Here’s Why an Expert Is Skeptical

President Donald Trump recently announced his “Great Healthcare Plan,” which promises to lower drug prices, lower insurance premiums and maximize price transparency.

Find Out: Would Trump’s Australian-Style Retirement Be Better or Worse Than the U.S. Plan?

Read Next: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too

The announcement comes at a time when many Americans are worried about the rising cost of healthcare. A January KFF survey found that healthcare costs are the top financial worry for many Americans, with two-thirds (66%) saying they are at least somewhat worried about affording the cost of healthcare — that’s more than the percent that are worried about affording food and groceries, utilities, housing costs and transportation expenses.

But will Trump’s plan actually make healthcare more affordable? Here’s what one expert thinks.

Trump’s plan focuses on several strategies: reducing prescription drug prices through Pharmacy Benefit Manager (PBM) reforms, applying “Most Favored Nation” (MFN) pricing to certain medications, providing insurance premium relief and expanding healthcare price transparency.

While each of these measures could generate savings, Peter Basica, founder of 360 Smarter Care — a company focused on reducing healthcare costs — said the overall impact would be modest when spread across the population.

“For the sake of discussion, let’s say the PBM reforms and MFN reforms perform well above projections at 20% — the savings amount to $51 billion,” he said. “Spread that over the U.S. population, and it breaks down to $150 per American. While welcome, it doesn’t begin to move the needle.”

Check Out: I’m a Financial Planner: Cut These 7 Hidden Expenses To Save Hundreds a Month

One proposal would move certain prescription drugs to over-the-counter (OTC) status. On paper, this could lower drug prices and reduce visits to physicians’ offices, urgent care centers and emergency departments. In practice, Basica warned, the change could backfire.

“This is a terrible idea,” he said. “Hospital care is the largest driver of the $5.1 trillion healthcare expense, and 25% of hospital visits could have been avoided if the patient had simply taken their prescription drugs as prescribed.”

Basica said medication adherence is closely tied to the relationship between patients and their primary care physicians.

“The lack of that personal relationship, the lack of trust in their physician, is directly related to the lack of
adherence,” he said. “Moving some of the most common prescription drugs to OTC further erodes the concept of a trusted primary care physician-patient relationship.”

Basica is skeptical of Trump’s healthcare plan, but he noted that it isn’t a unique issue with this specific plan.

“How often do government programs deliver what they promise?” he said, pointing to past reforms, like the Affordable Care Act, that were expected to lower costs but fell short.

That said, some elements of the proposal are more feasible than others.

Recent legislation has already codified PBM reforms, making them the most likely to take effect. MFN pricing could also generate real savings — but only for a small number of the most expensive prescription drugs. By contrast, moving drugs to OTC status may simply shift costs from insurers to consumers.

“Most prescription drugs are covered by some form of insurance with a copay,” Basica said. “Moving a prescription drug to OTC means there will be no insurance coverage, so the cost shifts to the medical consumer.”

Another proposal would attempt to lower insurance premiums by sending funds directly to consumers rather than insurers. While the idea sounds appealing, Basica said the real-world impact would likely be limited.

“In practice, the healthcare consumer is most likely going to use the subsidy to pay their health insurance premium to an insurance company,” he said. “In the real world, nothing changes.”

Expanded price transparency is also unlikely to deliver major savings, he added.

“Even a [basic medical] procedure will rarely cost the price posted because of the way the medical billing system is constructed,” he said. “Think of it as the base price for a car with a long list of options. The price on the wall is $100, but the patient is diabetic, hypertensive and overweight. Each one of these conditions is actually a multiplier of the bill.”

Posting prices may be better than posting nothing at all, he said — but it’s unlikely to transform what patients ultimately pay.

While Trump’s healthcare proposal includes ideas that sound promising, the overall savings for most Americans may be limited. Without bigger structural changes to how care is delivered, paid for and managed, Basica believes the plan is more likely to reshuffle costs than significantly reduce them.

Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: Trump’s Healthcare Plan Promises Lower Costs: Here’s Why an Expert Is Skeptical