Buchberger: Evaluating Trump’s health care reform plans

November 22, 2016 GMT

We now have a new president-elect in Donald J. Trump, which narrows down the number of health care reform plans we have to evaluate to one. In this article I am going to take president-elect Trump’s plan point-by-point and evaluate the application or benefit of each point.

Those of you who have read my column in the past know that I support a repeal of the Affordable Care Act, since it is not affordable. Case in point: United Health Group posted a $2 billion profit last year and the state of New York felt it needed a 13-percent increase for next year. President-elect Trump has said that he plans to repeal the individual mandate and keep the “pre-existing condition” and “age 26” language. These are excellent areas to compromise on the language and will begin to remove the “cash cow” that President Obama handed to the insurance industry.

The concept of selling insurance across state lines sounds good in theory and makes a great talking point when it doesn’t have to be backed up with anything. The reality is that if Excellus sells its product in New York or in Nebraska, it is still Excellus selling the product. It will not compete against itself. As I have said before, the health insurance industry is a monopoly and the players will not fight each other on price. The only way to reduce premium cost is to take their market away from them (more on that later).

Allowing individuals to fully deduct health insurance premium payments from their year-end taxes is very helpful for the average person. Unfortunately, insurance carriers such as United HealthCare, Excellus, etc. will see this as an opportunity to keep premiums high since the premium will be a wash for the individual and ultimately create a tax refund. Therefore, the government will still be paying the premium. This item in Trump’s plan only works if employer-based health care is eliminated. Elimination of the employer-based health care system effectively changes the health insurance market for the carriers and forces them to reduce price to a lower market value.

His fourth point is establishing tax-free health savings accounts, which could become part of an individual’s estate and passed on to heirs without an estate penalty. This is an extremely solid component of President-elect Trump’s plan. This one aspect puts the most pressure on the insurance industry to lower premiums because now individuals would have a choice of placing the $10,000-$15,000 per year they pay for health insurance into an HSA each year, instead of giving it to the insurance company. If they are young and healthy, it allows them to afford preventive care and accumulate funds for more costly procedures later in life. This is ideal for young working individuals getting started in life. Of course, the responsibility and discipline to deposit into their HSA falls squarely on their own shoulders.

His fifth bullet point calls for price transparency from providers and hospital organizations to allow individuals to shop for the best prices on treatments. Once again, this sounds good as a talking point but is irrelevant in our current system. The only way this bullet even becomes relevant is if the concept of the co-payment is completely eliminated from the health insurance vocabulary. Patients don’t have any idea what the service costs until they get their explanation of benefits 30-60 days later. They are only responsible for the co-payment so, to the patient, the cost of the service is irrelevant. Secondly, the provider is never reimbursed what they charge. They contract for an amount that equals the co-payment and the balance of the contracted fee. The difference between the billed amount and the contracted fee disappears into cyberspace, as though it never existed.

Trump also believes that Medicaid should be handled on the state level, including incentives, to “preserve our precious resources.” Taking funds used for Obamacare and putting them into Medicaid will allow necessary structural changes to fundamentally improve Medicaid. Increasing Medicaid reimbursements to preferred provider organization or co-payment levels will reduce emergency room visits. It will allow patients to maintain a relationship of preventive care with their doctor. Office visits are a fraction of the cost of ER visits, and prevention always costs less than treatment.

Trump’s final point is to break down barriers that prevent drug providers of less expensive, safe products from entering the free market. Again, this sounds good on paper but, as with selling insurance across state lines, the pharmaceutical industry is a small community. Cutting back its advertising (television and print), sponsorships (teams, arenas, etc.) and allowing doctors to talk to patients about their prescription medication options is what is needed to reduce pharmaceutical costs.

Eliminating provider networks, co-payments and employer-based insurance, and changing antitrust laws in the end are the items that will eventually create competition and force the insurance industry to lower health insurance premiums.