COMMENTARY

Seven Pillars of Trumpcare

Saurabh Jha, MBBS, MRCS, MS

Disclosures

October 20, 2016

Editor's Note: Saurabh Jha is an academic radiologist who did his medical training in his native UK. He is interested in health policy, in which he has a master's. He writes frequently about health topics at The Health Care Blog. This article is adapted with permission from that website.

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Saurabh Jha, MBBS, MRCS, MS

"What is Mr Trump's mysterious healthcare plan which will reduce costs, improve quality, and increase access? What is Mr Trump's policy position on healthcare?"

This is relatively easy to answer when it comes to health policy. Just ask what people want. Seniors don't want Medicare rescinded. Even the free-market fundamentalist group, the Tea Party, wants Medicare benefits as they stand. At one of their demonstrations against Obamacare, a protester warned, without leaving a trace of irony, "Government, hands off my Medicare."

Rest assured, Trump will protect Medicare. Even raising the eligibility age for Medicare may be off the cards as far as he is concerned. He has promised that no one will be left dying on the street. That people no longer die on the streets but in hospitals, because emergency rooms must treat patients regardless of their ability to pay, is irrelevant. The point is that Mr Trump knows that the public values their healthcare. Trumpcare will show that Trump cares.

But it gets complicated. Yes, the public want top-notch healthcare for themselves. No, the public don't want to die on the streets. Yes, the public want a government that looks after them. The problem is that the public don't really want to pay more for these services. Not much more, at least.

How will Trump manage people's contradictory desires? Trump released his healthcare manifesto earlier this year. Here are its seven pillars:

  1. Repeal Obamacare

  2. Allow purchase of insurance across state lines

  3. Allow people to deduct insurance from taxes

  4. Expand health savings accounts (HSAs)

  5. Require price transparency for medical goods and services

  6. Block-grant for Medicaid to the states

  7. More free market for pharma

Trump's first test will be repealing Obamacare. It is clear that Mr Trump doesn't like Obamacare. He says about Obamacare that "people have had to suffer under the incredible economic burden." What will he do about people with preexisting conditions who insurers must cover by law, thanks to Obamacare? Will we return to the days when insurers turn down patients because they have comorbidities, or yank their premiums so high that they cannot afford insurance?

Trump wants to take care of everyone. To fund a system that takes care of everyone, without the insurance market imploding, he must (a) raise taxes and/or (b) make people buy insurance. Raising taxes is not part of #MakeAmericaGreatAgain. And he says that "no person should be required to buy insurance unless he or she wants to." So Trump is on a sticky wicket with his first pillar. Alternatively, he could just erase "Obamacare" and write "Trumpcare."

Trump wants a more market-driven system to lower costs and raise quality. He will let people buy insurance across state lines, so long as it complies with the laws of the state in which the person lives, which sort of defeats the point of buying cheaper insurance in another state. It's like being able to buy stuff tax-free from Delaware only if I pay the taxes I would have had to pay in Pennsylvania.

It is important not to dismiss an idea just because Donald Trump likes it. For example, expanding tax benefits to those outside employer-sponsored insurance is not as egregious as some say. It levels the playing field and weakens the grip of employer-sponsored insurance, arguably the most potent force preserving the status quo. And reigning in big pharma is a small idea whose time came a long time ago and never left—I am amazed that left-leaning health economists or Clintonphile health policy wonks are not pushing for more boots on pharma.

His idea of expanding health savings accounts (HSAs) is not new and has been proposed by economists such as John Goodman. HSAs encourage people to be thrifty with healthcare expenditure. This can lead people to do two things: skip necessary care and skip unnecessary care. Will there be net savings? It depends on the necessity of the care skipped and the cost of the unnecessary care skipped. If you wait too long to seek medical attention, you might not save costs for yourself or the system.

Trump wants people to be able to pass HSAs to their children. This is an interesting twist. Theoretically, this would motivate people to stay healthy so that more funds are available for their children. You can imagine a father saying to his son before going for his daily jog, "Son, I'm running for your life, not mine." But the flip side is that people may skip necessary treatment in their twilight, for fear of depriving their children of a financially secure future. Neither of these scenarios may occur, but you get the gist. For every positive in health policy, there's an equal and opposite negative.

HSAs won't last long if they're decimated by high hospital charges. Hospitals are known for their mark-ups, which are so feral that they make price-gouging water in the Sahara desert a noble endeavor in comparison. Obamacare has done precious little to control these charges. Trump says he will demand price transparency from providers. The theory is that when people know the prices of medical goods, they will shop for the best care, and competition for patients will drive the prices down and quality up.

Price transparency is one of those policy suggestions that sounds so good that you have to ask why it hasn't worked yet. It doesn't come under the genre of "Hey, I have a great idea: Let's cure global poverty," but it's not too far from it.

There are caveats with price transparency. Optimism must be tempered. For instance, if you're having a heart attack, there isn't much time to Google prices. And there is so much in the care bundle to consider—such as the price of the stent to open the coronary artery, blood thinners to keep the stent opened, saline, oxygen, and many more details, such as the price, skill, industry relationship, and conflicts of interest of cardiologists—that it would be difficult to meaningfully shop for the best deal for "heart attack care" while your heart muscle is slowly melting and fluid is filling your lungs, making it difficult for you to breathe.

Suffice it to say that when it matters the most, when the charges are the highest, which is when you're acutely and seriously unwell, price transparency is rather useless. When you're dying you will call the ambulance, not place a bid on Priceline. If you want a clever way of rephrasing this: Healthcare is price-inelastic when it matters most.

It will be difficult for the market to control the prices, even if Trump injects a dose of genuine capitalism in healthcare. That is unless the market rations care on the basis of ability to pay, which happens in countries like India, which has robust free-market healthcare. Government healthcare is abysmal in India. The rich get the best care because they can afford it, and the poor get the worst care because they can't afford it. This is rationing by price. People die sooner because they don't have enough dosh.

I doubt that Americans will put up with explicit rationing of healthcare that an amoral free market may create. Imagine the headline on pro-market Fox News: "Patient expires because of expired credit card: 20-year-old college student from Minnesota dies because of clot in lungs. Doctors refused to treat patient because her Mastercard had expired." Then all the pro-market (and anti-market) people will run to the government for help. The government will enact regulations, making it compulsory for hospitals to treat patients regardless of their ability to pay, thus killing the market. Sorry, I forgot—that was EMTALA.

But the point is that genuine free-market healthcare won't last long in modern society, which is now used to a certain level of security. Let's accept that as a basic fact whether you think healthcare is a right or not.

Here's my advice to Mr Trump: Have an adult conversation with your supporters. Tell them some home truths. Tell them that it costs to make people live longer. Let no health economist, or Sarah Palin, tell you otherwise. This is why smokers are a bargain for a healthcare system. As medicine gets better at diagnosing and treating diseases, healthcare gets more, not less, expensive, because there are new diseases to treat. Equality costs. Fairness costs. Safety costs. Prevention costs. Being prepared for potential epidemics such as Ebola costs. New drugs cost. New discoveries cost. Reducing healthcare costs also costs—such is the cruel irony of healthcare.

Where are the savings? Maybe in the Kingdom of God. In the Kingdom of George, Barack, and Donald, it's all costs, costs, costs, costs.

The market can reduce costs by rationing care by ability to pay. The government can reduce costs by refusing to pay for certain medical services, or for price-fixing hospital charges, or by negotiating with pharma. Beware of using the government approach, Mr Trump. Some of your supporters will call you a death panelist. Your more punctilious supporters, with a superficial understanding of Adam Smith, will say that you're abandoning the principles of the free market.

So ask your supporters not just what they want, but how much they are willing to pay for what they want. Then, Mr Trump, design Trumpcare.

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