HRI Trump administration spotlight: Policy impacts on pharma and life sciences
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.
HRI Trump administration spotlight: (Some) change is coming to healthcare
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?
HRI's analysis of the 2016 presidential election results
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.
Trump administration highlights – Feb. 6, 2017
Trump administration: New rule aims to stabilize ACA exchanges
The White House has submitted a rule to the Office of Management and Budget aimed at bringing stability to the ACA’s health insurance exchanges in 2018. Details have not been made public, but early reports suggest it could tighten requirements for enrolling in coverage outside the standard enrollment window, allow insurers to shift more costs onto consumers, reduce consumers’ grace period for failing to pay premiums, and give insurers more leeway to vary premiums based on age.
The rule is set to come as the ACA’s fourth enrollment season drew to a close with 9.2 million people selecting health plans through HealthCare.gov, slightly lower than last year’s 9.6 million. Enrollment numbers from some of the state-run exchanges are still pending, but it’s unlikely that HHS will reach its goal of signing up 13.8 million people for ACA coverage in 2017.
HRI impact analysis: Insurers have told lawmakers they need more clarity on exchange rules and assurance that steps will be taken to stabilize the marketplace before they start submitting premium requests for 2018 plans in April. Some insurers have already expressed doubt about participating. The proposals under consideration by the Trump administration are consistent with some of the insurance sector’s suggestions for bringing short-term stability to the market, but it’s unclear whether the measures go far enough to stem an exodus of insurers. For instance, the ACA sets age band requirements at 3 to 1, meaning insurers cannot charge older customers more than three times what they charge younger enrollees. Insurers have said that expanding the band to 5 to 1 would allow them to reduce premiums and attract young, healthy consumers to help balance the costs of sicker enrollees. Smaller tweaks in the age band may not have enough of an impact for insurers.
Trump administration: Some clarity on the two-for-one executive order
A memo released by the White House last week provides guidance to government agencies for implementing President Trump’s executive order, Reducing Regulation and Controlling Regulatory Costs,which requires federal agencies to identify two regulations for elimination before introducing a new one. The order also sets a budget for regulations.
The memo answers some questions raised by the order, including which regulations are covered by it and how regulation costs should be calculated. The memo clarifies that the order applies to any “significant regulatory action,” as defined by section 3(f) of Executive Order 12866 issued by President Bill Clinton. This could include any rule that would have an annual effect on the economy of $100 million or more, creates an inconsistency or interferes with an action issued by another agency, or materially alters the budgetary impact of entitlements, grants, user fees or loan programs. The memo states the “opportunity cost to society” as defined under OMB Circular A-4 should be considered when calculating costs and benefits of a proposed rule. Independent government agencies, such as the Social Security Administration, FTC and the Consumer Product Safety Commission, are spared from this order’s requirements, as are spending rules that cause income transfers from taxpayers to beneficiaries, such as rules governing Medicare spending.
HRI impact analysis: The memo gives federal agencies a framework for implementing the executive order. CMS and FDA will have to determine whether a new proposed rule meets the definition of a “significant regulatory action,” and if so, must identify at least two regulations to cut. The agencies also will have to calculate regulations’ costs and create ways to put the two-for-one rule in place, which could slow the process.
Trump administration: Health industry weighs in on executive order on immigration
The US health industry, which employs thousands of immigrants and treats many foreign patients, is awaiting a judicial decision regarding President Trump’s Jan. 27 executive order temporarily suspending entry for residents of seven nations and admissions of refugees. On Feb. 3, a judge in the US District Court for the Western District of Washington issued a nationwide temporary restraining order, effectively lifting the travel and immigration order. The Trump administration is appealing the case. Other legal challenges to the order have been filed, and many observers warn they could last years and perhaps land in the US Supreme Court, according to The New York Times.
HRI impact analysis: President Trump’s executive order, if upheld by the courts, would have widespread implications for the health industry. International medical graduates represent one in four physicians in the US and provide a disproportionate amount of care in rural and low-income communities, according to the American Medical Association (AMA). Patients from overseas arrive each day to seek care in American hospitals. In a letter to US Department of Homeland Security Secretary John Kelly, the AMA urged the federal agency to clarify the order and “mitigate any negative impact on the nation’s health care system.”
New entrants also have voiced concern. On Feb. 5, tech companies with healthcare interests, including Apple, CareZone, Castlight Health and Google, joined more than 100 fellow technology companies in an amicus brief supporting the state of Washington’s legal challenge. The brief asserts that the order “threatens companies’ ability to attract talent, business, and investment” and makes international travel riskier. “That is true even for persons or countries not currently covered by the order because there is no way to know whether a given country may be added to the no-entry list,” the brief states. Health organizations should consider expressing their opinions on the order to trade organizations and lawmakers and begin planning in case it takes effect.
Trump administration highlights – Jan. 30, 2017
Trump administration: Two-for-one regulatory executive order raises questions
An executive order issued by President Donald Trump this week directs most federal regulatory agencies, including those overseeing healthcare, to identify at least two regulations for elimination before issuing a new one. The order also directs agencies to adopt a regulatory budget and requires that the total cost of new and repealed regulations be “no greater than zero” for fiscal year 2017. Once confirmed, the Director of the Office of Management and Budget will be responsible for enforcing the order. President Trump has nominated Rep. Mick Mulvaney, R-S.C., for that position.
The order did not detail how costs would be defined, measured or calculated, nor did it outline how regulations would be chosen for elimination. The regulatory weeding also will take time; agencies must still follow the time-consuming repeal process. A December 2016 study published by the George Washington University Regulatory Studies Center discusses the pros and cons of how such requirements — which have been adopted in Canada, the United Kingdom and Australia — can be implemented.
HRI impact analysis: The order’s repercussions for the heavily regulated healthcare industry could be significant. Rick Pollack, president and CEO of the American Hospital Association, praised the order: “Excessive red tape not only stands as a barrier to care but as a key driver of cost.” Other health organizations are still reviewing it. Life sciences and other healthcare companies may be particularly affected, as FDA and CMS work to implement recent legislation such as the 21st Century Cures Act and the Medicare Access and CHIP Reauthorization Act of 2015. The reauthorization of the FDA’s user fee programs, which are set to expire in September, may also be affected. Republican lawmakers’ plans for the ACA may depend heavily on writing new regulations, which could become bogged down by the order.
Trump administration: FDA hiring freeze may affect life sciences industry
An executive order signed by President Trump prohibiting the hiring of new staff could negatively affect the life sciences industry. Unlike most federal agencies, the FDA obtains the majority of its budget throughindustry-paid fees, which drug and medical device companies pay when they apply for product approval, among other actions. These fees are used to hire hundreds of review staff. The order did not include an exemption for employees paid by fees. Another memorandum limiting agency communications has apparently stalled previously planned meetings on reauthorizing those same user fee programs.
HRI impact analysis: The hiring freeze could result in slower FDA drug approvals and adoption of reforms resulting from the bipartisan 21st Century Cures Act. Review staff are critical to ensuring that drug and medical device applications are approved within statutory timelines, and delays can cause costly lost productivity for companies. A freeze also prevents the agency from hiring additional staff to create improvements — such as a faster medical device review pathway — meant to benefit companies. Also, stalled meetings may increase the chances that the user fee program may not be reauthorized before the existing authority runs out, which may require a temporary extension or budget cuts.
Trump administration: New bills aimed at shoring up ACA exchanges for now
Four ACA replacement bills designed to stabilize the individual exchange markets were presented this week during a House Energy and Commerce Committee hearing. The replacement bills are intended to comfort insurers wary of participating in the ACA exchanges as the GOP works on repealing the law’s provisions via budget reconciliation. One of the bills would increase the age band ratio established under the ACA to 5-to-1 from 3-to-1, a change insurers would welcome; ACA requirements currently allow charging older Americans only three times as much as they charge younger ones. Another would change the 90-day grace period for missed premium payments to comply with a period established by state law, or set it at 30 days if no state law exists. A third bill would prohibit replacement legislation from including provisions limiting coverage for those with pre-existing conditions. The fourth would require HHS to investigate consumers seeking coverage during special enrollment periods before that coverage can start.
HRI impact analysis: Last week in Philadelphia, the GOP failed to unite around a single ACA replacement plan or strategy. But the four bills, aimed at shoring up the system and preventing its collapse amid uncertainty, could find bipartisan support. Many insurers are beginning to prepare for the spring, when they must submit their 2018 plans for participating in the exchanges. Lawmakers hope such legislation will quell insurers’ fears about participating. A recent letter from the National Association of Insurance Commissioners preaches caution to legislators, reminding them that in some states “the individual market is robust with increased enrollment and premiums have stabilized.”
Trump administration highlights - Jan. 23, 2017
Trump administration: Executive order on ACA signals flexibility on key areas
An executive order issued on Inauguration Day by President Donald Trump directs leaders of relevant agencies, such as HHS, to take steps to “waive, defer, grant exemptions from, or delay” provisions within the Affordable Care Act (ACA) that, in officials’ eyes, would “impose a financial burden” on a state, individual or company. The order also calls for agencies to offer more flexibility to states operating healthcare programs, including Medicaid. Any changes will have to be consistent with federal law, including the ACA and the Administrative Procedures Act.
HRI impact analysis: Executive orders cannot change or repeal laws or regulations. They often are used to lay out policy approaches to government agencies, lawmakers, industry and the public. In this case, President Trump is sending a message that he intends to repeal the ACA, with the goals of lessening regulatory and financial burdens and increasing flexibility. Federal agencies that plan to alter ACA regulations will have to do so using the normal notice-and-comment process, which takes a minimum of several months. Still, the order sets the stage for regulatory changes that could affect healthcare organizations. For example, HHS could issue more hardship exemptions to the individual mandate, which could destabilize the ACA insurance exchanges by reducing the number of healthy people seeking coverage. States also could gain easier access to Medicaid waivers under Section 1115 of the ACA, which could allow them to restructure how they pay for certain provider services. Health organizations should begin modeling scenarios to better understand the implications of regulation changes inspired by executive orders.
Trump administration: Lawmakers announce two more ACA replacement plans
Lawmakers floated two more ACA replacement plans this week, bringing the number of potential plans to at least 10. US Sen. Susan Collins, R-Maine, and US Sen. Bill Cassidy, R-La., introduced a plan on Monday that would offer states choices on handling the ACA. The Patient Freedom Act repeals Title I of the ACA, which contains requirements such as the individual and employer mandates, actuarial value requirements and age band requirements, and offers states three options: keep the ACA, adopt a system that auto-enrolls uninsured individuals in basic coverage, or create a new plan. Also this week, Sen. Rand Paul, R-Ky., introduced the Obamacare Replacement Act, which repeals the individual and employer mandates, community rating restrictions, rate review, essential health benefits, the medical loss ratio provision and other ACA provisions. Sen. Paul’s bill includes a two-year open enrollment period for people with pre-existing conditions, features a $5,000 tax credit for contributions to a health savings account, and allows greater flexibility for states to administer Medicaid. All three senators have called for repeal to be accompanied by replacement, without long delays.
HRI impact analysis: As the GOP seeks to coalesce around a single replacement plan, more iterations continue to surface. GOP lawmakers are in Philadelphia this week to discuss their agenda for the next few months, with a focus on the ACA. While potential plans have multiplied, many share common elements, including repealing the individual mandate, increasing use of health savings accounts, offering tax credits to help pay for premiums and other costs based on factors other than income, shifting guaranteed coverage to continuous coverage for pre-existing conditions, and converting Medicaid to a block grant system. Health organizations should ensure their voices are heard as lawmakers work their way toward a plan, and they should evaluate which likely changes will affect them most.
Trump administration highlights - Jan. 16, 2017
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 – Jan. 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.