Donald Trump’s health care plan shows a remarkable ignorance of health insurance markets. Trump’s plan largely revolves around repealing Obamacare and deregulating to remove lines around states to attempt more competition. The glaring problems with this plan are twofold; first it assumes there is more competition in the market than there is, second it ignores the vital role states play in regulating their own healthcare. The result is deregulation as a catchphrase, good for applause lines but with no realistic way of actually working in the market. Trump’s healthcare plan would do more harm than good for consumers and put more money in the pockets of insurance companies.
Over the past year, the Coalition to Protect Patient Choice has been working to block the largest health insurance mergers ever attempted, between Anthem and Cigna and Aetna and Humana. Through these efforts we have become intimately familiar with how different states have different healthcare goals, policies, and regulations. Contrary to how Trump explains his Affordable Care Act fix, lines around states are not arbitrary. Regulating insurance is a responsibility of the states, and state lines represent where the laws of one place end and the laws of another place begin. Each state is a laboratory. crafting what works best for their citizens and borrowing successful ideas from each other.
Donald Trump wants to remove the state lines and allow insurers to compete everywhere. What would removing those lines look like? For starters, regulations would have to become uniform. The process of becoming approved to sell health insurance in a particular state serves as a barrier to entry, which Trump’s plan would want to avoid. That eliminates the need for state insurance commissioners, who work with the Attorney General to enforce insurance laws in their state, as well as staff that monitors reimbursement to providers, approve or deny premium hikes, take consumer complaints, and evaluate mergers.
You could argue that eliminating insurance commissioners is not necessarily disastrous; Trump could ramp up regulation at the newly empowered federal level. All evidence indicates this would not happen. The Trump-Pence ticket has called for a moratorium on new regulation, lower taxes and a decreased role for federal government.
Trump’s plan hinges on a reality that does not exist, because the health insurance industry has become incredibly concentrated over the past ten years. Five companies now capture most of the market, which means that it simply does not meet the minimum requirement to produce what we think of as competition, a force that drives down price and increases quality. Add to that litigation happening now which will decide – after the election but before the inauguration – if that number will be reduced to three. When there are so few options for consumers and employers to choose from, the insurance companies get to call the shots. It is also easier for them to engage in tacit collusion, a price-setting phenomenon which keeps health care costs high.
Consumers have it bad enough as it is when it comes to health care costs. Donald Trump’s plan takes a good first thought – increasing competition – and runs with it in the absolute wrong direction. Deregulation of health insurance will only give the companies more power to overcharge and harm consumers.