Good morning, Hank. It's Tuesday.
Let’s talk about the healthcare proposals of Donald Trump and Hillary Clinton, but
first I should say that if you’re interested in healthcare or health in general, you should
check out Health Care Triage, hosted by Dr. Aaron Carroll.
It’s an amazing show.
Okay, to understand the candidates’ proposals, we need to look at the current healthcare
system and its problems, so journey back with me to 2008.
At the time, most Americans got insurance through private companies.
There was a publicly funded program for the elderly to get insurance called Medicare.
Many low-income families got coverage through a publicly funded program called Medicaid,
and about 15% of Americans had no health insurance at all.
So, broadly speaking, back in 2008, our healthcare system had three huge problems.
The first was those 15% of people without insurance.
Many people who didn't work for big companies, including me, literally could not get health
insurance for any price because private insurers could deny you based on pre-existing conditions.
And for many other people, private insurance plans were just too expensive to afford.
And that brings me to our second big problem back in 2008, which was that our health care
just cost too much.
We were spending 16% of our nation's total economic output on healthcare.
Most other rich nations spent under 10%.
Like, our healthcare costs were so stupefyingly high that in the United States, more tax dollars
per capita went to healthcare spending than Germany, Japan, the United Kingdom, or Canada.
All those countries spending fewer tax dollars per person on healthcare had universal,
publicly funded healthcare.
The United States had nothing close to that.
Also, lastly, for all this money we were spending not to insure everyone, we weren’t getting
particularly good healthcare outcomes, like, by almost any measure.
From life expectancy to medical errors to hospital admissions for preventable diseases,
the United States was not near the top.
So then comes the Affordable Care Act of 2010, which was designed to address some of these
problems, with the emphasis on the “some.”
The ACA was primarily designed to get more people health insurance.
About half of the newly insured were supposed to get Medicaid, which was expanded to include
everyone making up to 138% of the poverty line, and the other half were supposed to
get insurance through exchanges, these marketplaces where everyone can get health insurance regardless
of pre-existing conditions.
And the insurance would be affordable because households making up to 400% of the poverty
line would have their insurance costs subsidized by the government on these exchanges.
The ACA also sought to reduce spending by lowering costs within Medicare, and it raised
some new taxes, including one on medical devices.
But it left the rest of the U.S. healthcare system largely unchanged.
So that was the basic idea.
Now, the ACA has never been fully implemented because a 2012 Supreme Court decision made
the Medicaid expansion optional for states, and nineteen states have so far declined to
do it, which means that millions of poorer Americans remain uninsured.
That said, the ACA has been successful at reducing the number of uninsured people.
Today, it’s around 9.1%.
And it may have played a role, although experts disagree about this, in the slowing growth
of healthcare costs in the United States.
For the twenty years before 2008, healthcare costs in the United States rose by an average of 8%.
In the last five years, they’ve risen by an average of 5.5%.
But, to be clear, costs are still rising faster than inflation and median weekly earnings.
Healthcare outcomes continue to lag behind, and our healthcare system is still far, far
more expensive than any other nation on earth, although the gap with Europe has closed a bit.
The ACA wasn’t really designed to address those problems, and it hasn’t.
And there are other problems, too.
In the employer market, premiums and deductibles are rising as employers cover on average a
smaller percentage of healthcare expenses than they did ten years ago.
On the exchanges, some insurance companies are offering fewer plans.
And because companies are insurers are now required to offer comprehensive coverage with
no lifetime benefit limits, many people who previously had bare bones insurance plans
have seen their insurance costs go way up.
These are all real problems, but it’s very important to understand that the structural
shortcomings of the United States healthcare system are much, much older than Obamacare.
The ACA is not the reason our healthcare costs are so high, and we know that because they
were very high before the ACA.
So with all that in mind, let’s look at both candidates’ healthcare reform proposals,
using analysis from the RAND corporation, which is nonpartisan and widely considered centrist.
Let’s start with Trump’s plan.
First, he would repeal the ACA.
Now, Trump has said he’ll find ways to make sure that private insurers continue offering
plans to people with pre-existing conditions, but he hasn’t said how this would be possible.
Trump would also change the way Medicaid is funded, to block grants.
This would basically mean that states would get to administer their own Medicaid programs,
but most analyses see these block grants over time involving lots of cuts.
And lastly, Trump would allow insurance companies to sell plans across state lines, and he would
also make all health insurance premiums tax deductible.
But remember, these are deductions, not tax credits, so they would mostly benefit people with high
incomes for reasons explained in this video.
Altogether, the RAND analysis concludes, I’m just gonna quote here: “The Trump proposals
decrease the number of insured, increase out-of-pocket spending for consumers enrolled in individual
market plans, and raise the federal deficit compared to the ACA.”
So, here’s how: Around 19.7 million people would lose their insurance if the ACA were
repealed, and Medicaid block grants would probably increase the number of uninsured further.
Sales of plans across state lines and tax deductible premiums would get some people
insured, but all in all, RAND concludes that about 20.3 million fewer Americans would
have health insurance under Trump’s plan.
Out-of-pocket expenses would go up, according to RAND, for two reasons.
First, because the tax deductions offered by the Trump plan are less generous than the
tax credits offered by the ACA.
And secondly, they estimate that sales of plans across state lines would raise out-of-pocket
expenses because there would be an increase in the so-called bare bones plans.
These are plans with high co-pays or deductibles, or limits to annual or lifetime benefits.
RAND estimates that the average annual out-of-pocket expenses per person, including deductibles
and co-pays and insurance premiums and everything, would go from about $3200 per person to $5700 per person.
And the deficit would go up, because with the repeal of the ACA, the taxes it raised
would also be repealed, as would the changes in Medicare reimbursement.
This would lower some taxes, but most of the savings were in changes to Medicare, so all
in all, under Trump’s plan, according to RAND, the deficit would go up by about 5.8 billion dollars.
And I should add that all the nonpartisan analyses I could find agreed on all three fronts:
that Trump’s plan would reduce the number of insured people, increase out-of-pocket
costs, and increase the deficit.
Okay, let’s move on to Hillary Clinton’s proposals.
Clinton would amend the ACA in three big ways.
First she would introduce a $2500 tax credit, or $5000 for married couples filing jointly,
that could be applied to healthcare expenses over 5% of income.
So if you’re a single person making $50,000 a year and you pay $5000 a year in health
insurance premiums, you would get a $2500 tax credit.
Because this is a tax credit and not a deduction, it would be available to everyone, not just
high-income households, but that also means it would be more expensive.
Secondly, Clinton would reduce the marketplace premium maximum.
I know this is a little confusing.
Healthcare policy makes tax policy look like a pleasant walk in the park.
But basically, right now the cost of health insurance premiums on the marketplace exchanges is
effectively capped at 9.6% of income.
To not benefit from the cap, a family of four has to make $96,000 a year or more.
Basically, Clinton’s plan would lower the cap from 9.6% to 8.5% for most households.
But of course, that program would also cost money.
And then lastly, and maybe most interestingly, Clinton would offer a public insurance option
on the exchanges.
This would allow anyone, not just seniors and low-income people to get their insurance
from the government.
RAND hasn’t yet updates its analysis of the public option, but basically, it would
probably be cheaper than private insurance because it would share administrative costs
with Medicare, and so it would slightly reduce the deficit by reducing healthcare subsidies.
So all in all, according to RAND, I’m just gonna quote again: “All of the policies
considered increase the number of insured people and reduce consumers’ out-of-pocket
spending on health care.”
RAND estimates that the Clinton tax credit alone would lead to 9.6 million more people
getting health insurance, and that households of all income levels would see their out-of-pocket
healthcare expenses go down.
The biggest reduction in healthcare costs would be for families making between thirty
and sixty thousand dollars a year, but they would go down for everyone.
But of course these problems would also increase the federal deficit by what RAND estimates
to be ninety billion dollars.
So that is RAND’s summary.
Trump’s plan would lead to significantly higher out-of-pocket costs, fewer insured
people, and a modestly higher budget deficit.
Clinton’s plan would insure more people, lower out-of-pocket costs, but raise the deficit more.
But of course you have to consider those deficits in the broader context of the candidates’
budget and tax proposals.
And to be clear, overall, under Trump’s proposals, the budget deficit would be trillions
of dollars more than under Clinton’s proposals.
The other question, of course, is will either of these proposals significantly reduce the
overall cost of U.S. healthcare?
And the answer is probably not.
The Trump campaign will argue that selling policies across state lines will increase
competition, but that is deeply contested.
And also, even in the rosiest projections, it wouldn’t decrease spending much.
The Clinton campaign, meanwhile, will say that a public option would put real price
pressure on private insurers.
And it might, but I’ll put a link in the dooblydoo explaining why a single-payer healthcare
system would not magically fix the U.S.’s problems.
The truth is, this is a complicated, multifaceted problem, and anyone trying to sell you simple
solutions probably isn’t telling you the whole story.
And that includes me, by the way.
This is definitely only an introduction.
If you want to learn much more about healthcare policy and health insurance and different
strategies for dealing with it, check out Health Care Triage.
They’ve got a great video out now about Medicaid’s return on investment, and next
week, they’re have a much more comprehensive analysis of the candidates’ healthcare plans,
so subscribe to them.
You can find sources, as well as information about how to vote in the dooblydoo below.
Hank, I will see you on Friday, unless you have a child in the interim.
End screen, Hank always says I need an end screen.
So I put some videos here about health insurance, why you need it, what the healthcare system
in the United States is like, why it’s so incredibly complicated.
Also, if you’re looking for a hot slice of tax policy, that video is just one click away,
and Rosianna drew you a bunny to cheer you up.
Thanks, Rosianna.