Millions Could Lose Their Health Insurance Under Trump’s Plan to Repeal and Replace Obamacare
Policy + Politics

Millions Could Lose Their Health Insurance Under Trump’s Plan to Repeal and Replace Obamacare

© Joshua Roberts / Reuters

Republican nominee Donald Trump has vowed that he would repeal the Affordable Care Act and replace it with “something terrific” if he is elected president.

Earlier this year, under pressure to explain what he had in mind, Trump’s campaign unveiled a series of policy proposals calling for Medicaid to be transformed into a state block grant program and for tax exemptions on employer-provided health insurance to be extended to individuals who purchase coverage on the open market. Trump’s “Healthcare Reform to Make America Great Again” program also would allow health care insurers to sell policies across state lines to encourage more competition and hold down premium costs.

Related: Obamacare Premiums Rising At Least 10 Percent Next Year

“We will work with Congress to make sure we have a series of reforms ready for implementation that follow free market principles and that will restore economic certainty to everyone in the country,” Trump’s campaign pledged.

Yet a new joint study by the Commonwealth Fund and the RAND Corp. released on Friday warns that Trump’s repeal-and-replace approach to Obamacare would be disastrous for many and would fall far short of providing an acceptable replacement of Obamacare. If fully implemented, Trump’s plan would decrease the number of Americans currently with insurance by between 15.6 million and 25 million primarily because of block grants to states for Medicaid and CHIP.

The analysis was conducted by RAND, a worldwide research organization that used sophisticated computer models to assess the Trump and Clinton approaches to health care reform. The non-partisan Commonwealth Fund, based in New York, which assisted in preparing the final report, is a proponent of health care reform and expanded coverage.

The study found that loss of coverage would disproportionately affect low-income individuals and those in poor health. Higher income individuals would be the primary beneficiaries of Trump’s approach. People remaining in the individual insurance market without the benefit of Obamacare would face higher out-of-pocket costs than under current law. Moreover, because Trump’s proposed reforms would not replace Obamacare taxes and financing mechanisms to offset operating costs and subsidies, they could boost the federal deficit by as much as $41 billion.

By contrast, Democratic presidential nominee Hillary Clinton’s proposals for preserving and building on President Obama’s signature health care program would provide coverage for an additional nine million people, the study found. Clinton has proposed changes in the ACA law to make health care more affordable to consumers. Her approach, for instance, would include a cost-sharing tax credit of up to $2,500 for individuals and $5,000 per family, as well as a lower ceiling on the maximum premium contribution allowed.

Related: With Aetna Pulling Out, Can Anything Save Obamacare?

Clinton also favors a proposal gaining momentum among liberal Democrats to create a public health insurance option to Obamacare – a government entity that could control hospital and physician fees and charges and offer a less expensive alternative to private health insurance plans. According to the new study, her policies would increase the number of insured individuals by between 400,000 and 9.6 million, and decrease consumers’ health spending relative to current law. 

Three of the four major proposals by Clinton for building on Obamacare would also increase the deficit, with the tax credit for people with high out of pocket costs the priciest. Taken together, Clinton’s proposals would drive up the deficit by $104.6 billion, according to the report.

Trump has echoed a long-standing GOP refrain that the Affordable Care Act is a flawed program – too costly for consumers, not profitable enough for insurers and riddled with regulatory restrictions and taxes on businesses – and will eventually collapse of its own weight. Indeed, as the subsidized health insurance program prepares for its fourth season, reports that United HealthCare, Aetna and other major insurers are planning to pull out of the program while a majority of the 24 Obamacare insurance co-ops have gone out of business are raising serious questions about Obamacare’s future.

Despite its legions of financial and marketing problems, Obamacare has added 18 million people to the rolls of the insured during the past several years–driving down the national rate of uninsured from 16 percent in 2010 to an historic low of 8.6 percent this year. A full repeal of Obamacare – including Medicaid expansion and means-tested tax credits for coverage in health insurance marketplaces across the country --would increase the number of uninsured individuals by 16 million to 25 million relative to the ACA, according to the new study.

Trump and Clinton are proposing radically different approaches to reforming Obamacare, and those conflicting views are certain to get attention during the three nationally televised presidential debates this fall, beginning with Monday night’s event on the Hofstra University campus in New York.

Related: More Bad News for the Remaining Obamacare Co-ops

Clinton is certain to continue to make the same case she made during her Democratic primary battle with Sen. Bernie Sanders of Vermont that while Obamacare is seriously flawed, it makes far more sense to reform and build on the existing system than tearing it down and starting from scratch. Trump, in sharp contrast, will argue that Obamacare is beyond salvation and that one of his first acts as president would be to work with a Republican-controlled Congress to dismantle the program and replace it with a series of market-oriented approaches.

However, Trump and other prominent Republicans -- including House Speaker Paul Ryan of Wisconsin -- have never been able to fully articulate a strategy for replacing Obamacare that wouldn’t result in a significant loss in the number of Americans who currently benefit from health care insurance. The new joint study by the Commonwealth Fund and RAND strongly reinforces the possibility that Trump’s approach simply wouldn’t come close to offsetting the effects of repeal.

Sara Collins, a vice president of the Commonwealth Fund and an expert on health care and access, said in an interview on Friday, “You just get very small offsets in coverage – or very small gains in coverage – and they do tend to go to people with higher incomes.”

Related: Obamacare Insurers Are Looking for a Taxpayer Bailout

A full repeal of Obamacare would have serious ramifications for lower income people and those with serious health problems: For instance, Congress would scrap the government subsidies for low and moderate income people purchasing coverage on the government-run insurance exchanges and eliminate the current prohibition on insurers denying coverage to applicants because of pre-existing medical problems.

According to the new study, a repeal of Obamacare would mean that people who continued to purchase coverage in the individual market – instead of getting it through an employer as most people do – would see their premiums and out-of-pocket costs rise from an average of $3,200 to $4,700 a year. Those who would benefit most from Trump’s Obamacare replacement options – especially the proposed new tax deduction on premiums – are people with higher incomes who typically purchase the most expensive, top of the line, insurance.

The study found that the number of uninsured people in fair or poor health could triple under Trump’s approach, from an estimated 2.1 million under current law to between 5.7 million and 7.1 million under Trump’s approach.

“People who have low and moderate income under these replacement options and the repeal – and also health problems – would likely see their insurance costs climb, and many people with health issues would likely lose coverage for the medical problems or be denied coverage altogether,” Collins said. “But the gains would largely go to higher income people and people who tend to be a bit healthier.”