Consumer Confidential With David Lazarus
Column

Cheaper, better 'insurance for everybody'? Good luck with that

Let’s give Donald Trump, who will be sworn in Friday as the 45th president of the United States, the benefit of the doubt.

Let’s take him at his word that he has a plan to provide “insurance for everybody” that is “much less expensive and much better,” as he said in an interview with the Washington Post.

How will he do it? Trump didn’t reveal any details, except to declare that Americans will be “beautifully covered.”

So I turned to several prominent healthcare experts — people who, unlike Trump, have spent many years studying this stuff — and asked how you’d cover everyone and do it better than current insurance plans and for less money.

The experts were unanimous.

It can’t be done.

“You can do cheaper,” said Nadereh Pourat, director of research at the UCLA Center for Health Policy Research. “Or you can do better. You can’t do both.”

She was speaking with an understanding that Trump and Republican lawmakers are not open to a single-payer, Medicare-for-all approach, which would indeed extend coverage to everyone for less than what most people currently pay.

“I don’t want single-payer,” Trump said.

Presumably, then, he foresees universal coverage being provided by for-profit insurers — the same companies that, prior to Obamacare, denied coverage to people with preexisting conditions or pulled coverage once people got sick.

He also has found a way to make coverage affordable to people with preexisting conditions without relying on premiums from healthy people to offset those costs.

“I don’t see how that works,” said Dana Goldman, director of the USC Schaeffer Center for Health Policy and Economics. “In order for insurance to work, you have to get healthy people into the risk pool. If you don’t mandate that they get there or provide a good enough carrot to get them there, the whole thing falls apart.”

Republican lawmakers have floated various ideas that could be part of whatever is being cooked up to replace the Affordable Care Act, which they’re determined to repeal as quickly as possible.

The buzz words for Republicans lately have been “universal access,” which is not the same as universal coverage. Universal coverage means everyone has health insurance. Most other developed nations accomplish this through single-payer systems.

“Our goal here is to make sure that everybody can buy coverage or find coverage if they choose to,” a House leadership aide explained to reporters at a Republican healthcare briefing last month. The aide bravely spoke on condition of anonymity.

So Trump and Republican lawmakers are saying that everyone will have a chance to buy insurance that’s cheaper and better. But here’s where things get hinky.

What they’re apparently talking about are high-deductible plans attached to health savings accounts. Such plans typically have lower monthly premiums because the policyholder may be responsible for the first $5,000, $10,000 or more in healthcare expenses.

That can be attractive to healthy people, for whom such plans serve as a safety net in case of catastrophic illness, such as a heart attack or a cancer diagnosis.

High-deductible plans can be disastrous for anyone with a preexisting condition, who will be exposed to the full cost of healthcare until their deductible is met. That can mean financial ruin for many working families.

Moreover, how do you guarantee that people with preexisting conditions would even be able to obtain insurance? Obamacare required that insurers make coverage available to everyone, but it did this with a mandate that almost everyone buy insurance, thus reducing insurers’ risk by bringing in more healthy people.

Trump hasn’t said how he’d address the problem.

“We’re going to have insurance for everybody,” he told the Post. “There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.”

He added that people “can expect to have great healthcare. It will be in a much simplified form. Much less expensive and much better.” Policyholders will enjoy “lower numbers, much lower deductibles.”

Most healthcare experts believe Republicans will tackle preexisting conditions with a return to so-called high-risk pools — state or federal groupings of sick people. There’s just one problem with such systems.

“They don’t work,” said Shana Charles, an assistant professor of health sciences at Cal State Fullerton. “We have decades of data showing that high-risk pools don’t cover enough people and are too expensive.”

Without premiums paid by healthy people to lower costs, rates for sick people within high-risk pools quickly skyrocket and become unaffordable, even with subsidies.

Before high-risk pools were made obsolete by Obamacare, California had one called the Major Risk Medical Insurance Program.

The program was perpetually underfunded, meaning that it had to limit how many people could be covered at any one time, usually only about 7,000. Thousands more were stuck on waiting lists.

And even when people obtained coverage under the program, monthly premiums would run as much as $1,000, annual coverage would be capped at $75,000 and there would be a lifetime limit of $750,000.

So what might Trump try instead?

USC’s Goldman proposed that basic coverage be available to all, with deductibles pegged to people’s income. The wealthier you are, the higher your deductible. The poorer you are, the lower your deductible.

As a result the rich would subsidize the poor — as opposed to the healthy subsidizing the sick — and would be able to augment their own coverage with supplemental insurance plans.

Cal State’s Charles said the only realistic solution for offering affordable coverage to everyone is a Medicare-for-all approach. To make it politically palatable to conservatives, she said, “just don’t call it single-payer.”

Both of those ideas have merit. And as Charles said, “All other ideas involving the private sector have been tried.”

Trump said what he wants “is to be able to take care of people.”

Let’s give him the benefit of the doubt. Let’s hope he proves worthy of our trust.

 

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