Trump’s Healthcare Proposals

BY EMMA PHELPS

Although Donald Trump promised to “not let people die in the streets” throughout his campaign,¹ his healthcare proposals will increase the number of Americans without healthcare coverage and make insurance unaffordable for many low and middle-income Americans. He has laid out his bare-bones plan to repeal Obamacare, “modernize” Medicare and “maximize flexibility for states in administering Medicaid” on his transition website.² During the Republican primaries, Trump repeatedly stressed the need to replace or reform Obamacare, not simply repeal it.³ However, the actions on his transition website appear to be based entirely on a plan put forward by House Republicans in June of 2016, commonly referred to as the Ryan plan. The leader of Trump’s healthcare transition team, Ado Machida, has worked as aide to Dick Cheney and lobbyist for pharmaceutical corporations.⁴ He will now move towards implementing the Ryan plan that aims to repeal Obamacare, reverse the expansion of Medicaid, and increase the privatization of Medicare .⁵

The Affordable Care Act, commonly known as Obamacare, expanded health insurance coverage to 20 million Americans who were not previously covered.⁶ It created healthcare exchanges, mandated that every American have health insurance or pay a fine, provided subsidies for families with incomes up to 400% of the federal poverty level, prevented people from being denied coverage due to pre-existing conditions, and expanded Medicaid coverage.⁶ The exchanges suffered from implementation problems and the mandate to buy health insurance has been unpopular. However, the mandate was necessary to bring a large enough number of healthier, younger people into the exchanges. Trump proposes to repeal the Affordable Care Act and replace it with a system that includes Health Savings Accounts, high-risk pools for individuals with pre-existing conditions, and greater control of health insurance regulation by the states.²

The Ryan plan allocates $25 billion in funding for high-risk pools run by states.⁷ High-risk pools were used prior to Obamacare and allowed people who buy health insurance as individuals instead of through their employers, and were turned down by health insurance companies due to pre-existing conditions to buy insurance.⁷ Under Obamacare, people with pre-existing conditions can buy health insurance at the same rates as everyone else within the exchanges.⁷ High-risk pools were organized by the states but run by private insurance companies. Premiums were usually capped at around 150% of the average premium in the state.⁸ The pools were criticized for being expensive, underfunded, and for having limited plan choices.⁷

The other key piece of Trump’s plan to replace Obamacare is Health Savings Accounts (HSAs) which were promoted by Newt Gingrich and created by George Bush.⁹ These are tax-protected savings accounts that people could use to pay for their family’s healthcare costs. The Ryan plan touts HSAs as a way for people to “take responsibility for day-to-day health care expenses” when used in conjunction with high-deductible health insurance plans.⁹ However, these accounts mainly benefits those who pay high taxes and so would like to put their money in tax-free accounts. It is unclear how they would function as a replacement to Obamacare because Obamacare subsidizes health care for low and middle-income American and only those in high tax brackets would benefit substantially from HSAs.

Obamacare also expanded Medicaid, the program that provides health insurance to low-income Americans; it now covers all people earning below 138% of the federal poverty line in states that signed on to the program.¹⁰ The Medicaid expansion resulted in 12 million Americans gaining health insurance and was funded almost entirely by the federal government.¹⁰ The Ryan plan would repeal the Medicaid expansion and allow states to impose work requirements, increase co-pays and require those earning less than the federal poverty level to pay premiums.¹¹ States would also be allowed to require more stringent documentation to prove that recipients were citizens and residents of the state, which would increase barriers to access. Currently the federal government pays at least $1 for every $1 that a state spends on Medicaid. Under the Ryan plan, states would receive either block grants or per-capita payments for Medicaid from the federal government. Either way, federal Medicaid funding would be greatly reduced.¹¹

Trump plans to “modernize Medicare,” the program which provides health insurance to all seniors and some younger people with disabilities.² Assuming that this means implementing the recommendations laid out in the Ryan plan, this will consist of premium support and increasing enrollment in Medicare Advantage Support.¹² Premium support is a system where the government would pay seniors a fixed amount of money that they could then use to either enroll in traditional Medicare or Medicare Advantage Managed Care. The federal contribution would be capped and not tied to medical inflation. If health care costs rose at a greater rate than inflation, which has been the case in recent years, seniors would have to pay increasingly larger proportions of health care costs.¹² The Ryan plan heavily promotes Medicare Advantage plans which are essentially a form of Medicare privatization. In traditional Medicare, the government pays health care providers directly (a form of single-payer insurance). In contrast, in Medicare Advantage plans, the government pays a private insurance company to cover the senior. These plans often offer perks like coverage of prescription drugs but cost the government an average of 14% more than traditional Medicare.¹³ The private insurance companies use this money for profits and to market their plans directly to seniors.¹³

Obamacare, although far from perfect, did greatly increase health care coverage. It made health insurance more affordable for low and middle-income Americans and expanded Medicaid coverage for those most in need. Trump’s proposals, based on the Paul Ryan’s plan, will cut Medicaid, eliminate exchanges, make health insurance much more expensive for those with pre-existing conditions, and move towards Medicare privatization. Twenty million Americans may lose their coverage. Trump’s proposals do not provide a convincing alternative to Obamacare that would ensure that all Americans have access to affordable health insurance.

Emma Phelps is a sophomore from the United Kingdom and is majoring in Ecology & Evolutionary Biology. She can be contacted at emma.phelps@yale.edu.

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References:

1. Trump: I won’t let people die in the streets. (2016).MSNBC. Retrieved from http://www.msnbc.com/msnbc-quick-cuts/watch/trump-i-won-t-let-people-die-in-the-streets-631593027801
2. Trump, D. (2016). Healthcare. President-elect Donald J. Trump. Retrieved from https://www.greatagain.gov/policy/healthcare.html
3. Schleifer, T., Luhby, T., &Tatum, S. (2016). Trump appears to compromise on Obamacare. Retrieved from http://www.cnn.com/2016/11/11/politics/donald-trump-obamacare-interview/index.html
4. Bandler, A. (2016). Meet the new members of the Trump team. The Daily Wire. Retrieved from http://www.dailywire.com/news/10737/meet-new-members-trump-team-aaron-bandler#

5. Diamond, Dan. (2016). More details on the Trump health plan, team. Retrieved from http://www.politico.com/tipsheets/politico-pulse/2016/11/the-trump-transition-more-details-on-his-health-plan-and-transition-217369.
6. How does Obamacare work? (2016). Retrieved from https://obamacare.net/how-does-obamacare-work/.
7. Norris, L. (2016). ACA’s coverage of pre-existing conditions made high-risk pools obsolete. Will they be resurrected as an Obamacare replacement? Retrieved from https://www.healthinsurance.org/obamacare/risk-pools/.
8. Consumer guide to high-risk health insurance pools. (n.d). National Association of Medical Underwriters. Retrieved from https://www.nahu.org/consumer/HRPGuide.cfm.
9. Court, E. (2016). Health savings accounts are a crown jewel of ‘Trump care.’ Retrieved from http://www.marketwatch.com/story/health-savings-accounts-are-a-crown-jewel-of-trump-care-2016-11-17.
10. Policy basics: introduction to Medicaid. (2016). Center on Budget and Policy Priorities. Retrieved from http://www.cbpp.org/research/health/policy-basics-introduction-to-medicaid.
11. Pear, R. (2016). Expect Medicaid to change, but not shrivel, under Donald Trump. The New York Times. Retrieved from http://www.nytimes.com/2016/11/16/us/politics/trump-medicaid-health-care.html?_r=0.
12. Gleckman, H. (2016). How Trump may remake Medicare. Retrieved from http://www.forbes.com/sites/howardgleckman/2016/11/16/how-trump-may-remake-medicare/#6827bd644a82.
13. Morrissey, M. (2009). Medicare privatization: a cautionary tale. Economic Policy Institute. Retrieved from http://www.epi.org/publication/pm142/.