We're now officially less than five months away from Election Day, and voters are turning their attention to where the candidates stand on specific issues. Among the issues expected to garner a lot of attention this election season is what should be done with healthcare in America.
Outgoing President Barack Obama could wind up being most remembered for his implementation of The Affordable Care Act, or Obamacare as it's best known. Obamacare wound up turning the prior healthcare system on its head by making health insurance plans as transparent as possible within an online marketplace. It also disallowed insurers from turning away consumers with pre-existing conditions and required that plans on Obamacare exchanges meet new, beefed-up minimum benefit requirements.
In turn, consumers saw their obligations increase via the individual mandate. This essentially means consumers need to purchase insurance or face a penalty come tax time. In 2016, this penalty had grown to the greater of $695 or 2.5% of modified adjusted gross income. Overall, about 12.7 million people were enrolled in Obamacare by the end of the most recent enrollment period for 2016, and a near-equal amount found coverage via Medicaid under the Medicaid expansion in 31 states.
Is Obamacare really the best healthcare option?
But is Obamacare right for America? That was the roundabout question posed by national pollster Gallup to more than 1,500 Americans last month.
Gallup's poll sought Americans' opinions on the three remaining presidential candidates' healthcare plans, giving respondents the choice of answering whether they "favored," "opposed," or had "no opinion" on each candidate's plan. Here's a quick refresher on what each candidate has pledged to do:
- Hillary Clinton: Clinton, the presumptive presidential nominee of the Democratic Party, has essentially pledged to keep the Affordable Care Act in place. Clinton has praised the work of Obama in implementing the plan and anticipates building on its success.
- Bernie Sanders: Sanders, on the other hand, wants to repeal Obamacare and institute Medicare-for-All, meaning federally funded single-payer insurance for all Americans. This single-payer system would be funded by a 2.2% health benefits tax on all Americans, as well as a 6.2% employer tax. Additional tax reforms on ordinary income tax brackets, capital gains, and dividends would also boost revenue for the program.
- Donald Trump: Trump's seven-point healthcare plan hinges on repealing Obamacare and replacing it with something entirely different. Trump wants to allow consumers to buy pharmaceutical products from overseas markets and shop for health insurance across state lines, and he expects Health Savings Accounts to be of greater emphasis.
Surprisingly, this is America's favorite healthcare plan proposal
With these proposals in mind, Gallup asked consumer to rate the following three proposals:
- "Keeping the Affordable Care Act in place" -- Clinton's plan.
- "Replacing the ACA with a federally funded healthcare program providing insurance for all Americans" -- Sanders' plan.
- "Repealing the Affordable Care Act" -- Trump's plan.
According to Gallup, 48% favored keeping the Affordable Care Act, while 49% opposed it. This probably comes as no big surprise, given Obamacare's low favorability numbers since it was first signed into law in March 2010.
Some 51% of respondents favored repealing Obamacare, while 45% opposed the idea. In other words, Trump's healthcare proposal would appear to have a little more steam than Clinton's.
However, the overwhelming favorite was the single-payer plan offered by Bernie Sanders. Overall, 58% of respondents favored the idea, with just 37% opposing it and another 5% having no opinion.
In a separate question, Gallup asked respondents to choose between putting a single-payer system in place versus keeping Obamacare in place, and single-payer won by an even broader margin -- 64% to 32%.
Is Medicare-for-All really the best option?
Are Americans right to believe that a single-payer system is their best option? On one hand, Sanders' proposal certainly has its benefits.
To begin with, providing insurance to everyone with a federally funded program means cutting the connection between insurance and employment. In other words, Americans would not have to fear losing their insurance when they lose their jobs. The single-payer system would essentially make health insurance a right, rather than a privilege.
Medicare-for-All, as proposed by Sanders, would also allow the federal government to negotiate prescription drug prices. Drugmakers in the U.S. have incredible pricing power, as they get little pushback from insurers and enjoy long patent protection periods. With the federal government in the consumer's corner, drug developers could find their pricing power and margins stymied.
Sanders' progressive ordinary income tax bracket reforms would also accomplish something a majority of Americans would like to see: the rich paying more. Sanders' progressive income tax reforms tend to focus on a mid-single-digit percentage of the population that's considered well-to-do, which means little change for the working-class American.
Not so fast
But there are concerns, too. For starters, the healthcare system is already under an unbelievable amount of strain, given the addition of enrollees thanks to Obamacare and the expansion of Medicaid, and this doesn't even take into account the tens of millions who are still uninsured. Suddenly passing a single-payer program could crush existing healthcare infrastructure and slow treatment options to a crawl as tens of millions of new patients are accepted into the system.
Another concern with Sanders' Medicare-for-All proposal would be higher costs passed along from business. The employer tax of 6.2% could be a tough pill for businesses to swallow. My guess is we'd see businesses pass along higher costs to the consumer to cover this healthcare obligation -- or worse, we'd see employees having their hours cut or getting laid off.
Single-payer could also be a concern for investors in the healthcare sector. The biggest factor here would be the federal government exerting its power to drive down or cap pricing for drug developers and device makers. Pricing power is what makes the U.S. market such an attractive place to do business for drugmakers, and without it we could witness substantial margin contraction. It's also possible we could see job cuts and investments in overseas countries if a single-payer, federally funded healthcare system were put in place.
Regardless of who winds up in the Oval Office following the November election, they'll have to work with Congress if they expect to effect any change on our current healthcare laws -- and frankly, that's no guarantee. Nonetheless, since we're talking about your healthcare premiums and healthcare investments here, you'll want to pay attention to how public opinion is shifting, as well as how the candidates' opinions on healthcare reform are evolving. Whichever candidate takes office could very well have a direct impact on your wallet!