Initial analysis from JPA Health

What will health policy look like during the Trump Administration? Trying to understand what President-elect Trump will do about healthcare—an area in which he gave just one speech—is not easy. But, combining his statements from the campaign trail with the plan put forth by Republicans, provides some signals. Here are our thoughts just days after the election:

Obamacare

Let’s start with the obvious: The repeal and replacement of the Affordable Care Act, or Obamacare. Given the breakdown in the Senate, it doesn’t look like a straight repeal is possible. That said, neither Trump nor the Republicans, who have promised repeal and replace since passage, are likely to change their minds about eliminating it. How can it happen? Here are two very different scenarios:

• One school of thought holds that all the Trump Administration has to do is drop the current administration’s appeal of House v. Burwell. That may be enough to defund key insurance subsidies so insurers flee the program.
• The most likely path forward is budget reconciliation legislation. Congress did this in 2015, but President Obama vetoed it. This tactic allows for repeal of many of the ACA’s high-profile provisions including:
  • the individual and the employer mandates;
  • the “Cadillac” tax and medical device tax; and,
  • the expansion of Medicaid coverage for adults up to 138 percent of the federal poverty level.

The prospect of Obamacare being eliminated leads to a cascading set of question with enormous implications. Pragmatically, what will happen to the 20 million people who rely on the ACA for insurance or through Medicaid expansion in 31 states? Politically, with mid-term elections two years away, does Congress or a new president really want to be known for taking away healthcare insurance/coverage for 20 million people?

How will the Trump Administration replace coverage for 20 million people? On June 22, the Republicans unveiled a plan that included:

• Enacting a refundable tax credit for Americans who don’t have employer-provided health insurance.
• Expanding the use of private health savings accounts (HSAs) and high deductible health care plans.
• Modifying existing laws that inhibit the sale of health insurance across state lines. Many Republicans feel that allowing insurers to offer approved insurance in any state will increase the competition and drive down the cost of plans.
• Funneling the costliest patients to high-risk pools. The ACA sought to bring young, healthy people into the pools to spread risk. However, the Republicans believe taking the sickest, hardest to insure out of the marketplace and putting them into subsidized state-based, high-risk pools will drop the price of insurance for everyone else.
• Restructuring the Medicaid and Medicare programs. This involves block granting Medicaid to the states, so they could experiment with strategies best tailored to their needs. In the context of Medicare, the proposal moves to a “premium support” model where seniors choose a private health plan.
• Increasing the level of transparency. Long at the heart of consumer-directed health care advocates, Trump has specifically called for price transparency from all healthcare providers, “especially doctors and healthcare organizations like clinics and hospitals.”

Pharma, FDA, and Research Funding

Moving beyond repeal and replace, what does the Trump presidency mean for the pharmaceutical industry and patient advocates? Some of this comes together in the 21^st Century Cures Act, but we’ll get to that in a moment.

For industry, the scenario under President Trump is looking more positive. Initially, Trump advocated for Medicare to negotiate better prices on drugs. He also advocated the importation of drugs from foreign sources. In recent months, he’s said less about these ideas, and he’ll probably run into a firewall of Republican opposition if he moves too far in the direction of either one. Of course, that’s assuming the pharma executive guiding his transition team or the New Jersey governor who has his ear and is intent on protecting a dominant home-state industry ever let the ideas go that far.

The 21^st Century Cures Act has long been a priority to complete this year. Initially passed by the House in 2015, the bill and its Senate companion ease FDA restrictions on the development of new drugs and devices. In exchange for agreeing to less regulations, Democrats secured additional funding for FDA and $10 billion in new research money for NIH over the next five years. Inclusive in this amount is funding for the Cancer Moonshot and the Precision Medicine Initiative, two items strongly favored by President Obama and Vice President Biden.

On Wednesday, Senate Majority Leader Mitch McConnell expressed a desire to pass the bill in the upcoming Lame Duck session, but there are some indications the Democrats may not go along now. Why? Democrats are concerned that easing restrictions on the FDA now will be giving away too much in advance of next year’s reauthorization of the Prescription Drug User Fee Act, which will give Republicans another chance to reduce FDA restrictions.

Still, the 21^st Century Cures Act has strong bi-partisan support. If Republicans are truly intent on limiting government spending, it may be the best chance for advocates to get a large increase in research funding as long as Republicans control Congress and the White House.

Final Thoughts

The rapid evolution of our healthcare system that began over the last eight years encompasses more than just Obamacare. The systemic changes in healthcare delivery including the adoption of HIT through the HITech Act, the movement away from a fee-for-service model (including the adoption and implementation of MACRA), and efforts to support better disease management are additional aspects of reform that will continue moving forward. Setbacks or fights over issues like the scope and reach of the Center for Medicare and Medicaid Innovation may occur, but by and large, systemic healthcare delivery reform will continue while we fight over health insurance reform.

In the next several months, beginning with the debates over key appointments at HHS and other health-focused agencies, significant opportunities will emerge for committed stakeholders to make their voices heard. But be assured that with the re-emergence of one party control of Washington, issues will move faster. Gridlock will be reduced. Success in pressing an agenda will go to those who can unite quickly, amplify their voices best, and communicate clearly.

JPA encourages its clients to have a seat at the table as these issues evolve. Call us if you would like to discuss these concepts further, plan your approach to advocate for your point of view, or strategize how to participate in the process and/or get your voice heard.