The impact of Trump’s 5-point healthcare proposal

President Donald Trump didn’t advocate for a specific piece of legislation on healthcare in his Feb. 28 joint address to Congress, but he did outline several parts of plan similar to what House Republican leaders have already proposed.

Trump called on Congress to replace and replace the Affordable Care Act (ACA), describing the law as “imploding” and asking for cooperation from members of both parties in crafting its substitute.

“Mandating every American to buy government-approved health insurance was never the right solution for our country,” Trump said. “The way to make health insurance available to everyone is to lower the cost of health insurance, and that is what we are going to do.”

Trump then laid out five “principles” he wants to see in the replacement plan, all of which have been discussed before:

1. “We should ensure that Americans with pre-existing conditions have access to coverage, and that we have a stable transition for Americans currently enrolled in the health care exchanges.”

Trump has previously said he wanted to keep the ACA’s ban on insurers denying coverage based on pre-existing conditions. House Speaker Paul Ryan’s “Better Way” healthcare plan proposed bringing back high-risk pools for these higher-cost patients, but coverage guarantees were dependent on enrollees maintaining coverage. If their insurance lapsed, they’d be charged a penalty to re-enroll under the Ryan plan.

2. “We should help Americans purchase their own coverage through the use of tax credits and expanded health savings accounts, but it must be the plan they want, not the plan forced on them by our government.”

A leaked draft of the House’s latest ACA replacement contained subsidies for buying health insurance, but unlike the ACA, they would be based on age, not income or geography. People under the age of 30 would receive $2,000 per year, while a 60-year-old would get $4,000. Also, unlike the ACA, they wouldn’t rise along with premiums, leaving customers more exposed to annual hikes.

The result would be lowered tax credits overall, with younger and wealthier enrollees benefitting. A Kaiser Family Foundation examination of the subsides said “people who are lower income, older, or live in high premium areas would be particularly disadvantaged” compared to ACA’s tax credit structure.

As for health savings accounts, the tax benefits would be similarly skewed towards richer Americans, as lower-income customers may struggle to set aside money for future medical expenses.

3. “We should give our state governors the resources and flexibility they need with Medicaid to make sure no one is left out.”

Trump’s line doesn’t offer specifics on what would happen to the Medicaid expansion, but the leaked Republican bill would eliminate it, offering additional funding capped based on the total number of Medicaid enrollees.

The president had previously favored turning Medicaid into a state-run block grant program. Both options are likely to lead to states limiting eligibility and services provided when the real cost of coverage isn’t fully covered by federal funds.

4. “We should implement legal reforms that protect patients and doctors from unnecessary costs that drive up the price of insurance and work to bring down the artificially high price of drugs and bring them down immediately.”

HHS Secretary Tom Price has advocated for major changes to medical malpractice laws, like limiting damages patients can receive and moving cases out of the court system. A House committee has advanced legislation which would cap punitive damages at $250,000.

As for the pharmaceutical reforms, Trump has repeatedly promised action to lower costs, hinting he may want to allow Medicare to negotiate drug prices.

5. “The time has come to give Americans the freedom to purchase health insurance across state lines.”

While Trump said this change would create “a truly competitive national marketplace,” the proposal ignores two facts: a) States can already join interstate compacts thanks to a largely forgotten provision of the ACA, but only three have passed such laws because b) insurers have shown little interest in trying to form an adequate network in states where they don’t have existing provider relationships.

The official response to Trump’s address from the Democratic Party was largely focused on the ACA. It was delivered by Kentucky Gov. Steve Beshear, whose state saw the biggest drop in the uninsured rate after implementing the ACA’s Medicaid expansion and setting up a state-based insurance exchange.

He said the ACA does need “some repairs,” but said the plans put forward by Republicans would go against Trump’s promise of “insurance for everybody.”

“Mr. President, folks here in in Kentucky expect you to keep your word, because this isn't a game; it’s life and death for people,” Beshear said. “These ideas promise access to care, but deny the importance of making care affordable and effective. They would charge families more for fewer benefits and put the insurance companies back in control.”