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Trump And Clinton’s Healthcare Debate Was No Contest

Donald Trump’s penchant for brusque remarks came in handy during the second presidential debate, eight days ago.

When the discussion turned to the president’s health law, the GOP candidate’s message was clear: “Obamacare is a disaster. You know it. We all know it.” Only Hillary’s own spouse put it better, when he called Obamacare “the craziest thing in the world.”

For her part, Clinton strained to portray Obamacare as a mostly successful reform, promising to “fix what’s broken“ about the law and “save what works.” In reality, her plan would simply repeat the most disastrous mistakes of Obamacare — saddling insurers with new mandates and regulations and American patients with higher coverage costs and less choice.

Trump’s healthcare reform plan has flaws of its own. But if it’s a choice between Trump’s imperfect healthcare vision and Clinton’s delusional one, there’s no contest.

Clinton admitted during the debate that “premiums have gotten too high” under Obamacare. Yet she’s committed to precisely the kind of federal meddling that sent rates skyward in the first place.

Obamacare requires insurers to accept all comers regardless of their health status, a rule known as “guaranteed issue.” Through a separate rule, known as “community rating,” the law prohibited insurers from charging older or sicker patients any more than three times what they charge younger, healthier ones.

Insurers have raised premiums in response. Next year, rate hikes for exchange plans will average 24 percent.

Clinton believes that more mandates will fix this state of affairs. She plans to cap prescription drug expenses for the chronically ill at $250 a month. She’d also force insurers to classify emergency visits as “in-network” and to pay for three sick visits to the doctor, with no out-of-pocket costs to the patient.

Of course, Clinton is well aware that these new regulations will send premiums even higher. That’s why she wants to empower state officials to reject insurance hikes whenever they see fit. Insurers would then face a choice between financial ruin and leaving the exchanges altogether. Either way, consumers would have even fewer coverage options.

Here too, Clinton’s proposals would only add to Obamacare’s problems. Huge financial losses are already driving insurers out of the exchanges.

In April, UnitedHealthcare announced that it would exit all but a “handful” of state marketplaces. Aetna is leaving 70 percent of the counties where it currently sells exchange plans. Humana will remain in only 11 exchanges in 2017. Thanks to this mass exodus, almost one-third of U.S. counties will have only one exchange-plan provider next year.

Hillary Clinton has called for a government-run “public option” to compete against private insurers in the exchanges. But the feds have the luxury of running unlimited losses. So a money-losing public option may end up being the only option on the exchanges. And that could lead to a disastrous single-payer, “Medicare-for-All” system for all Americans.

Given the size of the target, it’s no surprise that many of Trump’s criticisms of Obamacare were spot on. But he offered more than broadsides against the health law — he has also sketched a vision for replacing it.

For instance, he’s proposed converting Medicaid to a block grant structure. That can’t happen soon enough. Obamacare’s Medicaid expansion has put the program on an unsustainable path. In fiscal year 2014, Medicaid spending rose by a staggering 14 percent. Costs are expected to reach $890 billion by 2024.

A block-grant approach to Medicaid would rein in this spending by holding states accountable. Providing lump-sum payments based on the size of each state’s Medicaid population would create an incentive to keep costs down, since any savings in the program would directly benefit state coffers. Block grants would also leave states free to use Medicaid funds in ways that meet the unique healthcare needs of their residents.

Trump’s promise to lift restrictions on selling insurance across state lines is just as encouraging. As he put it, if “we get rid of those lines, you will have competition.”

He’s right. Allowing Americans to shop for insurance outside their state would vastly expand the number of coverage choices available to them. This, in turn, would force insurers to offer better, more affordable coverage in order to win the business of consumers.

A truly interstate risk pool could also yield lower prices for consumers. Thanks to the law of large numbers, the more people in a risk pool, the more stable and predictable its costs.

Some of the GOP candidate’s less defensible health-policy views went unmentioned during the debate. Among them is his support for granting the federal government authority to directly negotiate prices with manufacturers under the Medicare Part D drug benefit — a position he shares with his opponent.

That reform would effectively impose price controls on prescription drugs through Part D, destroying the incentive for pharmaceutical innovation in the process. Drug firms currently spend an average of $2.6 billion and roughly a decade developing each new drug. If federal officials are free to dictate their own prices — as a buyer the size of the federal government essentially has the power to do — the chances of recouping these costs would be slim. That would leave them little financial reason to invest in new treatments.

Nevertheless, of the two distinct visions of health policy offered up at the latest debate, Trump’s is the obvious choice. Unfortunately, given the alternative, that’s not saying much. Obamacare needs to be repealed and replaced with a market-based system that will lead to affordable, accessible, quality system for all.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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