So, by now, you’ve heard what Donald Trump has said about health care, which actually isn’t all that new nor was it expected to change if he should become the next president of the United States. The president-elect said that his new replacement plan for Obamacare would pretty much give insurance to “everybody,” though Trump didn’t divulge details (via WaPo) [emphasis mine]:
Trump warned Republicans that if the party splinters or slows his agenda, he is ready to use the power of the presidency — and Twitter — to usher his legislation to passage.
“The Congress can’t get cold feet because the people will not let that happen,” Trump said during the interview with The Post.
“It’s very much formulated down to the final strokes. We haven’t put it in quite yet but we’re going to be doing it soon,” Trump said. He noted that he is waiting for his nominee for secretary of health and human services, Rep. Tom Price (R-Ga.), to be confirmed. That decision rests with the Senate Finance Committee, which hasn’t scheduled a hearing.
“I think we will get approval. I won’t tell you how, but we will get approval. You see what’s happened in the House in recent weeks,” Trump said, referencing his tweet during a House Republican move to gut their independent ethics office, which along with widespread constituent outrage was cited by some members as a reason the gambit failed.
“We’re going to have insurance for everybody,” Trump said. “There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.” People covered under the law “can expect to have great health care. It will be in a much simplified form. Much less expensive and much better.”
Okay—a lot of conservatives might get queasy from this. I criticized Trump about this aspect of his campaign platform. Alas, he won. This is what he said he was going to do. And Trump isn’t a conservative; he’s more of a right-leaning populist. He outlined this position in the debates--and in various interviews, so let’s not get all excited that this is some sort of “out of left field” policy change. For quite some time, Trump has been in favor of government-funded health care. He admitted to it on CBS’ Scott Pelley on 60 Minutes in September of 2015:
Scott Pelley: What's your plan for Obamacare?
Donald Trump: Obamacare's going to be repealed and replaced. Obamacare is a disaster if you look at what's going on with premiums where they're up 40, 50, 55 percent.
Scott Pelley: How do you fix it?
Donald Trump: There's many different ways, by the way. Everybody's got to be covered. This is an un-Republican thing for me to say because a lot of times they say, "No, no, the lower 25 percent that can't afford private. But--"
Scott Pelley: Universal health care.
Donald Trump: I am going to take care of everybody. I don't care if it costs me votes or not. Everybody's going to be taken care of much better than they're taken care of now.
Scott Pelley: The uninsured person is going to be taken care of. How? How?
Donald Trump: They're going to be taken care of. I would make a deal with existing hospitals to take care of people. And, you know what, if this is probably--
Scott Pelley: Make a deal? Who pays for it?
Donald Trump: the government's gonna pay for it. But we're going to save so much money on the other side. But for the most it's going to be a private plan and people are going to be able to go out and negotiate great plans with lots of different competition with lots of competitors with great companies and they can have their doctors, they can have plans, they can have everything.
This was on the docket. So, what about congressional Republicans; they’ve already set the gears in motion for a repeal through the reconciliation process. The replacement is where the real work begins and Trump didn’t go into how he will lobby Democrats to pass his replacement legislation. In the Senate, the GOP needs eight Democrats to defect. That’s a tall order, especially since they’re positioning themselves to block everything on the agenda for the incoming Trump White House.
For those on the Right, we’re just going to have to accept that on some issues, incoming President Trump won't fit the usual conservative mold. He may drift to the left on trade and childcare, though be right with the GOP on taxes and job creation. For those who aren’t so pleased with this shift, they can hope that Trump’s replacement plan mirrors what George W. Bush wanted to do for health care in 2007, which would have reduced the number of uninsured Americans by 65 percent without a mandate (via
President Bush proposed a sweeping health reform plan that would have replaced the current tax exclusion for employer-provided coverage with standard tax deductions for all individuals and families. The Bush plan called for a tax deduction that would have applied to payroll taxes as well as income taxes. Moreover, if one were worried about non-filers, the subsidy could easily have instead been structured as a refundable tax credit in which case even those without any income taxes would have gotten an additional amount.
What's sad is that the Bush plan actually was superior to Obamacare when it comes to providing universal coverage. Remember, Obamacare actually does not provided universal coverage. The latest figures from CBO says that when it is fully implemented in 2016, Obamacare will cut the number of uninsured by only 45%, covering 89% of the non-elderly. Even if illegal immigrants are excluded, this percentage rises to only 92%. In contrast, the Bush plan (without a mandate!) would have cut the number of uninsured by 65%.
The basic structure is to offer all Americans a standard tax deduction, in 2007 set at $15,000 for families and $7,500 for individuals. The deduction would apply to payroll tax - both employee and employer contribution - as well as to income tax. Importantly, the size of the deduction would be independent of the amount spent on the plan. Any taxpayer who has a plan that includes catastrophic coverage gets the full deduction, irrespective of the plan's cost. That is important because it creates the incentives to choose efficiently. A family that wanted to spend less on the plan than the value of the deduction would pocket the difference. A family that wanted to spend more on a plan than the value of the deduction would bear the additional cost out of pocket.
As a consequence, consumers would reap the full benefit of keeping the cost of their plan low, which prompts them to shop and choose effectively. If the extra coverage offered by a $10,000 plan over an $8,000 one is not worth at least $2,000 to the consumer, he will not purchase it. Under the current system, part of the cost is borne by others because the tax system does not treat employer-provided health insurance as income. As a consequence, a dollar spent by the employer or worker costs less than a dollar to that worker. The Bush plan would eliminate that distortion, replacing the non-taxed status of employer-provided health insurance with the standard deduction. By eliminating the link to employers, health insurance becomes more like auto insurance, where the consumer has appropriate incentives to shop around.
Okay—maybe Trump’s replacement plan even being anything like this is just pie-in-the-sky. The fact is that Trump has a history of being receptive to government-funded health care, he’s said it prior to winning the election, and it might put him at odds with some GOP lawmakers on the Hill. At the same time, it may be all we have left. There are many on the Right, like Avik Roy of Forbes, who has advised the Perry, Romney, and Rubio campaigns on health care issues, that the only time for a clean repeal of Obamacare was during the 2012 election, which we lost. He aptly noted that by the time 2016, or even 2014, rolled around—the GOP would be in the tough position of fighting for a replacement plan, while defending themselves from liberal attacks that they were taking away health insurance from Americans. In fact, it would be millions of Americans’ health insurance plans. That’s already happened with congressional Democrats smearing the GOP for wanting to make America sick again.
Even if the GOP sharpens its messaging to voters, the people who want to take someone’s stuff away is always going to lose in this fight. Might as well work with what we have, though at this point no one knows that Trump is going to do. It’s how he likes it, maintaining control of the narrative. So, we’ll find out what’s in the bag soon.
On a side note, Roy wrote an interesting white paper on how combining the health care plans of Switzerland and Singapore might be a good foundation to achieve universal coverage through market-oriented policies, such as health savings accounts. Singapore also has their public and private health insurance providers compete—and private health insurance providers are required to tell would-be buyers the price scale of their coverage to encourage shopping if the premiums are too high.
Well, whatever the president-elect has up his sleeve on health care, it's safe to say that Trumpcare has arrived.