With Laura Adams, Senior Insurance Analyst for insuranceQuotes.com
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Clinton vs Trump: The prize-fighting atmosphere of this year’s presidential election process has two opponents glowering at each other from either side of the ring, diametrically opposed in nearly every area. The winner will be determined by either a knock-out margin or a close call. Whomever that victor is, you can be assured that one of the major platform items to be addressed, and one that affects all Americans profoundly, will be healthcare.
Laura Adams, a personal finance expert and senior insurance analyst for insurancequotes.com has great insight into the ideas and proposals of both Hillary Clinton and Donald Trump on this critically important issue.
Simplistically, Donald Trump favors the repeal of Obamacare and Hillary Clinton wants to tweak and expand it.
Before examining the two varying positions, Laura points out that before either candidate can affect change to our healthcare system, there are countless complex laws and regulations on a state-to-state basis that come into play with many of the insurance carriers. In addition to that hurdle, any change or even dissolution of Obamacare must have the support of Congress.
Bear in mind, Laura says, that if Trump is elected and the Republicans retain control of the Congress, probably nothing would block a repeal; however, if the opposite occurs and the Democrats are in control, it’s a different game altogether.
The reality is that higher insurance premiums are expected for next year, largely due to a lack of competition in some areas of the country, but also because of prescription drug costs and a rise in the cost of living. On the positive side, Obamacare has eliminated pre-existing conditions as an exclusionary factor and the percentage of people in the US who are insured is now above 90%, the highest ever. In spite of that, the negatives can’t be ignored. Costs must come down without compromising quality of care and availability for all. One major problem with Obamacare has been the refusal of young people to opt in—whether because of financial concerns or a sense of invincibility. The theory was that the younger, healthier population paying in would balance out the older, sicker people who place the most weight on the healthcare system.
Beyond his insistence that he favors the repeal of Obamacare, Donald Trump hasn’t spelled out his healthcare policy in much detail beyond stating that it would be “something much better”.
Laura goes on to say that, “He has said that he would look at insurance more on a federal basis rather than a state basis, so he’s talking about not letting insurance companies compete state-to-state, not letting an insurer say, ‘Okay, I’m going to do business in North Dakota, but I’m not going to do business in South Dakota,’ and breaking up those state lines would sort of level the playing field with competition. That’s really about as specific as he’s gotten.”
Trump also said he would save $11 billion by taking immigrants out of the system, would exempt health savings account from taxes, and would mandate doctors and hospitals to offer more transparent prices. Laura adds that to her, this sounds like the free-trade system we had in past and that didn’t work very well.
Hillary Clinton then would expand and fine-tune Obamacare by decreasing costs and placing caps on prescription drugs and premium increases. In addition, she would expand Medicare in those states that had chosen to not expand it. This idea is primarily for those consumers who don’t qualify for Obamacare because they earn too much, placing them in a sort of rock-and-a-hard-place position—they can’t afford insurance company premiums and they don’t qualify for Medicaid.
She would also lower the Medicare eligibility age from 65 to 55, taking some older, unhealthier consumers out of the healthcare system and into Medicare, thereby shifting the burden. A controversial item in her proposal is the single-pay option similar to that in Great Britain and Canada where the government is the single payer, a one-stop place where all insurance receipts and payments come through the centralized government.
Those who oppose Clinton’s plan complain that this system is slow and would jeopardize the high quality of medical care now enjoyed in this country.
In conclusion, Laura believes we all need to pay close attention to all sides of this issue. “We pay a great deal of money for healthcare,” she says, “and when our health is not in good shape, when we don’t have the care that we need, it really inhibits the rest of our financial life, our ability to earn income and to really be happy, so this is a very important issue.”
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: As the election rhetoric picks up and finger-pointing and nastiness abounds, I thought we would take a quiet, steady look at the two candidates’ ideas and proposals for healthcare after the election. I’ve asked Laura Adams to join me today. Laura is a nationally recognized personal finance expert and senior insurance analyst for insurancequotes.com. Hey, Laura, welcome to the show.
Laura Adams: Thanks so much. Great to be with you.
Steve Pomeranz: Whoever wins in November, it’s expected that our next president’s going to change healthcare in this nation, and this outcome at the ballot box could affect everything from our insurance premiums and prescription drug costs to whether you receive any coverage at all. Laura, what is truly at stake in November?
Laura Adams: When it comes to healthcare, the entire healthcare system as we know it is really at stake. We’ve got two candidates that could not be further apart when it comes to their vision for healthcare, what they want to see happen, and how they think about the current system that we have. There’s really a lot at stake here for consumers. If you’ve got health coverage and you’ve been able to get it through Obamacare, maybe because you’ve got a pre-existing condition, if that is taken away from you we could be looking at some very unhappy people who may not be able to get coverage or to get it only at a very high rate or to roll back the twenty million Americans who are getting coverage through Obamacare right now. That’s a lot of people who would have some surprises.
Steve Pomeranz: Yeah, I want to get to that in a little while. Really, we’re talking about a black-and-white issue here. It’s either the repeal of Obamacare, as Trump has suggested he wants to do, or the expansion of Obamacare, the tinkering, the fixing, the fine-tuning, and also expanding coverage to more people under the Hillary plan. How much power, let’s use that word I guess, does the president actually have to make these changes?
Laura Adams: It’s not quite as simple as saying, “Let’s push a button and roll back Obamacare.” There’s a lot of very complex laws, rules, regulations on a state-by-state basis that come into play with many many insurance carriers. If Trump were to repeal or eliminate Obamacare, he’s definitely going to need the support of Congress. Earlier this year, the Republican-led Congress did pass a bill to repeal Obamacare which was blocked by President Obama, so that bodes well for a Trump White House, but here’s the thing; it’s possible that the GOP will lose control of the Senate this November. That could complicate things immensely for a Trump plan to roll back Obamacare.
Steve Pomeranz: Yeah. Before Obamacare, how many people were uninsured, and now with Obamacare a few years old, how many people are now insured?
Laura Adams: Prior to the law when things really got rolling—in 2013 is really when we saw things coming into play—prior to that, about seventeen to eighteen percent of Americans were uninsured. Now that Obamacare is really in force we’ve had folks enrolling for several years now, that rate, it’s down significantly. We’re seeing rates as low as ten percent, may even be lower than that as we get into the open enrollment this year and look ahead to 2017. These are some of the lowest uninsured rates that the nation has seen ever.
Steve Pomeranz: I guess the Democrats are seeing this part of it as a success, but also there’s a lot of information out there suggesting significantly higher health insurance costs in the next year. Why are costs rising, and to what extent are they actually expected to rise next year?
Laura Adams: They are expected to rise again next year. This is largely due to lack of competition in many areas. There are some areas of the country where consumers don’t have a lot of choices. Let’s say you’re in a rural area, you may literally have one option on the marketplace, and when an insurance company has that type of power over a given geographic area they can do pretty much whatever they want with rates. Lack of competition in some areas has played into rising rates. Also certainly the cost of healthcare has been rising, in general, the cost of prescription drugs has been rising in this country, all of those play into what it costs to go to the doctor, to get procedures completed. Cost of living increases as well. All of these make medical care more expensive. Unfortunately, while there are a lot more people who are insured as you mentioned, the prices are not cheap.
A lot of people say, “Hey, Obamacare is great, but it’s not affordable for me.” I think that’s the challenge, and I think that’s certainly what Hillary is looking to do if she becomes president. She’s looking to get costs down. She’s really looking to put caps on prescription drug costs, put caps on premium increases, and really try to make the existing system more affordable and more manageable for the everyday American. Somebody who’s just lost their job or who’s self-employed has no options with a group plan, and they’re really on their own as an individual. Just trying to make it more affordable for them.
Steve Pomeranz: The insurance world was quite different prior to Obamacare. Insurance companies priced their risks based upon the population they were serving, so if you were older your insurance would cost more. If you were sick or had conditions, let’s say heart conditions or whatever, insurance would cost more; and for those that were the very sickest, they couldn’t’ get insurance at all, which created its own set of problems, but insurance companies could price accordingly so they could price to risk. Basically, that’s what insurance companies do. If you live in a house in a flood district or you live on the ocean it’s riskier than if you don’t, so home insurance premiums should reflect that or even life insurance premiums. Now with Obamacare, one of the essential positives that they thought was going to help was the fact that even though we have an aging population, if you are now all a sudden bringing in a lot of healthy younger people, then that would help to support the older people in these plans and therefore keep prices at bay, but, in fact, that really hasn’t happened. How come?
Laura Adams: Right. Many young people are not buying in, they’re not saying, “Yes, I want to get coverage.” We really don’t know why, but we think many young people just feel “invincible”. They think, “Gosh, I’m young, I’m healthy, I feel good. I’m not going to need health coverage,” and they say also, “I can’t afford it.” The penalty is there to try to encourage people to get coverage, but when a lot of folks do the math and they look at exactly what that penalty is on an annual basis compared to the premiums on an annual basis they say, “You know what? I’ll take the penalty. It’s less.” That’s not a wise decision, obviously, because any small health issue that may come up, a quick trip to the emergency room could be thousands of dollars and could really be a financial hardship for many people. I do think that trying to get the younger population enrolled is going to be a challenge and that is part of leveling out the risk.
Insurance companies can charge older folks more, but there’s a cap on that. They can only charge them three times as much as they would charge a younger consumer. This has been a challenge to continue to make health insurance profitable for companies. If they’re not profitable, they can’t pay our claims, right? They’re going to go out of business. It also needs to be affordable for the everyday consumer. These are really big, complicated issues that the next president is going to have to deal with.
Steve Pomeranz: The average cost for the Bronze Plan, which is the lowest plan available through Obamacare, was about twenty-five hundred dollars in 2015, but the penalty for not getting it on average was, let’s say, about a thousand dollars. People make the quick math, they say, “Well I’d rather be penalized a thousand bucks than pay twenty-five hundred bucks,” but they’re only thinking in a very limited way because, as you said, one little, even small event could blow that fifteen-hundred-dollar differential way out of the water and can be quite financially dangerous to them. I guess they’re going to have to raise the penalty to equal the premium or something like that.
First of all, let me tell you who I’m talking with. I’m speaking with Laura Adams. She’s a nationally recognized personal finance expert and also senior insurance analyst for insurancequotes.com.
Trump would eliminate Obamacare. What’s he going to put in its place?
Laura Adams: We really don’t know. He hasn’t been very specific. He’s said he would replace it with “something much better”. Not giving a lot of specifics.
Steve Pomeranz: That actually sounds like Trump, right? It’s a vague Trumpism, but go ahead. “Something much better”.
Laura Adams: He has said that he would look at insurance more on a federal basis rather than a state basis, so he’s talking about not letting insurance companies compete state-to-state, not letting an insurer say, “Okay, I’m going to do business in North Dakota, but I’m not going to do business in South Dakota,” and breaking up those state lines would sort of level the playing field with competition. That’s really about as specific as he’s gotten. We know that he would probably shift a lot of it from a federal responsibility to the private sector. That seems a likely strategy for him. We don’t have a lot of specifics, and we do know that he makes it sound like it would be very easy to do, but it’s something that would certainly take multiple years. I don’t think people should fear that next year they’re not going to have health insurance if he were elected. This is something that would take a little time to unravel, but we don’t know specifically what he would replace the current system with.
Steve Pomeranz: He’s looking to take immigrants out of the program. He says that he can save another eleven billion dollars in healthcare costs by just rigorously enforcing existing immigration laws. I know that’s one of the things he’s saying. I know he’s also saying that he would exempt health savings accounts from taxes. He would also mandate that doctors and hospitals be required to offer more transparent prices so patients can shop for more affordable healthcare services. All this sounds pretty good, sounds like a free-trade idea, kind of a capitalist idea, but we kind of had that in the past. I don’t see that that was necessarily working all that well.
Laura Adams: Right. It doesn’t seem much different from what we’ve had. I think that what we need to really consider with our next president is, what is their plan, and also what support are they going to get from Congress? This is key. Are they going to have the ability to really bring both sides together if we’ve got a divided House and look at, “How can we work together to come up with solutions?” Obamacare is a very large law, and it contains a lot of information outside of healthcare. It has to do with things like student loans and a lot of other financial issues that many consumers don’t realize are even in that law, so there’s a lot there to unravel.
Steve Pomeranz: Wow, that’s for sure. What is Clinton’s plan? I know she is firmly behind Obamacare, and she wants to actually expand Obamacare. Tell us a little bit about that.
Laura Adams: One thing that she has talked a lot about is expanding Medicaid in the states that chose not to expand it. There are consumers out there who do not qualify for Obamacare because they earn too much money to get a subsidy, so they can’t afford it, but yet they still don’t qualify for Medicaid, and that could be because they’re not a parent, for instance. There are some states that have left millions of people just hanging out there without coverage. She has said that she’s going to close that gap, so she’s going to make sure that those states that did not expand coverage do it even if that takes federal funds.
She’s also talking about looking at Medicare in a new way. She’s looking at lowering the eligibility age from sixty-five to fifty-five. In essence, that would take some of the older perhaps unhealthier Americans out of the healthcare system and putting them into the Medicare program a decade earlier, shifting that burden away. As I mentioned earlier, she’s definitely looking at capping increases on prescription drugs and premium increases. Ultimately, she wants a public option for Americans-
Steve Pomeranz: What does that mean? We hear that term a lot, “a public option”, what does that actually mean?
Laura Adams: That means healthcare that is completely offered by the federal government, so instead of getting your coverage from a private insurance company you would be getting it through the federal government. Think of Medicare, think of the way that operates today, and then sort of imagine that expanded out to every American. That’s really what she’s going for, and I think it’s not likely that that could happen in one fell swoop. We’ll probably have sort of a transition and multiple options for consumers before we were to get there one hundred percent.
Steve Pomeranz: It’s also called “single payer” insurance, single payer being the government, in this case. I guess it would be similar in a large degree to what Great Britain has with the National Health Service, what Canada has, more of that one-stop place where all insurance receipts and payments come through the centralized government.
Laura Adams: That’s it, and opponents to that say, “Well, look at other countries.” They’ve got very slow-working systems. You’ve got people who are waiting for very serious procedures, and they say, “Hey, they’re coming to the United States for procedures.” There are definitely pros and cons on all sides of this issue. It’s definitely something that all Americans need to think carefully about. What do we want our future healthcare to look like? For many of us, this is one of the most important economic issues in our lives. We pay a great deal of money for healthcare, and when our health is not in good shape, when we don’t have the care that we need, it really inhibits the rest of our financial life, our ability to earn income and to really be happy, so this is a very important issue.
Steve Pomeranz: You talk about the complexity of these issues. On the face of it, it sounds good, “We’ll lower the age for eligibility of Medicare from sixty-five to fifty-five,” and everybody’s like, “Whoa, that’s really great. I’m fifty-five years old, I’ll be able to get Medicare and that’s fine.” Whether that is an added cost or something that benefits the budget is a question, but when you think about that, just that alone would create so much more competition for doctors because all these new people would be entering the Medicare system. I know there’s—at least in my area which is South Florida, which is very heavily in the Medicare camp, to say the least— getting a doctor’s appointment is hard enough and even the level of service is sometimes questionable under Medicare. Adding all of these new people to the Medicare rolls I think would be very problematical.
My guest Laura Adams has joined me today, and, Laura, you’ve done a fine job telling us and helping us understand the difference between the two candidates. Laura is a senior insurance analyst for insurancequotes.com. Thanks for joining us.
Laura Adams: Thanks so much for having me.
Steve Pomeranz: To join the conversation and to hear this segment again and to find out more information about Clint versus Trump with regards to all things financial, don’t forget to join us at onthemoneyradio.org or now at stevepomeran,.com. Thanks, Laura.
Laura Adams:Thanks, Steve, you’re terrific. I appreciate it.
Steve Pomeranz: Thank you, bye.