Clinton and Trump Health Plans Compared

Ken Terry

September 26, 2016

Hillary Clinton's top healthcare proposals would decrease the number of uninsured by nearly 40%, but would cost the government up to $90 billion in 2018. The key elements of Donald Trump's healthcare plan would result in up to 25 million people losing healthcare coverage, and would produce a net loss to the federal treasury of up to $41 billion in 2018. Those are among the findings of research by the RAND Corporation in conjunction with the Commonwealth Fund.

Hillary Clinton's Proposals

The Clinton proposal that would have the most impact is a tax credit of up to $2,500 per single person or $5,000 per family to offset the cost of out-of-pocket spending that exceeds 5% of income. This credit would be available to all individuals enrolled in private insurance. The tax credit would be refundable — that is, applied in advance of tax payments — and would be applied against the sum of an individual's or family's premium contributions, deductibles, and copayments. For people enrolled in the insurance exchanges established by the Affordable Care Act (ACA), the tax credit would be net of existing credits that the ACA applies to make coverage affordable.

The second of the four Clinton proposals considered in the analysis would reduce the maximum premium contribution to ACA exchange plans from 9.66% to 8.5% of income at 400% of the federal poverty level (FPL). There would be proportional reductions at lower income levels down to 100% of FPL. Under the ACA, the government reduces the cost of insurance by giving consumers an advance premium tax credit (APTC) to cover the difference between the cost of their premium and the payment limit.

Clinton would also fix the "family glitch" in the ACA. Currently, families with access to employer coverage are eligible for APTCs only if a family member's contribution for single enrollee coverage exceeds 9.6% of income. But many families that must spend more than that on family policies are ineligible for APTCs because only the cost of an individual policy is considered. Clinton would give family access to APTCs if the enrollee contribution for family coverage exceeds 8.5% of income.

Clinton has also said she plans to repeal the "Cadillac tax" on high-cost employer health plans.

Finally, Clinton would offer a "public option" — a government-run health plan — on the insurance exchanges. RAND assumes that the public plan would reimburse hospitals and physicians at Medicare rates and would have lower administrative costs than private plans. But, while it would be somewhat less expensive than private plans, the public plan would also be less popular, the analysis says, because fewer providers would contract with a plan that would pay them less than private plans.

The cost-sharing tax credit would increase the number of insured people by 9.6 million compared with what would be expected in 2018 under current law, RAND said. Reducing premiums on the exchanges would boost insurance enrollment by 1.7 million people. Fixing the "family glitch" would add another 1.1 million to the rolls, and the public option would insure an additional 400,000 people.

In all these scenarios, out-of-pocket spending would increase as income moved up to 400% of FPL, but it would flatten out for people who earned more than that. For people with incomes of 139% to 250% of FPL, spending would drop by a third. It would fall just 23% for poorer people, many of whom are on Medicaid.

"Relative to ACA, the cost sharing tax credit leads to significant reductions in out of pocket spending, particularly for low- and moderate-income individuals," RAND said.

The cost-sharing tax credit would increase the federal deficit by $90.4 billion in 2018. The reduction in the maximum premium contribution would cost the government $3.9 billion, and fixing the family glitch $10 billion. Adding a public option would reduce the federal deficit by $0.6 billion, partly because of competitive pressures on health plans that would reduce the total amount of APTCs.

The combined effects on coverage and the federal deficit of all four options would be similar to those of the cost-sharing tax credit alone, the researchers added. But the other three proposals would expand coverage to additional individuals.

Regarding the cost of prescription drugs, among Clinton's proposals: require health plans to cap out-of-pocket spending on drugs at $250 a month; allow Medicare to negotiate drug prices; and allow imported drugs for personal use if they meet safety standards.

Donald Trump's Proposals

Trump's main proposals essentially echo the Congressional Republicans' repeated calls to "repeal and replace" the Affordable Care Act, along with a few specific ideas that have been Republican standards 'since the George W. Bush administration.

Repealing the ACA, RAND noted, would mean axing the expansion of Medicaid and means-tested tax credits for coverage in the health insurance marketplaces. All reforms in the individual insurance market would be eliminated, including community rating and prohibiting insurers from denying coverage to people with pre-existing conditions. ACA-related revenue from the individual and employer mandates, reductions in the rate of Medicare spending growth, and the implementation of new taxes and fees would also be eliminated.

RAND also analyzed the impact of repealing the ACA plus each of three other proposals: allowing people to use pretax dollars to purchase individual insurance; block grants to the states for Medicaid and the Children's Health Insurance Program; and allowing the sale of health insurance across state lines.

Repealing the ACA alone would result in 19.7 million fewer people with health insurance in 2018, the researchers found. This assumes that people newly enrolled in Medicaid who were eligible prior to the ACA remain enrolled.

Adding a tax deduction for individual insurance and also repealing the ACA would result in 15.6 million fewer insured people than would be expected under current law. Repeal plus allowing insurers to sell their products across state lines would cut the number of insured by 17.5 million. And repeal along with switching to a Medicaid/CHIP block-grant program would result in 25.1 million fewer insured. The analysis of Trump's block-grant proposal assumes that the amount of these grants — which could be spent however states chose to — would be based on the level of pre-ACA Medicaid and CHIP spending.

All three policies would increase the number of uninsured among those with incomes under 250% of FPL ($60,750 for a family of four). For those with higher incomes, policies would have mixed effects. Repealing the ACA would have little impact on those people; however, repeal in combination with the tax deduction or allowing insurers to sell across state lines would increase the number of higher income people with insurance.

Fully repealing the ACA would cause average out-of-pocket spending for individual market enrollees to rise from $3,200 to $4,700. Repealing the ACA and rolling out the tax deduction would result in average out-of-pocket spending of $3,500. If insurers could sell policies across state lines, out-of-pocket spending would average $5,700, because there would be no premium or cost-sharing support and bare-bones plans with high cost sharing would proliferate.

Repealing the ACA alone would increase the federal deficit by $33.1 billion in 2018, because the loss of revenue from the ACA would exceed the savings. If the tax deduction were added, the deficit would swell by $41 billion, according to the researchers. It would be only $0.5 billion with Medicaid block grants included, because the federal government would cut assistance to the states. With repeal plus sales across state lines, the deficit would increase by $33.7 billion.

To help make prescription drugs more affordable, Trump would remove barriers to market entry for drug providers, and allow people to use imported drugs if they meet safety standards.

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