Trump’s proposals will undo much of Obamacare’s progress, leaving no room to reduce the cost or improve the effectiveness of American health insurance.
When Barack Obama assumed office as president of the US in 2009, 45 million Americans did not have any form of healthcare. This meant they could neither afford to buy medical insurance nor were they covered by any form of employer-provided or government insurance scheme. The Patient Protection and Affordable Care Act, or Obamacare as it is referred to, was introduced to fill this massive gap. By 2016, over 20 million previously uninsured Americans had healthcare coverage, companies could no longer deny insurance to those with pre-existing ailments, preventive services were now covered and no person could be denied continuation of their insurance if they became sick. All this is now set to change.
Donald Trump repeatedly denounced Obamacare during his campaign and vowed to repeal it on his first day in office. His election manifesto criticised it for reducing the care available to beneficiaries, limiting competition and decreasing the choices on offer. It is hardly unexpected that Trump chose to disregard its many fundamental positives – the increase in coverage, the fact that non-working adult children can continue on their parents’ insurance, that women no longer have to pay higher premiums than men or, significantly, that the rise in healthcare costs in the US has slowed to historically low levels. Paul Krugman, who has written extensively on the act, in a recent article in the New York Times, contends that Obamacare has, to a large extent, achieved its two principal goals – that of covering the uninsured and reining in health care costs. Trump instead focused on the cost of premiums, which is set to rise from next year, and sold the hype to the American public. He blamed the government’s entry into the healthcare market for the increase in premiums and promised to reduce regulation and let the market dictate competition –between insurance companies – to make healthcare more affordable and accessible. The rhetoric obviously succeeded as people chose to believe his propaganda rather than question the rationale of his argument. His powers of persuasion blinded them to the fact that it is precisely these free market principles and ineffective regulations which have landed American healthcare in the soup it is currently in.
The US spends almost a fifth of its entire GDP on health care. At 16.6%, OECD data shows that this is the highest amongst all member countries; yet it has the lowest fraction of its population covered by insurance. Japan and Switzerland, countries with the next highest levels of expenditure, fall way behind at 11.4%. The US also has the worst health outcomes amongst these nations. Its infant mortality rate is almost double that of Australia and France, and three times that of Japan. 62% of all personal bankruptcies in the country occur due to medical care costs. One reason the situation is so dismal is that insurance companies in the US have long dictated the terms for providing coverage, which has ensured the exclusion of those who need it most and in circumstances when they need it most. In a scathing indictment of the medical industry’s ethics and regulatory systems, the American Medical Association, in its Journal of Ethics, highlighted how market-driven corporate interests have led to unethical behavior and ensured immeasurable profits for pharmaceutical and medical care industries while the American population pays the price. American healthcare has come to epitomise the most expensive, inequitable and ineffective system in the world. But Trump believes giving an even freer hand to these industries will improve the US’s healthcare system.
Trump’s proposals for lesser regulation, tax breaks on paid insurance premiums and the use of special ‘health savings accounts’ – accounts used for health expenditure which enjoy certain tax exemptions – have all been tried before and failed. Free market policies are the cause, not the solution, for the American healthcare problem. That he is now considering retaining some elements of Obamacare – such as the continuation of young adults’ coverage on parental insurance or coverage for pre-existing conditions – means little, as these provisions have been made possible due to other sections of the act that he still strongly opposes, such as ‘the mandate’. Health insurance is built on the premise that the pool of healthy insured will cross-subsidise the medical care costs of the not-so-healthy. Obamacare attempted to ensure that the healthy also bought insurance by ‘mandating’ that all – who could afford it – buy insurance or pay penalties and also by subsidising it for those who could not. The rationale being that the young healthy cohort will also benefit when it needs emergency health care, and that as it grows older – and presumably less healthy – it will be on the benefitting side of the same provision. Trump’s strong opposition to this element makes it virtually impossible to continue with the provisions he now declares he favours.
Trump is also moving towards including some of the more traditional Republican party positions that are staunchly against women’s reproductive rights. He proposes the ‘modernisation’ of Medicare – a euphemism for drastic cuts in government aid to this healthcare programme for the elderly. His proposal to convert Medicaid – the aid programme for low income people – from an open-ended scheme providing care as required, to a limited grant, will lead to disproportionately lower health care for the poorer populations. That these positions contradict his own assertion of broadening health care access should come as no surprise. His new website as president-elect indicates no plans for the millions who remain uninsured or the women whose healthcare costs will skyrocket only because they chose (or didn’t choose) to be mothers or those who will have to pay from their own pockets for any preventive check-up. It makes no mention of the reduction in care that his plans will cause or the decreased choices it will lead to or the adverse impact it will have on the poorest and oldest and sickest. It quietly withdrew the one component of his pre-election proposals that could have helped reduce costs – allowing the importation of low-cost drugs. Most of all, it gives no indication that he has any plans, or desire, to address the underlying causes of the runaway costs of American healthcare or the discriminatory practices of insurance companies.
The US has cause to worry.
Anjali Chikersal is a Senior Fellow at Centre for Policy Research and leads its Health Policy Program.