Republican Healthcare Plans

I have previously written about the enhanced premium tax credits that were part of the American Rescue Plan Act that was passed in 2021. These credits are due to expire at the end of this year, resulting in significant premium hikes for millions of families that purchase health insurance through health insurance marketplaces. The Democrats had made extending these credits their price for voting to reopen the government. Ultimately, a handful of Democrats capitulated in exchange for the promise of a vote to extend the credits. That vote will more than likely fail. But most Republicans on Capitol Hill seem to understand the danger to their electoral prospects that will result from an expiration of the credits. Most recipients of the tax credits live in red states with the two largest populations being in Florida and Texas. Therefore, Republicans, including cult leader, convicted felon, and failed President Donald Trump, are eager to find a way to keep premiums affordable. Today I am going to review where things stand with Republican healthcare initiatives.

The most important thing to understand about Republican healthcare plans is that none of the top Republicans, including some who are fairly intelligent and otherwise reasonably competent, seem to understand the basics of health insurance and healthcare. As a result, many of the ideas they have presented are simply ludicrous. As someone who has purchased health insurance on the DC healthcare exchange since 2014 and received the enhanced subsidies since 2021, I have firsthand experience that these Republicans quite obviously lack. My experience is probably fairly similar to others who purchase insurance on the exchanges. Since 2021, almost everyone who purchased insurance in this manner also receives premium tax credits. I have repeatedly heard Republican lawmakers say things about the exchanges and the tax credits that are simply not true. I don't think they are lying. Rather, I believe that they are just uninformed.

The second most important thing to understand is that the Republicans don't have a healthcare plan. Trump famously said during one of the presidential debates that he has "concepts of a plan." Based on what I have observed, even that is an exaggeration. Republicans have a few, often contradictory, ideas. Moreover, to actually lower costs for healthcare, almost all aspects of the system would need to be addressed. For the moment, Republicans are focused almost exclusively on premiums. The premium increase is the time bomb in their hands that they are seeking to defuse before it explodes. While they may succeed in that task, nothing they are suggesting is likely to actually impact the cost of healthcare.

The most coherent Republican healthcare plan — which should not be confused with suggesting that the plan is in any way coherent — has been provided by Trump. I will quote it in full:

THE ONLY HEALTHCARE I WILL SUPPORT OR APPROVE IS SENDING THE MONEY DIRECTLY BACK TO THE PEOPLE, WITH NOTHING GOING TO THE BIG, FAT, RICH INSURANCE COMPANIES, WHO HAVE MADE $TRILLIONS, AND RIPPED OFF AMERICA LONG ENOUGH. THE PEOPLE WILL BE ALLOWED TO NEGOTIATE AND BUY THEIR OWN, MUCH BETTER, INSURANCE. POWER TO THE PEOPLE! Congress, do not waste your time and energy on anything else. This is the only way to have great Healthcare in America!!! GET IT DONE, NOW. President DJT

One problem with Trump's plan should be immediately obvious. He suggests preventing money from going to the insurance companies by having consumers buy insurance from insurance companies. Is any further evidence of Trump's reduced cognitive state needed after reading this? To give the President the benefit of the doubt, he seems to believe that consumers will get better deals by negotiating with insurance companies. This is an indication that Trump has no clue about health insurance. I will illustrate this by describing my own experience buying insurance both on the exchange and directly from an insurance company.

First, I will describe the healthcare exchanges, also called health insurance marketplaces. Prior to the annual purchasing period, health insurance companies prepare plans for the exchanges. All of these plans must meet a list of requirements. Plans are categorized as bronze, silver, gold, and platinum, with bronze being the least expensive and having the fewest benefits. Generally, the lower the category, the higher copays and cost-sharing are for the plan, but the lower the premiums. Within each category, companies can offer multiple plans. There might be plans that work with health savings accounts, HMO-style plans, PPO plans, and so on.

When the exchanges open for the annual "open season," consumers can review the plans available and choose the one that works best for them. A young person who is generally healthy might select a plan that has low premiums but high copays based on the expectation that few medical visits would occur. An older person might look for lower copays and better prescription drug coverage. Some families might be happy with a local network of doctors while others might require a national network. The point is that consumers can choose the best combination of cost and benefits for their own needs.

The DC exchange, called DC Health Link, initially opened with four different insurance companies offering plans to individuals and families. Over the years, this has been reduced to just two. However, there is still a pretty good selection of plans. For instance, there are currently seven bronze plans and five silver plans. There are ten gold plans and three platinum. That means that there are a total of 25 plans from which to select. Unfortunately, none of them are particularly cheap. The cheapest bronze plan has a monthly premium of $2748.47 for my family of four. The silver plan, similar to our existing insurance, has a premium of $3315.19 per month.

Initially, the Affordable Care Act contained premium tax credits for families making up to 400% of the poverty rate. However, as premiums rose, many families who were not eligible for credits struggled to pay the costs. My family, for instance, switched from a silver plan to a bronze plan at that time. This problem was addressed by enhanced premium tax credits included in the American Rescue Plan Act. The income limit was removed and, instead, a formula that ensured that families did not pay more than 8.5% of their income was utilized. Subsidies were provided to cover the gap between the cost of the second lowest-priced silver plan and the 8.5% cutoff. In practice, consumers would complete a cost-sharing document at the time they selected their insurance. Consumers would pay the premium at the cost after the credits, which were paid directly to the insurance company. Then, the credits would be reported on income tax forms and either increased or reduced based on the family's actual reported income.

There are a number of important points of purchasing on an exchange that I want to emphasize. First of all, all plans are ACA-compatible, which means they will have a number of desirable features (e.g. preventative care is usually free). Second, it is a one-stop marketplace. As a consumer, I have a single website through which I can apply for cost-sharing, review 25 different plans, and select the best plan for my family.

What Trump proposes is that instead of extending the enhanced premium tax credits, they be allowed to expire. In their place will be direct transfers of cash from the government to consumers, probably deposited into a HSA account. Consumers will then negotiate directly with insurance companies. How much money will be deposited? We don't know? Who will be eligible for it? We don't know. What restrictions will be placed on the funds? We don't know. Basically, the answer to almost any question about this plan is "we don't know."

Let's assume that the government will not hand out money willy-nilly (maybe not a good assumption). There will need to be a means of determining who should receive the money and how much. Presumably, this can be a form similar to the current cost-sharing application. If so, that means that consumers will be required to go to one website to complete that form. But what about the next step, actually buying the insurance?

As it happens, I also have experience buying insurance directly from an insurance company. A year ago, my dentist dropped the dental insurance that I had been purchasing through DC Health Link. There were very few dental plans available to individuals and families on the exchange, and my dentist only took one of them. That one was quite expensive. Therefore, I started checking the websites of the companies whose insurance she does accept. That was a long list. I visited website after website to check dental plans. What I found is that there were plans for Maryland, plans for DC, plans for federal employees, and various other plans with different restrictions. I frequently could not tell whether or not I was eligible for a plan. Making things more complicated, while my dentist might accept plans from a certain company, she normally doesn't accept all plans from that company. Even worse, in many cases, she was not sure which specific plans she accepted and which she didn't. The lists of doctors that the insurance companies provide were almost always out-of-date.

Once I compiled a list of plans from a variety of companies that I thought my dentist accepted, I had to compare them to choose the one that best met my family's needs. On the exchange, you can compare a number of plans side by side and easily evaluate the features of each. However, I was now dealing with plans from different companies. The companies did not have a common method of listing plan features. I had to create a spreadsheet and enter data manually. This was time-consuming and labor-intensive. I found a lot of strange restrictions on plans. When buying on the exchange during open season, the insurance will begin on January 1, no question about it. However, dental plans available directly from insurance companies often had a three-month period or so during which claims would not be accepted. I eliminated all such plans because I did not want my family to be without dental insurance, even for a short time. In the end, I selected a plan that was almost the exact cost of the plan that I had previously purchased on the exchange (but that my dentist had dropped), but had far fewer benefits. Even after all of this, I was still not sure that my dentist would actually accept the plan until she made the first claim.

Needless to say, I much prefer the experience of buying insurance on the healthcare exchange. Trump seems to believe that someone like me could call an insurance company and negotiate the price of a plan. I cannot imagine that working. Simply getting an actual person on the phone at these companies is often a challenge, and when you do, that person will have no interest in negotiating a price. The negotiating would consist of me proposing a price and them suggesting that I might be better off obtaining mental health insurance.

The bottom line is that Republicans will either do nothing, in which case voters all over the country will receive huge premium increases that they will still be paying when they go to vote in November, or Republicans will make changes that will make things even worse, which voters will also remember in November. The third possibility, which is actually the best, is that they will extend the current credits, at least temporarily, and then begin a more serious process of creating their own plan. That would require Republicans to disabuse Trump of the notion that Americans are eager to negotiate personally with health insurance companies. But maybe they can just pass legislation, bring it to Trump's office, and then say something like "What nice fake gold trim you have on the wall" while placing the bill on his desk for a signature. Trump recently confessed to not knowing who he had just pardoned. Does he really need to know what legislation he is signing?