Under the presidency of Barack Obama, Americans witnessed the biggest shift in how they purchase and receive healthcare in generations. The passage and implementation of the Affordable Care Act (ACA) is mostly to thank for that.
The ACA, or Obamacare, has reduced the uninsured rate to the lowest levels ever recorded by the Centers for Disease Control and Prevention, boosted the minimum essential benefits that each qualifying ACA plan must cover, and removed the ability for insurers to pick and choose who they want to cover. It's also created a transparent online marketplace where consumers can compare health plans in order to make more informed purchasing decisions.
But Obamacare has been far from perfect. Despite a record low uninsured rate, premium prices could rise by a double-digit percentage in 2017, more than two-thirds of Obamacare's 23 approved healthcare cooperatives have closed their doors due to excessive losses, and three of the five national insurers have dramatically scaled back their future coverage due to ongoing losses derived from adverse selection and weaker-than-expected young adult enrollment figures.
Donald Trump's vision for American healthcare
Should Democratic presidential nominee Hillary Clinton find herself in the Oval Office following the Nov. 8 election, she plans to build upon Obamacare's successes. On the other hand, challenger Donald Trump, the Republican Party's presidential nominee, has a seven-part plan that would mostly head in the opposite direction of where President Obama has taken -- and Clinton would continue to take -- American healthcare.
Here are seven ways Donald Trump would change American healthcare if he becomes president.
1. Repeal Obamacare
The biggest departure from the healthcare policies of President Obama and presidential hopeful Hillary Clinton is that Donald Trump would seek to completely repeal Obamacare. This would, in effect, eliminate federal aid to expanded Medicaid programs in 31 states, halt the minimum essential benefit requirements for ACA plans, and cancel the individual mandate that requires consumers to purchase health insurance, or face a penalty come tax time.
2. Allow health insurance to be purchased across state lines
One of the ways Trump would seek to lower health insurance premium inflation is by allowing people to purchase health insurance plans across state lines.
For instance, individuals and families living in rural regions of the country often pay higher insurance premiums because they usually live far away from specialized medical equipment. As an example, you may not find that the specialized care you need is anywhere close if you live in the sparsely populated states of Alaska or Wyoming. This can require long trips for medical care, perhaps even out of state. Not surprisingly, Alaska and Wyoming have among the highest monthly premiums in the country.
If Trump were able to pass his reforms, people living in rural areas would be able to shop for health insurance anywhere in the country, potentially reducing their per-month premium costs and providing something of a national risk pool for insurers.
3. Incentivize health insurance purchases through full premium tax deductions
Under Obamacare, the individual mandate coerces consumers to purchase health insurance with the threat of the Shared Responsibility Payment (SRP) if they don't. In 2016, the SRP is the greater of $695 or 2.5% of your modified adjusted gross income (up to the annual cost of the lowest-priced bronze plan in your state).
With Trump's proposed healthcare reforms, Americans would be incentivized to enroll knowing that their premiums would be fully deductible on their current-year federal income tax filing. In a way, this is akin to allowing individual tax filers to act like corporations and take full deductions on their premium payments.
4. Emphasize the use of Health Savings Accounts
Donald Trump has also strongly emphasized the use of Health Savings Accounts, or HSAs. To be crystal clear, HSAs already exist, so Trump isn't necessarily proposing anything different than what some of the American people already have access to.
For those unfamiliar with HSAs, these are tax-deferred plans open to individuals and families enrolled in high-deductible health plans. Should your high deductible meet the limits set by the IRS, and as long as you're not enrolled in Medicare or being claimed as a dependent on someone else's tax return, you'd qualify to contribute to an HSA.
What's special about an HSA is that it allows an individual to withdraw money at any age for qualifying medical expenses on a tax-free, penalty-free basis.
5. Require price transparency from health insurers
If there is but one similarity between Donald Trump's proposal to reform American healthcare and Obamacare it would be the call for improved pricing transparency from health insurers. Obamacare uses its online marketplace exchanges to make plan prices and comparisons as transparent as possible. It's a bit unclear how Trump would approach the idea of increased price transparency with insurers, but it nonetheless remains a key point among his proposed healthcare reforms.
6. Block grant Medicaid to the states
Sixth, Trump would alter the way the federal government channels federal dollars to the states by advocating in favor of block-granting Medicaid to the states. The thinking behind Trump's proposal is that state and local governments have a far better understanding of what programs are in need of federal money and which ones aren't, compared to the much larger federal government. By using block grants to the states themselves and removing federal intervention, Trump believes quite a bit of waste could be eliminated, thus allowing federal Medicaid dollars to stretch further.
7. Remove barriers to entry for overseas drug providers
Lastly, Trump would tackle the sky-high cost of prescription drugs, which is among the leading causes of premium inflation in the U.S., by removing the barriers of entry into free markets for overseas drug providers. In simpler terms, Trump wants to allow American citizens to be able to purchase pharmaceuticals products in overseas markets, such as Canada, that are markedly cheaper than they are in the United States, thus saving money in the process.
A good example would be the highly controversial severe-allergic-reaction medicine EpiPen, which, in the U.S., costs more than $600. In Canada, according to Tim Smith, the general manager of the Canadian International Pharmaceutical Association, a single EpiPen costs between $100 and $145. Being able to purchase safe and effective brand-name drugs overseas could reduce what Americans pay out of pocket, and it may also slow premium inflation.
Would Trump's healthcare plan work?
The biggest question of all is whether Trump's healthcare reforms would work.
On one hand, Trump's plan to promote cross-state health insurance sales and cross-border pharmaceutical product purchases would both work in favor of the consumer by increasing competition and choice. In theory, both should work to weigh down premium inflation by increasing the risk pool for all insurers. Similarly, block-granting Medicaid to the states should help eliminate some level of wasteful spending, albeit it's tough to gauge how much money would actually be saved.
On the other hand, it's a bit unclear how consumers with preexisting conditions, and lower-income consumers, would fare under Trump's plan. With no provision requiring acceptance, insurers could again return to their ways of picking and choosing who they'll accept as members. Furthermore, Trump's call for full tax deductions for premiums favors the wealthy and those who can afford comprehensive healthcare coverage, while providing only modest benefits to those who may struggle to afford health insurance and purchase a lower-priced plan.
Clearly, Trump's plan has its positives and negatives. Deciding whether or not it'll work is up to you and the nearly 219 million other registered voters.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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