President Trump touts short-term plans, price transparency in State of the Union

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Trine K. Tsouderos HRI Regulatory Center Leader, PwC US February 05, 2020

During his third State of the Union speech on Tuesday, President Donald Trump touted his administration’s expansion of short-term plans and efforts around price transparency but did not announce any major new healthcare policy proposals.

He also did not offer news, awaited by industry, about his controversial proposal to tie some drug prices paid for by Medicare Part B to prices overseas, the so-called International Pricing Index policy, or an ongoing disagreement about how to protect consumers from surprise medical bills. Biopharma executives surveyed by HRI in 2018 said the pricing index proposal was their top regulatory concern. The Office of Management and Budget is still reviewing the index proposal.

On drug pricing, Trump urged lawmakers to send him a bill that would to lower drug prices but did not outline what that bill should include. He did highlight progress on generic drug approvals, which hit historic highs in recent years.

The president pointed to lower premiums offered by short-term, limited duration insurance plans, which are now allowed to be sold for terms just under a year, with several renewals, as a salve for rising premiums. Those plans’ premiums often are lower because they offer less coverage and are not beholden to certain consumer protections required by the Affordable Care Act (ACA).

Trump also highlighted his executive order encouraging his administration to push price transparency, which led to a final rule in November requiring hospitals to publish their negotiated charges with payers for 300 “shoppable” services, while making a variety of charges on all services and items available. The American Hospital Association, the Federation of American Hospitals and other hospital groups sued to block the rule, arguing that it violates their First Amendment rights.

In his speech, Trump also said he would guarantee protection for consumers with preexisting conditions but did not detail his plan to do this if his administration succeeds in overturning the ACA, which extends protections to people with preexisting conditions.

HRI impact analysis

In his 2016 campaign, Trump outlined eight major healthcare policies that he said would save consumers and the federal government money. They were: repealing and replacing the ACA, requiring price transparency from providers, expanding use of health savings accounts, allowing sales of insurance policies across state lines, allowing re-importation of prescription drugs, allowing Medicare to negotiate drug prices, converting Medicaid funding to block grants, and making premiums tax-deductible for individual taxpayers (for an analysis of these policies, please see HRI’s report on Trump’s healthcare platform).

The president’s speech highlights how hard it is to make significant changes to the US healthcare system, a $3.6 trillion marketplace with deep economic and cultural roots in every community in America and strong advocates in DC and state capitals. Despite efforts to move the needle on the industry, HRI projected that medical cost trend, a measure of prices and utilization, will be 6% in 2020, a tick up from previous years.

The administration’s efforts to force drugmakers to publicize list prices in televised ads has been mired in court battles; a lawsuit has been filed over its policy requiring providers to publicize some negotiated rates. Short-term, limited duration insurance and association health plans, the lower-premium coverage touted in the speech, remain a very small part of the overall insurance market.

The FDA’s record approvals of generics have had limited impact on the most significant source of high prices for drugs: biologics and other specialty drugs, according to analysis by HRI. Most top-selling drugs won’t see competition anytime soon from traditional generics, according to the analysis. Meanwhile, biosimilars, in some respects generics for biologics, have been slow to take off, with a relatively small number approved by the FDA and available to consumers, according to HRI’s report.

In post-caucus polls, Iowa caucus goers named healthcare as one of their top issues. Healthcare continues to be seen by the public as unaffordable, and there is evidence people are skipping necessary and preventive care because of cost. This is despite relatively high rates of insurance coverage. Public frustration over the healthcare system’s cost likely will continue to prompt lawmakers and candidates for public office to make bold proposals, but incremental change has been the reality for the past decade, since passage of the ACA.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

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