President Trump's Campaign Promises on Medicaid and Medicare

A Look at Plans to Changes to Entitlement Programs

campaign promise
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President Donald Trump made promises to Americans on the campaign trail. Repealing the Affordable Care Act (ACA), more commonly known as Obamacare, and preserving Medicare were on the top of that list. Is the President living up to those campaign promises?

A Look at Trump's Campaign Promises

As a reminder, President Trump campaigned on a seven-part health plan. With the following changes, he vowed to make health care great again.

  1. Repeal the Affordable Care Act, aka Obamacare
  2. Allow selling of health plans across state lines as long as health plans follow state guidelines
  3. Allow individuals to deduct health insurance premiums on their tax returns
  4. Allow individuals to use Health Savings Accounts (HSA)
  5. Require price transparency across the healthcare system
  6. Discontinue federal grants to states for Medicaid
  7. Allow expansion into free markets, including purchasing cheaper drugs overseas, to decrease the cost of prescription medications

Is President Trump delivering on his campaign promises?

Trump Takes on Medicaid

No matter how you look at it, Medicaid funding is on the chopping block. This could affect how many people are able to access health care through the program.

Repealing Obamacare

When the Affordable Care Act was introduced in 2010, there were as many as 48 million uninsured Americans, approximately 15.7 percent of the population. According to the Centers for Medicare and Medicaid Services (CMS), the passage of the law decreased that number to 9.2 percent by 2015.

Obamacare allowed young people to stay on their parents' plans longer, prevented insurance companies from increasing premiums based on pre-existing conditions, allowed for expansion to existing Medicaid programs and developed the Health Insurance Marketplace as a more affordable option to those who did not meet criteria for Medicaid. Simply put, the cost of private insurance plans at the time was simply too high for many people to manage.

Many argue that Obamacare continued to leave health plans out of financial reach. The deductibles for many plans have become so high that many people cannot afford them. Is that better than having no health care at all?

President Trump tried to reverse many of the policies put forth by Obamacare by repealing the ACA and replacing it with the American Health Care Act (AHCA), aka Trumpcare, in 2016. Although the act was approved by the House, it failed to pass in the Senate. If he had succeeded, the Congressional Budget Office estimated that 14 million people would have lost access to health insurance in 2018 and 23 million people over the next 10 years.

Cutting Federal Funding to Medicaid

Obamacare offered incentives to states that chose to proceed with Medicaid expansion. Those states received federal dollars to assist them, up to 100 percent of expansion costs for three years and then 90 percent of costs through 2020. Medicaid expansion would have come to a halt under the AHCA, although Trumpcare would continue the promised funding through 2020.

Beyond repealing Obamacare, the AHCA aimed to cut other federal funding to Medicaid programs as well. It had proposed limiting funding to block grants. Since 1965, states have received federal dollars for Medicaid based on the number of people that were eligible for the program. Block grants would change all that, offering a fixed amount of money for Medicaid regardless of a state's need. Funding changes would affect all states, not only those that participated in Medicaid expansion.

Decreased federal support for Medicaid would place a heavy burden on the states to make ends meet. Many states are struggling with budget deficits as it is. In 2016, more than half of the states earned less revenue than their proposed budgets and 19 of them had to make budget cuts mid-year to stay afloat.

The Congressional Budget Office estimated that the AHCA would have cut Medicaid funding by $800 billion over the next decade. By putting more burden on the states to provide funding, who and what Medicaid covers would likely change. States would need to set up enrollment caps, establish waiting lists for people who meet Medicaid eligibility requirements, or cut benefits to keep costs in check.

Although the AHCA failed to pass, the GOP continues to target Medicaid funding. The initial GOP 2019 Fiscal Year Budget proposed $537 billion in cuts to Medicare and $1.5 trillion in cuts to Medicaid and other health programs over 10 years. With mandatory budget cuts needed to compensate for the $1.5 trillion triggered by the GOP tax bill, Republicans have Medicaid in the cross-hairs. Although the 2019 FY Budget made it through the House, it failed to gain approval in the Senate. Budget negotiations are ongoing.

Decreasing Medicaid Spending

President Trump may not have repealed Obamacare or put an end to Medicaid expansion, but his policies may well decrease how much money is spent on Medicaid.

In January, CMS issued a State Medicaid Director Letter that addressed the use of Section 1115 waiver proposals to add work requirements as a condition for Medicaid eligibility. In April 2018, President Trump then signed an executive order that encouraged states to pursue those work requirements. The intention is to promote employer-sponsored health insurance and to decrease the financial burden on the Medicaid system.

To date, 12 states have applied but only four states (Arkansas, Indiana, Kentucky, and New Hampshire) had their Medicaid waivers approved by CMS. Waivers are pending in Arizona, Kansas, Maine, Mississippi, North Carolina, Ohio, Utah, and Wisconsin. Kentucky was to be the first to enact the requirements but a U.S. Federal District Court struck down the legality of those requirements in June just before they were to take place in July. It is unclear if this will prohibit the other states from moving forward in January 2019.

Trump Takes on Medicare

On the campaign trail, President Trump promised not to cut Medicare benefits, but the AHCA would have certainly had an impact on Medicare beneficiaries. He also made several promises for American seniors that he has yet to take action on.

Negotiating Drug Costs

The same medications used in the United States often cost less in foreign countries. For example, Advair, a common medication used to treat asthma, costs $309.60 per month in the United States whereas it only costs $74.12 in Canada and $46.99 in the United Kingdom. At the current time, Medicare does not allow enrollees to purchase their medications out of the country to take advantage of cheaper drugs. President Trump stated he would change that but no action has yet been taken. Not surprisingly, the pharmaceutical industry has lobbied against it.

President Trump campaigned that he wanted to negotiate with American pharmaceutical companies for better rates. Medicare Part D prescription drug plans are currently run by private insurance companies, and laws are in place that prevent the federal government from intervening in pricing. With only ten percent of health spending on medications, the Congressional Budget Office (CBO) states they would not expect significant cost reductions with federal intervention. Other policy briefings suggest that Medicare could save as much as $16 billion every year by negotiating and decreasing the cost of brand-name drugs to levels the federal government has already negotiated for Medicaid and the Veterans Administration.

The Trump administration did put forth a proposal in May 2018, American Patients First, which discusses plans to decrease the cost of prescription drugs. It does not address purchasing foreign medications or allowing Medicare to negotiate with pharmaceutical companies. It does, however, encourage a lift of the pharmacy gag rule. As it stands, a pharmacist is prohibited from notifying patients about cheaper drug alternatives. For example, a medication may be cheaper to buy out of pocket than with an insurance copay. There may even be cheaper generic medication alternatives available. If legislation were to be enacted, it would help to improve transparency in the healthcare industry.

Tax Savings

President Trump may offer Americans opportunities to save on taxes and not just through the infamous GOP tax bill. At the present time, Medicare beneficiaries are not allowed to take advantage of health savings accounts.

That could change if the GOP 2019 Fiscal Year Budget comes to pass. It proposes that Medicare beneficiaries could set aside money tax-free for the purposes of paying for healthcare expenses. By also making the cost of premiums tax deductible (an amount ranging from $1,608 to $5,143 for Medicare Part B in 2018)seniors could save more of their retirement earnings.

Repealing Obamacare Affects Medicare

Though attention has been focused on Medicaid and the uninsured, a full-out repeal of the ACA could have significant repercussions for people on Medicare as well. Obamacare helped to establish programs to improve hospital care, to decrease Medicare fraud, and to innovate new payment models that could save money for the program. It also expanded on Medicare coverage, making preventive services like colonoscopies and mammograms free when you receive care from a participating provider. Most importantly, it helped to decrease the cost of prescription drugs for people on Part D plans.

At first, it was unclear how the AHCA would address these issues, but it seems that not all Obamacare efforts were on the chopping block. The AHCA would not have changed Medicare benefit, and the donut hole to close by 2020 as planned.

It did aim to decrease taxes. The AHCA would have repealed the Medicare payroll surtax on high-income earners, meaning that less money would be available for the Medicare Trust Fund over time. In fact, it was estimated that the Medicare Trust Fund would lose solvency by 2025, three years earlier than predicted in 2016, if the AHCA comes to pass.

The Reality of a Trump Administration

President Trump went to task and signed an executive order on January 20, 2017, the day of his inauguration. The order directed federal agencies to scale back on Obamacare "to the maximum extent permitted by law". The order did not, however, repeal the ACA nor did it outline how agencies were to proceed on the issue.

Though he stated he would not touch the Medicare program, President Trump named Representative Tom Price as Secretary of Health and Human Services, a former surgeon who endorsed partial privatization of Medicare with the "Better Way" plan put forth by the GOP in 2016. In addition to that, he had advocated major cuts to the Medicaid program. After resigning from his position for controversy regarding abuse of public funds, Price was replaced by Alex Azar.

The President also tapped Seema Verma to run the Centers for Medicare and Medicaid Services (CMS). A healthcare consultant and founder of SVC. Inc., her work in Indiana led to the requirement that people on Medicaid pay monthly fees or otherwise lose their coverage for six months. She has been proactive in her current role to enact work requirements and other changes for Medicaid programs nationwide. 

A lot of promises have been made and many lives will no doubt be affected. President Trump has sent mixed signals to the American people. What he has promised on the campaign trail has not always been in alignment with his actions as President.

A Word From Verywell

At this time, the Affordable Care Act remains the law of the land. President Trump promised to repeal Obamacare but Congress failed to pass the AHCA. He promised to keep Medicare untouched but has proposed significant cuts to the program. It is still early in the presidential administration, and only time will tell if the President will live up to the promises he made to the people who voted for him on the campaign trail.

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