Good morning Hank, it's Tuesday. Let's talk about the health care proposals of Donald Trump and Hilary Clinton, but first, I should say
that if you're interested in healthcare or health in general, you should check out Healthcare Triage, hosted by Dr. Aaron Caroll (it's an amazing show).

OK! To understand their health care proposals, we need to look at the current health care system and its problems, so journey back with me to 2008. At the time, most Americans got insurance through private companies. There was a publicly-funded program for the elderly to get insurance called Medicare. Many low-income families got coverage through a publicly-funded program called Medicaid, and about fifteen percent of Americans had no health insurance at all. 

So broadly speaking, back in 2008, our health care system had three huge problems. The first was those fifteen percent of people without insurance. Many people who didn't work for big companies, including me, literally could not get health insurance for any price because private insurers could deny you based on pre-existing conditions and for many other people, private insurance plans were just too expensive to afford.

And that brings me to our second big problem back in 2008 which was that our health care just costs too much. We're spending sixteen percent of our nation's total economic output on healthcare. Most other rich nations spend under ten percent. Like out health care costs were so stupifyingly high that in the United States more tax dollars per capita went to health care spending than Germany, Japan, the United Kingdom, or Canada. All those countries spending fewer tax dollars per person on health care had universal publicly-funded health care. The United States had nothing close to that. Also, lastly, for all this money we were spending not to insure everyone, we weren't getting particularly good health care outcomes. Like, by almost any measure from life expectancy to medical errors to hospital admissions for preventable diseases, the United States was not near the top. 

So then comes the Affordable Care Act of 2009 [2010, actually!] which was designed to address some of these problems, with the emphasis on the some. The ACA was primarily designed to get more people health insurance. About half of the newly insured were supposed to get Medicaid, which was expanded to include everyone making up to 138% of the poverty line and the other half was supposed to get insurance through exchanges, these marketplaces where everyone could get health insurance regardless of pre-existing conditions. And the insurance would be affordable because households making up to 400% of the poverty line would have their insurance costs subsidized by the government on these exchanges. The ACA also sought to reduce spending by lowering costs within Medicare and it raised some new taxes including one on medical devices.

So that let the rest of the US health care system largely unchanged. So that was the basic idea. Now, the ACA has never been fully implemented because a 2012 Supreme Court decision made the Medicaid expansion optional for states and 19 states have so far declined to do it, which means that millions of poor Americans remain uninsured. That said, the ACA has been successful at reducing the number of uninsured people. Today it's around 9.1 percent. And it may have played a role - although experts disagree about this - in the slowing growth of health care costs in the United States. For the 20 years before 2008, health care costs in the United States rose by an average of 8 percent; in the last five years, they've risen by an average of 5.5 percent. 

But to be clear, costs are still rising faster than inflation and median weekly earnings. Health care outcomes continue to lag behind and our health care system is still far, far more expensive than any other nation on Earth, although the gap with Europe has closed a bit.

The ACA wasn't really designed to address those problems - and it hasn't. And there are other problems too. In the employer market, premiums and deductibles are rising as employers cover on average a smaller percentage of health care expenses than they did 10 years ago. On the exchanges, some insurance companies are offering fewer plans and because insurers are now required to offer comprehensive coverage with no lifetime benefit limits, many people who previously had bare bones insurance plans have seen their insurance costs go way up.

These are all real problems, but it's very important to understand that the structural shortcomings of the United States health care system are much, much older than Obamacare. The ACA is not the reason our health care costs are so high and we know that because they were very high before the ACA.

So with all that in mind, let's look at both candidates' health care reform proposals using analysis from the RAND Corporation, which is non-partisan and widely considered centrist.

Let's start with Trump's plan. First, he would repeal the ACA. Now Trump has said he’ll find ways to make sure that private insurers continue offering plans to people with pre-existing conditions but he hasn't said how this would be possible. Trump would also change the way Medicaid is funded to block grants. This would basically mean that states get to administer their own Medicaid programs but most analyses see these block grants over time involving lots of cuts. And lastly, Trump would allow insurance companies to sell plans across state lines and he would also make all health insurance premiums tax deductible.

But remember these are deductions, not tax credits, so they would mostly benefit people with high incomes for reasons explained in this video. Altogether, RAND analysis concludes, and I'm just gonna quote here, "The Trump proposals decrease the number of insured, increase the out-of-pocket spending for consumers enrolled in individual market plans, and raise the federal deficit compared to the ACA."

So here's how around 19.7 million people would lose their insurance if the ACA were repealed and Medicaid block grants would probably increase the number of uninsured further.

Sales of plans across state lines and tax deductible premiums would get some people insured but all in all, RAND concludes that about 20.3 million fewer Americans would have health insurance under Trump's plan.

Out-of-pocket expenses would go up according to RAND for two reasons. First, because the tax deductions offered by the Trump plan are less generous than the tax credits offered by the ACA. And secondly, they estimate that sales of plans across state lines would raise out-of-pocket expenses because there would be an increase in the so-called bare-bones plans. These are plans with high co-pays or deductibles or limits to annual or lifetime benefits. RAND estimates that the average annual out-of-pocket expenses per person including deductibles and co-pays and insurance premiums and everything would go from about $3,200 per person to $5,700 per person.

And the deficit would go up because with the repeal of the ACA, the taxes it raised would also be repealed as would the changes in Medicare reimbursement. This would lower some taxes but most of the savings were in changes to Medicare. So all in all, under Trump's plan according to RAND, the deficit would go up by about 5.8 billion dollars. And I should add that all the non-partisan analyses I could find agreed on all three fronts: That Trump's plan would reduce the number of insured people, increase out-of-pocket costs, and increase the deficit.

Okay let's move on to Hillary Clinton's proposals. Clinton would amend the ACA in three big ways. First, she would introduce a $2,500 tax credit or $5,000 for married couples filing jointly that could be applied to health care expenses over 5% of income. So if you're a single person making $50,000 a year and you pay $5,000 a year in health insurance premiums, you would get a $2,500 tax credit. Because this is a tax credit and not a deduction, it would be available to everyone, not just high-income households, but that also means it would be more expensive. 

Secondly, Clinton would reduce the marketplace premium maximum. I know this is a little confusing, healthcare policy makes tax policy look like a pleasant walk in the park. But basically, right now the cost of health insurance premiums on the marketplace exchanges is effectively capped at 9.6% of income. To not benefit from the cap, a family of four has to make $96,000 a year or more. Basically Clinton's plan would lower the cap from 9.6% to 8.5% for most households, but of course that program would also cost money. 

And then lastly, and maybe most interestingly, Clinton would offer a public insurance option on the exchanges. This would allow anyone, not just seniors and low-income people, to get their insurance from the government. RAND hasn't yet updated its analysis on the public option, but basically it would probably be cheaper than private insurance because it would share administrative costs with Medicare. And so it would slightly reduce the deficit by reducing health care subsidies. So all in all, according to RAND, I'm just gonna quote again, "All of the policies considered increase the number of insured people and reduce consumers' out-of-pocket spending on health care." 

RAND estimates that the Clinton tax credit alone would lead to 9.6 million more people getting health insurance and that households of all income levels would see their out-of-pocket health care expenses go down. The biggest reduction in health care costs would be for families making between 30 and 60 thousand dollars a year but they would go down for everyone. But of course these programs would also increase the federal deficit by what RAND estimates to be 90 billion dollars. 


So that is RAND's summary. Trump's plan would lead to significantly higher out-of-pocket costs, fewer insured people and a modestly higher budget deficit. Clinton's plan would insure more people, lower out-of-pocket costs but raise the deficit more. But of course you have to consider those deficits in the broader contexts of the candidates' budget and tax proposals, and to be clear overall under Trump's proposals the budget deficit would be trillions of dollars more than under Clinton's proposals.

The other question of course is will either of these proposals significantly reduce the overall cost of U.S. health care, and the answer is probably not. The Trump campaign will argue that selling policies across state lines will increase competition but that is deeply contested. And also, even in the rosiest projections, it wouldn't decrease spending much. The Clinton campaign, meanwhile, will say that a public option would put real price pressure on private insurers, and it might but I'll put a link in the doobly-doo explaining why a single-pair health care system would not magically fix the U.S.' problems.

The truth is this is a complicated, multi-faceted problem and anyone trying to sell you simple solutions probably isn't telling you the whole story. And that includes me, by the way, this is definitely only an introduction. If you want to learn much more about health care policy and health insurance and different strategies for dealing with it, check out Healthcare Triage. They've got a great video out now about Medicaid's return on investment and next week they'll have a much more comprehensive analysis on the candidates' health care plan so subscribe to them. You can find sources as well as information about how to vote in the doobly-doo below.

Hank, I will see you on Friday, unless you have a child in the interim. End screen! Hank always says I need an end screen so I've put some videos here about health insurance, why you need it, what the health care system in the United States is like, why it's so incredibly complicated, also if you're looking for a hot slice of tax policy that video is just one click away. And! Rosianna drew you a bunny to cheer you up. Thanks Rosianna.