Donald Trump on Health Care
How Trump's Health Care Policies Will Raise Premium Prices for You
President Trump has taken many steps to weaken the Affordable Care Act even without repealing and replacing it. On February 20, 2018, his administration proposed a plan to loosen regulations on short-term insurance. As Trump stated in his October 2017 executive order, he wants to allow short-term policies to last up to a year. The Obama administration capped them at 90 days. Trump’s administration has argued that this will allow more Americans to “find coverage that meets their needs.” Short-term plans cost less but don’t offer many benefits.
Since these plans are attractive to young, healthy people, the change will likely cause a rise in premiums for comprehensive plans.
On January 11, 2018, his administration allowed states to impose work requirements on Medicaid recipients. At least 10 states asked for this permission. They will cut off benefits for “able-bodied” recipients unless they have a job, are caregivers, or are in school.
The requirement won't affect 95 percent of Medicaid recipients. Sixty percent are either younger than 18 or older than 65. Another 25 percent already work. At least 10 percent are either disabled, caregivers, or students. The requirement targets the small percentage of childless single adults to whom the ACA expanded benefits.
Repeal of Mandate
On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act. It repeals the Obamacare tax on those who don't get health insurance. This removes the incentive for healthy people to get insurance.
The CBO estimated 13 million people would drop coverage as a result. Health care costs will rise because there will be fewer healthy people paying premiums. Health insurance companies will be left with just the sicker people.
Removal of the mandate means fewer people will get preventive care or treatment for chronic diseases.
Their conditions will be more likely to create a health crisis. They will use expensive emergency rooms as a substitute for primary care, sending costs up for everyone. One study forecast that premiums will rise between 35 to 94 percent over the next three years. Parts of the South and Midwest will bear the brunt of the price hikes.
Trump's Executive Order Weakens Obamacare
On October 12, 2017, President Trump signed an executive order to modify Obamacare in five ways. These changes went into effect in January 2018.
First, the order directs the Secretary of Labor to expand access to association health plans. These are policies made available to trade groups, small businesses, and other associations. The order expands the types of groups that can form these health plans. It also prohibits them from refusing coverage or charging more to those with pre-existing conditions. It would allow people on association health plans to buy policies in other states.
The order fulfills a campaign promise to allow health insurance companies to sell policies across state lines. Each state has specific regulations. That makes it expensive for national insurance companies to operate in different states.
As a result, five companies service half the insured population. Increased competition should reduce these companies' monopoly power and lower costs.
But the executive order might do the opposite. The big companies are the only ones with the clout to operate across state lines under the current policy. If it becomes even easier for them to do so, they would raise prices. Even more frightening is that the new policies wouldn't be as closely regulated. The administration would exempt them from the Affordable Care Act's rules and from state licenses.
As a result, the plans wouldn't have to offer the ACA's 10 essential benefits. They could reimpose lifetime and annual limits. These plans might look like they did in the early 1990s. They left 398,000 people with $123 million in unpaid claims.
If this rule took effect, it could drive people away from the insurance offered on the exchanges.
They would flock to the lower-cost association plans, even though they offer fewer benefits. The ACA-compliant plans would be stuck with the sickest people. That's like asking auto insurance companies to insure only those who have been in car accidents. This would force insurance companies to raise rates or drop out of the exchanges.
The order could also affect those with company-sponsored plans. The ACA allows employers to choose a coverage plan from any state. That didn't matter when the ACA mandated all plans to have the same benefits. But employers might flock to the new plans with fewer benefits because they cost less.
Second, Trump’s executive order requests the Labor Secretary to ease restrictions on short-term health plans. Under Obamacare, these policies could last no longer than three months. Trump wants them to last up to 12 months. In February 2018, Trump’s administration proposed plans to put this change into effect.
Third, the order requests the Labor Secretary to allow employers to use pretax dollars for “health reimbursement arrangements.” These help workers pay for any medical expenses. Under Obamacare, workers could only pay for health policies that met its rules.
Fourth, the order commissions a study to find ways to limit consolidation within the insurance and hospital industries.
Fifth, it directs agencies to find additional means to increase competition and choice in health care.
Alexander- Murray Plan
On October 12, 2017, President Trump stopped reimbursing insurers who waived deductibles and copayments for low-income customers. His administration blamed Congress for not appropriating the funds to cover these ACA subsidies. Congress is considering funding the program for $10 a year between 2019 and 2021. A study showed that the subsidy would allow insurance companies to cover 3.2 million people. They would in turn provide enough revenue to lower premiums for everyone by 20-40 percent.
On October 17, 2017, Senators Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., announced a bipartisan deal to save Obamacare from this latest attack. Over the following two months, several pieces of legislation were proposed, culminating in the Alexander-Murray deal.
This proposed bill would have continued the subsidies until 2019. It tried to restore $106 million to promote the health insurance exchanges. States would have “more flexibility in the variety of choices they can give to consumers." Insurers could offer catastrophic plans to those 30 or older. It loosened the requirements for states to receive 1332 waivers. It required insurance policies to cover Obamacare's 10 essential benefits without raising prices for those with pre-existing conditions.
Alexander-Murray has not been approved. But once Trump stopped the reimbursements, insurance companies said they must raise customers' premiums by 20 percent. Some major insurers signaled possible pullbacks. They included Cigna, Health Care Service, Molina Healthcare, Highmark Health, and Independence Blue Cross. They all agreed to stay in the exchanges, but some left certain states. Half of U.S. counties now only have one insurer. Another 30 percent only have two.
To keep them in the exchanges, states had to approve rate increases. For example, Kentucky, Mississippi, and Virginia approved a 25 percent rate increase. The ACA subsidies would cover those increases for many people. But that adds to the deficit. The Congressional Budget Office estimates it will cost the government at least $194 billion over the next 10 years.
Other Trump Efforts to Weaken the ACA
Trump asked Congress to create a plan to replace Obamacare. Throughout 2017, they proposed many alternatives. None of them could get enough votes to pass.
On September 22, 2017, the Trump administration announced it would close the health insurance exchanges for 12 hours on the first day of open enrollment, November 1, 2017. It would shut down the exchanges from midnight to noon for “maintenance outages” every Sunday of open enrollment except for December 10, 2017.
Trump has cut funding and personnel needed to help people enroll. The administration has also posted negative messages about the ACA on YouTube and Twitter.
The president directed the Internal Revenue Service to allow people to slide by if they don't get insurance. On October 20, the IRS stated that it will uphold tax laws, despite the president’s order.
In his first 100 days, President Trump signed an executive order to "ease the burden" of Obamacare. It directs agencies to do what they can within the existing law to lift the ACA regulations.
How Trump's Actions Affect You
If you're healthy, Trump’s actions could lower your costs. First, you no longer have to pay the penalty under the new tax plan. Second, you could purchase a short-term or association plan that costs less but doesn’t offer all 10 ACA benefits. If you became sick, you might exceed the plan's annual or lifetime limit. Then you'd have to buy Obamacare insurance for a much higher price.
If you have a chronic illness, your costs will rise. That's because you'll have to rely on the ACA plans on the exchanges. As healthy customers leave those plans, the companies will raise prices to remain profitable.
National health care costs will rise at a faster rate than under Obamacare. With the ACA, costs rose around 5 percent a year. In 2014, they increased 5.3 percent. In 2015, they rose 5.8 percent. In 2007, they rose 6.5 percent. From 2000 to 2004, health care costs rose 7 percent each year. Obamacare helped more people receive low-cost preventive care before they needed high-cost emergency room care.
Trump's plan could also add to the debt. As insurance costs rise, so will the cost of subsidies. That increases the deficit and debt.
The ACA's expansion brought the health service industry many new customers. It opposes any changes that takes customers away. For that reason alone, they oppose some of Trump's plans.
Hospital groups oppose Trumps' plans for specific reasons. They don't want their emergency room costs to increase. They realize that would happen once preventive care under expanded Medicaid is withdrawn.
The health insurance lobby, America's Health Insurance Plans, opposes any reductions to Medicaid financing. The industry would file lawsuits against any plan they don't support. It played a significant role in forming Obamacare. For example, it was responsible for the individual mandate. The insurance companies wouldn't insure those who are sick unless the government mandated that the healthy are also covered.
Trump Promises No Longer in Current Plans
In March 2017, Trump announced he wanted to allow Medicare to negotiate lower prescription drug prices with pharmaceutical companies. To do this, Congress would have had to amend the act that established Medicare Part D. It prohibited Medicare from negotiating. Drug companies said they needed that protection to provide funds for research and development of new cures. The CBO found that Medicare wouldn't save much by negotiating. That's because health insurance companies already do a lot of negotiation.
In the past, Trump has mentioned the following four ideas, but they are not in any current congressional plans.
1. Keep existing Medicare and Social Security benefits intact. These benefits are part of the mandatory budget. They were created by prior Acts of Congress and cannot be changed by a president. It would not solve the problem of rising health care costs.
2. Offer a universal “market-based” plan. Trump originally wanted to provide a range of choices similar to the Federal Employees Health Benefits Program. In 2016, he suggested expanding Medicare. That's what was in Obama's original health care reform plan. Many are opposed to universal coverage, especially if they see it as a sign of socialism. That was one reason for the failure of Hillarycare.
3. Require health care providers to post prices for their services. That allows people to shop for the best value. The competition should drive prices down.
4. Allow consumers to purchase drugs overseas. The competition should drive down drug prices.
To understand the ACA better, see my book, "The Ultimate Obamacare Handbook."