Asked to explain his health-care proposal during the presidential debate, Donald Trump said, “I have concepts of a plan. I’m not president right now. But if we come up with something I would only change it if we come up with something better and less expensive.” This is even less specific than when he said in 2016 that he wanted to do away with “lines around the states.”
There are ways to make health care better and less expensive than it is, but the only chance to do so is for Republicans to present an alternative to government control. Unfortunately, the inability to articulate such an alternative has been a problem for Republicans that, while it dates back further than Trump, he is only exacerbating.
The hybrid U.S. health-care system, which accounts for one-sixth of the U.S. economy, is a confusing mess. It lacks the government-imposed cost restraints that, while impairing quality and access, can help contain spending in fully socialized systems. But the state still has a large enough role to stifle the sort of market innovation that has led to lower costs and better quality in many other sectors of the economy, such as transportation, technology, and communications.
Ever since Republicans failed to repeal and replace Obamacare, they have been in a bit of a holding pattern on health-care policy. With time, the appetite for full repeal has waned, especially as Tea Party members who were elected on promises to get rid of the law have been replaced by more populist members of the caucus who are less hostile to the welfare state. Yet at the same time, Republicans still don’t want to come right out and say that Obamacare is here to stay and they will work to make it less bad.
The fundamental problem with Obamacare is that instead of improving quality of care and reducing costs, it imposed a raft of new rules that made everything more expensive, and then offered subsidies so that taxpayers would absorb those higher costs. When the cost of premiums was too high to be covered by the subsidies, rather than address the underlying cost issue, Biden simply expanded the subsidies. While first passed as a “temporary” Covid measure, and then extended in the Inflation Reduction Act, this expansion of subsidies is something Harris wants to make permanent (at a cost of $335 billion over a decade).
The central driver of the increase in premiums is that Obamacare forces insurers to cover older and sicker individuals and to offer a wide array of benefits, while capping the prices they can be charged. This increases the costs on younger and healthier individuals who no longer have the option of purchasing less expensive plans that are more tailored to their limited health-care needs. After repeal failed, the Trump administration made some headway by expanding the number of months individuals could use short-term plans that aren’t subject to the same regulatory requirements, but the Biden administration clawed that back.
With a better command of the facts, Trump could use this as an opportunity to contrast the costly and restrictive approach of Biden and Harris with an approach aimed at reducing costs and providing more choices to consumers. Yet instead of talking about additional ideas to reduce the regulatory burden of Obamacare, Trump has only advocated adding to it. In his attempt to take away the IVF issue, Trump proposed free IVF for everybody by either direct government payment or forcing insurers to cover the treatments — which would be among the most expensive mandated benefits the government could require.
While fully liberating the health-care system would require repealing Obamacare, given that Republicans don’t seem to have the appetite for that, another option would be to revisit ideas to provide more choice within Obamacare — for instance, adding a cheaper “copper” plan to the platinum, gold, silver, and bronze options on the program’s insurance exchanges.
Trump could also propose to address the tax treatment of health insurance by loosening restrictions on tax-free health savings accounts. Ideas would include raising the current limits of $4,150 for individuals and $8,300 for families; removing the requirement that HSAs can only be opened by those who have high-deductible insurance policies; and allowing individuals to use the funds toward the payment of premiums. Depending on how far Republicans would want to go, these proposals would all have revenue effects. But those could be offset by Medicaid reforms aimed at lowering the rate of spending growth. They could also consider expanding Medicare Advantage as part of an effort to at least dip their toes into entitlement reform.
Whatever the ultimate package of ideas, Trump and his fellow Republicans would be much better off advancing a clear vision for health-care policy than muttering about “concepts of a plan” and letting Harris off scot-free for her prior support for the elimination of private insurance and current support for a $335 billion Obamacare expansion. As we’ve seen time and again, when Republicans don’t advance their own health-care policies, big-government progressives are happy to fill the void.