Advice for Trump (and Cruz and Rubio and Hillary and Bernie) on Health Policy

Commentary by Devon Herrick

Source: Townhall

Of all the Republican presidential candidates, Donald Trump has said the least about health policy. Far more is known about Rubio, Cruz, Clinton and Sander’s health care agendas. Remember, Trump is the guy who once said it would be easy; just “lock the best health care policy minds in a room -- and don’t let them out until they’ve crafted a plan for providing terrific coverage for everyone.” Some of Trump’s more detailed comments during his campaign painted a rather incoherent picture. Fortunately, much of the bad health policy Trump flirted with on the campaign trail is noticeably absent from his official website.

When Trump finally released his health proposal on his campaign website, it included a lot of garden-variety Republican ideas. But, as the Washington Post and many of my Republican colleagues (and left-of-center pundits) pointed out, it hardly constitutes a “plan.” It includes some decent ideas, but much more needs to be done to make it into a sound health policy proposal. The following bold headings are Trumps broad policy proposals. In what follows, I explain how to fix them.

Completely Repeal Obamacare (including the mandate, regulations and subsides). It’s not enough to merely repeal Obamacare; it has to be replaced with something tangible. Of course, a good start is to repeal the mandates, the mandated benefits and the costly regulations that prevent working class Americans from buying health plans they can actually afford. Not everyone needs -- or can afford -- a Cadillac Plan (or an Obamacare plan) that costs as much as the monthly payment on a new luxury car. Most working class Americans would be satisfied with an affordable health plan with defined benefits that affords them the ability to actually see a doctor when they need one. That’s not the case with many Obamacare plans.

In the past Trump has suggested he would keep the costly provision prohibiting insurers from charging premiums that reflect enrollees’ health risk. That necessarily jacks up the cost of coverage for most people. Those regulations didn’t work when states tried (and mostly rejected) them in the 1990s, and they didn’t work under Obamacare. There are better ways to help the sick -- including a risk-adjusted tax credit, and high-risk pools with care coordination that incentivizes patient compliance.

Make Health Coverage Tax Deductible. Allowing individuals to deduct the cost of individual health coverage from their taxes has been suggested for years. Rather than tax deductibility or Obamacare’s sliding scale subsidies, a tax credit is a better way to create tax fairness between individual and employer coverage. Credits could be uniform, age-adjusted or risk-adjusted. Families with employee health coverage could keep their existing coverage instead of a credit.

Allow Health Savings Accounts. That’s a good idea, although it doesn’t appear Trump is proposing anything that’s not already allowed. Why not make it a bold idea by depositing a uniform tax credit into an HSA so everybody without employer coverage has one? Individuals could use it to buy individual coverage, to pay cost-sharing, or to pay for direct care. Why not increase the contribution limits, allow everyone access to an HSA, allow HSAs to purchase over-the-counter drugs, and to replace income lost to sick days?

Require Price Transparency. That’s a good idea in theory, but difficult in practice. There is not one price; but dozens of prices for a given procedure -- depending on the health plan. The key is to make providers and health plans want to disclose prices, as they do when competing on the basis of price. Start by banning contractual nondisclosure agreements in health care that forbid revealing prices. Ban balance billing by providers who have not disclosed the price and signed an agreement with patients prior to performing the service. Make medical bills and out-of-network fees more difficult to collect when providers have not provided a price quote or attempted to work out an agreement with their patients ahead of time. Require binding arbitration or mediation to resolve disputes.

Sell Health Insurance Across State Lines. Trump would allow interstate insurance companies to sell policies in other states as long as the insurers met the regulations in the state where the policy was being sold. This caveat is a mistake. When this idea was all the rage among Republicans a dozen years ago, it was intended to spur competition not only among insurers, but also among state legislatures to force some of the overly-regulated states to reform state regulations. At the time, many states mandated costly benefits and expensive regulations that other states chose not to require. Allowing interstate competition would discourage state lawmakers from pandering to special interests who wanted their services mandated.

Medicaid Block Grants. This is a standard Republican proposal. It’s also a good one. At the very least, the federal government’s contributions for state Medicaid programs should not be open-ended. The respective federal and state contributions should be negotiated -- and the starting point for the federal share should be a function of poverty rates within the state. States should be free to experiment and tailor programs to their needs – and be the ones on the hook for all cost overruns at the margin.

Allow Importation of Prescription Drugs. It is a popular idea among voters that drug makers should not be allowed to engage in price discrimination, where they sell an expensive drug cheaper in India than in Indiana. Yet, most economists suspect allowing consumers to import other countries’ drug price controls would have very little effect on American drug prices. It would, however, have a huge effect on drug prices in third world countries. American drug makers would be forced to raise prices abroad. A better way is to streamline the approval process at the FDA to allow faster drug approval, which would spur more competition.

If Trump wants to have an actual plan, he would be wise to consider these changes. The markets needs the flexibility to design insurance products Americans can afford and are willing to buy. The health care system also needs to bring down the cost of medical care through consumerism and appropriate market incentives. That’s something at which the Unaffordable Care Act failed miserably.

There are numerous other ideas worth considering. Encourage Medicare to use cost containment tools, such as coordinated care for the sickest, high-cost patients; use selective contracting to obtain lower prices; use reference pricing to encourage seniors to seek cheaper alternatives. Adopt site-neutral payments but allow competitive bidding where specialty clinics are allowed to undercut Medicare’s fees in return for more business. Eliminate the most lavish Medigap plans that result in excessive spending. Aggressively route out fraud; kick fraudulent providers out of the program and use algorithms to deny payment before the cash has changed hands.

What most Americans really want is the chance to see a doctor when they feel ill. This is increasingly difficult as the supply of primary care providers falls short of the demand for their services. There are ways to boost primary care providers. Boost residency slots, streamline the path to primary care practice for foreign medical graduates, nurse practitioners and physicians assistants. And deregulate telemedicine to allow providers to care for patients across state lines.

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