Top health industry issues of 2020: Regulation trumps policy

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Despite strong rhetoric on healthcare from campaigning politicians, the outcome of the 2020 election is unlikely to bring about profound, industry-shaking change. Instead, the heated political contest likely will determine the fate of Trump administration policies on Medicaid, the Affordable Care Act (ACA), pricing transparency and trade.

“Regulation is perhaps more important than legislation right now,” Brian Marcotte, president and CEO of the National Business Group on Health, told HRI in an interview. “I think that there are some policy changes that Congress can take up that are smaller in nature but significant. But unless the next president and their political party takes the House and Senate, they won’t get any major healthcare legislation passed. So I think that the opportunity is more on regulation and policy at this point.”[i]

The election nevertheless could clear a path for lawmakers from both parties to address consumer-pleasing, bipartisan issues, such as drug pricing reform, a rethink of Medicare Part D and, possibly, a federal solution to surprise billing.

During the first three years of the Trump administration, the US healthcare spend maintained its upward climb, from $3.4 trillion in 2016 to a projected $3.8 trillion in 2019.[ii] In 2020, CMS projects that US healthcare spending will reach $4 trillion.[iii] The percentage of uninsured Americans also has grown under this administration after shrinking in the wake of the passage of the ACA during the Obama administration, reaching a low in 2016. In 2018, 8.5 percent of Americans were uninsured, up from 7.9 percent in 2017.[iv]

True or false? Industry should expect the HHS to publish less regulation than usual next year.

True! HRI’s analysis of regulatory activity before, during and after presidential election years showed regulatory slowdowns in the 12 months before presidential elections.

Healthcare continues to be a top priority for voters, according to a survey of American consumers conducted by HRI in the fall of 2019. Seventy-one percent of adult Americans of both parties said they were likely to vote for a candidate based on their healthcare policies or ideas.[v]

The election’s outcome will determine the fate of policies championed by the Trump administration that do not enjoy bipartisan support (see Figure 3). The administration has used its regulatory power to tweak the administration of the ACA, efforts that could be rolled back under a Democratic president. This includes expanding sales of association health plans and short-term, limited duration insurance, both of which are exempt from some of the ACA’s consumer protections for the group and nongroup markets.[vi]

Figure 3: The fate of four Trump administration priorities is at stake in the 2020 election

It also includes encouraging states to apply for waivers to impose work requirements on some Medicaid beneficiaries, a move that has been struck down in lower courts and is working its way through the legal system. The administration also is working with several states on proposals that would create “block grant”-type payments for federal funding for Medicaid.

The administration’s efforts around drug pricing have mostly bipartisan support and have coalesced around increasing approvals of generic products and requiring drug companies to publicize list prices in television ads, a move that was struck down by the courts.[vii]

Both parties support changes to Medicare Part D to protect seniors with expensive prescriptions from skyrocketing out-of-pocket costs. Legislation drafted by the Democratic-led House and the Republican-led Senate proposed structural changes to the benefit and out-of-pocket caps for seniors.[viii] These bipartisan efforts, slowed in an election year, could gain momentum after Election Day.

Figure 4: Expect a slow 2020 when it comes to healthcare regulation

Overall, 2020 likely will be a slow year for action on healthcare out of Washington, DC. An analysis of regulatory activity shows a decline in the 12 months before a presidential election and a rebound in the 12 months after one (see Figure 4).

For the healthcare industry at large, leadership may be as important as policies. One of the most important decisions a president can make is the appointment of leaders for key agencies such as the FDA, HHS and CMS. Companies should pay attention to who is angling for these jobs in a new administration and what the effects could be for key policy issues and agency operations.


Plan for potential swings in a few critical areas

Should the Republicans win the presidency again, providers and Medicaid managed care plans should prepare for a continuation of the administration’s efforts to transform Medicaid by encouraging states to impose work requirements on some beneficiaries, increase eligibility reviews for coverage and seek block grants for federal funding. The administration also has tied immigration policies to public coverage.

These efforts have helped reduce Medicaid enrollment, driving up the numbers of uninsured Americans. Providers serving large numbers of Medicaid beneficiaries in states enthusiastically embracing these policies could see increases in uncompensated care and bad debt. Children’s hospitals could be affected, as the number of children losing Medicaid coverage has increased, according to an analysis by The New York Times.[ix] Medicaid managed care plans may find reductions in enrollment and increased churn as beneficiaries lose coverage more often.

A Democratic presidential win likely would signal an end to approvals of waivers for these sorts of programs and an end to policies linking immigration status to public coverage. Democrats may work to shore up the ACA exchange enrollment through restoration of advertising dollars and funding for support services. They also may reverse course on the expansion of access to short-term, limited duration insurance and association health plans and attempt to pass legislation around drug pricing and surprise billing. The Democrats also appear less likely to continue the Trump administration’s approach to Chinese trade policy, and pharmaceutical and life sciences companies, in particular, may benefit from increased certainty in this area.

Pharmaceutical companies likely will continue to experience some degree of uncertainty around trade no matter who wins the White House. Tariffs on essential chemicals produced in China have complicated supply chains for drug companies, which should scenario plan for extended trade tensions with this key nation.[x]

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The long march toward value-based care likely will continue no matter who wins

Both parties favor the federal government’s shift toward paying for quality and not quantity of services.[xi] Publicly rating healthcare organizations also has bipartisan support. Health organizations should continue to invest in information infrastructure and staff that are able to collect and analyze data necessary for maximizing value-based payments.

In 2018, Danville, Pennsylvania-based Geisinger Health launched the Geisinger at Home program, which addresses nutrition needs and provides urgent and specialty care and other services.[xii] At the Cleveland Clinic’s 2019 Medical Innovation Summit, Dr. Jaewon Ryu, president and CEO of Geisinger Health, said the Geisinger at Home program, which is offered to the sickest 5 percent of the provider’s patients, “led to a 43 percent drop in emergency room visits” in that group.[xiii]

The march toward value-based care also requires developing skills around addressing the social determinants of health, factors that have been getting more attention from CMS in recent years. “Medicare has been paying for diabetes for a long time, paying for things like somebody needing an amputation because a limb needs to be amputated, paying for the prosthetic. Just seven years ago they began to pay for diabetes prevention programs,” former HHS Secretary Kathleen Sebelius told healthcare executives at PwC’s 180 Health Forum. “Finally, CMS is getting the point that maybe investing before someone becomes diabetic makes a little more sense than waiting until you have to deal with some of the horrific outcomes.”[xiv]

CMS has started reimbursing for services that could be categorized as social determinants of health, and has indicated interest in doing more.[xv] Tax policy also is supporting these activities. The Tax Cuts and Jobs Act of 2017 created a tax program that could inject millions of dollars into projects aimed at addressing the social determinants of health.[xvi]

The opportunity zone program offers investors tax benefits in exchange for investments in low-income census tracts deemed “qualified opportunity zones” by the federal government. The investments present natural opportunities for health organizations to team up with investors, such as private equity firms or family offices, to address health issues in a struggling community.[xvii]

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Identify other areas of change

Increasingly, companies outside healthcare are taking action, banding together to develop better, more efficient or more cost-effective care models.[xviii] “Our members are focused on the levers with which they can do something about addressing pricing, overall cost and quality,” Elizabeth Mitchell, president and CEO of the Pacific Business Group on Health, told HRI.[xix]

Healthcare companies should consider how strategic actions of non-healthcare firms may begin to remake the healthcare environment through competition rather than legislation. By strategically aligning investments to these trends, businesses can better weather any policy or regulatory changes that may come. They should also consider how economic trends may significantly affect healthcare trends.

The overall economy is another factor. Twenty-seven percent of healthcare executives polled by HRI said they were “very” concerned about a potential economic downturn or recession affecting their business in 2020, including 40 percent of life sciences executives. Just 22 percent of health services provider executives expressed the same concern.[xx]

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Benjamin Isgur

Health Research Institute Leader, PwC US

Karen Young

US Health Industries Leader, PwC US

Glenn Hunzinger

US Pharmaceutical and Life Sciences Leader, PwC US

Gurpreet Singh

Health Services Leader, PwC US

Michelle Lee

Health Industry & Pharma Life Science Tax Leader, PwC US

Greg Rotz

US Pharmaceutical and Life Sciences Advisory Leader, PwC US

Tim Weld

US Health Industries Assurance Leader, PwC US

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