Will Trump's Big Health Care Plan Give You Money Trouble?

On Monday, President Donald Trump addressed a joint session of Congress (and the nation). In his speech, he shared his blueprint for the country’s future.

Many of his remarks centered on national security, jobs and taxes, but the item on many minds was health care.

Following a spate of town hall meetings in which angry constituents confronted their Republican representatives, Trump laid out his vision for replacing the Affordable Care Act (ACA, also called Obamacare).

Trump’s health care plan, if enacted by the Republican-controlled Congress, is likely to have an impact on your bottom line. Here’s how.

5 Health Care Principles in Donald Trump’s Speech

Trump’s speech to Congress included five principles he wants to see in the ACA’s replacement plan.

1. Keep Coverage for Pre-Existing Conditions

Trump insists that any replacement of the ACA should keep the coverage requirement for pre-existing conditions. If you’re staring down a medical condition, you should still be covered, assuming Trump gets his way.

2. Continue Tax Credits & Expand HSAs

Trump wants to continue offering tax credits to those who need help paying for health insurance (something that’s currently offered under the ACA). He also wants to expand the use of Health Savings Accounts (HSAs).

3. Offer States ‘Resources and Flexibility’ for Medicaid

One of the key points of the ACA was its Medicaid expansion. However, when the Supreme Court upheld the ACA in 2012, it ruled that states didn’t have to participate in Medicaid expansion. As a result, some states have “gap” populations, where tens of thousands aren’t covered by the ACA but still can’t get Medicaid.

Trump has promised “insurance for everybody,” and Medicaid expansion is probably a part of that. House Speaker Paul Ryan is a proponent of the use of block grants for Medicaid, and that could change the way Medicaid is administered in some states.

4. Pass Legal Reforms & Reduce the Price of Drugs

Trump’s health care plan champions legal reforms to protect patients and doctors from “unnecessary costs.” He hasn’t offered a lot of information about how to go about that, though.

A more interesting part of that principle is the idea of reducing drug prices. President Trump has been focused on the cost of prescription drugs since his campaign and insists that negotiation can bring down the cost of drugs. If this tactic is adopted, it could help many people on life-saving medications save money.

5. Create a National Insurance Marketplace

One of the sticking points many people have is that, for the most part, you can’t buy insurance across state lines. The ACA allows for multi-state exchanges, but they haven’t been used very much and success has been dubious.

Trump hopes a national marketplace will force insurers to compete more and offer additional choices for consumers, driving down the price.

What Trump’s Health Care Vision Means for Your Wallet

President Trump’s proposed health care policies would likely have an effect on your insurance costs. Here’s what to watch for.

Tax Credits for Coverage

The ACA currently offers tax credits for purchasing insurance through an exchange. Donald Trump’s speech to Congress last night indicates that tax credits for coverage will still be part of the plan.

But for millennials, that could actually mean paying more for coverage, thanks to a re-jiggering of how these tax credits would work.

A draft ACA replacement bill has been circulating, and presumably, the Trump Administration approves (Trump health secretary Tom Price is in favor). In this bill, tax credits are based on age instead of income.

If that policy is passed, older Americans would see more help under a new health care plan and younger Americans would see less. For some millennials getting subsidies under the ACA today, premium costs could go up due to a smaller tax benefit.

Expansion of HSAs

Details about the expansion of Health Savings Accounts haven’t been released, but their use is supported by both Trump and GOP members of Congress. This provision could be a good thing for younger Americans with few health care needs.

With an HSA, you receive a tax deduction for your contribution, and the money grows tax-free as long as you use it for qualified medical expenses. Under the ACA, you need a high-deductible plan to qualify. A high-deductible plan comes with a lower monthly premium, so users can save money each month that way.

If you don’t spend a lot on health care, the expansion of HSAs could be an advantage, depending on how the expansion is accomplished. If contribution limits are raised or the requirement for a high-deductible plan is eliminated, the HSA piece of “repeal and replace” could have a net benefit on your pocketbook.

National Health Insurance Exchange

The theory behind a national health insurance exchange is simple: Buying across state lines would give consumers more choices and cheaper coverage.

However, this might not actually work as intended. A study from Georgetown University looked at a six-state exchange under the ACA and found that it didn’t bring in new options, or even reduce costs.

On a national scale, though, the results might be different. If insurers are forced to compete by offering different plans, it’s possible that costs could decrease. However, state regulation will still be an issue, and no one has addressed how state-level regulation fits into a national health exchange.

Continuous Coverage

In his speech to Congress last night, Trump insisted that the government shouldn’t mandate coverage. But what’s the alternative?

According to the draft ACA replacement plan, Americans would need to have “continuous coverage” for a set period of time in order to take advantage of coverage for pre-existing conditions. In addition, those who don’t maintain continuous coverage would be subject to higher rates if they decide to re-enroll with an insurance plan.

If you don’t maintain coverage, you could see a significant uptick in your premiums as a result.

What Happens If You Receive Insurance Through Work?

One thing Trump didn’t address was the issue of what happens to those who receive insurance through work.

It isn’t clear how tax credits, Medicaid block grants and other items would be paid for, since the latest proposals are mum about the taxes the ACA imposes on those with higher incomes.

Ideas circulating among GOP members of Congress include a provision that caps the tax exclusion on coverage from employers. That means if your employer-sponsored health coverage exceeds the cap, you could pay higher tax costs.

The Bottom Line on Trump’s Health Care Plan

For now, it’s mostly speculation. Trump’s speech set forth principles for an ACA replacement, some of which protect the more popular aspects of Obama’s health plan.

Of course, it’s actually up to Congress to decide how to proceed. President Trump can outline his preferences, but that doesn’t mean Congress will follow his lead.

As with any policy, there will be winners and losers. Whether you end up paying more or less for insurance depends on what happens next in Congress.

Image: BasSlabbers