Trump's Four Useless Alternatives to Obamacare

It's all about higher costs and lower protections.
January 13, 2017, 3:00pm

Around 1:30 am on Thursday, Republicans began the process of dismantling Obamacare with a budget resolution, which triggers Congress to get moving on repeal legislation and kicks off the grand public health experiment of seeing what happens when twenty million people suddenly don't have health insurance. The resolution nearly passed straight down party lines, 51-48, with Senator Claire McCaskill (D-MO) objecting, "Because there is no replacement, I vote no."

But we shouldn't worry that Republicans will repeal Obamacare and have nothing to replace it with. Oh god no, it's much worse than that.

Republicans are ready to cherry-pick from a Rolodex of bad ideas, ones that promise a race to the bottom for consumer protection and higher costs for people who need health insurance the most. Here are four of them.

The Plan: Sell insurance across state lines
Why It's a Bad Idea: Conservative health insurance ideas are ironically pro-choice: They feel people should have a choice about the insurance they have, which will increase competition and lower costs. That's why selling insurance across state lines is a Republican fantasy and a talking point that Trump recited in the second presidential debate: "We have to get rid of the lines around the state, artificial lines, where we stop insurance companies from coming in and competing."

What Trump ignores is that the ACA has permitted sales across state lines since January 2016, allowing states to form healthcare choice compacts. The reason this fact is easy to ignore is that most states aren't interested—only three states have signed them into law since the ACA kicked in. Yet conservatives want to make sales across state lines the rule, not the exception.

Here's how it could collapse a market: If State A says healthcare premiums should be the same for healthy people as sick people, then premiums are sure to be higher than in State B, where regulations aren't as strict and prices are lower. State B would attract young, healthy people who want the cheapest rate possible. In turn, State A's pool would become mostly sick people and their rates would soar, which would scare away more people, raising the costs even higher. "The end result is that we could reach a race to the bottom in terms of regulation, where insurance companies gravitate to the loosest regulations and it would be hard for states to impose any sort of consumer protections," says Christine Eibner, a senior economist at the RAND Corporation.

The Plan: High-Risk pools
Why It's a Bad Idea: Health insurance would be very cheap if it weren't for all those sick people, right? Paul Ryan wants to run with that idea and create separate insurance plans for sick people known as state high-risk pools.

But high-risk pools do the opposite of what insurance is supposed to do: Insurance works because cost is spread across a really large group. In a state high-risk pool, however, risk is concentrated into a small group of sick people who have greater medical costs, which means their premiums become very high.

"It goes against what insurance is in the first place," says Jean Hall, the director of the Institute for Health and Disability Policy Studies at the University of Kansas. Hall and her colleagues found that people with chronic illnesses in high-risk pools make healthcare decisions based on cost rather than necessity, which makes sense since high-risk pools imposed annual and lifetime coverage limits, policies that the ACA eliminated. But what if we could extend this anxiety from people with serious conditions to everyone? Well, that's option number three:

The Plan: Health savings accounts
Why It's a Bad Idea: Recently, Republican Representative Bill Huizenga proudly recounted the story of when his son fell from a trampoline and his family decided to forego a trip to the ER, because of the "cost difference" of taking him to his doctor the next day. After all, they couldn't be sure it was a broken arm. (It was a broken arm.) Welcome to the future of health savings accounts, where you, too, get to play "differential diagnosis" with your own family! Is it gas? Is it appendicitis? What's the "cost difference" of waiting it out?

Health savings accounts allow people and their employers to put money into a tax-free account for when people need medical care. "In theory that should cause people to make better choices and potentially that reduces excess health spending," Eibner says. "How this has worked in practice is not always as clear cut." A 2011 RAND study found that people didn't only cut down on unnecessary care, they also cut back on preventive care, like immunizations and cancer screenings.

But as with most of the Republican health care plans, there is some good news, so long as you are wealthy and healthy: They are excellent tax shelters, since contributions are either tax-deductible or made with pre-tax dollars and, once you turn 65, there's no penalty to withdraw from the account.

The Plan: Medicaid block grants
Why It's a Bad Idea: Another way to save money—for the federal government, not sick people—is to change Medicaid (government health insurance for people living near or below the federal poverty line) into block grants for states. The ACA tried to expand Medicaid access, opening it to all people in need, but the 2012 Supreme Court ruling that upheld the individual mandate gave states the option to do so—32 states including DC chose to expand and 19 did not.

Tom Price, Trump's pick for Health and Human Services Secretary, and Paul Ryan both have their hearts set on converting Medicaid into block grants, individual pots of money that Ryan insists will be "tailored to meet each state's needs." But that means the federal government would no longer pick up what states can't afford, the way it does with Medicaid, hurting deep red states like Mississippi and West Virginia. The Urban Institute analyzed a previous version of this plan and found that because of the budgetary limitations it poses, between 14.3 and 20.5 million of the poorest Americans would lose Medicaid coverage.

Why would anyone want to do this? "The motivation is that this will give them the opportunity to limit who gets coverage, to limit the benefits that people are eligible for in their coverage, and basically try and cut down on the numbers and coverage people get to save money for states," says John McDonough, professor of the practice of public health at the Harvard T.H. Chan School of Public Health. "It's a terrible idea."

Update 1/13/17: A previous version of this story reported that the resolution passed straight down party lines. Senator Rand Paul (R) actually voted against it.