
Obamacare, whatever its flaws, has extended insurance coverage to an estimated 16 million people. Donald Trump promises to repeal it and in return offers no direct support for poor and middle class families who struggle with health costs. His sole substantive proposal on health care is to deregulate insurance companies to make it easier for them to sell insurance across state lines.
Trump summed up his plan in the debate on Thursday: “When you get rid of the lines [around the states] it brings in competition.” Circular hand motions were added to make the point more vivid.
There are two major problems with this proposal: (1) it doesn’t work, and (2) even if it did, it’s nothing close to a complete health care plan for the nation.
In theory driving down costs by encouraging interstate competition is a nice free-market idea. But as the Upshot has detailed, the evidence that this works in practice is nil:
The trouble is that varying or numerous state regulations aren’t the main reason insurance markets tend to be uncompetitive. Selling insurance in a new region or state takes more than just getting a license and including all the locally required benefits. It also involves setting up favorable contracts with doctors and hospitals so that customers will be able to get access to health care. Establishing those networks of health care providers can be hard for new market entrants….
In 2012, Ms. Corlette and co-authors completed a study of a number of states that passed laws to allow out-of-state insurance sales. Not a single out-of-state insurer had taken them up on the offer. As Ms. Corlette’s paper highlighted, there is no federal impediment to across-state-lines arrangements.
The laborious work of setting up a network of providers is not something that out-of-state insurers can easily replicate, and as far as the evidence goes, there’s no sign it would have any effect on the insurance market or costs to consumers.
Even if eliminating state barriers somehow restrained growth in health care costs, repealing Obamacare would toss 10 million+ back into the realm of the uninsured. What would happen to people with pre-existing conditions? That Trump hasn’t even thought about addressing these issues highlights how shallow his approach to policy is. After eight months of running for president all he’s picked up on health care is an irrelevant sound bite on “lines around states.”
In the clip below, when Dana Bash asked Trump if he has any other health policy ideas to add, Trump responded: “There’s nothing to add. What’s to add?” Meanwhile his odds of winning the GOP nomination are approaching 80%.
