Donald Trump’s seven-point health-care plan contains a few promising reform ideas, but overall it’s not a serious proposal to replace Obamacare.
Rubio pressed Trump for details about how he would reform health care, beyond repealing Obamacare, and Trump just kept repeating that he would “get rid of the lines around the states,” without elaborating. Asked for more specifics, Trump said he had none.
It would be a stretch to call what Trump released “specifics,” but at least his seven-point plan gives us a clue about how he thinks about health care and what he might try to do in office. A point-by-point analysis of his plan reveals a startling lack of seriousness about what’s wrong with our health-care system, why Obamacare made it worse, and what we need to do to fix it.
Here’s what Trump proposes:
- Completely repeal Obamacare. Our elected representatives must eliminate the individual mandate. No person should be required to buy insurance unless he or she wants to.
So far so good. Like every GOP candidate, Trump wants to repeal Obamacare. Fine.
- Modify existing law that inhibits the sale of health insurance across state lines. As long as the plan purchased complies with state requirements, any vendor ought to be able to offer insurance in any state. By allowing full competition in this market, insurance costs will go down and consumer satisfaction will go up.
This is what got Trump into trouble last Thursday. What he meant by “get rid of the lines around the states,” probably, is that he would try to encourage competition by allowing insurance companies to sell plans in any state regardless of that state’s insurance regulations. It’s a familiar proposal that comes up whenever Republicans talk about repealing Obamacare, but it’s more of a sound bite than a viable policy reform.
Because states regulate health insurance, if an insurance carrier wants to do business in a state its plans must comply with state regulations. It’s not clear that Trump understands this, though, because his proposal states, “As long as the plan purchased complies with state requirements, any vendor ought to be able to offer insurance in any state.” That is already the case. Right now, any health insurance company (like UnitedHealth Group, the nation’s largest insurer) can offer insurance in any state—as long as the plans they offer in that state comply with state regulations.
What people mean when they say individuals should be allowed to “purchase insurance across state lines” is either, A) insurance companies should be able to sell plans in one state under the regulatory regime of another state, or B) the federal government should take over all health insurance regulation and create a single national market.
The former is a non-starter, since no state legislature would ever allow that. As for the latter, a federally regulated national health insurance market could in theory be a good thing, but as Mark Hemingway noted in The Weekly Standard, “An even more likely scenario is that Congress uniformly makes everything worse for everybody. One idea to allow for more insurance competition would be for the federal government to set up some sort of health insurance ‘exchange’ where consumers could buy insurance directly from competing providers… Sound familiar?” Of course it does, that’s Obamacare.
- Allow individuals to fully deduct health insurance premium payments from their tax returns under the current tax system.
This is a fine idea as far as it goes—after all, the unlimited tax deductibility of employer-sponsored coverage is a relic from World War Two price controls. The problem is that simply allowing individuals to deduct premiums from their taxes doesn’t go far enough. The reason Obamacare offers a refundable tax credit, not merely a tax deduction, is that a lot of people can’t afford premiums to begin with. In theory, because refundable tax credits are an up-front payment, individuals can use them to pay for premiums they could not otherwise afford. Obamacare, however, didn’t make the affordability problem go away, it made the problem worse.
That’s why almost every major Obamacare repeal and replace plan (including Rubio’s) has included some form of refundable tax credit for those who don’t have coverage through an employer. Whether this is the best way to ensure coverage is debatable, but almost no one thinks that tax deductibility alone would enable poor Americans to purchase coverage, even if Obamacare were repealed. Without tax credits, the result instead would be that a great many people would “slip through the cracks,” which is precisely what Trump says he wants to avoid.
Continue reading for point 4 and 5…