The Trump administration unveiled the outlines of a health care reform plan last week and, surprisingly for any policy proposal these days, it contains some decent ideas that would empower individuals instead of bureaucrats. Unsurprisingly, though, “The Great Healthcare Plan” doesn’t really undo the bad government interventions and restrictions that limit choice and raise costs. The plan might offer some improvement over what we have, but it should be a lot better. In fact, legislation that would greatly improve the plan has already been presented to Congress.
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“President Donald J. Trump’s Great Healthcare Plan is a broad healthcare initiative that will slash prescription drug prices, reduce insurance premiums, hold big insurance companies accountable, and maximize price transparency in the American healthcare system,” the White House boasted Thursday.
In its current form, the Great Healthcare Plan consists largely of four bullet points with some limited explanation, aimed at improving transparency, increasing patients’ control over their health care dollars, and improving access to medications without having to ask expensive permission.
Specifically, the plan aims to lower drug prices by “codifying the Trump Administration’s Most-Favored-Nation deals to get Americans the same low prices for prescription drugs that people in other countries pay.” It also “makes more verified safe pharmaceutical drugs available for over-the-counter purchase.”
The administration proposes to lower insurance premiums by no longer “sending big insurance companies billions in extra taxpayer-funded subsidy payments and instead send that money directly to eligible Americans to allow them to buy the health insurance of their choice.” It also “funds a cost-sharing reduction program for healthcare plans which would…reduce the most common Obamacare plan premiums by over 10%.” The cost-sharing plan is an existing arrangement that subsidizes some Silver Affordable Care Act (ACA) plans to reduce premiums, copayments, and out-of-pocket costs.
The Great Healthcare Plan would also require insurance companies to publish “the percentage of their revenues that are paid out to claims versus overhead costs and profits” and the percentage of claims they reject. Insurers would also have to “publish rate and coverage comparisons upfront on their websites in plain English” and, if they accept Medicaid or Medicare, “prominently post their pricing and fees,” building on a requirement from his first term that hospitals and insurers post prices.
Right now, the Great Healthcare Plan is skeletal, lacking much in the way of detail. That said, it does contain what could be good ideas, depending on implementation.
“Reclassifying many prescription-only pharmaceuticals as over the counter should indeed help lower drug prices,” comments Jeffrey A Singer, a Cato Institute senior fellow and Arizona surgeon. “In many cases, once drugs are sold over the counter, their sticker price ends up lower than what insured patients used to pay in copays.”
“The plan includes a number of provisions that would lower overall health care costs and generate modest fiscal savings, and one provision – related to the ACA subsidies – that could substantially increase borrowing, depending on its design,” adds the Committee for a Responsible Federal Budget. “By our rough estimates, the cost-reducing provisions could reduce primary deficits by about $50 billion over a decade. The ACA changes could generate modest additional savings or increase primary deficits by up to $350 billion, depending on the design.”
That said, “‘Obamacash for enrollees’ would expand Obamacare and create countless problems,” cautions Cato’s Michael F. Cannon, who sees lost opportunities in the proposal. He points out that “‘universal health accounts’ would free workers to control the $1 trillion that employers control—a larger effective tax cut than Reagan’s.” He recommends an addendum to the plan to “secure Trump’s greatest first-term health care accomplishment by permanently removing barriers to Obamacare-exempt plans.” Specifically, he praised Trump’s first term expanded exemptions from meddlesome and expensive federal regulations for relatively short-term health care insurance plans.
The Citizens’ Council for Health Freedom (CCHF) also sees openings for improvement. “We know President Trump wants his plan to be a great health plan, but unfortunately, his plan keeps in place the infrastructure that is hurting patients, doctors, and prices today,” comments Twila Brase, CCHF president.
Brase praises expanded access to medications without prescriptions. But she warns that “Trump’s plan does not restore real health insurance—the affordable major medical indemnity policies solely for catastrophic and insurable events—and thus restricts the health coverage choices that Americans need.”
She also proposes putting “the dollars in the hands of Medicare recipients and give them a choice between Medicare, which is running out of money, and affordable real health insurance.”
Basically, critics of what we’ve seen of the Great Healthcare Plan worry that it just builds a little more transparency and a few more options—plus added subsidies—into existing Obamacare distortions of the medical marketplace.
A good place to start in terms of fleshing out the health care plan with details that would expand choice and patient freedom and lower costs is Sen. Rand Paul’s (R–Ky.) “Health Marketplace and Savings Accounts for All Act,” introduced last month.
“With my plan, to provide the leverage needed to reduce the cost of premiums, nearly any conceivable membership entity, such as Costco or Amazon, would be empowered to collectively bargain on behalf of their members with health insurers to lower rates,” Paul commented.
The bill raises the annual contribution cap on tax-advantaged Health Savings Accounts (HSAs) from $4,400 for individuals and $8,750 for families to $24,500 and extends HSA eligibility to everybody. It also expands what HSAs can cover. More patients could cover their costs without going through a third party.
Basically, Paul’s bill would dramatically increase Americans’ control over their health care money and make their coverage portable by delinking it from employment.
The Trump administration rightly recognizes that American health care needs reform and greater patient power over expenditures, but the plan it offers is skeletal and needs improvement. It should incorporate existing proposals and legislation that would strip intrusive rules from medicine and empower Americans to control their own care.
