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A look at how Trump's specific plans for healthcare could impact the industry.
By abolishing Obamacare-which Donald Trump vows to do-the health insurance industry and providers would be released from its numerous regulations.
According to information on Kaiser Health Foundation’s website, millions of people insured under the Affordable Care Act (ACA) policies, expansion of Medicaid eligibility, or through public subsidies could lose their coverage. In addition, the change would unleash large, economic, quality, and accessibility impacts upon individuals, communities, states, providers, and health plans, Kaiser Health Foundation reports.
“Individuals would lose coverage as subsidies disappear or are reduced dramatically,” says James Smith, MBA, FACHE, executive vice president, GE Healthcare Camden Group, Rochester, New York. “As insurers lose members, they will react as any business by attempting to grow market share and cut costs.”
Smith expects insurers to increase insurance premium prices to help absorb the cost of infrastructures built for a different model of healthcare and for a much larger population. “Because there would no longer be controls over benefits nor would there be limits on administrative costs and caps on profits, it could send premiums as well as out-of-pocket expenses skyrocketing,” Smith says.
Consequently, insurers would have to reallocate costs throughout their companies-forcing layoffs, consolidations, and ultimately bankruptcy for those who cannot change fast enough. “This cascade could lead to consolidation with greater concentration of both health plans and providers as they respond to a necessity to grow even larger and to do it faster to absorb decreasing membership across a set of fixed costs,” Smith says.
Now let’s take a look at how Trump's specific plans for healthcare could impact the industry.
In addition to repealing ObamaCare, Trump would abolish the mandate on individuals to purchase insurance.
If this occurred, according to authors of The Commonwealth Fund Blog, an estimated 12.3 million fewer people would have insurance, which in 2017 would roll back 56% of the insurance gains since the inception of the ACA. Furthermore, individual market enrollment would decline by about 25%, with the largest losses occurring among the young and healthy. Consequently, individual market premiums in 2017 would increase by 8%.
Trumpcare would rely on market forces, including tax deductions and the use of health savings accounts, to limit costs of private insurance coverage, says Joseph M. Mack, MPA, president, Joseph Mack & Associates, Dana Point, California.
“Trump implies that premium costs would be less,” says Mack. “What may actually occur is that insurance companies will design products and premiums in an effort to cherry pick individuals who have higher earnings and present lower risk.”
Trump also proposes to allow the sale of health insurance across state lines, shifting Medicaid from federal to state control, but he would not require insurance companies to develop and sell products to every state or every population.
“Regulating the sale and management of these products might require expanded federal policing-a political philosophy that seems to contradict Republican values-given the fact that the health insurance industry is a part of the banking and finance industry,” says Jay Wolfson, DrPH, JD, distinguished service professor of Public Health, Medicine, and Pharmacy; associate vice president, University of South Florida Health; and senior associate dean, Morsani College of Medicine, University of South Florida, Tampa, Florida.
Says Mack, “This proposal would potentially benefit larger multistate plans already in place. It may also lead to increased consolidation as smaller single state plans struggle to compete with plans with larger risk pools to mitigate losses.”
Furthermore, abolishing restrictions on selling insurance across state lines would require repealing The McCarran Ferguson Act passed by Congress in 1945 that returned insurance regulation to the states to ensure the preeminence of state regulation, he says.