Today's Managing Health Care Costs Number is Seven
Donald Trump revealed his health care plan yesterday. Obamacare was over 1000 pages of legislation and tens of thousands of pages of regulations. TrumpCare is 1092 words.
Here's a summary, with my comments:
1. Repeal Obamacare - especially the individual mandate
A lot goes out the window with the repeal of Obamacare. Insurers can resume underwriting - refusing to offer plans to those who are high risk. They can charge discriminatory rates for those with existing ilnesses, write policies that exclude prexisting illnesses, and simply refuse to insure the sick - who most need insurance. The individual mandate is required for "guarantee issue" health insurance -and getting rid of it means we can't be sure that the sick will be able to get insurance.
2. Allow insurance to be sold across state lines
This has been proposed over and over - and there are six states that allow cross-border health insurance sales. It hasn't made any difference. The Trump plan would require that insurers follow the laws of each state- so the administrative benefit would be tiny. Many of us who live in states with vigorous regulation of insurance don't really want to have insurance offered by companies that wouldn’t meet existing regulatory standards. State regulation of health insurers has included vigorous enforcement of risk based capital requirements -so that insolvent insurers don't stick providers with bad debt and abandon their members in the middle of a plan year.
3. Allow full premium tax deductibility whether insurance is purchased through employers or individually
The health insurance tax deduction already costs a quarter of a trillion annually. It encourages wasteful insurance purchases, and is of value to those with high income but not those with modest income. We probably need to diminish tax deductibility of employer sponsored health insurance, as opposed to increasing tax deductibility of non-employer sponsored health insurance. The ACA's excise tax does this - although the likelihood that this will ever be imposed seems slim.
4. Promote health care savings accounts
HSA's are increasingly common - as health plans have migrated to high deductibles. I'm not sure how the Trump plan is different than what's currently going on.
5. Require provider price transparency
A good idea - which can help pressure higher price providers to lower their prices. However, there's growing evidence that there is little opportunity for most patients to effectively "shop." I fully support this element -but I think it's likely to lead to only modest cost savings.
6. Convert Medicaid to block grants
Medicaid is a huge success - responsible for much of the decrease in uninsurance. The Supreme Court decision which allowed states to avoid the ACA Medicaid expansion has shown us what will happen with block grants. The poorer states (where there are more residents who need Medicaid) will be the losers - and this will further increase economic disparities. This is a genuinely terrible idea.
7. Allow importation of drugs
I think of this as trying to harness the benefits of price regulations while proclaiming the virtues of the free market and competition. Prices are lower in other countries because those countries have lower GDP (thus less discretionary income -so that they have more price sensitivity.) They are also lower elsewhere because virtually every developed country regulates drug prices. However, importation of pharmaceuticals so that patients in the US benefit from drug price regulations in other countries just won't work. The pharmaceutical companies are likely to raise prices or cut quantities of medications to other countries that export significantly to the US. Drug importation could decrease costs in the US a little - but that would be unlikely to be sustained.
My grade for TrumpCare. 1 out of 7. It's a loser!
