Trump’s Not-So-Great Health Care Plan

President Donald Trump recently unveiled his “Great Healthcare Plan,” vowing to bring down soaring premiums and “fix” the Affordable Care Act. 

But Trump’s single-page plan is likely to fall far short of his promises, says Edwin Park, a research professor at Georgetown University and a former health policy advisor to the National Economic Council under President Joe Biden. 

For instance, Trump wants to give cash directly to households to pay for health care. But the amounts on offer are woefully inadequate. “They’re talking about a limited sum of money—a thousand dollars,” Park said. Trump also wants more “transparency” in health care pricing so patients can shop for cheaper care. But Park warns this idea will have little impact. Individual consumers have no leverage to negotiate, nor will they be in a position to do so if faced with a medical emergency. 

Many Americans are already in dire straits after the expiration of enhanced premium subsidies under the Affordable Care Act at the end of last year. Enrollment in ACA marketplaces has declined by 1.2 million, and many households that are re-enrolling are opting for cheaper “bronze” plans with scantier coverage. 

This transcript has been edited for length and clarity. The full interview is available at Spotify, YouTube, and iTunes. 

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Anne Kim: The President’s “Great Healthcare Plan” is one page. Is this even a serious proposal? Is it even a plan? 

Edwin Park: There’s never been and never will be a credible plan to repeal or replace the Affordable Care Act from President Trump and his administration. And as you said, this is just a one-page fact sheet with a few bullets. The enhanced premium tax credits that help people better afford marketplace coverage have already expired, and this includes no provision to extend those. There’s some replacement funding to go to people’s accounts, but that’s going to be highly inadequate to buy coverage and it actually undermines the Affordable Care Act.

Anne Kim: I want to walk through some of the elements that are proposed in the “fact sheet,” and the first idea that Trump proposes is reducing drug prices. What is he talking about?

Edwin Park: He’s announced drug pricing agreements with a handful of manufacturers, who have said that they’ll agree to offer bigger discounts. But it’s voluntary on the part of manufacturers, and states already get the largest discounts under Medicaid today. 

So it’s a question of whether these are going to be much bigger discounts than what state Medicaid programs already get today and whether manufacturers are going to participate in great numbers. What are the discounts actually going to look like? And do they even have to provide discounts on all the drugs that they currently manufacture? That’s all unclear. There are many unanswered questions about this approach, so whether it actually will lower drug prices significantly is still up in the air.

Anne Kim: Another plank of this plan is sending cash directly to Americans to pay for health care. So it could sound appealing to a lot of people, right? Can you explain why maybe this isn’t the best way to reduce costs?

Edwin Park: This is an old line of thought among conservative health policy folks. Instead of people pooling their risk as part of an insurance pool so they’re insured against catastrophic expenses, people would get tax-favored accounts to purchase health care services like the cost of going to the doctor, or the cost of going to the hospital. 

So instead of providing subsidies to purchase marketplace plans under the Affordable Care Act, a limited amount of money would go into accounts. They could use that to buy insurance potentially, but that insurance may be substandard. It may not have to comply with the rest of the Affordable Care Act. 

The idea is rather absurd that people would then have an incentive to negotiate with a physician, a hospital, or with their pharmacy to get lower prices. Obviously they don’t have any leverage to bargain for a lower price. But also in an emergency situation, you’re not going to be able to decide to price shop across providers. When you have a traumatic brain injury, a heart attack, or you have cancer, you need the care that you need immediately.

Anne Kim: This proposal also seems to assume that the amount of money that’s going to be provided to consumers is going to be enough, either to pay for the coverage or to pay for the care directly. And that just seems unrealistic as well, right? We’d be talking about trillions of dollars in cash to people to pay for health care.

Edwin Park: Yes. They’re talking about a limited sum of money—a thousand dollars. And that’s not enough, particularly since it’s a flat payment irrespective of income. The [expired ACA subsidies] vary and are greater for those with lower incomes who need more help to purchase health insurance. 

We know that if you go to the hospital, we’re talking six, seven-figure price tags. Some of the breakthrough drug therapies have seven figure price tags. A little bit of money is not going to be able to help a family afford the health care services they need. They need health insurance, and they need to be insured against catastrophic costs if they end up very sick and need a lot of health care services.

Anne Kim: And to the extent it does help anyone, it would really only be very high-income people who would benefit, right? We do have existing health savings accounts and so-called high deductible plans, but the deductibles are really high for the most part. And the evidence shows that the people who are taking advantage of these plans tend to be more affluent folks.

Edwin Park: We’ve seen already with the expiration of the enhanced subsidies that a lot of people are moving from so-called “silver” plans to “bronze” plans. But these bronze plans have deductibles that are $5,000, $6,000, or $7,000. That’s simply unaffordable for low- and moderate-income families. And as you say, the experience with health savings accounts—these tax-favored accounts that are already in law and have been in place since the early 2000s—is that they’re primarily a tax shelter for high-income people to save more on top of the retirement contributions and savings that they’re already accruing. So it’s primarily going to help those who already don’t need help to pay for their health care.

Anne Kim: There is a final set of ideas that seem to focus on disclosure and on transparency. Trump also proposes to revive a “cost-sharing reduction program” that he claims will save money. What’s that? 

Edwin Park: Ironically enough, this harkens back to the first Trump administration. Under the Affordable Care Act, premium subsidies help you purchase health insurance in the marketplace. But there are also so-called cost-sharing reductions that lower deductibles and other out-of-pocket costs like co-payments under those plans. 

The Trump administration in its first term blocked funding for those cost-sharing reductions. In response, insurers did what’s called “silver loading.” It’s very complicated, but they were funding cost-sharing assistance—lower deductibles and co-pays—by increasing the cost of their plans. You have to be in a silver-level plan to get these [benefits, but premium subsidies made these plans affordable]. 

The Trump administration is now saying it’s going to reverse what it did in the first term and fund the cost-sharing reductions. Now that actually has the effect of lowering the amount of premium subsidies that remain available under the Affordable Care Act.

So while it lowers unsubsidized premiums, it increases the out-of-pocket costs for those who are subsidized. And more than 90 percent of those participating in the marketplace are receiving some sort of subsidy. That’s why the Congressional Budget Office has previously estimated that it’s going to increase the uninsured by about 400,000 to do so. So this isn’t about making coverage more affordable. It’s about making it less so.

Anne Kim: So now let’s talk about the big push on “transparency.” The text of the plan says that Trump wants, for example, for providers to “prominently post their pricing and fees in their place of business.” Is this going to have any impact at all? 

Edwin Park: This is just talking about posting list prices, but the only ones who pay list prices today are those without health coverage, who are self-pay. They’re purchasing coverage on their own. But that’s not the price of a service for most people who are insured, because whether it is Medicare and Medicaid or private insurers who negotiate on the behalf of employers and individuals enrolled in those plans, they’re using their overall leverage to negotiate lower prices. Even if these list prices are available, an individual patient is going to have very little ability to get a physician, a hospital, another provider, a nursing home, so forth, to lower their prices just because they have some money in their accounts, and they’re willing to pay for it outside the normal insurance channel. 

Transparency is helpful, but is it really going to make coverage more affordable? It’s highly unlikely just because people can’t bargain for lower prices in any significant way. And that’s even more so in the case of a medical emergency.

Anne Kim: Republicans in the House and the Senate seem to be bending over backwards to incorporate some of these proposals into their own piece of legislation that they are proposing. One of these groups is the Republican Study Committee (RSC), and they’ve put together a plan for a second reconciliation bill to put before Congress this year that seems to include many of the provisions we talked about earlier, along with ideas to cut Medicaid even more, especially for legal immigrants to the United States. You recently wrote about this for Georgetown; can you walk through some of the more egregious provisions that you saw in this RSC proposal?

Edwin Park: One of the provisions of HR1, the budget reconciliation law enacted in July of last year, would eliminate eligibility for Medicaid and the Children’s Health Insurance Program for many legal immigrants as of October of this year. That includes refugees, those granted asylum, and victims of domestic violence and human trafficking.

The Republican Study Committee proposal goes even farther and eliminates Medicaid eligibility for all legal immigrants so only citizens could get Medicaid. This is just a proposal for a second reconciliation bill, but it’s quite extreme.

All those with legal permanent residence, who have green cards, would lose their coverage. Children and pregnant women, whom many states cover through the so-called ICHIA option through Medicaid and CHIP, would lose their coverage. Those from Cuba and Haiti who remain eligible despite the HR1 provision will lose eligibility as well as migrants from certain South Pacific islands. And that’s on top of the 10 million plus who would lose eligibility under the budget reconciliation law from last year, and the nearly 5 million who would lose coverage under the expiration of the enhanced premium tax credits under the ACA. 

Anne Kim: If I remember right, even before HR1, welfare reform legislation from 1996 put a pretty significant waiting period for eligibility for legal immigrants, right? 

Edwin Park: You had to wait five years after getting an adjustment of legal status to get Medicaid and CHIP. The only big exception was for, as I mentioned, kids and pregnant women. States could cover those populations in Medicaid before that five-year bar. And more than half of states, both red and blue states, have taken that up. This proposal from the Republican Study Committee would take that all away.

Anne Kim:  What else would you like to see Congress doing? Let’s set aside the question of the ACA subsidies being extended, because obviously we’d like that to happen. But if you had to pick one or two priorities that would actually lower health care costs, what would you want Congress to prioritize?

Edwin Park:  I think one thing would be to reverse or delay many of the cuts that were enacted in HR1, which are going to increase the number of people who are uninsured. Research shows that if you have Medicaid coverage in childhood, those kids will have higher educational attainment, they’re more likely to finish high school and go on to college. They’re more likely to be healthier as adults, less likely to be suffering from disabilities, less likely to have to go to the emergency room, and they’ll be more productive economically in terms of higher earnings. If you want to ensure a better future for the next generation, preventing these health care cuts from last year, these draconian cuts, is certainly something that I would hope Congress would do in coming years.

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