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 – July 31, 2017

Trump administration: What’s next for health reform?
In the wake of last week’s dramatic failure in the US Senate to repeal or replace any of the Affordable Care Act (ACA), lawmakers from both chambers and parties are making new efforts to address health reform. Among them are a small group of Republican lawmakers, including Rep. Mark Meadows, R-N.C., chairman of the conservative House Freedom Caucus, and Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La., according to media reports. Another group, called the Problem Solvers Caucus, consists of 40 Republican and Democratic House members working on bipartisan improvements to the ACA while calling on their fellow lawmakers to stabilize the ACA’s exchanges, according to press reports. President Donald Trump has suggested that the government should stop paying insurers billions in ACA cost-sharing reduction payments, which would likely cause the exchanges to deteriorate. These payments sit at the center of a growing legal morass. Some Republican lawmakers, including Sen. Majority Leader Mitch McConnell, R-Ky., have indicated they are ready to move on from health reform to other legislative priorities, including tax reform, the budget and raising the debt ceiling. Lawmakers also must address healthcare issues unrelated to reform, such as passing CHIP reauthorization.

HRI impact analysis: Lawmakers appear most likely to turn to other pressing legislative priorities as time grows short before the end of the fiscal year and other deadlines. Little is likely to get done in August, as House members have started their recess and the Senate may recess as early as today. The healthcare industry should continue to use scenario planning and determine what potential policies could mean for their business. They also should closely monitor regulatory actions taken by the administration, which has wide latitude in administering the ACA. For example, HHS Secretary Tom Price has suggested he is willing to expand waivers on the ACA’s individual mandate, which could significantly affect individual markets in some states.

Trump administration: CMS could cut billions in uncompensated care for hospitals starting in October
The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule last week outlining up to $43 billion in cuts over 10 years to Medicaid disproportionate share hospital (DSH) allotments, starting in October. Under the proposed rule, DSH allotments would be reduced by $2 billion in 2018. Cuts would increase by $1 billion each year until 2024 and 2025, when payments would be cut by $8 billion. DSH payments are funds the federal government provides to offset hospitals’ uncompensated care costs, thus improving access for Medicaid and other uninsured patients. The ACA originally instituted the cuts, which were supposed to start in 2014, but Congress delayed them three times. CMS is accepting comments until Aug. 28.

HRI impact analysis: An April 2017 analysis by the Medicaid and CHIP Payment and Access Commission (MACPAC), an independent government panel, found that though hospital uncompensated care is falling nationally—particularly in ACA Medicaid expansion states—hospitals serving the highest share of low-income patients continue to report negative operating margins. For these hospitals, Medicaid reimbursement was $16.2 billion short of actual hospital costs in 2015, according to an analysis by the American Hospital Association (AHA). Without continued DSH payments, safety-net hospitals could be forced to reduce services or cut their workforces, according to an article in Modern Healthcare. Given the payments’ history, it’s possible the cuts will be delayed again. The AHA and America’s Essential Hospitals, two influential advocacy groups, said they plan to urge Congress to delay the cuts a fourth time. But most major Republican proposals to repeal and replace the ACA have included reductions in federal Medicaid spending, suggesting that another delay may not be assured.

Highlights – July 24, 2017

Trump administration: Senate Republicans fail to pass repeal/replace legislation
In a dramatic vote taken around 1:30 am Eastern Friday morning, Senate Republicans again failed to win enough votes to pass legislation to repeal and replace provisions of the Affordable Care Act (ACA). The early morning vote focused on the Health Care Freedom Act, also known as the “skinny repeal,” which fatally failed to win the support of three Republican senators - Sen. Susan Collins of Maine, Sen. John McCain of Arizona and Sen. Lisa Murkowski of Alaska - or any Democratic senators. The 49-to-51 vote capped a week of frantic legislative activity revolving around Republican senators’ other repeal/replace legislation, including the Obamacare Repeal Reconciliation Act (failed 45-55) and the Better Care Reconciliation Act (failed 43-57). The early morning failure of the “skinny repeal” legislation, barely eight pages long and released just a few hours before the vote, marks a critical setback for the Republican health reform effort. As of Friday morning, it appeared the Senate would move on to other legislative priorities, but it was not entirely clear whether the health reform effort would truly be set aside. A bipartisan ACA “repair” effort is possible. HRI and Strategy&, PwC’s strategy practice, modeled a “repair” scenario in a recent report, Health reform 2.0: A guide to developing resilience amid an uncertain future for the Affordable Care Act.

HRI impact analysis: Even if the House and Senate take a break from their efforts to repeal and replace the ACA, the administration still has power to strengthen or weaken the law. The words “The Secretary shall” appears more than 1,400 times in the ACA, giving the HHS Secretary significant authority over the functioning of the law. Other branches, such as the Internal Revenue Service and the Department of Justice, also can impact the ACA. President Donald Trump has, in an executive order, Tweets and speeches, called for letting the law falter. Shortly after the “skinny repeal” failed, President Trump Tweeted, “let ObamaCare implode.” Health organizations may see continued uncertainty around ACA measures, health policy changes and other issues, such as the question of whether the federal government will continue to make cost-sharing reduction (CSR) payments to insurers. The administration’s decision to leave the fate of those payments up in the air each month has led insurers to raise premiums for ACA plans and pull back from participating in the marketplaces. Health organizations should build enterprise resilience to steel themselves in the face of the continued uncertainty.

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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

The FDA’s new commissioner, Dr. Scott Gottlieb, has extensively argued that the agency is in need of regulatory reform meant to get critical medical products to patients more quickly and efficiently. Gottlieb’s previous statements signal a greater likelihood of significant change at the FDA, which has been given new authority – both statutory and executive – by legislators and President Donald Trump to streamline and accelerate the way it regulates. As change takes place, life science companies may benefit and find reasons to celebrate – but so, too, will their competitors. 

Read HRI's spotlight, The FDA leans forward: Dr. Scott Gottlieb’s opportunity to reshape the agency


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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