The leading presidential candidates’ positions on health reform could not be farther apart. Donald Trump wants to repeal Obamacare it in its entirety. Hillary Clinton wants to expand it. If elected, she plans to prop up Obamacare with more taxpayer subsidies. The Obama Administration is already looking for ways to bail out insurers as they flee the federal and state marketplace. Clinton now wants to boost subsidies to low-income households as well.
Expanding Obamacare. Under the Affordable Care Act (ACA), the government pays all premiums in excess of 2 percent to 9.5 percent of income, based on a sliding scale. The individual mandate forced many families to select cheaper plans with high-deductibles. This was an unforeseen turn of events that bothers the collectivists. Clinton wants to lower the premium cap so no one in the exchange pays more than 8.5 percent of income. She also wants to break the bank by giving a $2,500 (individual) /$5,000 (family) tax credit to cover out-of-pocket costs (and exchange plan premiums) that exceed 5 percent of income, for those ineligible for public programs. If you think your premiums are too high, she also wants the Department of Health and Human Services (HHS) to regulate premiums, even in the state exchanges. If there is a more direct way to turn the exchange into a costly, high-risk pool for poor, sick people, I’d be hard pressed to think of one.
Speaking of bad ideas; the Clinton campaign wants to bolster enrollment in the exchanges by opening them up to illegal immigrants. Unless she also plans to subsidize the plans, it’s unclear why a demographic that tends to shun health coverage would want high-priced exchange coverage unless they were already sick. I wonder if she understands what the term adverse selection means?
Although she does not explain it this way, Clinton would trash Health Savings Accounts (HSAs). She wants to require health plans to provide three “free” office visits (for illnesses, not prevention) before deductibles are met. Providing even nominal benefits below the statutory limit ($1,300 per individual, $2,600 family in 2016) will disqualify plans from being HSA-compliant. Trump would encourage people to use HSAs to pay out-of-pocket costs -- which is already allowed current law.
Clinton would forbid insurers from charging higher out-of-network copays when patients patronize an in-network hospital and get hit with a balance bill from an out-of-network provider. This is a disastrous attempt to solve a problem with other peoples’ money. Providers unaffiliated with your health plan could bill it whatever they want and force your insurer to pay it (which insurers will respond to by raising your premiums). In no time all, hospital-based physicians would drop out of networks and raise prices.
Both Clinton and Trump favor greater price transparency. Big deal! So does every politician, employer and consumer. Making a law forcing providers and insurers to reveal prices will merely expose list prices in the form of billing code gibberish. Both candidates also would get rid of the Cadillac Tax. That’s arguably one bad idea they both have in common.
Expand Medicaid. Under Clinton, states that have not expanded Medicaid could do so at any time and receive three years with 100 percent federal matching funds, just as the early adopters did. Clinton would not reform Medicaid or otherwise change the structure. The bloated, wasteful programs would remain bloated and wasteful. By contrast, Trump would repeal Medicaid expansion and convert Medicaid federal matching funds into a block grant. Trump would allow states to experiment, design their own Medicaid programs and make most of their own coverage decisions. This is something Clinton should consider.
Expand Medicare. As if the program isn’t going broke fast enough, Clinton wants to allow 55 to 64 year olds to buy into Medicare at bargain basement prices. She gives lip service to expanding the use of value-based purchasing. But whenever Medicare tries a new experiment likely to save money, Congress caves to lobbyists and blocks the experiment.
Clinton believes HHS should dictate the prices for drugs for the Medicare program -- especially specialty drugs and other high-cost drugs. (Donald Trump backed away from this bad idea months ago). If price controls are not enough, Clinton also would require drug makers to cough up rebates to the Medicare program similar to what Medicaid receives.
Drug Proposal is a Bitter Pill. Clinton wants to allow Americans to import drugs from abroad for personal use, but only from certain countries. This proposal is similar to one advocated by Donald Trump early in his campaign. Although illegal, personal importation already occurs on a small scale. Presumably Clinton would expand the current policy of Customs looking the other way when seniors order unlicensed, generic blood pressure meds (drop-shipped from India) from fake Canadian pharmacies located on webservers in Belize the or Seychelles Islands.
Clinton would “Cap the Copay” on prescription drugs at $250 per month. Only about 1-2 percent of drugs would be affected. Without cost-sharing to discourage high-cost drugs, over time this percentage could likely grow as drug makers raise their prices. Clinton also opposes “pay-for-delay” agreements by drug companies fending off generic competition. She also proposes a cash-grab by eliminating tax deductions for direct-to-consumer advertising. It is arguably little more than campaign rhetoric, but Clinton would make drug makers justify their price increases. She also favors reducing the exclusivity period for biologics from 12 years to seven. Coupled with her price controls, this would ensure there will be far fewer new biologics.
The presidential candidates’ health proposals are a hodgepodge of diverse ideas. As you would expect Trump relies on the free market, but provides few details. Clinton has a veritable plethora of bad ideas composed of government interventions, campaign rhetoric and wishful thinking.
Devon M. Herrick, PhD. Is a health economist and senior fellow at the National Center for Policy Analysis.