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Trump Crying ‘Socialism’ Isn't a Health-Care Plan

Max Nisen

(Bloomberg Opinion) -- After months of promising a big beautiful health-care plan, President Donald Trump finally delivered something.

Escaping briefly from the impeachment drama going on in Washington, Trump used a Thursday speech in Florida to announce a new executive order aimed at steering more seniors into privately managed Medicare Advantage plans instead of traditional Medicare. The president is selling it as part of a broader effort to lower costs and protect seniors from Democratic proposals such as "Medicare for All" that he said would “raid Medicare to fund a thing called socialism.” It served as a preview of the rhetoric the president will use as he attempts to gain an advantage on a strong issue for Democrats. 

It's easy to see why he's going this way. Change is scary. Medicare for All, which would end most private insurance and put all Americans on a government-run plan, gets a mixed reception in polls. But health care is still a minefield for Trump. 

Crying "socialism" at efforts to change America’s health system isn’t new. Medicare was decried as a capitalism-killer in the 1960s. The Affordable Care Act got the same treatment, even though it echoed ideas that came from a conservative think tank. Now Medicare is so well-regarded that the president is making its "defense" a centerpiece of his health agenda. As for the ACA, it’s getting increasingly popular, and Republican efforts to repeal it contributed to their losing control of the House.

In that context, it's worth looking at what Democratic proposals would do. Rather than destroying Medicare, they'd arguably improve it and expand it. The current program isn't perfect. It includes substantial premiums, as well as co-pays, deductibles, and co-insurance for using care. There's no cap on out-of-pocket expenses for people in traditional Medicare, which can create a significant financial burden.

Medicare for All – essentially universal health coverage – would substantially extend the benefits available to seniors and eliminate all out-of-pocket costs. The plan’s coverage of long-term care would remove a huge weight from the elderly and their families. There are some potential trade-offs: Wait times could increase as more people join the program, and taxes would increase. Even so, it’s hard to frame the plan as a definite negative for most seniors. 

Medicare for All is also the least likely of the Democratic health plans to become law. Most of the party’s presidential candidates support less disruptive policies that would still help seniors. Some would expand benefits, most would cap out-of-pocket expenses, and some would do both. By contrast, Trump's proposal may not do all that much for seniors.

The idea behind Medicare Advantage is that competition between private insurers like UnitedHealth Group Inc. and Humana Inc. that sell these plans will boost efficiency and decrease costs. People who sign up for these plans get access to expanded benefits, out-of-pocket caps, and potentially lower premiums. In return, though, they face more limited access to a narrower set of doctors – the very thing the president says Democratic plans will bring. Cost savings and profits have to come from somewhere, after all.

The executive order reportedly includes some additional cost-control efforts, including a fraud crackdown and an expansion of the role of nurse practitioners. They are unlikely to have a major impact. A reported boost to tax-advantaged health-savings accounts will largely benefit the wealthy. 

Moreover, the order may open the president to accusations that he’s trying to privatize Medicare. Republicans also will have to contend with the Democratic counter-argument that more Americans should get Medicare Advantage-type benefits without subsidizing insurer profits. There’s also the salient fact that insurers who run these plans have over-billed U.S. taxpayers by nearly $30 billion in the last three years alone, according to the Department of Health and Human Services’ own estimates . 

Ranging into other health-care areas, Trump’s speech also touted his various drug-pricing initiatives, failing to mention those that have failed to make it to the finish line. Other vulnerabilities remain, too, like the administration's support for a lawsuit that could kill the ACA even as the president makes a contradictory pledge to protect people with pre-existing conditions.

Perhaps inevitably, Trump couldn't stay away from the impeachment inquiry. Towards the end of his Wednesday remarks, he implied that drugmakers unhappy about his efforts might be involved. If Trump wants to turn health care into a strength, he’ll have to do better than that. 

To contact the author of this story: Max Nisen at mnisen@bloomberg.net

To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

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