HRI's analysis of the 2016 presidential election results
Trump transition: Promising dramatic change for the health industry, Donald Trump becomes 45thUS President today
President-elect Donald Trump will take the oath of office at noon Eastern Standard Time today. During his campaign and transition period, President-elect Trump has promised profound change for the industry, including repealing and replacing the ACA, changing the corporate tax structure, imposing tariffs on imports and bringing down drug prices.
A key figure in President-elect Trump’s push for health reform likely will be US Rep. Tom Price, R-Ga., the nominee for HHS secretary. Price, who answered questions during his first, courtesy, confirmation hearing this week, sponsored one of the most detailed Republican replacement plans, the Empowering Patients First Act. That plan repeals the ACA and replaces it with expanded use of health savings accounts, sales of insurance plans across state lines, limited age-based tax credits to help consumers pay for premiums, limited guarantees of coverage related to pre-existing conditions, $3 billion in federal funds over three years to help fund state high-risk pools and tort reform, among other provisions. Seema Verma, Trump’s choice to head CMS and an architect of Vice President-elect Mike Pence’s Medicaid expansion plan during his time as governor of Indiana, likely will join Price as a key policymaker in the Trump administration.
HRI impact analysis: Healthcare reform will be a priority for the Trump administration’s first 100 days. In media interviews, President-elect Trump has indicated he will be ready to reveal a replacement plan once Price is confirmed. President-elect Trump can make some changes relatively quickly without congressional action, such as changing contraception coverage rules, via executive order. Republicans in Congress have enough votes to repeal ACA budget-related provisions, such as Medicaid expansion, premium subsidies, mandates and taxes, through the budget reconciliation process, which they launched this month. To repeal and replace the rest of the law, including provisions such as guaranteed issue and allowing children to stay on their parents’ policies until age 26, the GOP will need bipartisan support in the Senate.
On Tuesday, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) released an update to an analysis conducted a year ago of a partial ACA repeal. That analysis examined HR 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015, which likely will serve as a template for the GOP’s partial ACA repeal through budget reconciliation. In their update, the CBO and JCT concluded that a partial repeal would result in 18 million more uninsured in the first year, rising to 32 million by 2026. Premium rates in the individual market would rise 20 to 25 percent in the first year and double by 2026, the groups concluded. CBO and JCT also wrote that a year after repeal of marketplace subsidies, insurers would leave the nongroup market covering about 50 percent of the US population, and by 2026, 75 percent of the population would live in areas without any nongroup coverage. Since the election, trade associations such as AHA, AHIP and AMA have weighed in on GOP plans for the ACA, in some cases voicing particular concern about a partial repeal and delay of a replacement.
Trump transition: President-elect Trump warns pharmaceutical industry about pricing, manufacturing
President-elect Trump last week issued several stark warnings to the pharmaceutical and life sciences sector. In his first press conference since the election, he said that companies in the industry “are getting away with murder” by charging too much for drugs. He also was critical of the sector for manufacturing products outside of the US. “They’re politically protected, but not anymore,” he told The Washington Post, and said one way he could move drug prices was through tweets. Calling the industry “disastrous,” Trump said, “We have to get our drug industry coming back. … They’re leaving left and right.” Trump also said he would like to see more “bidding” on drugs, but gave no further details on that.
HRI impact analysis: President-elect Trump’s remarks come at a politically tumultuous time for the pharmaceutical industry, which has come under fire by consumers and politicians for drug pricing. While total spending on drugs has risen in the last 10 years, mean out-of-pocket spending on prescriptions has fallen for privately insured individuals since 2005, an HRI analysis found. President-elect Trump said his team is finishing a potential ACA replacement plan, and his administration will oversee the 21st Century Cures Act implementation and the prescription drug user fee program reauthorization. An adversarial relationship with the administration could be problematic for the pharmaceutical industry.
Trump transition: Dr. David Shulkin nominated for top VA post
President-elect Trump has nominated Dr. David Shulkin for secretary of the US Department of Veterans Affairs (VA). Shulkin is currently the undersecretary of health at VA. A board-certified internist and Obama administration appointee, Shulkin led the VA’s efforts to improve healthcare access for veterans after investigations by CNN and other media in 2014 found serious problems with access to timely care. Before joining the VA in 2015, Shulkin was president of Morristown Medical Center in Morristown, N.J., and was CEO of Beth Israel Medical Center in New York City. In 2000, Shulkin founded DoctorQuality, a website offering physician quality ratings, safety reporting and other consumer tools.
HRI impact analysis: Reports of VA’s outdated information technology infrastructure and uneven quality across its 1,300 clinics and hospitals may foster new opportunities for private-sector collaboration. In testimony last summer before the Senate Committee on Veterans' Affairs, Shulkin advocated for a cloud-based digital health platform and shifting to a commercial, off-the-shelf electronic health record system that would improve or replace the VA’s vast system. The VA also has shown a willingness to pilot new technologies and care models, such as telehealth. Shulkin’s past experience in academic medicine and healthcare software may energize efforts to modernize the agency’s technology and improve consumer access to health information and services. While Shulkin has strong healthcare credentials, in his new role he would be responsible for all parts of the VA enterprise, including the Veterans Benefits Administration, which manages disability and educational benefits, among other things; the National Cemetery Administration; construction; and acquisitions.
Transition highlights – January 9, 2017
Trump transition: AMA, Trump join against “repeal and delay”
As Republican lawmakers prepared legislative moves to repeal some parts of the Affordable Care Act (ACA), the American Medical Association (AMA) released a letter urging Republican and Democratic leadership in the House and Senate to unveil a replacement bill before any repeal. The letter, released Jan. 3 and signed by AMA CEO Dr. James Madara, cited the effect “repeal and delay” could have on the number of uninsured without a simultaneous replacement plan. “Patients and other stakeholders should be able to clearly compare current policy to new proposals so they can make informed decisions about whether it represents a step forward in the ongoing process of health reform,” Madara wrote. President-elect Donald Trump also weighed in Wednesday in his first press conference since the election, saying that a bill will be introduced shortly after the confirmation of his nominee for HHS, Rep. Tom Price, R-Ga. A replacement plan will “most likely be on the same day or the same week, but probably the same day, could be the same hour” as a repeal, the President-elect said.
HRI impact analysis: The AMA joins America’s Health Insurance Plans (AHIP) and the American Hospital Association (AHA) in raising concerns about the “repeal and delay” strategy. Several Republican politicians, such as Sen. Rand Paul of Kentucky, Ohio Gov. John Kasich and Michigan Gov. Rick Snyder,also have voiced concerns. Republicans will be able to repeal budget-related provisions of the ACA with a simple majority in the Senate via the budget reconciliation process, which crept forward this week with a 51-48 Senate vote Thursday morning to adopt a budget resolution. Republicans in Congress have yet to unite around a plan, and Trump has not offered support for any specific plan. One of the most detailed plans is Rep. Price’s Empowering Patients First Act.
Trump transition: Newest White House health policy aide named
President-elect Trump tapped Katy Talento to join the White House policy team as a healthcare adviser. Talento is legislative director for Sen. Thom Tillis, R-N.C. According to Talento’s LinkedIn page, she was vice president of corporate affairs at MosquitoZone International, a company specializing in fighting vector-borne diseases, and had served on the Senate Committee on Homeland Security and Governmental Affairs and the Senate Federal Financial Management Subcommittee. Talento has a bachelor’s degree in sociology from the University of Virginia and a master’s degree in epidemiology from Harvard University.
HRI impact analysis: Talento joins a White House domestic policy team headed by Andrew Bremberg, a former HHS staffer in President George W. Bush’s administration. Bremberg has been leading Trump’s transition at HHS. Talento and Bremberg, along with Price, will help shape the Trump administration’s health policy strategy, which could include block-granting Medicaid, shifting power to the states, age-based tax credits for buying insurance, tort reform and free-market-friendly reforms. Bremberg also served on presidential candidate Mitt Romney’s transition team in 2012, where he worked on developing an ACA repeal strategy.
Transition highlights – December 12, 2016
Trump transition: AHIP outlines solutions for a stable, competitive individual market
In a memo released last week, America’s Health Insurance Plans (AHIP) laid out its proposals for creating short-term stability and long-term improvements to the individual market. With president-elect Donald Trump and Republicans in Congress pledging to quickly "repeal and delay" the Affordable Care Act, AHIP stressed avoiding coverage disruption by funding transitional programs similar to ACA measures such as cost-sharing reductions and reinsurance through 2019. AHIP also advocated for the maintenance of sufficient funding for Medicaid. AHIP, which represents 1,300 health insurers, expressed support for the use of tax credits and high-risk pools to keep coverage affordable. Both have been flagged as potential solutions by the new administration.Acknowledging the individual mandate’s likely end, AHIP emphasized the importance of finding other incentives to encourage people to sign up for coverage, such as late enrollment penalties. AHIP also supported extending insurers’ deadlines for filing exchange products in 2017 for the 2018 enrollment season.
HRI impact analysis: Health industry trade associations are beginning to release public statements outlining their views ahead of the new administration’s arrival. Some of these associations, such as the American Hospital Association and the American Academy of Actuaries, have said that repealing or defunding the ACA without an immediate replacement plan could disrupt the market. Industry associations and trade groups should closely monitor incoming HHS officials and their policy goals. And healthcare associations should send policy ideas to transition leaders to help inform the president-elect’s 2017 healthcare policy agenda.
Trump transition: House Republicans’ motion granted to halt ACA subsidies case
A federal appeals court granted House Republicans’ motion to delay a hearing on the constitutionality of ACA’s cost-sharing reduction (CSR) payments. CMS pays CSR subsidies to insurers to reduce out-of-pocket costs for lower-income consumers shopping for coverage on ACA exchanges. The payments were ruled unconstitutional in May by a U.S. District Court judge. President Barack Obama’s administration and HHS Secretary Sylvia Burwell appealed the ruling. The appeals court ordered both parties to file motions for future proceedings by Feb. 21.
HRI impact analysis: With President-elect Donald Trump’s inauguration next month, Republicans will serve as plaintiff and defendant in this case. If the Republican administration drops its appeal, or if the court’s ruling is upheld on appeal, cost-sharing subsidies would disappear. This could lead insurers to raise premiums or leave the exchanges. If insurers pass those costs on to consumers, some may no longer be able to afford insurance.
Transition highlights – December 5, 2016
Trump transition: AHA asks President-elect Trump for regulatory relief, drug price policies
In a pair of letters, the American Hospital Association (AHA) asked President-elect Donald J. Trump to reduce health systems’ regulatory requirements and address drug prices. The AHA, which represents 5,000 hospitals and health systems, asked the president-elect to cancel Stage 3 of the meaningful use program and suspend the hospital star ratings system, among other requests. Regarding escalating drug prices, the AHA argued for new policies such as allowing drug reimportation, providing mandatory drug rebates, and limiting generic drug “pay-to-delay” deals and patent “evergreening,” both of which delay generic drugs’ availability. With the president-elect expressing support for repealing and replacing the ACA, the AHA also recommended preserving ACA-linked alternative payment models and expanding them to a broader range of clinicians.
HRI impact analysis: A financial impact study released by the AHA and the Federation of American Hospitals found that repealing the ACA without replacing it would cost hospitals $165 billion from 2018 to 2026 and result in massive job losses. Several of the policy recommendations contained in the AHA letter – such as loosening meaningful use requirements and reforming Medicare – also overlap with provisions in the 21st Century Cures Act, pending legislation that the AHA supports. Healthcare organizations should pay close attention to incoming HHS officials and their policy goals. Healthcare associations should send distinct policy ideas to transition leaders to help inform the president-elect’s healthcare policy agenda in 2017.
Transition highlights – November 28, 2016
Trump transition: Nominees for HHS, CMS named
Early Tuesday morning, President-elect Donald J. Trump announced Rep. Tom Price, R-Ga., as his nominee for HHS secretary. Rep. Price, an orthopedic surgeon, is chairman of the House Committee on the Budget and sits on the House Ways and Means Committee, including its Subcommittee on Health. A vocal Affordable Care Act (ACA) critic, Price developed a bill – the Empowering Patients First Act – to repeal and replace President Barack Obama’s health reform law. Price’s plan repeals the ACA Medicaid expansion and offers consumers tax credits of $900 to $3,000 a year to help pay for premiums based on age, not income. It also allows insurers to impose pre-existing condition exclusions in some cases, supports high-risk pools with $3 billion in federal funds over three years and allows for insurance sales across state lines with some limitations. The 242-page plan limits health insurance tax breaks for employer-based insurance to $8,000 for individual coverage and $20,000 for family coverage, and it introduces tort reform measures, among other provisions.
On Tuesday, Trump also named Seema Verma as his CMS administrator nominee. Verma is founder and CEO of SVC Inc., an Indianapolis-based health policy consulting firm. She and SVC have expertise in Medicaid reform, including helping to design waiver programs for states such as Indiana, Iowa, Ohio and Kentucky and working on Medicaid projects in Tennessee, Michigan and Maine. Verma was a central figure in helping design Indiana’s Healthy Indiana Plan under then-Gov. Mitch Daniels and, later, Indiana’s Medicaid expansion waiver plan under Gov. Pence, now the Vice President-elect.
HRI impact analysis: Both Rep. Price and Verma have significant experience designing health reform packages that embody conservative goals. Price also understands the legislative tactics required to maneuver any ACA repeal and replace effort through Congress, where Senate Republicans hold too thin a majority to overcome Democrat filibusters. For example, Republican senators could use a budget reconciliation bill to repeal and delay many ACA provisions. In 2015, Price sponsored such a bill, which terminated provisions such as the individual mandate and medical device excise tax immediately but delayed ending measures such as the Medicaid expansion for about two years. That effort was vetoed by President Obama in February, but a similar measure likely would find a more favorable reception from the new administration.
Trump transition: FDA pauses plan to regulate laboratory developed tests
The FDA last week announced that it would no longer pursue a plan to regulate laboratory developed tests (LDTs) until President-elect Trump and the new Congress have a chance to weigh in on the proposal. Currently, CMS – not the FDA – oversees LDTs, which are tests developed within labs for their own use. LDTs differ from in vitro tests in that they arguably do not enter interstate commerce and do not require FDA approval. A guidance proposal released by the agency in 2014 would have subjected high- and moderate-risk LDTs to oversight by the FDA.
HRI impact analysis: The FDA’s decision represents one of the many ways healthcare regulation may be affected during the transition. The decision may be welcome news for the LDT community, which has threatened legal action against the FDA. However, traditional medical device makers may not welcome it; they have argued that LDTs compete against FDA-approved tests without having to meet the same requirements. Health organizations should identify regulatory proposals that are critical to their plans, and should prepare alternatives in case those proposals are shelved, reversed or delayed during the transition.
Transition highlights – November 14, 2016
Trump transition: Transition website launched with plans for healthcare
President-elect Donald Trump launched a transition website, www.greatagain.gov, offering new information about his plans for healthcare and a recruitment portal for people wishing to serve in his administration. According to the website, Trump plans to replace the Affordable Care Act (ACA) with a system that includes health savings accounts, high-risk pools and insurance sales across state lines, returning “the historic role in regulating health insurance to the states.” The website also lists proposals to reform the FDA, modernize Medicare, give states more flexibility with Medicaid programs and advance research and development. Some healthcare proposals mentioned by Trump on the campaign trail are missing from www.greatagain.gov, including allowing both the re-importation of drugs from abroad and the negotiation of drug prices by Medicare.
HRI impact analysis: Trump’s transition website states that his administration’s goal “will be to create a patient-centered healthcare system that promotes choice, quality and affordability,” words that echo President Obama’s drive toward value-based care. Trump’s broad message is, generally, one of reduced regulation, more power for the states and a more industry-friendly approach. Pharmaceutical manufacturers, for example, may benefit from Trump’s promise to speed reviews of new products. Trump may focus on eliminating the FDA backlog of generic drug applications, more industry collaboration and greater patient engagement. Insurers and providers face uncertainty around the fate of the ACA. As more details of his policies emerge over the coming months, healthcare organizations should model various scenarios to understand, and prepare for, their potential impacts.
Trump transition: More on fate of ACA
Trump this week said he is willing to keep some parts of the ACA, including provisions prohibiting insurance companies from denying coverage to consumers with pre-existing conditions and allowing children and young adults to stay on their parents’ insurance plans until the age of 26. “I like those very much,” Trump told The Wall Street Journal. He also told the newspaper that Obamacare could be “amended” instead of repealed and replaced. In a separate interview with CBS’ “60 Minutes”, Trump said he intends to have a transition period during which people who purchased insurance on the exchanges will still have coverage, even if the ACA is repealed.
HRI impact analysis: Without Democratic support, Republicans will find it difficult to repeal the ACA. Senate rules permit lawmakers to place holds on legislation using a filibuster, which requires 60 votes to end. Republicans, who hold 51 seats in the Senate, cannot break the filibuster on their own. However, Republican lawmakers could use a process known as budget reconciliation to dismantle parts of the law related to government spending with a simple majority vote. A previous budget reconciliation bill, vetoed by President Obama, called for an almost two-year delay in ending ACA provisions such as Medicaid expansion, premium assistance tax credits and reduced cost-sharing. The bill also called for the immediate elimination of provisions such as the individual mandate and of excise taxes on medical devices and high-cost employer-sponsored health coverage, also known as the “Cadillac tax.” Uncertainty may affect investments in efforts that depend on the ACA, such as certain value-based programs put forth by CMS’ Center for Medicaid and Medicare Innovation. Healthcare organizations will need to track legislative scenarios as they develop and consider their implications on strategy.
Transition highlights – November 7, 2016
How will Donald Trump’s presidency impact the health industry?
Following his first meeting with Republican leaders as president-elect, Donald Trump confirmed that healthcare will be among his top three priorities. During his campaign, Trump said repealing the six-year-old Affordable Care Act (ACA) would top his agenda during his first 100 days in office. As HRI’s latest report, “President-elect Trump: Turnaround time”, details, Trump also announced other proposals for the $3 trillion US health industry, including expanded use of health savings accounts, cross-state insurance sales, block-granting Medicaid and re-importation of medications. A newly-launched transition websiteadds to that list with endorsements for reviving high-risk insurance pools and reforming the FDA. Many of Trump’s healthcare proposals – such as cross-state insurance sales and turning Medicaid into a block grant program – echo reforms promoted by Republican lawmakers and policy experts for years. Others – such as the re-importation of drugs – are less familiar to his party colleagues.
HRI impact analysis: With Republican control of the House and Senate, Trump will have a shot at significantly impacting the ACA. The industry has spent six years adapting to the complex and comprehensive law, which reduced the number of uninsured by 20 million people and introduced provisions that are popular with the public, such as guaranteed issue, allowing young adults to remain on their parents’ plans until age 26 and filling the Medicare Part D “donut hole.” In its analysis of Trump’s healthcare proposals, HRI concluded that employers, who complained about the administrative costs of implementing the ACA, could find themselves spending money on changing employer policies and data systems to implement laws meant to replace the ACA, or parts of the law. Industry executives also have concerns about repeal or related scenarios, which would mean an end to revenue and tax provisions, including tax credits to offset premium costs. Medicaid expansion in its current form – which has decreased uncompensated care for providers – would presumably be reversed. At the same time, delivery reforms that providers have invested heavily in to accelerate the move toward paying for value could be scaled back.