The second presidential debate between Donald Trump and Hillary Clinton last Sunday provided Americans with insight into each of their plans for the future of healthcare in America.
Since the two candidates have very different views on the matter, let's take a closer look at what each of them plans to do if he or she wins next month's election.
Repeal and replace
Donald Trump's plan to fix healthcare includes dismantling the Affordable Care Act, reducing regulation, and expanding the use of health savings accounts (HSAs).
In last Sunday's debate, Trump highlighted runaway premium increases, rising costs to the federal government associated with the program, and the need to reform tax laws to provide Americans with more medical deductions.
The Kaiser Family Foundation estimates that in 2017, the average premium for the second-lowest "silver" plan offered on the marketplace will increase 9% from 2016. Increases vary widely state to state and county to county, and they depend on the type of health insurance plan chosen. Regardless, the average increase for silver plans dwarfs the 2% increase in premiums for these plans in 2016.
Rising premiums increase the amount the federal government spends on subsidies used to lower the cost of monthly premiums, and that means that the Affordable Care Act will represent a larger proportion of the federal budget 10 years from now than it does today. Roughly 82% of Americans receive subsidies that lower their monthly premiums to less than $100 per month, and the Congressional Budget Office (CBO) estimates Obamacare's cost will eclipse $1 trillion in 2026.
Trump believes that a better and cheaper solution involves repealing Obamacare and removing barriers that keep insurers from selling their insurance plans across state lines. He also favors expanding the use of HSAs, which are tax-advantaged plans that can be paired up with high-deductible healthcare insurance plans to pay out-of-pocket medical costs tax-free. Trump is also advocating for the full deductibility of health-insurance premiums for individuals.
In addition to those proposals, Trump would like to ease restrictions on importing drugs from countries such as Canada where they are cheaper. Trump also favors shifting federal funding of Medicaid from a share of state costs to a block-grant system.
Fix the flaws
Hillary Clinton believes that Obamacare provides an important safety net for millions of Americans who would otherwise be unable to avoid health insurance. As a result, she favors fixes to rein in healthcare premiums, such as boosting insurance enrollment among young Americans. She also proposes stricter regulation of premium increases and caps on out-of-pocket healthcare spending.
Currently, over 90% of Americans are enrolled in health-insurance plans. That's up from about 82% prior to Obamacare's launch, but despite the gains, a significant number of Americans continue to forgo health insurance. According to the CBO, roughly 27 million Americans remain uninsured this year, many of whom are younger than 34 years old, and who are referred to as the "young invincibles."
In part because healthy, young Americans aren't enrolling in Obamacare plans, insurance companies are struggling to turn a profit on marketplace plans, which is leading some insurers to head for the exit. Earlier this year, the nation's largest health insurer, UnitedHealth Group, announced it would be reducing its marketplace footprint from about two dozen states to only a handful of states.
Clinton believes that boosting insurance enrollment by healthy young Americans could improve Obamacare's profitability because it would allow insurers to spread their costs across more people. If so, then rising enrollment could improve the long-term viability of the Obamacare marketplace, and crimp increases in premium rates.
Clinton also wants to provide the Department of Health and Human Services with the ability to block or modify unreasonable rate increases by insurers.
Furthermore, Clinton favors capping the amount of money that Americans spend annually on prescriptions and on out-of-pocket healthcare. Since 2010, the average health-insurance deductible has increased seven times faster than workers' wages, according to the Kaiser Family Foundation, and as a result, individuals and families are responsible for paying for more of their care than ever before.
In a bid to change that, Clinton proposes expanding Obamacare so that plans include three free primary-care visits for illness every year. She also recommends creating a refundable tax credit of up to $5,000 per family to offset out-of-pocket medical spending that exceeds 5% of income. Finally, Clinton proposes capping out-of-pocket prescription drug costs at $250 per month.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. Like this article? Follow him on Twitter where he goes by the handle @ebcapital to see more articles like this.
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