Donald Trump’s Health-Care Plan and Where the ‘Repeal and Replace’ Slogan Falls Short

This was published as a Wall Street Journal Think Tank column on March 3, 2016.

The health-care plan detailed by Donald Trump begins with the repeal of Obamacare, which it would replace with a series of changes Mr. Trump hopes that Congress would enact. They include: allowing the sale of insurance across state boundaries, turning Medicaid into block grants to the states, allowing people to deduct the cost of their health insurance from their taxes as businesses do, expanding health savings accounts, and–in what I think would be a first–allowing those accounts to be passed on tax-free to heirs. Mr. Trump and some media outlets have characterized the plan as a replacement for the Affordable Care Act, in the spirit of “repeal and replace.” Whatever the pros and cons of these proposals–and they have both, as do the ideas put forward by Democrats–they are not a replacement for the ACA. To be clear: They do not accomplish the same goals through other means; they seek to repeal the ACA and substitute an alternative that has very different objectives.

The Affordable Care Act significantly reduces the number of uninsured by expanding Medicaid and providing government subsidies for people who cannot afford coverage, and it eliminates the worst abuses in the insurance system through reforms and regulation, such as prohibiting the exclusion of people with pre-existing medical conditions.

Mr. Trump’s plan, like ideas put forward by other Republican candidates, aims to reduce regulation and government spending, give people more low-cost insurance options, and lower taxes. Tax-deductibility for those buying insurance on their own would level the playing field for people whether they buy coverage themselves or get it through an employer. But that would do little to help the uninsured, who have lower incomes and don’t pay much in taxes. A plan like Mr. Trump’s, with its savings accounts and proposal to allow insurance purchases across state lines, might give some people wider access to bare-bones lower-cost insurance options. But those still are not options the vast majority of the uninsured would be able to afford, and freezing federal funding to states through block grants and repealing the ACA would roll back coverage gains of about 18 million people made under the ACA; it is also likely to increase the number of uninsured to levels higher than pre-ACA numbers. There is no mention of pre-existing conditions in Mr. Trump’s plan or mechanisms to ensure that sick people can get coverage.

Mr. Trump’s promotion of high-deductible plans with savings accounts is an example of an idea that has upsides but different objectives than the ACA. These plans would offer lower premiums–in return for higher deductibles–and encourage more prudent health-care use. Such options are widely available today, including in the ACA marketplaces. But they are generally not a good option for the chronically ill, who use health services more frequently than most or for lower-income people, for whom the deductibles are a barrier to care and an economic hardship. The average deductible for a high-deductible plan with a savings account is $2,196 for single coverage and $4,347 for family coverage. One National Institutes of Health study concluded: “As health reform efforts advance, policy makers must consider how to modify high-deductible plans to reduce the financial burden for families with chronic conditions.”

High-deductible plans with savings accounts also are not a good option for most of the uninsured. Eight out of 10 uninsured Americans are in families earning less than four times the federal poverty level–$76,000 for a family of three–and half earn less than two times the poverty level.

Mr. Trump’s plan and other proposals from GOP candidates pursue worthy objectives that Republicans favor, including giving people more affordable choices for health insurance. But their ideas are not a replacement for the ACA; they are an alternative to it that would move the health system in a very different direction. “Repeal and replace” is a slogan that itself may need to be replaced.

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