By Caroline Humer and Emily Stephenson
Oct 18 (Reuters) - When former President Bill Clinton called parts of Obamacare "crazy," he put his wife Hillary Clinton on the defensive and gave much-needed ammunition to her Republican rival for the presidency, Donald Trump, who wants to scrap it.
Bill Clinton said this month that while millions more Americans now have insurance coverage under President Barack Obama's signature 2010 healthcare law, small businesses and some families are still "getting killed" by surging healthcare costs. He later clarified that he was not criticizing the entire initiative, he was just making an argument for fixing it.
Still, Clinton's comments may not have been so crazy. He put a spotlight on an uncomfortable truth: after six years, billions of dollars and a sweeping reform that stands as Obama's single biggest domestic policy achievement, health care is still unaffordable for many Americans.
Americans are growing increasingly anxious about rising healthcare costs, and critics of the law have said it is not living up to its promises. Two of the nation's largest health insurers, Aetna (NYSE:AET) and United Healthcare, are also pulling out of the state-based health insurance exchanges that are the best-known creations of Obamacare.
Clinton says she wants to save the best of Obamacare, also known as the Affordable Care Act, while reducing costs. Trump says it is an expensive "disaster" that is on track to implode in 2017. He wants to replace it with something cheaper.
Whoever wins the presidency on Nov. 8 will likely face pressure to move quickly to reshape a healthcare initiative that affects millions of Americans.
WHY CONSERVATIVES THINK OBAMACARE IS CRAZY
Republicans opposed Obamacare from the start, labeling it a government intrusion into the healthcare market.
Some of them say the individual exchanges where Americans shop online for coverage are already in a "death spiral." They warn that with fewer consumers using the exchanges, more health insurers will exit them, sending premiums even higher, and further deterring people from signing up.
As the U.S. population ages, U.S. spending on healthcare - $2.9 trillion in 2014 - is projected to rise to more than one-fifth of the nation's gross domestic product. Spending rates under Obamacare did slow for a time, but they are on the rise again.
Trump has proposed getting rid of the exchanges and setting up tax-free health savings accounts for people with high-deductible insurance plans. He has also said he would set up state-based high-risk pools for people with medical conditions that make it hard to get coverage on their own. He also wants to allow companies to sell insurance across state lines to boost competition and drive down prices.
His advisers say he would draw on a plan proposed by Republicans in the U.S. House of Representatives, which includes a refundable tax credit to help Americans buy individual plans.
Republicans, like Trump, also want to change how they fund Medicaid, which serves poor families. Obamacare increased federal funding to states that expanded the program to more people with low incomes. Now Trump wants to limit funding by switching to pre-set, block grants.
Health policy experts are skeptical selling insurance across state lines would do much to rein in health insurance costs. And health wonks on both sides of the aisle said Republicans would likely balk at any proposals that threatened to yank health insurance away from 20 million people.
"Even Republican members of the House and the Senate are going to end up resisting rolling back the Medicaid expansion if that means that lots of people in their states would go uninsured," said Jim Capretta, a health policy expert at the right-leaning American Enterprise Institute.
LIBERALS DON'T THINK IT'S CRAZY, BUT...
Liberals like former Democratic presidential candidate Bernie Sanders haven't called Obamacare crazy, but Sanders does believe it doesn't go nearly far enough. During his campaign, he proposed replacing it with a single-payer insurance system he called "Medicare for all," based on the government plan for elderly and disabled Americans.
Hillary Clinton's plan doesn't go that far, but she would build on Obamacare by expanding tax credits for people shopping on the individual marketplaces, letting Americans buy into Medicare at a younger age, and adding a "public option," or a government-run insurance plan to compete with private insurers on the exchanges.
She has also proposed reducing Americans' out-of-pocket expenses outside their private insurance by offering a new refundable tax credit, and she would give states more federal funding to expand Medicaid for low-income people.
Two-thirds of states expanded Medicaid under the 2010 law, and that's where most of the newly insured people got coverage. Policy experts said that after Obama leaves office, more Republican-led states that objected to a plan so closely identified with Obama might be willing to expand Medicaid too.
Clinton's ability to expand tax incentives likely depends on which party controls the U.S. Congress. And while some states could act independently to launch public plans on their exchanges, many Republicans view the idea as wildly expensive and would strongly resist any effort by Clinton to require them nationwide.
WHAT EVERYONE THINKS IS CRAZY - DRUG PRICES
Obamacare did little to deal with soaring drug prices for lifesaving treatments like Mylan NV's MYL.O EpiPen. Democrats and Republicans say that's a problem for the next president, even though it's getting little attention on the campaign trail.
Trump and Clinton both want Americans to be allowed to buy cheaper drugs from overseas (Americans pay the highest prices in the world for drugs). Former Democratic U.S. Representative Henry Waxman made a similar proposal in 2009, but he was defeated by pressure from drug companies, which would likely oppose it again.
Clinton says Medicare should negotiate drug prices with companies, using its 55 million users to get a better deal. Trump made a similar call during the Republican primaries but it does not appear on his campaign website now.
Some health policy experts believe drug companies would respond to lower prices for Medicare patients by raising prices for everyone else. And to negotiate better prices, Medicare would have to be willing to stop covering certain drugs, which would be unpopular, they say.
Clinton has also suggested creating a commission that would watch for sudden spikes in prices of older life-saving drugs, a proposal that health policy experts said is achievable through rule making rather than legislation. She has also proposed a cap on drug co-payments.
Clinton has already put Wall Street on watch. Her tweets have brought down shares of Mylan and Valeant Pharmaceuticals (NYSE:VRX) International VRX.TO , which helped push many institutional investors out of healthcare stocks.
Drug companies are already responding to political pressure. Botox maker Allergan Inc (NYSE:AGN_pa) AGN.N , for example, recently committed to keeping price increases below 10 percent.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ U.S. Presidential Election 2016
cpurl://apps.cp./cms/?pageId=us-2016 GRAPHIC: Race to the White House
http://tmsnrt.rs/298mTyD Election 2016 Live Coverage
http://live.reuters.com/event/election_2016 Reuters.com politics section
http://www.reuters.com/politics Reuters election newsletter
http://share.thomsonreuters.com/assets/newsletters/Specialpackages/US_Election.pdf Swing states that may decide the U.S. election
http://reut.rs/1UhE642 FACTBOX-Clinton's policies on economy, Islamic State, other issues
FACTBOX-Trump's policies on immigration, economy, other issues