Editor’s Note: Abhinav Shashank is the CEO & Co-founder at Innovaccer Inc., a datashop integrating complex data across multiple distributed sources to give healthcare organizations greater insights to provider better care.
On November 9th, 2016 the United States of America witnessed a major turnaround in the administration. Republican candidate Donald Trump is the 45th president-elect of the United States, leading with 279 electoral votes. Donald Trump plans to bring about numerous changes to “Make America Great Again,” and true to his Republican roots, Trump’s plans for the health care focus on some key facets which have always been a concern for the GOP.
Donald Trump has outlined his healthcare plan for America that is centered around mainly the following key facets. A study conducted by the Commonwealth Fund with RAND Corporation using simulation analyzed his plans and came up with probable impacts.
1. Repeal Affordable Care Act
Donald Trump and the GOP want to fully repeal the ACA and replace it with something new, dubbed “Healthcare Reform to Make America Great Again.” However, the intention is to achieve a better law with some parts of ACA.
● Pre-existing Condition Clause will remain. As the Republican Plan “The Better Way” dated 22nd June 2016, Donald Trump plans to continue with it as no American should be denied on the basis of pre-existing medical conditions or demographics.
● Remove the Individual and Employer Mandate, as no one should be forced to buy health insurance.
● Reduce the growth rate of Medicare spending and implementation of new taxes and fees.
● About 19.7 million fewer people will be covered by an insurance policy, on repealing the ACA.
● Repealing the ACA alone would make the out-of-pocket costs shoot up as high as $4,700 for individuals per year.
● Would create a deficit of $33.1 billion.
2. Use of Health Savings Accounts (HSA)
A Health savings account is a tax-advantaged medical saving account available to the people of US, which allows people to contribute or draw money from for paying off medical expenses, tax-free.
● Under Obamacare, HSAs were available to only individuals who were enrolled in “High Deductible Health Plans.”
● Keeping the basics same, Trump proposes to expand HSAs, allowing all individuals to use HSAs where the contributions would not only be tax-free but will also accumulate over time.
● Moreover, he would allow HSAs to become a part of a person’s estate and would be passed on to heirs without any penalty.
● The health savings account program gives taxpayers a chance to put their money in a special fund, solely for their health coverage, without paying any federal taxes.
● The provisions in HSAs are flexible and secure, which could be a great benefit to all the people who enroll for it.
3. Making premiums tax deductible
Before ACA came along, there were substantial tax advantages available to people who had their employer cover for them, but that privilege did not extend to people who took up private, individual-market policies not provided by the employer. To solve this disparity, ACA had the provision of means-tested advance premium tax credits, known as APTCs – where the government reduces the cost of insurance by providing APTCs to bridge the gap between the cost of premium and payment limit.
● Donald Trump’s plan will allow individuals to fully deduct their premiums from their tax returns under the current tax system, facilitating a free market to provide insurance coverage to companies and individuals.
● The scheme Trump has will abolish APTCs and let individuals use pre-tax money to purchase individual market insurance.
● The aim is to provide people with an incentive to pay for coverage when they are healthy, and not make it mandatory.
● Adding a tax deduction will result in 15.6 million fewer people getting health insurance.
● The study suggests out-of-pocket costs for individuals would rise to $3,500 from this alone and speculation is that this will be lower for high-income families than families with lower income.
● High-risk pools will emerge with huge numbers of high-risk patients at the center, who would impose high costs which in turn would mean high premiums.
4. Funding Medicaid through block-grants
Under the current law, Medicaid gets join funds by the federal and state government and the federal government contributes 50 percent to 75 percent of the total costs and the rest is borne by the states.
● Trump proposes to fund Medicaid all over the country through block grants
● Under this, the federal government would give a fixed amount of money to states and let them fund their programs.
● The rationale behind this is that state governments know best about their population and should have the sole authority on how the money should be spent and will fare better without federal administration overhead.
● If the Medicaid block grant is in accordance with pre-ACA levels for inflation, it would only slightly burden the deficit, by $0.5 million.
● Introducing block grants might actually balance the increase in the deficit if the states take measures like reducing eligibility or cutting down enrollment outreach.
● 25.1 million people would lose their insurance, including 5.5 million of those who would have been eligible for Medicaid in ACA days.
5. Health insurance companies to sell their plans across states
So far, health insurance in the US was regulated by the ACA, with minimum standards to avoid variations in underwriting, guarantees and denying coverage. Owing to these regulations, health insurance companies who plan to sell their insurance plans in multiple states have to abide by the state regulations.
● Allowing health insurance companies to sell their plans across the state lines
● Any vendor that complies with the state guidelines can offer insurance plans in that state.
● Donald Trump believes that with such a competitive environment, the cost of insurance will go down with increased customer satisfaction.
● 17.5 million fewer people will have health coverage.
● The out-of-pocket costs would go as high as $5,700.
● The deficit for the federal government would inflate up to $33.7 million.
6. Increased transparency
As mentioned in Donald Trump’s Healthcare plans, there is a call for greater price transparency especially from the providers in various healthcare organizations. The goal is to make individuals aware aof the best prices of procedures, tests, and other medical procedures. How and to what effect will it be implemented is uncertain so far, thus impacts of this are unknown.7. Free market for drug provider
Donald Trump believes that the cost of care could be reduced to a great extent if Medicare negotiated with pharmaceutical companies. He wants to remove the existing barriers to entry into the free markets for drug companies. Trump declared in one of his speeches that Medicare could “save $300 billion” per year if it negotiated prices with the drug companies.
However, Donald Trump mentioned in his Healthcare plans, that it is not simple to repeal it and they would have to work with the Congress to have a ‘series of reforms’ for full implementation of a free market. Here is how they plan to replace the Affordable Care Act:
1. Repeal Affordable Care Act partially through reconciliation, with several subsidies expiring in 2019.
2. Have all the Republicans on board to work on a plan to create market-based universal coverage, which reduces the Federal role in the healthcare industry.
3. Utilize the two-year window to achieve the market-based universal coverage by repealing Affordable Care Act and replacing it with a system of means-tested tax credits.
The Road Ahead
In his health care pitch, Trump has focused on making the system voluntary rather than mandatory, where citizens can buy as much coverage as they need. Bringing about a transformation in the healthcare industry is easier said than done. It’s been only a few days since Donald J. Trump was declared president-elect and even though he has mentioned a lot of concepts he hopes to implement, the number of unknowns, make it seem like a long road ahead, especially repealing a comprehensive law like ACA.
Opinions expressed by HIT Consultant Contributors are their own.