As many as 9.6 million Americans could gain health insurance under Hillary Clinton's proposal to provide families a tax credit to help them pay for premiums, deductibles and coinsurance, according to a new analysis. For a typical family in the lower-middle class, the credit would reduce health-care expenses by roughly a third, but it would come at a cost to taxpayers of roughly $90 billion in the first year.
The Rand Corp. and the nonpartisan Commonwealth Fund published the analysis of Democratic presidential nominee's health agenda on Friday, along with a second document examining proposals from her Republican rival, Donald Trump. Trump's proposal to repeal the Affordable Care Act, President Obama's health-care law, would result in as many as 25 million Americans giving up coverage, depending on how the repeal is implemented.
The analyses arrive as Obama's changes are under renewed scrutiny. As the president approaches the end of his term, enrollment remains well short of initial expectations. Several major insurers have announced they will not participate in the exchanges established by the law, and conservative commentators are arguing again that the markets are fundamentally unstable.
Yet the reports show that both parties' proposed solutions have drawbacks. Clinton's plan would expand coverage, but only by supporting the insurance market with substantial and expensive new subsidies. Trump, for his part, has not come up with a replacement that could maintain the same level of coverage, and millions who gained insurance under the Affordable Care Act would become unable to afford it again under his policies.
The Affordable Care Act provides financial help to Americans purchasing insurance on the individual market if they are not covered through the government or their employers. The law also requires insurers to cover people whether or not they have existing illnesses.
Finally, to prevent newly covered unhealthy patients from increasing costs for insurers uncontrollably, the law requires nearly all Americans to buy insurance, in order to guarantee that the costs of caring for society's unhealthiest members would be widely shared.
Despite its flaws, this system — along with the law's expansion of the Medicaid program — has allowed millions of people to obtain insurance who did not have coverage before. Roughly 20 million would probably become uninsured again if Trump is elected and Congress votes to repeal the law, according to the report. Health-care costs for the typical family enrolled in the individual market would increase from about $3,200 to about $4,700 a year.
On top of that, according to the report, another 5 million Medicaid beneficiaries could lose coverage if Trump implements his proposal to convert the Medicaid program into a fixed annual grant to states to use as they see fit. The grant might not be sufficient for states to continue paying for those beneficiaries' medical treatment.
Several of Trump's policies could mitigate these effects on coverage. Trump has proposed allowing enrollees in the individual market to deduct their premiums from their taxable income, which would result in about 4 million more subscribers retaining coverage than in a scenario in which the Affordable Care Act is simply repealed.
The New York businessman has also proposed making it easier for insurers to sell policies across state lines, which the analysis predicts would allow about 2 million people to retain coverage.
These policies would have the greatest effect on poor and working-class Americans. Poor families are more likely to rely on Medicaid. Allowing policyholders to deduct their premiums would primarily benefit more affluent households, and more Americans in this group would become insured under Trump's plan.
If Trump repealed the Affordable Care Act and replaced it with his proposed deduction, the number of Americans in poverty without insurance would roughly double from 12 million to 22 million. By contrast, the number of uninsured Americans with household incomes of between $61,000 and $97,000 for a family of four would decline from about 4.4 million to about 3 million, according to the report.
Like Clinton's proposals, Trump's would come at a cost to the federal government, because he would eliminate the increases in taxes under Affordable Care Act. Repealing the law would add roughly $33 billion in the first year to the federal deficit, and roughly $41 billion with the proposed deduction for premiums.
Hillary Clinton has proposed a tax credit, worth up to $2,500 for individual taxpayers and up to $5,000 for families, that subscribers could use toward their medical costs, including premiums and other out-of-pocket expenses.
This credit would encourage some families that have not purchased insurance because of the costs of deductibles and coinsurance to join the market. Also, because this credit would be available to poor Americans that are ineligible for Medicaid because they live in states that rejected the program's expansion. Overall, the credit could reduce the number of insured by 9.6 million.
Sara Collins, a vice president at the Commonwealth Fund, said this estimate could exaggerate the effects of the tax credit.
"It is based on the assumption we made that everybody would claim the credit who was eligible," she said. Some uninsured households might learn about the credit only after a few years or not at all, in which case the effect on coverage would be more gradual and more modest.
The credit would be worth the most to the middle class. For a family of four with between roughly $34,000 and $61,000 in household income, health-care costs would decrease from about $1,700 to about $1,100 a year on average. For families with incomes between $61,000 and $97,000, costs would decline from about $3,100 to about $2,600.
Clinton has called for other policies that would also reduce the number of people without insurance.
She has proposed making the existing subsidies available through the Affordable Care Act more generous and making it easier for workers with subsidies to get those subsidies if the family plans offered by their employers are too costly. Together, these two policies would reduce the number of uninsured by about 2.8 million at a cost of about $10 billion in the first year to the federal government.
Creating a public option for insurance by allowing people who are not elderly to buy policies through Medicare would allow about 400,000 more people to obtain coverage.
The public option would modestly improve federal finances, the report projects, because private insurers would be forced to reduce premiums on the individual market to compete with cheap public insurance. The reduction in private-sector premiums would also reduce the subsidies the government is obliged to pay policyholders under the Affordable Care Act to help them afford coverage. These savings would total about $700 million in the first year.