Trumpcare is Better than Obamacare

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I wanted to wait for some time before giving my reaction to Trumpcare so I can take a look at the actual proposals instead of making a knee jerk reaction. The truth is that Trumpcare is better than Obamacare. Unfortunately it is not that much better than Obamacare so I cannot support it. It does do away with the worst portion of Obamacare but it does not fix the main issues causing our healthcare costs to rise. There is little point to replacing a flawed system with a slightly less flawed system. It would be better to just let Obamacare implode.

The Good

Rising Uninsured 

Believe it or not this is a good thing. The main problem with Obamacare was that it forced everyone to get insurance. You did not have to want it or find it particularly useful but you were forced to get it. This meant that the insurance companies, many of whom had a monopoly in their individual markets, could offer you whatever it wanted and you would be forced to purchase it. It was your tough luck if the product they offered had a deductible that was too high or doctors you did not want to visit. In a regular market the consumer would be able to correct this behavior by the company, by refusing to buy the product. Under Obamacare if you did not care for the product offered Obama would hit you with his tax or penalty until you gave in and purchased the inferior product.

Trumpcare gives the power of choice back to the consumer. If the product is terrible then you can refuse to purchase it. The insurance companies will have to offer a better product to get these consumers to purchase it again instead of having a literal captive market. It turns out that if you actually offer people a choice some of them may opt not to purchase insurance and this is a perfectly valid and rational choice depending on what the product actually offered is. Theoretically you could mandate one insurance company to have a monopoly and provide insurance to everyone in the US. They would be worse than Obamacare plans with deductibles of 200k and one doctor available in the middle of nowhere but they would cover everyone with insurance they can’t use. Quality of insurance matters as well.  As a general rule the life expectancy in the US goes up every year since the 1980’s. In 2016, under Obamacare, the life expectancy dropped.

The only people who would lose insurance under Trumpcare are those who did not want insurance in the first place. They are those who were only forced to buy substandard insurance by the gun the government pointed to their head. It is important to note that the provisions that allowed previously uninsurable people to get insurance are still there. If they want to continue their older plans they still can. The rest should get better plans as the insurance companies are forced to compete with each other.

Age vs Income

ANother important change is that subsidies are now based on age and not on income. All things being equal the younger person will have a lower premium than the older person. The younger one tends to be healthier and use insurance less than the older one so the insurance company charges a lower price for them. Restructuring the subsidies means that they reach the older people who would need them more. The younger ones who pay less will get lower subsidies and if they still needed more help they would most likely qualify for medicaid, medicare, or some other program.

The Bad

While Trumpcare does force companies to compete for their customers it still does not solve the structural issues which raise the cost of healthcare. Earlier on I wrote another article on the alt right view for Obamacare. I understand we will not be getting everything on the wish list as we are just one component of the Trump coalition. At a bare minimum I would expect there to be price controls for drugs or price transparency between hospitals for any bills to get our support.

Price Controls

Americans pay ten times more than other countries for their medicines. Drugs make up around 10-20% of total medical costs. Pharmaceutical companies have gone on the record and said that they need to charge Americans this outrageous amount to make up for the costs of developing new drugs. There is no reason why American citizens should bear this cost alone. The whole world benefits from new drugs and other countries must step up and bear their portion of the cost.

I understand if it is too difficult to set a whole set of prices out of the blue therefore we can include a standard set on the average of other countries. For example the price of a certain drug x cannot exceed the average of the selling price of the drug in Britain, France, Germany, and Japan. If the government is able to negotiate lower prices then great but at the very least Trumpcare would set a ceiling.

Hospital Price Transparency 

Everything gets cheaper with more competition. We want the insurance companies to compete with each other to lower prices. We want to remove the monopoly of drug companies in the country and get prices for medicine from the rest of the world. Hospital care and procedures would be the next price point that can be lowered with competition.

As things stand it is next to impossible to get a quotation from a hospital for procedures done. Most, if not all, hospitals will not even give you a list in their websites of what they charge per procedure. You usually only find one right before or right after the things are done to you. How can competition exist when customers are not aware of the price of the items? As part of Trumpcare we would like to see a requirement where hospitals are forced to list their base prices in their websites and give quotations upon request.

Reducing the cost of healthcare is not limited to insurance. We can actually reduce the cost of the components of healthcare. Either or preferably both of these in Trumpcare would lower the bill for everyone.

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