By: James Ewen
In the recent election cycle, as it is in all modern elections, healthcare was a common thread. With the news of a win for Donald Trump comes the trepidation of some 20 million people who are insured through the Affordable Care Act, a law that Trump has been outspoken about repealing as one of his first acts once he is sworn in. With a Republican-controlled Congress on his side this should be an easy task, although even without their help he could simply refuse to fund it through the budget process. So with that knowledge, let’s look at Trump’s healthcare plan.
The plan boils down to giving people better insurance at a more competitive price. To implement this plan, Trump has suggested giving tax breaks to encourage people to purchase insurance, creating Health Savings Accounts (HSAs), and allowing for insurance to be sold across state lines (something the auto insurance industry does). Let’s break this down.
Taking away the requirement to buy insurance is in itself a tax break. A tax break for purchasing insurance is part of the reason The Commonwealth Fund has suggested that Trump’s plan could increase the federal budget by as much as $41 billion. When you factor in creating more HSAs, basically healthcare-specific savings accounts that are tax-exempt (think IRAs), the plan would reduce healthcare costs while adding to the deficit. It’s unclear whether HSAs would only be available to those with high-deductible insurance plans, as they are regulated now, or if Trump’s plan is to extend them for use by everyone who is insured.
Currently, insurance costs in each state are dependent on the healthcare needs of the population. In states with an older majority, the cost of insurance is highly inflated for young people. In order to combat this, Trump would like to see insurance being bought and sold across state lines.
Allowing healthcare insurance to be purchased from anywhere in the country has the potential to give people many more plan options since it would eliminate state rules that sometimes cause a marked rise in the cost of coverage. Insurance companies could choose to be based out of a state that has less regulation, therefore providing a wider range of options. The intent of Trump’s plan is that this would cause more competition and the cost of insurance would decrease since it would be a buyer’s market. The main issue with this initiative is that insurers are not interested in it because it’s just not that easy.
The Affordable Care Act has initiated multi-state plans but has found some resistance as it is available in just 35 states. In order to provide insurance in a new region, the insurer needs to network with healthcare providers in that area to guarantee that the insurance plans will be accepted. However, if insurers did opt to set up their base in a state with the least regulations, that could spell trouble for those insured by that company. Regulations would need to become more standardized nationally in order to prevent insurers from taking advantage of weak consumer protections.
While there is much room left for debate, only time will tell what will actually come of this plan. Already, Trump has downplayed his fervent opposition to the Affordable Care Act, claiming he would keep parts of it in place including protecting the right of those with pre-existing conditions to purchase insurance. With that development, it’s certainly possible that aspects of his plan will change or become more clear before January.