Medicaid waivers could decrease enrollment
As of Oct. 29, 29 states had at least one application pending with CMS for a Section 1115 demonstration waiver. If approved, these waivers could grant flexibility in administering Medicaid within the states’ borders under the Social Security Act. At least six states are seeking to establish a work requirement for some residents to receive benefits.
HHS slows drive toward value-based care
Over the last nine months, HHS has made decisions to delay and revise some key government value-based care initiatives, often with the aim of giving providers more time to adjust. Data from a recent HRI survey of provider executives found that 35% of healthcare organizations have slowed implementation of their value-based care strategies because of regulatory uncertainty.
The federal government stops cost-sharing reduction payments
President Donald Trump’s decision to cancel cost-sharing reduction (CSR) payments to insurance companies just weeks before open enrollment started forced state regulators and payers to scramble to execute contingency plans. Though insurers were legally permitted to withdraw from the market after payments were cut, months of uncertainty leading up to the decision meant that many insurers had already made that decision. Insurers remaining on the market will see less competition: 29% of enrollees will participate in a single-issuer market, compared with 20% in 2017.
A potential proliferation of non-ACA-compliant plans
President Trump’s directive to federal agencies to expand access to association health plans (AHPs) and short-term, limited-duration insurance—both of which are exempt from some ACA provisions—is intended to expand consumers’ choices of plans, and especially to increase their access to plans with lower premiums. These offer skinnier benefits for lower costs and have the potential to be profitable for insurers. They may also be attractive to a customers who are young and healthy, without extensive healthcare requirements. An HRI survey found premium expense and out-of-pocket costs were the most pressing issues for consumers.
Drug pricing reform
While federal health reform efforts remain in limbo, the pharmaceutical industry is still likely to be affected by states’ efforts to rein in or control drug spending. Since 2016, six states have passed legislation that would require pharmaceutical companies to disclose information related to their drugs’ pricing, reveal the cost of producing their drugs or when they plan to raise a particular drug’s price, or impose civil penalties if a price increase is determined to be unreasonable. The industry also may face additional pricing pressure from government programs. Already, Massachusetts has petitioned the federal government to allow them to exclude certain drugs from its Medicaid formulary lists
The pharmaceutical industry could gain from federal tax reform. House Republicans introduced tax legislation in November that would reduce the corporate tax rate to 20% from 35%, shift to a territorial tax system and allow a repatriation of unremitted foreign earnings at a special rate. But it’s likely that not all changes will be beneficial. The same proposal calls for eliminating the orphan drug tax credit, an incentive to spur the development of drugs for rare diseases. The tax is worth 50% of the “qualified clinical testing expenses” incurred by a company in a given taxable year.
Worries about “job lock” return
The ACA created speculation about the end of “job lock,” which refers to employees remaining in a job for the health insurance alone. The CBO’s 2014 estimate of the labor market concurred that the law could provide some easement. The need to keep employer-sponsored health insurance was the reason a quarter of people surveyed passed up an opportunity to change jobs according to a 2008 survey. Should ACA reforms occur, employers could see workers staying in jobs they no longer want, which could contribute to payroll costs and affect productivity.
Non-ACA compliant plans come with risks and benefits
The Trump administration’s executive order expanding access to association health plans (AHPs) could allow small employers to join together to offer plans across state lines with lower premiums that forego some ACA protections, such as mandatory coverage of essential health benefits. AHPs could form as large group health plans, which are exempt from both the ACA’s essential health benefits requirements and the prohibition against underwriting based on member health. This allows employers to obtain lower-cost insurance plans, albeit ones that may prohibit older employees and staff in poorer health from joining. When similar plans were explored in the past, they proved to be at higher risk for insolvency and fraud. They can create an uneven playing field with traditional insurance markets, raising the risk of adverse selection in traditional plans.