Initial Analysis of the Trump Health Care Plan

Trump recently released his seven point plan for health care reform in the U. S., and I wanted to offer some initial thoughts to his different elements. Some of point contained multiple sub-points, so I broke them out into individual elements.

1. 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.

I’m fine with any candidate that wants to repeal Obamacare, but the elimination of the Affordable Care Act in its entirety solely for the purpose of eradicating the individual mandate is like burning down your house to get rid of a rat. The ACA has bridged gaps in the consumer-corporate partnership that went long unfulfilled; gaps such as an end to pre-existing conditions, a standardized set of basic health benefits, access to preventative care, and premium equity.
Premium equity may not initially appear as a cornerstone of the ACA, but under Trump’s plan, this is a term that will become mainstream within a matter of months if the ACA is repealed. Premium equity, in its most basic definition, is the equitable distribution of premiums across cohorts. Essentially, if you have diabetes, and I am a healthy man, we pay the same premium for the same level of coverage. This prevents insurance companies from gouging high-risk clients.

2. 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 plan worked so well with credit card companies. This is a weak argument, as none of us know exactly how the removal of this barrier will affect insurance carriers, it is a similar comparison. Credit card companies used to be previously subjected to laws that required the interest rates be based on the location the credit card bank was headquartered. This law was jettisoned by the Supreme Court, and South Dakota passed State Laws eliminating the maximum interest rates, and consumers have been swimming in credit card debt since.
Would insurance carriers capitalistically benefit in the same manner of credit card companies? One thing’s for sure: insurance costs will absolutely not go down, just as credit card interest rates and consumer debt did not go down. It’s not in the interest of shareholders.

3. Allow individuals to fully deduct health insurance premium payments from their tax returns under the current tax system.

This ties in to my main argument against the ACA from previous posts. Health Insurance is NOT Health Care. If Trump is going through the effort of repealing the ACA, why not replace it with a more cost-effective system?
Medicare operates at a much lower administrative cost than private plans, and has a slower growth rate than private insurance premiums. What does this mean? If two identical consumers received the same type of coverage, utilized the same benefits, and were similar in every way, the consumer who claimed his insurance premiums as a tax deduction would cost more than the consumer who received Medicare coverage.
If Republicans were truly for government cost containment and efficiency, they would repeal the ACA and implement Medicare for all.

4. Businesses are allowed to take these deductions so why wouldn’t Congress allow individuals the same exemptions?

I’m not going to speak much to this, but the marriage between your employer and health insurance is an antiquated relic from World War II. Medicare-for-all would divorce us from being slaves to our jobs for health coverage. Again, not only would the Federal Government save on the costs of health care, but businesses would no longer be able to deduct the cost of insurance from their taxes.

5. As we allow the free market to provide insurance coverage opportunities to companies and individuals, we must also make sure that no one slips through the cracks simply because they cannot afford insurance.

This is a bit of an empty statement that offers no resolution to ‘the cracks.’

6. We must review basic options for Medicaid and work with states to ensure that those who want healthcare coverage can have it.

What basic options are being referred to here? States have only recently been granted the authority to expand Medicaid coverage beyond extremely limited groups, and only about half of States have chosen this expansion. In States that have not chosen to expand Medicaid coverage at the expense of their own constituents being left without insurance (Texas for example, has approximately 1 million uninsured individuals who fall outside of Medicaid coverage and below the minimum amount for Federal premium assistance).

7. Allow individuals to use Health Savings Accounts (HSAs). Contributions into HSAs should be tax-free and should be allowed to accumulate. These accounts would become part of the estate of the individual and could be passed on to heirs without fear of any death penalty. These plans should be particularly attractive to young people who are healthy and can afford high-deductible insurance plans. These funds can be used by any member of a family without penalty. The flexibility and security provided by HSAs will be of great benefit to all who participate.

This provision has some merit. I would argue these funds typically go into a 401k-style savings account that can be subject to large amounts of risk.

8. Require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals. Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure.

This is a legitimate recommendation, and subject to many of the harsh criticism the ACA received from Democrats and Republicans alike.

9. Block-grant Medicaid to the states. Nearly every state already offers benefits beyond what is required in the current Medicaid structure.

As a person who has personally had State Medicaid budgetary oversight responsibilities, I would contend most States are ill-equipped to manage block grants. However, that is a highly subjective and anecdotal response. Part of what makes the Medicaid program unique is the partnership between the State and Federal government. It creates an informal system of checks and balances, as one agency monitors the other. Block grants would systematically remove this system of checks and balances. However, we have no long-term case studies of a State implementing block-grant funding, so I would be open to a trial.
For those of you unfamiliar with the term and funding principles, States typically request assistance in paying for Medicaid services from the Federal government. In exchange for payment, the Federal government regulates how those funds can be spent (what services are appropriate, and for which populations). Block grant funding is essentially a lump-sum annual check to the State to spend the funds how that State sees fit.

10. The state governments know their people best and can manage the administration of Medicaid far better without federal overhead.

I think I covered this above.

11. States will have the incentives to seek out and eliminate fraud, waste and abuse to preserve our precious resources.

States have the incentive now to eliminate fraud, waste, and abuse. The State and Federal government dually fund Medicaid programs. State dollars are currently at risk to FW&A, and the incentive currently exists to save State dollars.

12. Remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products.

This needs further explanation. Are these ‘barriers’ the FDA? If so, we have a prime example currently unfolding of what happens when these barriers are removed from society in the dietary supplement market.

13. Congress will need the courage to step away from the special interests and do what is right for America.

This is a no-brainer. The same could be said for the environment, economy, and every other aspect of our nation. In 1994, the FDA’s regulation of supplements was basically neutered. “Between 1994 and 2008, the number of dietary supplement products on the market increased from 4,000 to 75,000. In the first 10 months of 2008, the FDA received nearly 600 reports of serious adverse events (including hospitalization, disability, and death) from these products and 350 reports of moderate or mild adverse events. However, the FDA believes that these reports are drastically underreported and estimates that the annual number of all adverse events is 50,000.”
Is this the same outcome we desire as a society with the pharmaceutical industry?

14. Though the pharmaceutical industry is in the private sector, drug companies provide a public service.

Yes, which lends to why it is regulated as such.

15. Allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers.

Just like Chinese goods? The FDA regulates the conditions, purity, source, and a number of other variables for drugs manufactured in the U. S. This regulation is often referred to as cumbersome and costly, but would you feel safe taking anti-psychotics if these measures can be bypassed?
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