus the other side of that coin -- the insurers could hike prices to make themselves profitable.

Campbell: Right, Kristine. At the heart of the matter, what Trump is really saying is that premiums are rising rapidly, and that's a big problem. There's evidence, and we've talked about it on the show previously, that insurers have not adequately priced their plans to turn a profit. United Healthcare (UNH 1.35%), as you were alluding to, has already said that they're going to go from providing health insurance in a couple dozen states to just a handful of states in 2017, because they're losing hundreds of millions of dollars on the plans that they offered this year.

Harjes: So, when we look at this statement as a whole made by Trump, it's true that numbers are going up. Whether or not there are individual cases of 68%, 59%, 71%, that's entirely possible. I would say the statement, as a whole, is true but needs context. Is that fair?

Campbell: I think that's pretty fair.

Harjes: On the same lines of insurance, Hillary Clinton also weighed in with a claim that we're at 90% health insurance coverage, which is the highest that we've ever been. To give this one a little bit of context within the debate itself, this was part of her claim that she wants to get coverage to 100%, have the costs go down, and the quality go up.

Campbell: Right. I think the question is, are we really at 90% insured? The answer to that question is yes, we are. I think a lot of times, when we think about Obamacare, we only think about the marketplaces. And while the marketplaces are an important part of Obamacare, we have to realize that the Affordable Care Act included a lot of other things, including an expansion of Medicaid in over 30 states. If you couple together all of the provisions associated with the Affordable Care Act, we end up with a population where 91.4% of Americans are covered by health insurance. So, less than 10% right now are going without.

Harjes: Exactly. Getting to 100% definitely won't be easy. I'm not even convinced that it's possible. But to stick to the facts here, we have 22 million people that are uninsured. A big thing to realize about this population is that one third of them are ages 19 to 34. This has been a sticking point for Obamacare -- it's really difficult to get younger, healthier people to sign up for health insurance, despite the fact that the penalty for not doing so is increasing.

Campbell: Right. The 22 million number is actually after we remove illegal immigrants. It's controversial. There's been some discussion over whether or not there should be allowed to buy Obamacare plans in the system, since we're paying for their healthcare coverage indirectly through business to the emergency rooms and that type of thing. We'll leave that for another day, who knows? You're right, this is going to be tough. This last 10% is going to be tough. You have the young invincibles who maybe aren't fully employed or don't really see the value in preparing for that accident or illness that comes out of nowhere. It's going to be hard to convince them.

You have poor populations, too, that simply don't have access to the technology or the resources, that don't fully understand the program. It's going to be hard to reach out to them as well. So, getting the last 10% will be tough. Then, of course, depending on who wins the election, we have no idea if we'll go toward 100% or less than 100%, because we have two very different outlooks on what the future should be regarding Obamacare between these two candidates.

Harjes: Along those lines, one of the other things that came up in the debate was claimed by Trump that Hillary Clinton wants to go to a single-payer system. Before discussing whether or not that's true, can you give us a little bit of context on what that even means?

Campbell: There was a lot of debate during the primary between Bernie Sanders and Hillary Clinton on the value or the concept of a Medicare-for-all, where basically you would eliminate the system as it stands today and you open up Medicare so that everyone can participate in Medicare, rather than just people who are over 65. Bernie Sanders advocated for Medicare-for-all. Hillary Clinton did not. But she did concede over the course of the primary to start thinking about possibly expanding Medicare to include more people, perhaps people who are in their 50s, or areas, for example, where insurers like United Healthcare have exited, and maybe there's only one choice, or there are no choices in the Obamacare exchanges, perhaps providing people with an option where they can buy into Medicare regardless of their age that way.

Harjes: Great explanation. Thanks, Todd! You also answered the question of whether or not this claim is true. Clinton to has indeed never endorsed a Medicare-for-all system.

Campbell: Yeah, she actually came out earlier in the year and said it's just not something we can do given how vested we are in our current system. It would be too hard to do. So, she has been advocating for changing Obamacare, making it better, recognizing that it has faults and making some tweaks and adjustments along the way. That, of course, is in stark contrast to Trump, who has said that he favors a full repeal of Obamacare and starting from scratch with an entirely new system.

Harjes: One of the big things that he doesn't like about Obamacare is the cost. He stated in the debate that Obamacare is going to be one of the biggest line items in the federal budget very shortly. This is an interesting one. According to the Committee for a Responsible Federal Budget, the Affordable Care Act is actually beneath Social Security, Medicare, defense, interests, and non-AC-related Medicaid. It's projected to remain below these line items through 2026.

Campbell: Yeah. Again, I think this is one of those "true with context" situations. No one would deny that the Affordable Care Act is an expensive program. It's costly. By the CBO's estimates, we're talking about costs eclipsing $1 trillion sometime in the middle of next decade, which is certainly not chump change. As it stands now, however, I guess it depends on how you say "one of the most expensive line items." I don't know where you cut that off. But, yes, these other programs are more expensive than the Affordable Care Act. The Affordable Care Act, however, is not a cheap program. Again, it goes back to that debate of how important is healthcare to America in a political sense?

Harjes: It's worth noting that providing care to the uninsured is costly in its own ways.

Campbell: Correct.

Harjes: One last -- well, not even one of the last. Another claim we want to talk about today -- Trump claims that Canadians come into the United States for big operations because their single-payer system is broken. This came right after the claim that Hillary wants to go to a single-payer system, and it was one of his ways of describing why a single-payer system will not work. It is true that Canadians do come into the United States for care, at times. The Fraser Institute reports that 52,000 Canadians came into the United States in 2015 for care. Normally, this was because of the wait times for non-life threatening procedures. This is becoming a trend in this show -- context is necessary. Fifty-two thousand people out of the Canadian population of 35 million is actually just 0.1%. To give even more context to that, the CDC estimated that 750,000 United States residents travel abroad for their care every year. That is 0.2%, so a rough double of the Canadian population. Here, this is normally because it can be less expensive to travel overseas for your healthcare.

Campbell: Right. The argument here is, "Our healthcare is so good as it stands today that it attracts other people to come here and get their care." The other side of that is, if it was 100% true, we probably wouldn't have such a large number of Americans traveling elsewhere to get care, too. If it's not life threatening, emergency care, and it's something expensive like cosmetic surgery, dentistry, heart surgery, that can maybe allow you to travel, people are going to shop for the best deal, and sometimes that will mean crossing the border from Canada to the U.S., and sometimes that will mean crossing the border from the U.S. to Canada. 

I always look at healthcare as a whole. It's kind of a rating of saying, "What's the life expectancy of the nation?" If you have a higher life expectancy, your healthcare system is probably doing a pretty good job. The U.S. has a high life expectancy, 70.5 years old or something like that. That's pretty darn good. But it's also not in the top 5. It's not in the top 10. It's not in the top 15. It's not the top 25. It's actually 31st in the world. So, we can definitely be doing things better. We do have a good system, but we could be doing things better.

Harjes: One of the other claims we wanted to discuss today was, going back to Hillary Clinton, she claims that 8 million kids every year have health insurance because of actions that she took. Is this a true statement?

Campbell: Yeah, I'm going to give her the benefit of the doubt on this, because although she wasn't in Congress, so she couldn't submit the bill, Ted Kennedy did, to establish the Children's Health Insurance Program. Kennedy has said that it wouldn't have happened without her efforts.

Harjes: This was in 1997, when Clinton was the first lady.

Campbell: Correct. We have 8.4 million children now covered by CHIP. So, yeah, we'll say her role was pretty significant in helping make sure that insurance increased for about 8 million children. Yep.

Harjes: She also claims to have made medicine safer for kids by requiring dosing to be more carefully done. Though she didn't name an act -- and I don't think she named the Children's Health Insurance Program, either, by its actual name -- this claim was referring to the Pediatric Research Equity Act. This was actually another true statement.

Campbell: Right, which you could argue is a pretty important thing, because you don't want to be giving the same dose to an adult as you would to a child, necessarily, unless you knew it was safe.

Harjes: Right. Those are all the true/false statements that I have in mind, Todd. Did I miss anything?

Campbell: I've got a couple more. I'm not sure how much time we have, but we'll go through it. One of the big assertions by Trump is that the removing of the artificial boundaries that prohibit insurers from competing against state lines would provide a significant cost savings to people going out and hunting for premiums. I think that was an interesting comment by him. I think he said, for President Obama, by keeping these boundary lines around each state, and it was almost done until just toward the end of the passage of Obamacare, and he went off from there to talk about the architect of Obamacare and the like. But again, what he's talking about is these lines that prohibit selling insurance claims across state lines. And, yes, those lines exist. States govern insurance individually, so they regulate it on an individual basis.

However, there's considerable debate over whether or not allowing a plan in Arizona to be sold to someone in New Hampshire would actually work, because there's a lot that goes into these plans. You have to establish systems, networks of doctors and hospitals. If you have a plan and Arizona, someone in New Hampshire is not going to be flying to Arizona for their care. So, there are a lot of reasons why this strategy might not work out quite the way as some intend.

Harjes: This seems like it might be a little bit more difficult of a statement to put a true/false label on. Have there been any studies looking into this?

Campbell: I think what's important for people to remember is the idea of tearing down these artificial borders is not new. It's been discussed for a long time. There was a study done back in 2012 that evaluated a number of states that tried to launch pilot programs that would allow for cross-border selling of insurance. Georgia, Kentucky, Maine, Rhode Island, and a couple others participated. And, unfortunately, not one insurer took them up on the offer.

Harjes: Interesting. At this point, we are running out of time. Before we sign off, I want to reiterate something that came up quite a few times throughout this discussion today -- all of these statements need context. It's very easy to take a single line from a debate or a campaign speech or an advertisement and touted as a singular statement and try to draw implications from it, but there's always more to the story. Like we tell you with stocks, do your homework, do your research, look in and try to understand the bigger picture. That is the best way that you could possibly go about truly understanding how each of these candidates truly feels about the United States healthcare system.

Todd, thank you so much for all of your contributions today and always. As always, people on the program may have interests in the stocks that they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell any stocks based solely on what you hear. For Todd Campbell, I'm Kristine Harjes. Thanks so much for listening and Fool on!