This article takes a look at the relationship between Trumpcare and Obamacare. Central to the Trumpcare platform is the repeal of Obamacare. The first order of business for President-Elect Trump will be to repeal, not restructure, Obamacare.
The complicated, more than 1,000 page law, the Affordable Care Act, is supposed to increase access to health insurance coverage for all Americans. In February 2016 Trump stated that he didn't “want people dying in the streets" and that he did like Obamacare's individual mandate help up by the supreme court. However, his platform has evolved as he released his seven-point plan and his support has been rescinded as he intends to fully repeal Obamacare on his first day in office.
Since March of 2010, the American people have had to suffer under the incredible economic burden of the Affordable Care Act—Obamacare. This legislation, passed by totally partisan votes in the House and Senate and signed into law by the most divisive and partisan President in American history, has tragically but predictably resulted in runaway costs, websites that don’t work, greater rationing of care, higher premiums, less competition and fewer choices. Obamacare has raised the economic uncertainty of every single person residing in this country. As it appears Obamacare is certain to collapse of its own weight, the damage done by the Democrats and President Obama, and abetted by the Supreme Court, will be difficult to repair unless the next President and a Republican congress lead the effort to bring much-needed free market reforms to the healthcare industry.
The impact of Trump's proposal to repeal Obamacare requires policy adaptation at numerous levels of government. The text of the Affordable Care Act covers Medicare and Medicaid expansion, regulations, subsidies and taxes. The purported benefit, according to Trump, is that his plan would save $1.1 trillion, according to the Congressional Budget Office's 2015 estimates. What is not so loudly expressed is that the cost of the repeal would be $1.5 trillion, thereby making Trump's plan a considerably (to the tune of $500 billion) more expensive alternative. Perhaps the aspect most indicative of the inefficiency of Trump's healthcare platform is that these changes would only benefit approximately 1 million Americans while at the same time 22 million Americans would lose insurance.
Will Trump Change Obamacare if He Can't Repeal It?
The significant cost of Trump's plan to repeal the ACA can be lowered only if he preserves some of the Medicare cuts and tax increases currently implemented by Obamacare.
Right out the gate Trump's plan to repeal the ACA will cost 21 million people their insurance coverage. Trump has declined to provide hard financial data regarding his plan, but his plan does include existing aspects of Obamacare like making health insurance premiums tax-deductible and it includes provisions for establishing tax-free savings accounts specifically for medical expenses. These concessions would cover 5% of the 21 million Americans who would otherwise lose coverage under his plan.
One of Trump's major cost-cutting measures, and one that has been a favorite of conservatives since Reagan, is to "block-grant" Medicaid for the states. Block-granting would have the federal government provide a specific budget amount to the states as a lump sum to use for the state-run Medicaid programs without the federal oversight and regulation. Critics of block-granting Medicaid claim that the funding would be outpaced by the growth of Medicaid costs. The Center on Budget and Policy Priorities have indicated that this type of program would lead to a growth reduction of 1.5 to 2 percent annually.
Conservative response has been insubstantial, essentially rallying around the idea that it would decrease fraud and discourage states from attempting to lump as many services under the purview of Medicaid as possible. Proposals in the past, put forward by Newt Gingrich, George W. Bush and Paul Ryan, have indicated billions of potential savings. Without any specifics regarding the size or scope of block grants, it is difficult to correlate Trump's plan with relevant past calculations. While conservatives argue that block grants, if properly implemented, could feasibly replace Obamacare, there is no indication that health coverage would not decrease. As with many of his stated policies, Trump includes enforcement of existing immigration laws as an additional source of Medicaid cost reduction.
What else is in Trump's Seven-Point Plan?
"Modify existing law that inhibits the sale of health insurance across state lines." Trump seeks to increase competition between the states by allowing individuals to purchase plans from another state. His reasoning is that it will cause the market to force insurance companies to adapt in order to remain competitive. Businessman Trump claims that competition of this nature will result in lower healthcare costs.
"Allow individuals to fully deduct health insurance premium payments from their tax returns under the current tax system." Trump argues that since businesses are permitted to deduct their own insurance premiums this should apply equally to individuals.
"Allow individuals to use Health Savings Accounts (HSAs). Contributions into HSAs should be tax-free and should be allowed to accumulate." While this is a point in Trump's plan, it is important to note that this is actually already a part of the Affordable Care Act. The thought process behind this point is that the young and healthy will be able to accrue funds in a tax-free account until the time comes that they need it to pay medical expenses like deductibles. This can have numerous benefits to the individual including lowering their tax bracket or similarly increasing the amount of subsidy for which they qualify.
"Require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals." This point coincides with Trump's overall platform of encouraging a free market. Price transparency facilitates competition, allowing consumers to choose the most affordable and cost-effective treatment based on their needs and budget. In addition to providing savings to the individual consumer, this should reduce insurance costs generally across the board in all areas and not just for individuals. This saves money for businesses as well as for state and federal government.
"Remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products." Trumps fundamental response to Obamacare is to promote free markets. Allowing American consumers to purchase drugs from other countries is a further expansion of the idea that competition lowers prices.
One particular subject that Trump has mentioned on the campaign trail, but is not part of his seven-point plan, is pre-existing conditions. "I agree with that 100%, except pre-existing conditions, I would absolutely get rid of ObamaCare. I want to keep pre- existing conditions. It's a modern age, and I think we have to have it... Yes, they will keep preexisting conditions, and that would be a great thing."
Final Analysis of Trump on Obamacare
Between the lines of Trump's incessant call to "repeal Obamacare" is the demand for a free, competitive marketplace for insurance. He supports some of the fundamental aspects of Obamacare, among them supporting pre-existing conditions and tax-free Health Savings Accounts. Opening state borders, demanding transparency, giving individuals the same tax-deduction benefits of businesses and allowing Medicare to negotiate the cost of prescriptions are all parts of the same concept: marketplace competition brings costs down. "By allowing full competition in this market, insurance costs will go down and consumer satisfaction will go up."