The Health Care Reform Proposals of Hillary Clinton and Donald Trump

Sara R. Collins, Ph.D.

Vice President, Health Care Coverage and Access

The Commonwealth Fund

USC Center for Health Journalism

Clinton vs. Trump: The Future of U.S. Health Care

October 28, 2016

Exhibit 1.

Summary of Major Findings

• Hillary Clinton and Donald Trump prop0se starkly different approaches to U.S. health care.

– Very different potential outcomes for consumers.

• Clinton proposes to maintain and build on the Affordable Care Act:

– Fewer uninsured;

– Lower out-of-pocket costs;

– New federal spending.

• Trump proposes to repeal and replace ACA:

– More uninsured;

– Higher out-of-pocket costs;

– New federal spending.

Exhibit 2. 2016 Presidential Candidates’ Health Care Proposals

Proposal Features Hillary Clinton Donald Trump

Approach to ACA Maintain the ACA Repeal the ACA

Marketplaces/Individual market

Add “public option” plan; invest $500 million annually in enrollment campaign; allow people to purchase marketplace plans regardless of immigration status.

Permit sale of insurance across state lines.

Medicaid 100% federal match for Medicaid expansion for first three years, regardless of start date.

Fund Medicaid through block grants to states.

Employer coverage Repeal Cadillac tax; expand eligibility for small business tax credit to firms with up to 50 workers.

Medicare Allow people ages 55 and older to buy into Medicare

Source: Comparing the 2016 Presidential Candidates’ Health Proposals, The Commonwealth Fund, September 2016. http://www.commonwealthfund.org/interactives/2016/sep/comparing-candidates-health-proposals/

Proposal Features Hillary Clinton Donald Trump

Affordability

Premiums Enhance premium tax credits; fix “family glitch”; strengthen ability of states to modify/block rate hikes; vigorously enforce antitrust laws.

Make health insurance premium payments tax deductible.

Out-of-pocketcosts and deductibles

Refundable tax credits for high out of pocket costs and premiums; up to three pre-deductible sick visits; surprise medical bill protections.

Expand health saving accounts (HSAs).

Prescriptiondrug costs

Limits on Rx out-of-pocket costs; stop direct-to-consumer advertising; allow imported drugs; clear FDA generic backlog; reduce biologic exclusivity periods; raise Medicare rebates; let Medicare negotiate prices; monitor unjustified price increases.

Remove barriers to market entry for drug providers; allow imported drugs.

Exhibit 3. 2016 Presidential Candidates’ Health Care Proposals

Source: Comparing the 2016 Presidential Candidates’ Health Proposals, The Commonwealth Fund, September 2016. http://www.commonwealthfund.org/interactives/2016/sep/comparing-candidates-health-proposals/

Proposal Features Hillary Clinton Donald Trump

Mental Health and Substance Abuse

Coordinate mental and physical health care; enforce mental health parity; funds to prevent/treat addiction

Long-term care Tax credits and Social Security benefits for caregivers, coverage for Alzheimer’s care planning.

Delivery system reforms Double funding for community health centers; build on reforms to reward value and quality.

Require price transparency from all providers.

Exhibit 4. 2016 Presidential Candidates’ Health Care Proposals

Source: Comparing the 2016 Presidential Candidates’ Health Proposals, The Commonwealth Fund, September 2016. http://www.commonwealthfund.org/interactives/2016/sep/comparing-candidates-health-proposals/

Implications of Maintaining the ACA or Repealing it, Prior to Any Enhancements or Replacements

Clinton: Maintain ACA Trump: Repeal ACA

2018 Coverage: 251.6 million people insured

231.9 million people insured (19.7 million fewer covered)

Average out-of-pocketcosts in individual market:

$3,200 $4,700

Effect on deficit: $0 +$33.1 billion

Source: S.R. Collins and S. Beutel, “The Health Care Reform Proposals of Hillary Clinton and Donald Trump,” To the Point, The Commonwealth Fund, Sept. 23, 2016. http://www.commonwealthfund.org/publications/blog/2016/trump-clinton-presidential-health-care-proposals

Exhibit 5

Exhibit 6

Impact of Clinton’s Proposed Reforms on the Number of People with Insurance Coverage, U.S. Population Under Age 65, 2018

Notes: Changes in coverage relative to the ACA scenario are shown on the top of each bar in red and may not sum to subtotals because of rounding. Details reported in Appendix Table A.2.Data: RAND COMPARE microsimulation model.

Source: C. Eibner, S. Nowak, and J. Liu, Hillary Clinton’s Health Care Reform Proposals: Anticipated Effects on Insurance Coverage, Out-of-Pocket Costs, and the Federal Deficit, The Commonwealth Fund, September 2016.

Number of insured, in millions

251.6 261.2 253.2 254.3 252.0

0

50

100

150

200

250

300+9.6 +1.7 +2.8 +0.4

ACA Add cost-sharing

tax credit

Reduce maximum

contribution

Reduce maximum contribution and fix family glitch

Add public option

Exhibit 7

Impact of Clinton’s Proposed Reforms on Total Out-of-Pocket Health Care Spending of Insured People, by Income, 2018

Notes: Out-of-pocket spending = premium contributions + out-of-pocket cost-sharing. Dollar values are reported in Appendix Table A.3. Data: RAND COMPARE microsimulation model.

Source: C. Eibner, S. Nowak, and J. Liu, Hillary Clinton’s Health Care Reform Proposals: Anticipated Effects on Insurance Coverage, Out-of-Pocket Costs, and the Federal Deficit, The Commonwealth Fund, September 2016.

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

ACA Add cost-sharing tax credit

Reduce maximum contribution

Reduce maximum contribution and fix family glitch

Add public option

<139% FPL 139%–250% FPL 251%–400% FPL >400% FPL

Exhibit 8

Notes: Impacts that increase the federal deficit are shown in red, while those that decrease or have no effect on the federal deficit are shown in black. Changes in outlays and revenues are estimated relative to the ACA. We do not show the ACA’s changes to Medicare payment or revenues generated through new taxes and fees. These revenue-generating provisions remain roughly constant across scenarios and thus have no marginal impact on the deficit relative to the ACA. * Congressional Budget Office models premium tax credits as a reduction in revenue if they reduce taxes owed and an increase in outlays if the credit exceeds tax liabilities. For simplicity, we count the entirety of the premium tax credit as increase in outlays. Data: Estimates from RAND COMPARE microsimulation model.

$90.4

$10.0

-10

10

30

50

70

90

110

ACA Add Cost-SharingTax Credits

Reduce MaximumContribution

Reduce MaximumContribution andFix Family Glitch

Add Public Option

-$0.7

Net Deficit Impact (in Billions) Under Clinton’s Proposed Reforms Relative to the Affordable Care Act, 2018

Net change to federal deficit (billions)

$0.0 $3.5

Source: C. Eibner, S. Nowak, and J. Liu, Hillary Clinton’s Health Care Reform Proposals: Anticipated Effects on Insurance Coverage, Out-of-Pocket Costs, and the Federal Deficit, The Commonwealth Fund, September 2016.

Exhibit 9

Impact of Trump’s Proposed Reforms on the Number of People with Insurance Coverage, 2018

Notes: Changes in coverage relative to the ACA scenario are shown above each bar, in red. The estimated distribution of enrollment by source of coverage is available in Appendix Table A.2.Data: RAND COMPARE microsimulation model.

Source: E. Saltzman and C. Eibner, Donald Trump’s Health Care Reform Proposals: Anticipated Effects on Insurance Coverage, Out-of-Pocket Costs, and the Federal Deficit, The Commonwealth Fund, September 2016.

251.6231.9 236.0 226.5 234.1

0

50

100

150

200

250

300

–19.7 –15.6 –25.1 –17.5

Number of insured, in millions

ACA Repeal Tax deduction

Medicaidblock grants

Sales across state lines

Exhibit 10

Impact of Trump’s Proposed Reforms on Average Annual Out-of-Pocket Expenses for Individual Market Enrollees, 2018

Notes: The exhibit shows average annual out-of-pocket expenses, including premium and cost-sharing, for a standardized population consisting of individuals projected to be enrolled in the individual market under current law.Data: RAND COMPARE microsimulation model.

Source: E. Saltzman and C. Eibner, Donald Trump’s Health Care Reform Proposals: Anticipated Effects on Insurance Coverage, Out-of-Pocket Costs, and the Federal Deficit, The Commonwealth Fund, September 2016.

$3,200

$4,700

$3,500

$4,700

$5,700

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

ACA Repeal Tax deduction

Medicaidblock grants

Sales across state lines

Household ACA advance

premium tax credit

Proposed Trump tax

deduction

Two 40-year-old parents

and two children*Benchmark plan premium = $11,300

Income: $36,000

(150% FPL)

$9,900 $1,700

Income: $71,500

(300% FPL)

$4,700 $1,700

Income: $95,500

(400% FPL)

$0 $2,800

Income: $143,000

(600% FPL)

$0 $2,800

Exhibit 11

Estimated Subsidies Under Trumps Proposed Reforms for Individual Market Insurance, by Income and Household Composition, 2018

FPL = federal poverty level. The exhibit compares the tax credit that various household types would receive for purchasing the benchmark plan (i.e., the second-lowest cost silver plan) under the ACA’s advance premium tax credit (APTC) formula and under a tax deduction. In both cases, the subsidy depends on premiums. Specifically, the ACA’s APTC is calculated using the benchmark plan, while the value of the tax deduction is the product of the premium and the individual’s marginal tax rate. We compute a nationally weighted average premium for the benchmark plan for 2016 and inflate to 2018. Estimates are presented in 2018 dollars.Data: Estimates from RAND COMPARE microsimulation model.

Source: E. Saltzman and C. Eibner, Donald Trump’s Health Care Reform Proposals: Anticipated Effects on Insurance Coverage, Out-of-Pocket Costs, and the Federal Deficit, The Commonwealth Fund, September 2016.

Exhibit 12

Impact of Trump’s Proposed Reforms on Federal Deficit (in Billions) Relative to the Affordable Care Act, 2018

Notes: The exhibit considers the effect of the reforms relative to current law. Impacts that increase the federal deficit are shown in red, while those that decrease or have no effect on the federal deficit are shown in black. * We do not model the ACA’s effect on taxes (including taxes on the medical device, insurance, and pharmaceutical industries, limits on health savings accounts, and surtaxes on high-income individuals) and Medicare spending, and instead take these numbers from the Congressional Budget Office. We exclude revenues that may result from the possibility that firms drop coverage as a result of health reforms and pass savings back to workers in the form of taxable wages. Prior research has shown that, to date, employers do not appear to have dropped health insurance in response to them ACA. Estimates are presented in 2018 dollars.Data: Estimates from RAND COMPARE microsimulation model.

Source: C. Eibner, S. Nowak, and J. Liu, Hillary Clinton’s Health Care Reform Proposals: Anticipated Effects on Insurance Coverage, Out-of-Pocket Costs, and the Federal Deficit, The Commonwealth Fund, September 2016.

Net change to federal deficit (billions)

$33.1

$41.0

$33.7

0

10

20

30

40

50

$0.0 $0.5

ACA Repeal Tax deduction

Medicaid block grants

Sales across state lines

Exhibit 13

Conclusions

• Clinton’s health care proposals would provide insurance to millions more people than would Donald Trump’s proposals.

• Clinton’s proposals maintain the progressivity of the ACA subsidies while providing some savings to people across the income spectrum.

• Trump’s proposals make insurance coverage in individual market more expensive on average; proposals yield greater benefits to people in better health and/or with higher-incomes.

• Three of Clinton’s proposals would increase the federal deficit; offering a public insurance plan would slightly decrease deficit.

• Trump’s repeal of the ACA would increase the federal deficit: the loss of savings from ACA’s Medicare reforms and revenues would exceed savings from repeal of the coverage expansions.

• The candidates have promised to offset any new federal spending.