Initial Analysis: The Impact of the Election on Healthcare

Have you been wondering about what the impact of the election will be on health policy and healthcare?

Over the past few months, TripleTree has had numerous conversations with policy experts and healthcare executives to gain a better perspective on the future of healthcare, post-election. In this blog we will distill what we have heard over the course of our many conversations.

The overarching view is that very little, if any, major reform will occur in the near-term. For example, a full repeal of the Affordable Care Act (ACA) would require a 60-vote threshold to avoid a filibuster, which is unlikely. Additionally, any change attempted through the process of reconciliation will take time as Congress establishes a new budget. While reform is expected, any major reform will be challenged by a lack of bipartisan support.

The following is what we’ve heard from policy experts and healthcare executives regarding potential changes:

Medicare Advantage:

Approximately 18 million beneficiaries are currently enrolled in privately administered Medicare Advantage (MA) plans. MA plans have grown steadily at a 10% CAGR over the past decade. Throughout President-Elect Trump’s campaign, he was relatively silent on the topic of Medicare Advantage, although Speaker Paul Ryan has been more vocal in his support to further privatize MA. Subsidies for Medicare Advantage were decreased in 2010 as part of the ACA, and there will likely be proposals from Republican members of Congress to increase the subsidies and improve the ease of transitioning from traditional Medicare into MA programs. Given the complexity of any Medicare Advantage legislative reform, it is unlikely any major change will occur.

Managed Medicaid:

Will Medicaid Expansion be repealed? It is very unlikely President-Elect Trump will take healthcare coverage away from millions of low-income Americans. One concept to fund Medicaid proposed by some Republicans is federal block-grants or per-capita funding to the states. This initiative would continue to favor Medicaid health plans as states would need to attempt to improve managed care to minimize costs and increase quality. Work (or work-seeking) requirements also appear likely. In all scenarios, experts expect additional personal accountability for Medicaid beneficiaries. For example, Vice President-Elect Pence implemented preventative care incentives as part of his “Healthy Indiana Plan 2.0”.

Public Exchanges:

One of the most frequently derided components of the ACA, public exchanges, are likely to be repealed by the Trump administration. Health insurance carriers with significant exposure to the public exchanges will need to find other ways to distribute their plans to individuals and small groups directly and via brokers and other marketplaces. These carriers may also attempt to expand into other commercial and government-funded markets. The fully-insured individual and small group markets are not going anywhere and may potentially grow in popularity if Republicans create tax deductions for individual plans. Questions regarding individual mandates and coverage of pre-existing conditions will likely remain unanswered in the near term.

Consumerism:

President-Elect Trump has repeatedly stated his intent to increase price transparency, enable insurance plans to be sold across state lines, and increase free-market competitive dynamics to the healthcare ecosystem. The President-Elect’s stated plan would provide tax breaks for individual healthcare spending in combination with the removal of the requirement to buy insurance – placing more decision making in the hands of individual consumers. This should further benefit the tools and health services designed around consumer needs.

Health Savings Accounts:

Prior to election, President-Elect Trump demonstrated strong backing for Health Savings Accounts (HSAs), indicating his support for larger contributions and passing along the funds to heirs without penalties. More individual accountability across commercial and government-sponsored plans, along with tax deductibility of all health insurance premiums, could become a catalyst to increase adoption of HSAs or similar consumer-driven accounts. It is also likely the Republican administration will not enact the “Cadillac tax” on high-value health insurance plans that could have potentially created disincentives for HSAs.

Value-Based Reimbursement:

The movement to transform the U.S. healthcare system from fee-for-service to fee for value has been touted as critical to decreasing healthcare cost inflation. The concept has largely received bipartisan support and increasing support across both payers and providers. Most of the momentum in the past year has been led by the Centers for Medicare and Medicaid Services (CMS), with private payers expanding their programs in the wake of CMS initiatives. While the Trump administration will likely make personnel changes at CMS and may change the actual programs over time, it is likely the concept will stay in place and market participants that have developed capabilities to succeed under value based reimbursement will be well suited for future growth opportunities.

Providers:

Since the inception of the ACA, providers have spent notable time and investment in order to meet reporting and regulatory requirements. The GOP’s proposed healthcare blueprint outlines increased price transparency from all healthcare providers including physician offices and hospitals. It remains unclear what regulatory requirements could be implemented in this regard, however, incremental price transparency could have a positive impact for consumers who are price-conscious. Conversly, changes in current pricing and reimbursement models could challenge revenues and profits for providers.

Pharmaceuticals:

Increased price transparency for prescription drugs has been a growing trend, however, legislative change could be an accelerant. President–Elect Trump has repeatedly stated his intent to allow Medicare to negotiate drug prices directly with drug manufacturers. The President-Elect has also stated his intent to allow overseas drug-importation. The potential impacts and challenges of this are far ranging, from pricing to quality controls and / or risk of counterfeit drugs. On the flip side, trade reform could allow pharmaceutical companies to experience a lift from overseas exports and potential longer patent exclusivity rights. Any potential trade reform would be equally dependent upon other countries’ willingness to participate.

We will continue to monitor developments related to health policy and healthcare reform in the coming months and beyond.