HRI regulatory center

Regulatory and legislative updates and analysis


President Donald Trump: The latest healthcare developments

Comprehensive report: Health reform 2.0: A guide to developing resilience amid an uncertain future for the Affordable Care Act

President Donald Trump and Republican congressional leadership have promised to repeal and replace the Affordable Care Act (ACA). Just how that will happen remains unclear. For the nation’s healthcare providers, payers, pharmaceutical and life sciences companies, new entrants and employers, this uncertainty makes planning for the future a complicated matter. In this report, PwC’s Health Research Institute and the firm’s strategy practice, Strategy&, present a comprehensive analysis of scenarios for repealing and replacing the ACA, along with practical steps health organizations can take in this time of uncertainty. 

Read HRI and Strategy&'s report, Health reform: 2.0: A guide to developing resilience amid an uncertain future for the Affordable Care Act

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Guide to the American Health Care Act

On May 4, House Republicans passed the American Health Care Act (AHCA), which aims to partially repeal and replace the Affordable Care Act (ACA). As passed by the House, the AHCA would repeal $663 billion in ACA taxes and fees over 10 years, phase out the ACA’s expansion of the Medicaid program, cap federal Medicaid funding and cut it by $834 billion over 10 years, replace the ACA’s income-based premium tax credits and other subsidies with age-based ones, and give states flexibility to opt out of key ACA provisions (see Figure 1), according to analyses by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT). All told, 23 million fewer people likely would have insurance by 2026 compared with current law, according to the analyses. 

Read HRI’s spotlight, Trump administration health policy agenda: House passes the American Health Care Act

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Trump administration weekly highlights

Highlights – May 22, 2017

Trump administration: CBO/JCT release much-anticipated analyses of American Health Care Act
The American Health Care Act (AHCA)—the House Republicans’ bill to partially repeal and replace the Affordable Care Act (ACA)—would reduce federal deficits by $119 billion, taxes and fees by $669 billion, and federal Medicaid funding by $834 billion over the course of 10 years, according to analyses published by the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) on Wednesday. The bill would leave 23 million more people uninsured by 2026 than under current law. These new analyses examined the AHCA version that passed the House on May 4, and included an examination of the so-called “MacArthur Amendment.” That amendment, crafted by Rep. Tom MacArthur (R-NJ), offers states waivers to redefine essential health benefits and allows insurers to charge premiums based on health status for some consumers seeking coverage in the nongroup market. The CBO and JCT concluded that, for states that opt for waivers, nongroup premiums could decrease substantially for some due to skimpier coverage and the exodus of sicker, older customers from the market. (For a concise summary of the AHCA, please see HRI’s updated report on the bill, which will post this afternoon.)

HRI impact analysis: The new analyses show that the AHCA as it stands does not differ very much from earlier versions of the bill. Healthcare providers likely will feel the most impact given the deep cuts to Medicaid. The cuts are likely to increase bad debt, uncompensated care, and the number of uninsured consumers seeking care, and could lead to workforce reductions and increased mergers and acquisitions among hospitals and health systems. The AHCA does include restoration of $31 billion in funding over 10 years for Disproportionate Share Hospitals, but not a return to pre-ACA reimbursement rates.

National insurers are expected to face even greater variability across states as some opt for waivers and some do not. Medicaid managed care plans also could be affected as states experiment with block grants and other program design changes encouraged by the bill. Pharmaceutical and life sciences companies likely would not be affected significantly by the AHCA, according to HRI’s comprehensive analysis of scenarios for repealing and replacing the ACA.

The bill moves to the Senate next, where Republican lawmakers are working on their own version. If the Senate can pass a bill, the House and the Senate will form a conference committee and attempt a compromise. Because of the AHCA’s unique designation as a budget reconciliation bill, lawmakers likely have until Sept. 30—the end of the fiscal year—to send a bill to President Donald Trump for signing into law.

Trump administration: President’s budget calls for deep cuts to federal healthcare, public safety, medical research and safety-net spending
In its fiscal year 2018 budget proposal, the White House is seeking to cut HHS spending by $13.9 billion in 2018, and to cut overall health spending by $665 billion over 10 years. Included are cuts to NIH funding by $5.8 billion (-18 percent); the CDC by $1.3 billion (-17 percent); the FDA by $810 million (-31 percent); the Health Resources and Services Administration (HRSA) by $449 million (-4 percent) and the Substance Abuse and Mental Health Services Administration (SAMHSA) by $385 million (-9 percent). While Medicaid spending would decrease just $3.8 billion in 2018, federal contributions to Medicaid over 10 years would be reduced by $600 billion in addition to the $834 billion in Medicaid reductions sought by the House Republicans in their health reform bill, the American Health Care Act (AHCA). The budget also assumes an additional $250 billion in reduced federal spending over 10 years through health reform legislation, and $5.8 billion in cuts to the Children’s Health Insurance Program (CHIP) over 10 years. The White House budget lists $31.8 billion in reduced spending resulting from medical liability reform, which has not made it into any prominent health reform legislation yet. The White House budget also proposes dramatic cuts to social safety-net spending on programs such as community block grants and food stamps.

HRI impact analysis: Presidential budget proposals are non-binding political statements of spending and policy priorities. But the document provides a useful indication to regulated industries on what they can expect over the president’s term. President Trump’s budget indicates that sharp decreases in health and safety net funding and restructuring will be a hallmark of his approach to government spending, and that entities dependent on federal healthcare spending may anticipate fiscal challenges in the years ahead.

Entities dependent on the NIH’s research and development funding, such as academic medical centers and research colleges, could see fewer funds for studies or canceled studies. CHIP and Medicaid cuts could negatively affect providers, including safety-net hospitals and children’s hospitals, across the care continuum by tightening eligibility for enrollment and reducing reimbursement. Cuts at HRSA would reduce funding for rural health care delivery enhancements—such as for telehealth—and for AIDS under the Ryan White HIV/AIDS Program. SAMHSA would see $250 billion less in funding for mental health activities, which could affect preventive care and result in increased demand on providers for acute care services.

Highlights – May 15, 2017

Trump administration: Maine and Wisconsin propose innovation waivers that bring cost-sharing, work requirements, drug testing and other measures to Medicaid
Maine and Wisconsin expect Medicaid enrollments to decrease by up to 3 percent by 2022 if the innovation waivers they are seeking are approved and implemented. Both states are seeking Section 1115 waivers, which give states flexibility to test new ways of operating their Medicaid programs. Wisconsin and Maine want to require cost-sharing for some beneficiaries, including charging premiums based on income and requiring copayments for ER visits. Both states also want to establish benefit time limits on some Medicaid beneficiaries. Maine also would like to require some beneficiaries to work, and Wisconsin is seeking drug testing. The states expect these measures would eventually reduce Medicaid expenditures. Both states are seeking state-level public comment on their proposed waiver applications before the end of the month. Wisconsin announced the state will submit its application to CMS by May 26. As of Thursday, Maine had not announced an application submission date.

HRI impact analysis: The states’ proposals come two months after HHS Secretary Tom Price and CMS Administrator Seema Verma sent a letter to state governors encouraging them to apply for Section 1115 Medicaid waivers. Under the Obama administration, CMS had approved Section 1115 waivers in seven states that expanded Medicaid under the ACA, including Arkansas and Michigan. Maine and Wisconsin would be the first non-expansion states to apply. The Maine and Wisconsin proposals include provisions such as increased premiums similar to those proposed in the Healthy Ohio Program waiver, which was denied under the Obama administration. As states look to challenge Medicaid norms, they might find guidance in the details of Indiana’s waiver—approved during the Obama administration—of which Verma was chief architect. If the Maine and Wisconsin waivers are approved under Verma, the industry could see Medicaid waiver activity accelerate among non-expansion states, along with a proliferation of novel changes to their Medicaid programs.

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Payers: Trump administration briefs

As the debate over repealing and replacing the Affordable Care Act (ACA) moves to the US Senate, generating considerable uncertainty about the law’s future, health insurers face looming deadlines to participate in the ACA exchanges this fall. Several insurers already have announced they will drop or reduce participation, raising questions about the ACA nongroup market’s health as open enrollment begins Nov. 1.

Read HRI’s spotlight, Trump policy agenda – Exchange participation

 

After President Donald Trump and Republican leaders canceled a vote on the American Health Care Act (AHCA), the world became more complicated for health industry leaders and their consumers. Amid the multiple unknowns, health leaders may be tempted to wait for clarity. But in this atmosphere, it is even more important for organizations to lean into the unknowns and build resiliency. Healthcare companies can make some “no regrets” moves to build resilience amid periods of change and uncertainty.

Read HRI’s spotlight, What’s next for health reform?

 

As they mull the ACA’s fate, Republican lawmakers are weighing four options to replace the individual mandate. Any replacement to the mandate would need to accomplish two goals: encourage sign-ups by healthy enrollees, and discourage voluntary coverage gaps.

Read HRI’s spotlight, Replacing the individual mandate

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Providers: Trump administration briefs

After President Donald Trump and Republican leaders canceled a vote on the American Health Care Act (AHCA), the world became more complicated for health industry leaders and their consumers. Amid the multiple unknowns, health leaders may be tempted to wait for clarity. But in this atmosphere, it is even more important for organizations to lean into the unknowns and build resiliency. Healthcare companies can make some “no regrets” moves to build resilience amid periods of change and uncertainty.

Read HRI’s spotlight, What’s next for health reform?

 

The American Health Care Act (AHCA) aims to partially repeal and replace the ACA, by phasing out the ACA’s Medicaid expansion and capping federal funding for the program, among other things. Under the AHCA’s Medicaid plans, healthcare providers could experience a gradual increase in uncompensated care, cuts in Medicaid reimbursement rates, or both.

Read HRI’s spotlight, Implications of phasing out Medicaid expansion


Republican lawmakers are promoting Medicaid block grants as a way to control federal healthcare spending. Providers can expect a shift from an entitlement to a free market Medicaid approach, along with a possible rise in the uninsured population or decrease in reimbursement.

Read HRI’s spotlight, Medicaid block grants and per capita funding

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Pharma and life sciences companies: Trump administration briefs

As the US tax and trade reform debate continues, pharmaceutical and life sciences companies should waste no time in evaluating how different provisions would affect their business operations. Companies should model how these proposed changes could affect manufacturing and supply chains, locations of intellectual property (IP) holdings, unremitted earnings held overseas and planned capital expenditures.

Read HRI’s spotlight, Creating a pharmaceutical supply chain and business strategy amid tax and trade reform uncertainties


After President Donald Trump and Republican leaders canceled a vote on the American Health Care Act (AHCA), the world became more complicated for health industry leaders and their consumers. Amid the multiple unknowns, health leaders may be tempted to wait for clarity. But in this atmosphere, it is even more important for organizations to lean into the unknowns and build resiliency. Healthcare companies can make some “no regrets” moves to build resilience amid periods of change and uncertainty.

Read HRI’s spotlight, What’s next for health reform?

 

President Trump has consistently argued for lower prescription drug prices, but no specific plan has emerged from the White House. Pharmaceutical and life sciences companies are beginning to take steps to increase drug price transparency, limit price increases and explore novel approaches to demonstrate the pharmacoeconomic value of medicine, in light of pressure from all sides to justify pricing decisions.

Read HRI’s spotlight, Preparing for new drug-pricing risks


Tax proposals from the Trump administration could result in pharmaceutical, medical device and medical equipment companies restructuring their supply chains, repatriating overseas capital, and moving manufacturing back to the US. Such reforms, though, pose a sharp deviation from current global operational structures and thus could take years to be fully realized.

Read HRI’s spotlight, Tax reform proposals could impact pharma, medical device and equipment supply chains

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Health industry strategy: Trump administration briefs

Healthcare reform efforts by Congress will create challenges and opportunities that may require changes in operating models across the US healthcare industry. As the legislation undergoes debate and negotiation in Congress, healthcare organizations face considerable uncertainty. Organizations that have developed enterprise resilience—the ability to adapt the business model to change, anticipate disruption and recognize opportunities to generate a competitive advantage—may be best positioned to survive and thrive in these conditions.

Read HRI’s spotlight, Developing enterprise resilience in the face of health reform

 

The inaugural festivities are over, the revelers have gone home, and President Donald Trump has moved into the White House. With so much change in the air, what actions can health organizations take today?

Read HRI's spotlight, (Some) change is coming to healthcare

 

As the American Health Care Act (AHCA) bill makes its way through the legislative process, the nation’s healthcare industry is left to contend with considerable uncertainty. However, there are concrete steps healthcare stakeholders can take in the whirl of uncertainty to help build resilience no matter what specific policy provisions are enacted.

Read Strategy&’s article, Why Healthcare Companies Need to Focus on Enterprise Resilience

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2016 election insights and analysis

Like a chief executive hired to turn a failing company into a profitable one, president-elect Trump has said he will take an unflinching corporate approach to overhauling the US healthcare system. For an industry that prefers stability to surprises--and one that has worked to adapt to the Affordable Care Act—Trump’s “repeal and replace” agenda may create new uncertainty and opportunity for healthcare leaders.

Read HRI's report, President-elect Donald Trump: Turnaround time

 

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About the center

As the US healthcare system continues to undergo transformation, health industries are confronted with an evolving and complicated regulatory environment. With an eye towards how public policy impacts the business of healthcare, the HRI regulatory center serves as a vital resource for executive decision makers who must navigate the changes that lie ahead.

HRI's regulatory center is a group of seasoned professionals that analyze legislative and regulatory policy in Washington and in key states. The group, which focuses on all health sectors, publishes a weekly newsletter and more focused reports that detail the interconnection between Washington and healthcare. The HRI regulatory center calls upon key contacts in government and industry to develop a point of view that is both informative and actionable for health industry leaders.
 

Contact us

Benjamin Isgur
Health Research Institute leader
Tel: +1 (214) 754 5091
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Trine K. Tsouderos
HRI Regulatory Center Leader
Tel: +1 (312) 241 3824
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Alexander Gaffney
Senior Manager, PwC Health Research Institute, Washington
Tel: +1 (202) 414 4309
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