How Trump's Cheap Insurance Might Be More Expensive

Choosing skimpier plans may work out for the very healthy or very lucky. Others would be stuck with large, unexpected bills.

Joshua Lott / Reuters

In last night’s speech to a joint session of Congress, President Trump didn’t shed much light on how he would go about replacing Obamacare. But he did say he had a plan that would simultaneously “expand choice, increase access, lower cost, and provide better healthcare,” and the few details he did provide suggest he might support Republicans’ plan to roll back the basic benefits that insurers are guaranteed to cover.

“The way to make health insurance available to everyone is to lower the cost of health insurance,” Trump said.  Later, he said insurance plans “must be the plan [people] want, not the plan forced on them by the government.”

Though Trump didn’t spell it out, his rhetoric suggests he might be talking about “essential health benefits,” a set of 10 services that insurance plans are required to cover under Obamacare. These include things like lab tests, emergency care, and mental-health services. Before Obamacare, insurers could leave certain types of coverage out of their plans, and those plans were cheaper as a result.

Eliminating this “essential” package has become a typical Republican suggestion for health-care reform. At a breakfast with reporters last month, Representative Jim Jordan, a Republican from Ohio, said he wanted to “legalize inexpensive insurance,” and Senator Tim Scott of South Carolina has been quoted as saying, “In order for us to actually have real impact on making sure that this becomes a patient-centric approach to health care, we’re going to have to address those definitions, the essential benefits, giving more liberty and more flexibility for those definitions.” The draft House replacement bill leaked last week would also roll back these “essential” benefits, leaving them to the states to determine.

And as Trump suggests, it’s true that doing away with these required benefits would make some health plans—say, those that don’t cover mental health—much cheaper. The downside, though, is plans that did cover those services would get much more expensive, so women who needed maternity care, for example, or people who get a lot of lab tests, would be on the hook for a bigger bill.

This is one reason why the Urban Institute called eliminating essential benefits “risky,” in a recent report, adding, “Cutting a benefit from the rest of the package puts the cost of that type of care wholly on those families who have a health care need for it. In many circumstances, such cuts would make obtaining that type of care unaffordable for those needing it.”

And, of course, no one can predict emergency health problems, so if individuals picked a bare-bones plan that didn’t cover, say, prescription drugs, they could wind up paying for the drugs out of pocket.

So if Trump is suggesting what it sounds like he is, some health-insurance plans could get cheaper, yes. But for many, medical bills would still be yuge.