Trump’s Health Proposal is as much of an Enigma as Trump’s Popularity
Presidential candidate Donald Trump published his health proposal on his website recently. Trump’s health policy proposal is a veritable tossed salad of garden-variety Republican ideas. Slathered liberally on top is a nutty dressing of ill-thought out sound bites and populist rhetoric. Remember that Trump is the guy that famously said it would be very simple. “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.” One question those of us who work in health policy want to know is who would Trump lock into a room? Nobody I know one can identify a single Trump health care advisor. It’s a mystery.
Some of the previous proposals Trump has stated on the campaign trail point to a disjointed, incoherent plan. Fortunately, much of the bad health policy Trump flirted with on the campaign trail is noticeably absent from his official website. Over at Forbes, Avik Roy suspects it’s because (thankfully) Trump didn’t actually write it.
Universal Coverage. Trump hinted that he supports universal coverage when he said he doesn’t want people to “die in the streets” because they cannot afford health coverage. I don’t know why Republicans allow this narrative to endure. Most sick people die in their beds or in a hospital bed. Moreover, about 60 percent of health care spending is on chronic illness related to poor lifestyle choices. Think obesity, high cholesterol, hypertension, diabetes and many case of cancer. If you actual talk to moderate-income people, most are not terribly excited by the prospects of having high deductible health plans. What they actually want is the ability to see a doctor when they get sick.
Medicare for All. Among liberals Medicare for All (single-payer health insurance) is the utopia they all dream about. If the government is the only legal payer, it can use health care payroll taxes as an income redistribution scheme. But usually not discussed is that provider fees have to be set artificially low to ration care and make universal coverage affordable. A more accurate name would be Medicaid for All!
Trump suggested single-payer health insurance at one point. He ultimately rejecting the idea — probably after realizing socialist “Comrade Bernie” Sanders is the only other presidential candidate supporting such a cockamamie plan. The main attraction of single-payer is not buying power; it is monopsony power. If only one entity is allowed to pay for medical care that buyer has near-absolute control which services it will pay for and how much it will pay. One can easily imagine Trump’s attraction to that sort of market power.
Negotiate Medicare Drugs Prices. Although not on his website, in previous debates Trump asserted that Medicare could save $300 billion if it negotiated drug prices with pharmaceutical makers. Medicare only spent about $86 billion on drugs in 2014. Presumably, drug makers would be forced to pay Medicare to take their drugs. The Washington Post gave Trump’s claim four Pinocchios.
Obamacare Regulations. Although not on his website, Trump has said he would keep the provision prohibiting insurers from denying coverage to people with preexisting conditions. Trump would not keep the individual mandate, however. Regulations like guaranteed issue are always coupled with community rating, otherwise it makes no sense. Furthermore, most experts believe an individual mandate is necessary to keep guaranteed issue from destabilizing the insurance market. The thinking goes: unless you can force healthy people to enroll and over-pay for coverage, it is not possible to give unhealthy people a sweetheart deal. That is why Obamacare has an individual mandate.
Trump’s website proclaims “By following free market principles and working together to create sound public policy that will broaden healthcare access, make healthcare more affordable and improve the quality of the care available to all Americans.” (emphasis his) Just about every presidential candidate since Truman has made the similar promise. So what would Trump do?
Repeal Obamacare — including the mandate. Trump is correct that Obamacare will collapse under its own weight sooner or later. The question is how much more damage will Congress allow to occur before even Democrats in Congress admit it’s not working as intended.
Sell Health Insurance Across State Lines (as long as the policy conforms to state regulations). The insurance market has consolidated and many insurers already offer plans in numerous different states. This idea was all the rage among Republicans a dozen years ago. Former Arizona Representative John Shadegg (R-AZ) was its champion for many years. It was not designed to spur competition among insurance companies as Trump suggests. It was actually intended to spur competition among state legislatures to force some of the egregious ones (i.e. New York, New Jersey, Massachusetts, Maine) to reduce costly mandated benefits and regulations. Failure to do so would lead to the ultimate demise of domestically domiciled insurers. Yet, Trump would require insurers to conform to regulations in every state they do business. This also makes little sense. The regulations that were the most onerous, guaranteed issue / community rating, are apparently ones Trump supports. Obamacare has already codified these costly regulations into law.
Make Health Coverage Tax Deductible. Allowing individuals to deduct the cost of individual health coverage from their taxes has been suggested for years. It would create tax fairness between individual insurance and insurance purchased through an employer. But if Obamacare is repealed it would not help that many Americans. In the long run, it could potentially exacerbate the overuse of third-party insurance rather than self-insurance because the tax subsidy for individual health coverage would be open ended.
Encourage the use of Health Savings Accounts. That’s a good idea, although it doesn’t appear he proposing anything that’s not already allowed.
Require Price Transparency. That’s a good idea in theory, but difficult in practice. It’s not clear which price providers would have to disclose. Would it be the chargemaster price that few people actually pay? Would chargemaster prices be disclosed by CPT code making prices meaningless to anyone comparing prices for a service more complex than a CT scan? You get the idea. There is not one price; but dozens of prices for a given procedure. The actual price varies depending on the health plan. GM gets a better deal than the local flower shop owner. Would Trump require hospitals to disclose Blue Cross and Aetna’s proprietary negotiated prices? Or would he require hospitals to disclose cash prices? There are actually two (possibly more) cash prices. There’s the list price that you can pay in cash. There’s the cash in advance price. After a procedure is performed there is often an “I’m not going to pay my bill if you don’t give me a better discount” cash price.
Trump doesn’t delve into why prices are so hard to come by. Prices are rarely disclosed because providers do not compete on the basis of price. If he’d solve that problem, price transparency would naturally follow.
Medicaid Block Grants. This is a standard Republican proposal. It’s 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. States should be on the hook for all cost overruns at the margin.
Allow Importation of Prescription Drugs. This already occurs, but it’s up to the manufacturer to authorize importation or reimportation. What Trump is really saying is drug makers should not be allowed to engage in price discrimination, where they sell an expensive drug cheaper in India than in Indiana. Most economist suspect this would have very little effect on American drug prices. It would have a huge effect on drug prices in third world countries, however.
Trump’s website also calls for reforming mental health in America. He also worries that providing health care to illegal immigrants costs $11 billion annually. I doubt if that is accurate. Most research suggests it is Medicaid and Medicare beneficiaries that flood emergency rooms — not illegal immigrants. Most illegal immigrants are relatively healthy since they come here to work. They also tend to pay cash for services.
As is often the case, Donald Trump’s health policy proposal promises more than he can deliver. The hard reality that not everyone can have expensive health care paid for with other peoples’ money is not something that fits neatly into a populist sound bite.
In offering market solutions to the healthcare financing mess, everyone, including this OP, neglects to mention a policy requiring that healthcare payouts, whether from VA, Medicare, Medicaid, Obamacare or employer group insurance be available for spending overseas, as cash is now. That one policy change would drop prices and make healthcare much more available. No need to require medical providers to disclose their pricing.
Jimbino, my clients have world wide coverage and they are not standing in line to leave the country for treatment. I did have a young woman who was run over by a car going 60 miles an hour in another country. I remember that the husband said it was illegal for the doctor to tell him the treatment options at another hospital on the island.
Jimbino, imagine it being illegal to tell the patient about all treatment options!
This husband’s only concern was bringing his wife back to America.
I fear Ron is correct that many Americans don’t realize that high quality care exists abroad at prices a fraction of those in the United States.
Most people would never go abroad unless they had been informed of their options in advance and stood to save thousands in cost sharing.
There is a hospital in Bangalore, India whose 40 cardiac surgeons performs 600 cardiac surgeries a week. The surgeons have different specialties so if you have a cardiac problem, the odds are one of the surgeons knows how to fix your condition very well — having done 15 the week before and so on for years. The price is $2,000 per surgery.
That said, we don’t all need to go to India. If Medicare and health insurers / health plans would either: 1) require competitive bidding and reward highly-efficient cardiac surgery centers with volume business; or 2) implement reference pricing, Americans would not need to go abroad.
FORTIS owned TIME Insurance in America and they owned a lot of Hospitals in India. I think all options should be on the table. For example, if your cardiac surgeries cost $100,000 in the USA and only $10,000 in India, and travel expense is $10,000, your insurance company should explain the option and split the savings with the patient to encourage them to care about saving money.
Your 2017 family deductible is $14,300 but after your travel check of $35,000, for doing your surgery in New Delhi, you still have $20,000 cold hard cash.
Remember, your surgeon is going to be from India no matter where you do your surgery so take the money and run.
“many Americans don’t realize that high quality care exists abroad at prices a fraction of those in the United States.”
Yes. I’ve been saying this for years. I learned of it first-hand when I held a relevant management appointment at United Nations more than 10 years ago.
Because high quality care exists in other countries, at a fraction of the cost in the US, these countries also enjoy much less expensive insurance.
That fact leads to a major reason to be critical of our politicians and many of our pundits and so-called thought leaders: they blithely assume that affordable insurance in other countries is a consequence of nationalized, or singe-payer mechanisms . . . when in fact, the insurance is affordable because the medical care in those countries costs so much less in the first place.
Even private insurance costs much less in those countries. because the medical care costs much less.
Our leaders ignore or misunderstand (or both) this experience in other countries. Worse, they pander to the US public by promising insurance will be “affordable” if only the government will pay for it here.
Well, I say that’s just iggnant.
Even worse, years before Obamacare liberal pundits were fond of saying…
“health coverage will only be affordable when everyone has coverage.”
Somehow, forcing “everyone” (by that they meant healthy people with low medical costs) to buy costly, regulated coverage is making coverage “affordable.”
Now, I’m not advocating this (it’s an anecdote), but if you really want to make health care affordable, abolish insurance and most of the regulations that govern medical care and medical training. Medical prices would fall like a rock!
“Medicaid Block Grants. This is a standard Republican proposal. It’s a good one.”
WRONG, We need free and open markets in America and not corrupt local politicians selling government contracts, geez.
It’s great that Trump doesn’t care how we reform the healthcare system and Congress could come up with a plan that helps the American people and Trump will sign it. Trump doesn’t care. If those in Congress have their way we end up with refundable age-based tax credits which will replace the need for a huge chunk of Medicaid which is a cornerstone of the Monopoly of Government’s health insurance.
— The Sherman Antitrust Act of 1890 was the first measure passed by the U.S. Congress to prohibit abusive monopolies —
The most successful application of the Sherman Antitrust Act during the second half of the 20th century was the breakup of the American Telephone and Telegraph (AT&T) monopoly, which was agreed upon in early 1982 and went into effect on January 1, 1984.
President Trump’s job will be to enforce the law and The Sherman Antitrust Act is still the law of the land to protect free markets.
We need one NON PROFIT think tank in America that points out the truth that Medicaid is a giant government monopoly that is illegal under the SAA of 1890.
Jimbino, imagine it being illegal to tell the patient about all treatment options!
It’s strange to argue that opening up medical treatment to worldwide options fails because a doctor in some island says it’s illegal. Docs say all kinds of dumb and self-serving things, especially when you’re under anesthesia.
Sounds like a throwback to 1993.
A firm adherence to reference pricing would put some surgeons and hospitals right out of business.
If a patient facing surgery had to pay $15,000 out of pocket to have the surgery done locally, believe me that would happen exactly once within a large employer. Then there would be a rush to the cheaper provider (in India, Cuba, or another city in the USA)
Health care is largely a local cottage industry despite its immense size. Reference pricing could change that.
This will be a bumpy ride. As pointed out by Megan McCardle (among others) in one of her recent columns, health care has largely replaced manufacturing as the main source of good secure jobs in America. That is because health care (and education and government) has been sheltered from foreign competition. Reference pricing would change all that very fast.
Higher education is also subject to possible disruption by online learning.
As for getting surgery performed in India, Thailand, and elsewhere overseas, I would want to know more about how patients who had complications fared compared to patients with similar complications in the U.S. and how do the complication rates compare on a risk-adjusted basis among countries.
Personally, I don’t think I would want to travel to India and tolerate the long flight both ways to get open heart surgery even at one-tenth the cost. The consequences of being wrong (dying) are pretty severe, I think.
Barry, in America people are being switched to managed care from health insurance. In America the HMO might delay treatment and the consequences could be pretty severe, like dying.
The time it takes to fly to treatment is not as scary as letting the people paying for the treatment decide how they can save money on your treatment.
Americans may have much bigger concerns than tolerating an airplane ride.
These American HMOs should be required to make some payment for treatment even if the consumer uses a non-participating provider.
Ron – Other people are perfectly free to travel overseas for care if they want to. I’ll just tell you than when I had quintuple bypass surgery in 1999, I was sent home via car service after four days in the hospital. When the car pulled into my driveway, it was all I could do to make it the 50 feet to my front door. A 10 plus hour plane ride and all that goes with it is a big deal in that context.
I would think that insurers should be happy to accommodate members who want to go overseas for needed care if the cost savings are significant. As for HMO’s, their attraction is a lower premium as compared to PPO’s. People who buy an HMO product to get the lower premium should understand the rules that go with it.
Had the surgery been performed in India, you would have stayed two weeks or more at a 5-star hospital hotel with your own dedicated nurse for the first week. The cost of the extra 14 days would have probably been only $1,000.
Of course, comparing 1999 to 2016 is like nigh and day. There is a 1,000-bed hospital in Bangalore that performs 600 heart surgeries each week at a cost of $2,000 per surgery.
Devon – I wonder how insured members would react if their insurer told them they should go to a highly regarded hospital in India for their heart surgery or hip replacement procedure because it’s the most cost-effective high quality provider and suggested that the savings the insurer realizes may or may not help to stabilize the member’s insurance premium. No guarantees of course.
Alternatively, it could establish a reference price or indemnity amount that was in line with the all-in cost, including hotels and airfare, to have the care performed at the five star hospital / hotel in India. If the member wanted to get his care in the U.S., he would have to pay the cost difference out-of-pocket. I don’t think that would go over too well.
It is a worthwhile option for the self-payer, though.
Maybe the health plan could tell the enrollee… “You can have your knee replacement done here in the U.S. and pay $6,500 out of pocket — assuming your don’t exceed the $30,000 reference price then it could be much higher.”
“Or, you can go to this great facility in Costa Rica. We can make all the arrangements, you will owe nothing in cost-sharing and we will credit your entire next year’s worth of premiums as paid. Which would you prefer?”
Devon and Barry, I think much “medical tourism” today involves procedures that are not usually covered by insurance. Cosmetic surgery, for example, or new, still-experimental experimental treatments involving medication not approved by FDA. Americans seeking these treatments outside the US are likely more able to finance them without insurance.
Another reason is that, for expenses that are covered by insurance, an individual’s expected savings are limited to the amount of out-of-pocket expense after insurance. That could still be a large percentage – but a large percentage of a much smaller base, thus fewer dollars of potential savings. Limited savings would affect how long a person might be able to pay for a post-treatment stay; which in turn would affect one’s personal risk, I.e., coming home before fully recovered or before a complication emerged.
After all, no one can be certain that any necessary follow up would become known within the first 14 days – or the first “X” days – after major surgery.
One thing I think the emergence of “medical tourism” means is that 21st century medical practice is increasingly being defined in Asia, South America, and even Africa. First-rate medical care and medical research is no longer a near-exclusive technology of Western Europe and North America.
Meanwhile Medicare still does not cover any medical expense incurred outside the US..
Barry, you say, “As for HMO’s, their attraction is a lower premium as compared to PPO’s. People who buy an HMO product to get the lower premium should understand the rules that go with it.”
There is no warning or full and proper disclosure. How could consumers know the difference? People don’t realize that if they require a non-participating provider that their HMO will pay NOTHING which could kill their child.
Maybe consumers should sign: WARNING: If you try and save a buck or two by getting this HMO your child could be killed by these bloodthirsty crooks. An HMO is not insurance where you and your doctor have choices if you get cancer.
Ron is essentially correct about HMO’s and their incentives. The incentive of the HMO is not to treat while the incentive for FFS is to treat. There is no paper trail at the HMO when the workup and treatment isn’t provided. In FFS there is a huge paper trail when treatment is provided along with many different independent healthcare professionals being involved. FFS is much safer
Years ago some HMO’s had it in their contracts that the physician could not tell a patient about treatments not offered by the HMO. I think that was found illegal.
As far as medical tourism. I am sure some of those specialty hospitals do a good job for specific conditions. Whether that would be the best treatment or not is not really known. I’ll take good old US care where history has proven to me that the finest of care is offered in the US
As far as the non medical tourism hospitals abroad except for a relatively small number I would return home for an important problem. In fact I did so. When my wife broke a hip we had a private jet pick us up and deliver us to the hospital of our choice in the US at an astronomical price. She could not fly commercial. Fortunately American Express decided to cover the bill.
The hospital she was taken to was said to have done good hip surgery, but they were going to put in something quite backward from my standpoint and though they did the best they could with the financial constraints ( government run limited budget, underpaid docs) One day I should describe the way patients had to be treated because I found it terrible though I did not fault the doctors or the nurses.
Note a major 4 year study demonstrated physical decline for the elderly was almost twice as high in an HMO than under FFS.
Allan, thanks for standing up to the fact that HMOs are not insurance.
HMOs should at least be required to pay the low amount that they pay their non-English speaking providers when the consumer goes out-of-network in an effort to survive their cancer.
An HMO is like letting the opposing attorney pick your witnesses in a legal battle. The HMO is not on your side!
There are a variety of payment models. One is price rationing where people pay cash from their own reserves. Another is the casualty model where patients pay cash out of a casualty payment.
We know most patients don’t have sufficient reserves to pay for more than a broken down car. The casualty model would only work if the insurer helped the patient navigate the health care system.
Hospitals in Canada have global budgets to treat all those who present for care. We have seen that hospitals paid a fixed amount profit by avoiding patients — not treating them.
In our health care system we mostly use fee for service, where hospitals up code, admit seniors that may not need to be there and readmit seniors who didn’t get the care they needed post discharge. And charge high list prices that only serve to offer discount to health plans.
Of course, increasingly there are HMOs where insurers contract with narrow networks. There are also HMOs (like Kaiser) where the hospitals are owned by the insurer.
We also know the current FFS system is also not working. HMOs have perverse incentives. We cannot all get on a plane. But we need to move to a system where hospitals’ incentives are aligned with patients’. I cannot say what that system would look like. But it will likely be a hybrid of items mentioned above. It may be a hospital receiving at risk payments for a community which it has to recruit (sort of an ACO). Those people actually presenting for care would get balanced billed for charges above a reference price. Leaving the network to get a better price would claw back some of the at risk payments.
Basically we need an incentive where hospitals don’t profit from performing all manner of services and billing for every Band-Aid and plastic bedpan. But we do want hospitals to have an incentive to provide good care.
Devon, your last sentence about hospitals raises a fascinating questions.
Many, many hospitals in the US, maybe most, make a lot of effort to provide good care. Of course there are some medication errors….but I suspect that one could go to 300 hospitals in almost every city in the US and have a safe, decent, experience. My own two traumatic events at United Hospital in St Paul MN have been absolutely stellar in terms of efficient and attentive care.
But now to my point, which I never considered until I read the last sentence above.
Hospital payments mechanisms are baffling and screwy in the US, and yet the hospitals are really trying to provide good care.
Is this because:
a. they have a higher professionalism
b. they make lots of money
c. payment systems don’t matter that much for them
Let me phrase it another way. Global budgets and no bills to patients should be more efficient. And yet in Canada, England, and the VA system, hospitals on budgets are far from the best and seem unmotivated to many.
Whereas the US way of paying private hospitals is deeply screwy, but we get good care nonetheless.
Most U.S. hospitals (but not all) provide good care. I think it’s a case of: 1) professionalism; 2) they are paid well and don’t want Joint Commission to report bad outcomes that could impact (fully insured) patients patronizing them. 3) The risk of getting sued.
It’s all about incentives. Most have relatively good incentives to do a good job. They just don’t have incentives to hold costs down.
I’d add one more important factor. The business offices of the hospital are staffed by different people, with quite different goals and incentives, vs. the clinical staffs.
So I think it’s perfectly consistent that any given hospital can be finance driven and dedicated to provide excellent patient care, too.
Also keep in mind only a doctor can order and provide actual medical care. They also don’t want to get sued. They want to get paid and so does the hospital. Hospitals can do a lot to compromise quality. But the doctor is ultimately the one who decides to leave if he/she doesn’t think the hospital is helping do a good job. If the doctors leave, the administrator has an incentive to fix problems.
Devon, you say, “They want to get paid and so does the hospital.”
They want to get paid so bad that they know which people they can run all sorts of unnecessary tests on and they won’t be questioned, like people in auto accidents.
Their money is the providers’ biggest consideration. If running expensive tests limits their legal liability get ready for a ton of expensive tests, regardless if these tests help the consumer.
Making money is the only consideration and not keeping the expense low for the consumer, get real.
I heard a guy yesterday say that his wife talked to a doctor for 10 minutes in the ER, after their doctor told them to go there, and the bill was $10,000! Devon, these people don’t care about you.
Ron, for the most part physicians are pretty honest. They actually look you in the eye and it is my belief that the further from that view the less people care. At the furthest distance you are nothing but a number. That is why it is dangerous to place a contract with incentives between the patient and his physician. The physician has a ton of reasons to keep him more honest than the average citizen. There are reasons not to permit physicians to be owned because that permits non physicians to utilize a license any way they wish. Most of the recent incentives by government (ACO) and managed care are attempts to make the physician do things he wouldn’t otherwise consider doing.
AS far as others in the healthcare profession go they are parts of society so they are as honest as society is as a whole and likely as honest as any individual including you. The difference is that people gravitate to places that are somewhat dependent upon their morality.
Following my most recent cardiac procedure, virtually all of the care I received while in an observation unit for an overnight stay was provided by a nurse, a PA, and NP or a tech. A lot of the perceived patient experience upon leaving the hospital is influenced by not just the competence of those folks but their demeanor and bedside manner as well.
As for incentives on the billing side of the hospital, I think price transparency in terms of actual insurer contract reimbursement rates and realistic expected payments from self-payers should provide some motivation to control costs.