Throughout the 2016 presidential campaign, Donald Trump has made it clear he opposes the Affordable Care Act – a.k.a. Obamacare. He also has stated repeatedly that he wants to “take care of everybody,” and has offered up a few ideas of what that might mean. But those ideas would fall far short of taking care of everybody; indeed, they would substantially increase the number of Americans without health insurance.
Since March, the Trump campaign website has included a seven point “healthcare reform to make America great again.” The plan mentions: repealing Obamacare; allowing insurers to sell their products across state lines; providing a new tax deduction for health insurance premiums paid by households; promotion of Health Savings Accounts (without any specific proposal for how to do that); imposing a requirement for price transparency on those providing medical services to patients; converting Medicaid into a block grant; and allowing consumers to purchase prescription drugs at prices set by other governments (presumably Canada).
On another page on the campaign website, there’s a slightly different and more recent plan. It mentions: replacing the ACA with Health Savings Accounts (again without specifying what that means); working with Congress to create a “patient-centered” health system; establishing high-risk pools to lower premiums for patients with expensive medical conditions who have not maintained continuous enrollment in insurance; allowing insurers to sell products across state lines; and converting Medicaid into a block grant.
The two descriptions of what Trump would do if elected do not line up perfectly. The first plan mentions providing a universal tax deduction for health insurance, while the second omits it. The first plan mentions allowing Americans to import prescription drugs purchased at prices set by foreign governments; the second omits it. The first plan mentions requiring price transparency by those selling medical services; the second plan omits this. The second plan mentions high-risk pools, which does not appear in the first list. Both plans mention Health Savings Accounts, block-granting Medicaid, and allowing insurers to sell across state lines.
Both lists are also at odds with what Trump has said at various points when he has been asked about health care during debates or interviews. He has frequently mentioned his desire to “take care of everybody,” presumably meaning he wants everyone to have health insurance. He also mentioned during one of the GOP candidate debates that he favors retaining the ACA’s protections for people with pre-existing conditions. The two lists he has posted to his campaign web site would not come close to meeting these stated goals.
Whatever one thinks of the ACA, it has unquestionably reduced the number of Americans going without health insurance rather substantially. The Census Bureau recently reported that, in 2015, there were about 30 million Americans without health insurance, down from 45 million in 2013.
The ACA expanded enrollment in health insurance by: expanding eligibility for Medicaid to many millions of low-income households; providing large premium and cost-sharing discounts to households with incomes just above the eligibility level for Medicaid; and imposing a tax penalty on households going without qualified insurance (the “individual mandate”).
Although Trump’s health care plan is a moving target, it’s pretty clear he wants to get rid of the ACA’s key coverage-expanding provisions and would not replace them with anything that would come close to achieving the same result.
A primary obstacle to health insurance enrollment prior to the enactment of the ACA was the inability of lower income households to pay the premiums necessary to get coverage. The ACA provided very large subsidies to this population through expanded eligibility to Medicaid and the new premium and cost-sharing subsidies provided to consumers getting coverage through the law’s exchanges.
In the plan released in March, Trump proposed to give taxpayers a new deduction for health insurance premiums. This would subsidize enrollment in health insurance by allowing the value of the premium payment to be deducted from taxable income. This deduction would be valuable to households with high incomes (and thus high marginal tax rates) but would it provide almost nothing to lower income households. They often owe no income taxes at all, or, if they do, they pay taxes at a very low marginal rate. A reduction in their taxable income will provide a small reduction in their tax liability.
Trump has also suggested that HSAs will feature prominently in his replacement plan, without saying exactly what he would do to expand their use. HSAs allow taxpayers to set aside resources for health expenses. Some recent proposals have suggested allowing greater tax-free contributions to HSAs, and allowing their balances to be used for health insurance premiums, which is generally not allowed today. Like the tax deduction proposal, loosened rules for HSAs would provide tax additional assistance to some households. Contributions to, and distributions from HSAs, are non-taxable. This tax benefit might encourage some people to purchase insurance who otherwise would forgo it. But HSAs on their own, even with looser rules, would not provide much benefit to lower income families because they do not have enough discretionary resources to place more savings into HSAs.
The plan released by House GOP leaders in June is different from the Trump plan. It would provide anyone without access to employer coverage, Medicare, or Medicaid with a refundable tax credit to be used for the purchase of a health insurance plan. An age-adjusted tax credit of this kind, perhaps worth $2,100 or so for everyone age 35 to 49, would have real value for lower income households. The credit would go directly toward reducing the cost of enrollment in health insurance, and it would provide the same value to all households regardless of their income or tax liability. If a plan to replace the ACA is going to have any hope of making insurance affordable for lower income families, it must provide a tax credit of this kind, or something very similar to it. The House GOP can be described credibly as ensuring all Americans who want health insurance will have the resources to enroll in a plan.
In contrast, it is clear that any plan resembling what Trump has so far proposed would dramatically increase the number of Americans going without health insurance. One recent estimate puts the increase at around 20 million people.
There are strong reasons to object to the ACA. The law moves substantial new power and authority over the health system to the federal government. Over time, excessive federal regulation could lead to a reduction in the quality of care provided to patients and a slowing of the pace of innovation and medical progress.
But opponents of the ACA must recognize that it is not desirable to have large numbers of Americans going without health insurance. Therefore, their plans to replace the ACA must include provisions that put sufficient resources in the hands of lower income households to ensure they can enroll in affordable plans. A new tax deduction or, alternatively, expanded HSAs do not provide lower income households with enough financial help to make insurance affordable for them.
Donald Trump has said he wants to “take care of” all Americans with respect to their health care, but he has not proposed a plan that would do that, or even articulated principles for reform that would move in that direction. Instead, he has embraced broad concepts for an ACA replacement plan that would leave millions of people without health insurance.
If opponents of the ACA want to begin rolling back the law and to move in a new and better direction with reform, they would be wise to ignore what Trump has proposed and instead embrace the House GOP plan. That plan at least gives them the chance to show they understand that insurance matters, and that no American who wants to enroll in health insurance should be forced to go without it.