Will Donald Trump Live Up to His Campaign Promise on Health Care?

A Look at Plans to Change Medicaid and Medicare

Pharmacist talking to customer about prescription
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President Donald J. Trump made promises to Americans on the campaign trail. Repealing Obamacare and preserving Medicare were on the top of that list. Will our President live up to those campaign promises?

A Review of Trump's Healthcare Promise

As a reminder, President Trump campaigned on a seven-part health plan. With the following changes, he vowed to make health care great again.

  1. Repeal the Affordable Care Act, aka Obamacare
  1. Allow selling of health plans across state lines as long as health plans follow state guidelines
  2. Allow individuals to deduct health insurance premiums on their tax returns
  3. Allow individuals to use Health Savings Accounts (HSA)
  4. Require price transparency across the healthcare system
  5. Discontinue federal grants to states for Medicaid
  6. Allow expansion into free markets, including purchasing cheaper drugs overseas, to decrease the cost of prescription medications

Will President Trump deliver on his campaign promises?

Trump Takes on Medicaid

No matter how you look at it, Medicaid funding is on the chopping block. This could affect how many people are able to access health care through the program.

Repealing Obamacare

When the Affordable Care Act was introduced in 2010, there were as many as 48 million uninsured Americans, approximately 15.7 percent of the population. According to the Centers for Medicare and Medicaid Services, the passage of the law decreased that number to 9.2 percent by 2015.

Obamacare allowed young people to stay on their parents' plans longer, prevented insurance companies from increasing premiums based on pre-existing conditions, allowed for expansion to existing Medicaid programs and developed the Health Insurance Marketplace as a more affordable option to those who did not meet criteria for Medicaid.

Simply put, the cost of private insurance plans at the time was simply too high for many people to manage. Many will argue Obamacare continued to leave health plans out of financial reach.

President Trump is pursuing a repeal of Obamacare but has yet to offer a plan to replace it. A repeal would increase the number of uninsured people in the United States by tens of millions. Those on Medicaid may be hit hardest.

Cutting Federal Funding to Medicaid

Obamacare offered incentives to states that chose to proceed with Medicaid expansion. Those states received federal dollars to assist them, up to 100 percent of expansion costs for three years and then 90 percent of costs through 2022. Not only will Medicaid expansion come to a halt with an Obamacare repeal, the promised funding will be discontinued under Trump as well.

Beyond repealing Obamacare, President Trump aims to cut other federal funding to Medicaid programs. He has proposed limiting funding to block grants. Since 1965, states have received federal dollars for Medicaid based on the number of people that were eligible for the program.

Block grants would change all that, offering a fixed amount of money for Medicaid regardless of a state's need. Funding changes would affect all states, not only those that participated in Medicaid expansion.

Decreased federal support for Medicaid places a heavy burden on the states to make ends meet. Many states are struggling with budget deficits as it is. In 2016, more than half of the states earned less revenue than their proposed budgets and 19 of them had to make budget cuts mid-year to stay afloat.

The concern is that cutting federal funding could decrease the number of people covered by Medicaid, decrease what Medicaid actually covers, or both. Time will tell how it plays out.

Trump Takes on Medicare

On the campaign trail, Trump promised not to cut Medicare benefits, but he did have some ideas that would impact on the program.

Negotiating Drug Costs

The same medications used in the United States often cost less in foreign countries. For example, Advair, a common medication used to treat asthma, costs $309.60 per month in the United States whereas it only costs $74.12 in Canada and $46.99 in the United Kingdom. At the current time, Medicare does not allow enrollees to purchase their medications out of the country to take advantage of cheaper drugs. President Trump wants to change that. The pharmaceutical industry, however, has been firmly against it.

President Trump also wants to negotiate with American pharmaceutical companies for better rates. Medicare Part D prescription drug plans are currently run by private insurance companies, and laws are in place that prevent the federal government from intervening in pricing. Again, there is significant lobbying by pharmaceutical companies to continue this legislation.

With only ten percent of health spending reported on medications, the Congressional Budget Office (CBO) states they would not expect significant cost reductions with federal intervention. Other policy briefings suggest that Medicare could save as much as $16 billion every year by negotiating and decreasing the cost of brand name drugs to levels the federal government has already negotiated for Medicaid and the Veterans Administration.

Tax Savings

President Trump may offer Americans opportunities to save on their taxes. At the present time, Medicare beneficiaries are not allowed to take advantage of health savings accounts. With a change in legislation, Medicare beneficiaries could set aside money tax-free for the purposes of paying for healthcare expenses.

By also making the cost of premiums tax deductible (an amount ranging from $1,608 to $5,143 for Medicare Part B in 2017)seniors could save more of their retirement earnings.

Repealing Obamacare Affects Medicare

Though attention has been focused on Medicaid and the uninsured, a repeal of the Affordable Care Act could have significant repercussions for people on Medicare as well. Obamacare helped to establish programs to improve hospital care, to decrease Medicare fraud, and to innovate new payment models that could save money for the program. It also expanded on Medicare coverage, making preventive services like colonoscopies and mammograms free when you receive care from a participating provider. Most importantly, it helped to decrease the cost of prescription drugs for people on Part D plans.

None of these issues has been addressed by the Trump administration. Will an Obamacare replacement stop, continue, or improve upon these Medicare innovations? Beneficiaries will want to know.

The Reality of a Trump Administration

President Trump went to task and signed an executive order on January 20, 2017, the day of his inauguration. The order directed federal agencies to scale back on Obamacare "to the maximum extent permitted by law". The order did not, however, repeal the Affordable Care Act nor did it outline how agencies were to proceed on the issue.

Though he stated he would not touch the Medicare program, President Trump named Representative Tom Price as Secretary of Health and Human Services who was confirmed on February 10 after contentious Senate hearings. Price has been more than vocal about wanting a major overhaul of Medicare. He has endorsed partial privatization of Medicare with the "Better Way" plan put forth by the GOP in 2016. In addition to that, he has advocated for major cuts to the Medicaid program.

The President has also tapped Seema Verma to run the Centers for Medicare and Medicaid Services (CMS). A healthcare consultant and founder of SVC. Inc., her work in Indiana led to the requirement that people on Medicaid pay monthly fees or otherwise lose their coverage for six months. In other states, she has worked on proposals that require people on Medicaid to pay for part of their care or that require them to work or actively look for work. To date, she has contributed on a state level, but in a federal role, she could change standards nationwide.

A lot of promises have been made and many lives will no doubt be affected. President Trump has sent mixed signals to the American people. What he has promised on the campaign trail has not always been in alignment with his actions as President. An Obamacare repeal is likely to happen and Medicaid cuts are sure to follow. What will happen to Medicare, however, is a guessing game.

Sources:

A Better Way: Our Vision for a Confident America - Health Care. Better.GOP. http://abetterway.speaker.gov/_assets/pdf/ABetterWay-HealthCare-PolicyPaper.pdf. Published June 22, 2016.

Farmer L. Budget Shortfalls Expected in the Most States Since Recession. Governing.com website. http://www.governing.com/topics/finance/gov-nasbo-state-spending-survey-2017.html. Published December 13, 2016.

Gagnon MA, Wolfe S. Policy Brief. Mirror, Mirror on the Wall: Medicare Part D pays needlessly high brand-name drug prices compared with other OECD countries and with U.S. government programs. Public Citizen. http://freepdfhosting.com/ff84833f9f.pdf. Published July 23, 2015.

Negotiating for Lower Drug Costs in Medicare Part D. National Committee to Preserve Social Security and Medicare website. http://www.ncpssm.org/EntitledtoKnow/entryid/2061/negotiating-for-lower-drug-costs-in-medicare-part-d.

Obamacare Enrollment Numbers. Obamacare Facts website. http://obamacarefacts.com/sign-ups/obamacare-enrollment-numbers/. Accessed April 18, 2016.

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