How Clinton's and Trump's Health Plans Would Affect Costs and the Uninsured

Both plans expected to cost more, but Clinton's would insure more people.

September 23, 2016, 6:01 PM

— -- Hillary Clinton and Donald Trump are proposing fundamentally different approaches to health care reform, and their proposals would have dramatically different effects for the uninsured, out-of-pocket costs, and the federal deficit, according to a new analysis by the Rand Corp., a nonpartisan policy think tank.

Researchers examined the insurance coverage and financial implications of maintaining the Affordable Care Act (ACA), as Clinton hopes to do, versus fully repealing the law, as Trump has proposed.

They further analyzed the projected effects of four of Clinton’s central health policy proposals, and three proposals from Trump using Rand’s Compare microsimulation model, which has been used extensively after passage of the ACA to estimate the effects of health care reform.

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The study was sponsored and released by the Commonwealth Fund, a private foundation devoted to improving health care access and quality, especially for low-income and minority Americans.

By repealing the ACA, Trump would eliminate many of the law’s key protections, including those that reduce the cost-sharing burden for people in the individual market, prevent insurers from denying coverage to those with pre-existing conditions, and prohibit insurers from increasing premiums based on sex or health status. In addition to repealing the ACA, Trump has proposed several new reforms, including allowing individuals to deduct insurance premiums from their tax returns, converting Medicaid into a block grant program, and letting insurers sell across state lines.

Researchers analyzed each of these policies in turn and estimated that they would increase the uninsured population by approximately 15 million to 25 million people with disproportionate losses in coverage for low-income individuals and those with pre-existing conditions.

In a statement to ABC News, the Trump campaign argued that it would aim to maintain coverage for those with pre-existing conditions, though did not provide further details.

Repealing the ACA itself would cause the number of uninsured people in fair or poor health to nearly triple, from 2.1 million to 5.8 million, according to the study. Implementing a Medicaid block grant program, in which the federal government gives states a fixed amount of money to fund Medicaid and the Children’s Health Insurance Program, would further increase this number, the study found.

The Trump campaign said the Rand study used an out-of-date baseline funding number to come to this conclusion about the effects of block-grants, but did not offer a different baseline.

People buying insurance in the individual market would face higher out-of-pocket costs, and the federal deficit would increase approximately $0.5 billion up to $41 billion, depending on the policy initiative pursued, according to the report.

“The policies proposed by Donald Trump would reduce the number of insured,” said Professor Christine Eibner, the study’s lead author and senior economist at Rand. “But surprisingly, they also seem to increase the deficit.”

This is largely because while repealing the ACA would reduce spending on insurance and cost-sharing subsidies, it would also eliminate the ACA’s revenue-generating mechanisms, like changes to Medicare payments and taxes on health plans and medical devices. This could change as the proposals become more specific, Eibner said.

“Neither Clinton nor Trump have put their proposals into legislative language,” Eibner noted. “It’s possible that when they put a bill forward, there would be additional provisions that could make up lost revenue.”

Trump campaign officials vehemently disagreed with the report’s findings, arguing that the study “models an imaginary plan.”

“Our health care team in fact never spoke with anyone at either Rand or Commonwealth,” a campaign spokesman told ABC News. “We asked them to delay their report until they spoke with our health care team, but they declined to do so -- preferring to continue based on incorrect information. Their ludicrous claim that 20 million now covered would lose their coverage following a repeal is immediately disproven by the fact that any replacement we would adopt would ensure that those now receiving 'premium support' would be given subsidies or other forms of support to purchase health insurance in the private market through Health Savings Accounts."

Researchers estimate that selling insurance across state lines, one of Trump’s best-known proposals, would lower premiums on the individual market and insure an additional 2 million people. But overall, the number of insured would drop, since millions would lose insurance due to repeal of the ACA, according to the report.

Without requirements for insurers to cover people with pre-existing conditions, the state line policy would also result in 200,000 additional people in poor health losing health insurance, the report found.

With regard to out-of-pocket costs, Trump’s proposed tax deductions tend to benefit those with higher incomes compared to the ACA income-based tax credits, which preferentially help lower-income families and individuals.

“I think this suggests that the ACA has made a lot of headway,” said Dr. Anupam B. Jena, a physician and an economist at Harvard Medical School, who was not involved in the study. “To think about repealing it, you have to be really careful. But that doesn’t mean there aren’t policies to control costs and expand coverage worth entertaining from both parties.”

Clinton has advocated for maintaining the ACA and has further proposed four policies to limit consumers’ out-of-pocket spending. These include introducing cost-sharing tax credits that offset spending above 5 percent of income for everyone with private insurance; reducing the maximum premium contribution for those buying insurance in the marketplaces; giving more families enrolled in employer-sponsored coverage access to tax credits; and creating a government-funded public option to compete with private insurers in the marketplaces.

Each of these policies is likely to increase the number of insured individuals and reduce out-of-pocket spending for consumers, though with variable effects on the federal deficit, according to the analysis.

Unsurprisingly, policies with the largest coverage gains also result in the biggest increases in the federal deficit. For example, Clinton’s proposal to institute cost-sharing tax credits of $2,500 per individual or $5,000 per family for health spending exceeding 5 percent of their annual income would lead to more than 9 million additional people being insured. But the policy would increase the federal deficit by an estimated $90 billion. By contrast, adding a government-funded public option would insure about 400,000 more people and is estimated to decrease the deficit by $0.7 billion.

"Hillary Clinton will build on the health care progress we've made by expanding coverage to millions of Americans who need it and addressing the costs that families face,” a Clinton campaign spokesman said in a statement today. “On the other hand, Donald Trump's proposals would strip coverage away from many more people, including low-income families and those who are already struggling with health problems. That said, there were clearly some faulty assumptions made in this analysis that over-inflated the cost of the plan. Other independent estimates have set the cost vastly lower."

The study authors themselves emphasize that their model makes a number of assumptions and may need to be updated as additional policies are introduced or existing ones become more specific.

“The microsimulation model used in this study is generally very well respected,” Jena said. “There are, however, caveats you have to make with any model when you’re trying to predict the outcome of extremely complex policies. There’s a lot of uncertainty around each input. But broadly, this is probably correct. The numbers may not be exact, but the direction of the estimates is reliable."

Furthermore, several health policy proposals of both candidates were not included in the analysis because they lack specific details, were introduced later in the campaign, or do not directly impact insurance coverage and consumer spending.

“It’s important to know that these policies evolve over time,” Eibner said. “At this stage, things are still preliminary. Policies will crystallize and sharpen, and so will our estimates. Our goal here was to start a conversation.”

Watch the first presidential debate Monday at 9 p.m. ET. Full live coverage and analysis of the debate will begin on at 7 p.m. ET.

ABC News' Candace Smith and Liz Kreutz contributed to this report.

Dhruv Khullar, M.D., M.P.P. is a resident physician at Massachusetts General Hospital and Harvard Medical School. He is also a resident in the ABC News Medical Unit. Follow him on Twitter: @DhruvKhullar. Watch the first presidential debate Monday at 9 p.m. ET. Full live coverage and analysis of the debate will begin on at 7 p.m. ET.

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