Good morning, Hank. It's Tuesday. Let’s talk about the healthcare proposals
of Donald Trump and Hillary Clinton, but first I should say that if you’re interested
in healthcare or health in general, you should check out Health Care Triage, hosted by Dr.
Aaron Carroll. It’s an amazing show. Okay, to understand the candidates’ proposals,
we need to look at the current healthcare system and its problems, so journey back with
me to 2008. At the time, most Americans got insurance
through private companies. There was a publicly funded program for the
elderly to get insurance called Medicare. Many low-income families got coverage through
a publicly funded program called Medicaid, and about 15% of Americans had no health insurance
at all. So, broadly speaking, back in 2008, our healthcare
system had three huge problems. The first was those 15% of people without
insurance. Many people who didn't work for big companies,
including me, literally could not get health insurance for any price because private insurers
could deny you based on pre-existing conditions. And for many other people, private insurance
plans were just too expensive to afford. And that brings me to our second big problem
back in 2008, which was that our health care just cost too much. We were spending 16% of our nation's total
economic output on healthcare. Most other rich nations spent under 10%. Like, our healthcare costs were so stupefyingly
high that in the United States, more tax dollars per capita went to healthcare spending than
Germany, Japan, the United Kingdom, or Canada. All those countries spending fewer tax dollars
per person on healthcare had universal, publicly funded healthcare. The United States had nothing close to that. Also, lastly, for all this money we were spending
not to insure everyone, we weren’t getting particularly good healthcare outcomes, like,
by almost any measure. From life expectancy to medical errors to
hospital admissions for preventable diseases, the United States was not near the top. So then comes the Affordable Care Act of 2010,
which was designed to address some of these problems, with the emphasis on the “some.” The ACA was primarily designed to get more
people health insurance. About half of the newly insured were supposed
to get Medicaid, which was expanded to include everyone making up to 138% of the poverty
line, and the other half were supposed to get insurance through exchanges, these marketplaces
where everyone can get health insurance regardless of pre-existing conditions. And the insurance would be affordable because
households making up to 400% of the poverty line would have their insurance costs subsidized
by the government on these exchanges. The ACA also sought to reduce spending by
lowering costs within Medicare, and it raised some new taxes, including one on medical devices. But it left the rest of the U.S. healthcare
system largely unchanged. So that was the basic idea. Now, the ACA has never been fully implemented
because a 2012 Supreme Court decision made the Medicaid expansion optional for states,
and nineteen states have so far declined to do it, which means that millions of poorer
Americans remain uninsured. That said, the ACA has been successful at
reducing the number of uninsured people. Today, it’s around 9.1%. And it may have played a role, although experts
disagree about this, in the slowing growth of healthcare costs in the United States. For the twenty years before 2008, healthcare
costs in the United States rose by an average of 8%. In the last five years, they’ve risen by
an average of 5.5%. But, to be clear, costs are still rising faster
than inflation and median weekly earnings. Healthcare outcomes continue to lag behind,
and our healthcare system is still far, far more expensive than any other nation on earth,
although the gap with Europe has closed a bit. The ACA wasn’t really designed to address
those problems, and it hasn’t. And there are other problems, too. In the employer market, premiums and deductibles
are rising as employers cover on average a smaller percentage of healthcare expenses
than they did ten years ago. On the exchanges, some insurance companies
are offering fewer plans. And because companies are insurers are now
required to offer comprehensive coverage with no lifetime benefit limits, many people who
previously had bare bones insurance plans have seen their insurance costs go way up. These are all real problems, but it’s very
important to understand that the structural shortcomings of the United States healthcare
system are much, much older than Obamacare. The ACA is not the reason our healthcare costs
are so high, and we know that because they were very high before the ACA. So with all that in mind, let’s look at
both candidates’ healthcare reform proposals, using analysis from the RAND corporation,
which is nonpartisan and widely considered centrist. Let’s start with Trump’s plan. First, he would repeal the ACA. Now, Trump has said he’ll find ways to make
sure that private insurers continue offering plans to people with pre-existing conditions,
but he hasn’t said how this would be possible. Trump would also change the way Medicaid is
funded, to block grants. This would basically mean that states would
get to administer their own Medicaid programs, but most analyses see these block grants over time
involving lots of cuts. And lastly, Trump would allow insurance companies
to sell plans across state lines, and he would also make all health insurance premiums tax
deductible. But remember, these are deductions, not tax credits,
so they would mostly benefit people with high incomes for reasons explained in this video. Altogether, the RAND analysis concludes, I’m
just gonna quote here: “The Trump proposals decrease the number of insured, increase out-of-pocket
spending for consumers enrolled in individual market plans, and raise the federal deficit
compared to the ACA.” So, here’s how: Around 19.7 million people
would lose their insurance if the ACA were repealed, and Medicaid block grants would
probably increase the number of uninsured further. Sales of plans across state lines and tax
deductible premiums would get some people insured, but all in all, RAND concludes that
about 20.3 million fewer Americans would have health insurance under Trump’s plan. Out-of-pocket expenses would go up, according
to RAND, for two reasons. First, because the tax deductions offered
by the Trump plan are less generous than the tax credits offered by the ACA. And secondly, they estimate that sales of
plans across state lines would raise out-of-pocket expenses because there would be an increase
in the so-called bare bones plans. These are plans with high co-pays or deductibles,
or limits to annual or lifetime benefits. RAND estimates that the average annual out-of-pocket
expenses per person, including deductibles and co-pays and insurance premiums and everything,
would go from about $3200 per person to $5700 per person. And the deficit would go up, because with
the repeal of the ACA, the taxes it raised would also be repealed, as would the changes
in Medicare reimbursement. This would lower some taxes, but most of the
savings were in changes to Medicare, so all in all, under Trump’s plan, according to
RAND, the deficit would go up by about 5.8 billion dollars. And I should add that all the nonpartisan
analyses I could find agreed on all three fronts: that Trump’s plan would reduce the
number of insured people, increase out-of-pocket costs, and increase the deficit. Okay, let’s move on to Hillary Clinton’s
proposals. Clinton would amend the ACA in three big ways. First she would introduce a $2500 tax credit,
or $5000 for married couples filing jointly, that could be applied to healthcare expenses
over 5% of income. So if you’re a single person making $50,000
a year and you pay $5000 a year in health insurance premiums, you would get a $2500
tax credit. Because this is a tax credit and not a deduction,
it would be available to everyone, not just high-income households, but that also means
it would be more expensive. Secondly, Clinton would reduce the marketplace
premium maximum. I know this is a little confusing. Healthcare policy makes tax policy look like
a pleasant walk in the park. But basically, right now the cost of health
insurance premiums on the marketplace exchanges is effectively capped at 9.6% of income. To not benefit from the cap, a family of four
has to make $96,000 a year or more. Basically, Clinton’s plan would lower the
cap from 9.6% to 8.5% for most households. But of course, that program would also cost
money. And then lastly, and maybe most interestingly,
Clinton would offer a public insurance option on the exchanges. This would allow anyone, not just seniors
and low-income people to get their insurance from the government. RAND hasn’t yet updates its analysis of
the public option, but basically, it would probably be cheaper than private insurance
because it would share administrative costs with Medicare, and so it would slightly reduce
the deficit by reducing healthcare subsidies. So all in all, according to RAND, I’m just
gonna quote again: “All of the policies considered increase the number of insured
people and reduce consumers’ out-of-pocket spending on health care.” RAND estimates that the Clinton tax credit
alone would lead to 9.6 million more people getting health insurance, and that households
of all income levels would see their out-of-pocket healthcare expenses go down. The biggest reduction in healthcare costs
would be for families making between thirty and sixty thousand dollars a year, but they
would go down for everyone. But of course these problems would also increase
the federal deficit by what RAND estimates to be ninety billion dollars. So that is RAND’s summary. Trump’s plan would lead to significantly
higher out-of-pocket costs, fewer insured people, and a modestly higher budget deficit. Clinton’s plan would insure more people,
lower out-of-pocket costs, but raise the deficit more. But of course you have to consider those deficits
in the broader context of the candidates’ budget and tax proposals. And to be clear, overall, under Trump’s
proposals, the budget deficit would be trillions of dollars more than under Clinton’s proposals. The other question, of course, is will either
of these proposals significantly reduce the overall cost of U.S. healthcare? And the answer is probably not. The Trump campaign will argue that selling
policies across state lines will increase competition, but that is deeply contested. And also, even in the rosiest projections,
it wouldn’t decrease spending much. The Clinton campaign, meanwhile, will say
that a public option would put real price pressure on private insurers. And it might, but I’ll put a link in the
dooblydoo explaining why a single-payer healthcare system would not magically fix the U.S.’s
problems. The truth is, this is a complicated, multifaceted
problem, and anyone trying to sell you simple solutions probably isn’t telling you the
whole story. And that includes me, by the way. This is definitely only an introduction. If you want to learn much more about healthcare
policy and health insurance and different strategies for dealing with it, check out
Health Care Triage. They’ve got a great video out now about
Medicaid’s return on investment, and next week, they’re have a much more comprehensive
analysis of the candidates’ healthcare plans, so subscribe to them. You can find sources, as well as information
about how to vote in the dooblydoo below. Hank, I will see you on Friday, unless you
have a child in the interim. End screen, Hank always says I need an end
screen. So I put some videos here about health insurance,
why you need it, what the healthcare system in the United States is like, why it’s so
incredibly complicated. Also, if you’re looking for a hot slice
of tax policy, that video is just one click away, and Rosianna drew you a bunny to cheer
you up. Thanks, Rosianna.
