Understand how we got here — and how to move forward.


March 1, 2017

Trump set out 5 principles for health reform—but here's what he didn't say

Daily Briefing

    President Trump in his joint address to Congress last night criticized the Affordable Care Act (ACA) and called on lawmakers to move quickly on an alternative health care plan.

    Trump said, "Obamacare is collapsing—and we must act decisively to protect all Americans. Action is not a choice; it is a necessity."

    Although Trump provided only sparse details, he proposed expanding health care savings accounts and making it easier for insurers to sell plans across state lines—ideas that are featured in most GOP health reform plans. However, Trump also voiced support for tax credits to help individuals purchase coveragea proposal that has featured in some GOP plans but also drawn stark opposition from leading conservative Republicans.

    Trump's 5 health care reform principles

    In his speech, Trump outlined five key principles for health reform—the clearest guidance he has yet provided on what he wants to see from any ACA replacement plan.

    Extend protections for pre-existing conditions: First, Trump said "we should ensure that Americans with pre-existing conditions have access to coverage, and that we have a stable transition for Americans currently enrolled in the health care exchanges." Trump previously had signaled his support for maintaining some version of the ACA's protections for individuals with pre-existing conditions.

    Use tax credits and health savings accounts: Second, Trump said, "We should help Americans purchase their own coverage, through the use of tax credits and expanded health savings accounts—but it must be the plan they want, not the plan forced on them by the government."

    The idea of tax credits for the purchase of insurance, a version of which were included in a draft GOP reform proposal that leaked last week, have been a point of contention among Republicans. Several prominent Republican lawmakers, including House Freedom Caucus Chair Mark Meadows (R-N.C.) and Republican Study Committee Chair Mark Walker (R-N.C.), this week said they did not support the tax credits outlined in a leaked draft bill to replace the ACA and would vote against any GOP replacement bill that contains them.

    As for Trump's comment about Americans being able to choose "the plan they want," Axios reported that it signaled a desire to ease the ACA's requirements that health insurance provide certain benefits, such as mandatory maternity coverage. The leaked GOP bill would eliminate the ACA's essential health benefits package and instead allow states to determine which benefits would be considered "essential."

    Give states more flexibility on Medicaid: Third, Trump said "we should give our great state governors the resources and flexibility they need with Medicaid to make sure no one is left out." He did not specify, however, what "resources and flexibility" would be provided. Several GOP proposals, including the recent leaked draft bill, support turning Medicaid into a block grant program or per capita model—proposals that industry experts say would likely result in Medicaid funding cuts.

    Republican lawmakers and governors remain divided on how to reform Medicaid and what should happen to Medicaid beneficiaries who received new coverage under the ACA.

    Meet the Republican governors who want to save Medicaid expansion

    Implement medical malpractice reforms: Fourth, Trump said, "We should implement legal reforms that protect patients and doctors from unnecessary costs that drive up the price of insurance"—an apparent reference to tort reform efforts popular among GOP lawmakers.

    Selling insurance across state lines: Lastly, Trump said, "The time has come to give Americans the freedom to purchase health insurance across state lines," which he said would create "a truly competitive national marketplace that will bring cost way down and provide far better care." However, some experts are skeptical of the effectiveness of that approach. Research cited by Vox suggests that insurers when given the option chose not to sell plans in another state.

    Additional health reform issues raised in the speech

    Trump also used his speech to criticize what he called FDA's "slow and burdensome approval process," which he said is keeping "advances" from reaching patients. To accelerate approval, Trump proposed "slash[ing] the restraints" at FDA and across the government.

    Trump also lambasted rising drug prices, saying they need to be brought "down immediately."  But Trump did not mention how those prices should be reduced or whether the government should engage in price negotiations, a proposal he previously had touted.

    The key health care reform topics Trump did not mention

    Even as Trump outlined key elements of his approach to replacing the ACA, he remained silent about several open questions in the reform effort. In particular, while he criticized the ACA's individual mandate, he did not specify how that provision should be replaced, Vox reports.

    Most health care experts agree that some incentive for healthy individuals to purchase insurance—a purpose served by the individual mandate—is necessary to ensure that the insured population includes a sustainable mix of healthy and ill patients. GOP plans to date have incorporated a variety of approaches to the issue; in the leaked draft bill, for instance, Republicans proposed allowing insurers to charge up to 130 percent of the standard rate for the individual's first year of coverage if they do not maintain continuous coverage.

    In his speech, Trump said, "Mandating every American to buy government-approved health insurance was never the right solution for America," but he did not voice support for a specific alternative. He added, "The way to make health insurance available to everyone is to lower the cost of health insurance, and that is what we will do."

    Beshear delivers Democrats' response

    In the formal Democratic rebuttal to Trump's speech, former Kentucky Gov. Steven Beshear (D) touted the ACA's coverage expansions and criticized Trump and Republican lawmakers' efforts to repeal the law, the Washington Post reports.

    Beshear, who served as Kentucky governor from 2007 through 2015, oversaw the state's implementation of the ACA, which contributed to a decline in the state's uninsured rate from 20 percent to 7.5 percent.

    Beshear accused Republicans of trying "to rip affordable health insurance away from millions of Americans who most need it." He said, "So far, every Republican idea to 'replace' the Affordable Care Act would reduce the number of Americans covered, despite promises to the contrary. ... These ideas promise access to care but deny the importance of making care affordable and effective. They would charge families more for fewer benefits and put insurance companies back in control."

    Beshear vowed, "Democrats are going to do everything in our power to keep President Trump and the Republican Congress from" rolling back the ACA's coverage expansions.

    Republicans take away different interpretations of Trump's approach

    After Trump's speech, Republicans expressed differing views on the president's remarks.

    House Majority Leader Kevin McCarthy (R-Calif.) said he believed that Trump's comments on health care served as an endorsement of the House GOP leadership's replacement plan. House Majority Whip Steve Scalise (R-La.) agreed, saying that Trump's speech clearly demonstrated that he is working "directly" with lawmakers on the House GOP leadership's proposal.

    However, Rep. Mark Sanford (R-S.C.) said Trump's comments more closely aligned with a more conservative approach to ACA replacement. "I didn't hear 'continued expansion of Medicaid.' I didn't hear of a quasi-Cadillac tax: the surcharge on employer packages," Sanford said—referencing key elements of the leaked GOP leadership draft plan.

    Sen. Ted Cruz (R-Texas) also said he did not hear Trump specifically back any GOP plan. "I don't believe we heard any specific legislative endorsements," Cruz said, adding, "The president was laying out principles—they are principles I agree with: that we should honor our word that we should repeal Obamacare; that we should reduce the cost of premiums; that we should expand choice; that we should empower patients."

    (Goldstein, Washington Post, 2/28; Martin, New York Times, 3/1; Chakraborty, Fox News, 2/28; Min Kim/Bade, Politico, 3/1; Williams, CQ News, 2/28 [Subscription required]; Diamond, "Pulse," Politico Pro, 3/1 [subscription required]; Nather, Axios, 2/28; Kliff, Vox, 2/28; CNN, 3/1)

    The 2017 State of the Union: Health care reform beyond the ACA

    The new administration and Republican-controlled Congress have big plans to repeal and replace the ACA, causing tremendous uncertainty in the health care industry.

    To help navigate this uncertainty, this webconference will focus on what we know now about the repeal and replacement plan, as well as what we can expect in the weeks and months to come. Additionally, at this critical juncture point for the future of the ACA, it is only fitting to pull up and reflect on the successes and failures of the ACA as a whole across the past eight years.

    Register now

    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.