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As the 2016 presidential election approaches, analysts and experts are advising healthcare executives to watch and monitor certain issues.
As the 2016 presidential election approaches, analysts and experts are advising healthcare executives to watch and monitor certain issues, such as pharmaceutical spending and healthcare reform, which will surely impact the health insurance industry. Here’s a look at what they recommend keeping a close eye on in particular.
The healthcare agenda of Donald J. Trump, would-as currently outlined-benefit both insurers and healthcare providers, claims Sally C. Pipes, president and CEO, Thomas W. Smith Fellow in Health Care Policy, Pacific Research Institute, San Francisco, California. First, Trump would repeal Obamacare and reduce the burden on insurers who are losing significant money from participating in the marketplace exchanges, Pipes says. Insurers would no longer lose millions of dollars due to poor enrollment numbers under Obamacare and the fact that not enough young, healthy individuals have enrolled to cover the cost of coverage for older and sicker members.
Secondly, Trump would get rid of restrictions on the interstate sale of health insurance so that individuals who live in high-cost states could buy coverage from lower-cost states. “A national market would reduce restrictions on insurers regarding where they can sell and would allow them to expand their consumer base,” Pipes says.
Thirdly, Trump wants to promote tax-advantaged health savings accounts (HSAs), which debuted in January 2004. “This will not only help consumers, but also employers,” Pipes says. “HSAs allow individuals with high-deductible health plans to set aside tax-free money for healthcare expenses. Trump would also allow funds to be passed onto the next of kin tax-free following the death of an HSA holder. Having consumers save more of their own funds for healthcare would lessen the burden on employers to cover the cost of healthcare.”
Meanwhile Hillary Clinton wants to build on Obamacare-dubbed Obamacare 2.0. She would place even more mandates and regulations on hospitals, insurers, and healthcare providers. “Among her agenda items are to pad healthcare plans with additional ‘free’ services,” Pipes says. “She wants to require insurers to provide members with three complimentary sick visits to a doctor annually, in addition to the preventative care mandates already included under Obamacare.”
Furthermore, she would block insurers from charging more for out-of-network providers who work at in-network hospitals or for any emergency services, regardless of where they are delivered. “Standardizing prices for even out-of-network providers would be costly for insurers,” Pipes says.
Clinton's “Medicare-for-more” plan, which would allow Americans 50 and older to buy into Medicare, is also a stone’s throw from “Medicare-for-all”-the first step toward a single-payer healthcare system, says Pipes. “More government involvement spells bad news for the healthcare industry.”
Trump's plan would significantly hurt pharmaceutical companies, says Pipes. He wants to expand access to imported drugs from Canada as well as from overseas. “But drugs in other nations are only cheaper because their governments cap their prices,” she explains. “Importing foreign price controls would hurt pharmaceutical companies by stifling medical research and innovation of new treatments.”
Pharmaceutical companies spend enormous amounts of time and money-in excess of 10 years and $2 billion-just to develop one new drug and attempt to get it approved by FDA for consumer use. “If drug companies had to face price controls in the United States as well, they would have an even smaller chance of recouping their research investments and hence, it would curtail research and development,” Pipes maintains.
Grace-Marie Turner, president, Galen Institute, Alexandria, Virginia, also maintains that drug importation should be a no-go because many states that tried this in the past found that it was even more costly as they tried to protect consumer safety. “This is necessary when you allow borders to be open to prescription drugs from other countries without strict controls of the supply chain,” she says.
Turner also maintains that drug importation is a short-sighted, counterproductive idea. States that have tried this in the past found that it saved very little money, at least partly because of the added expense of trying to protect consumers from unsafe drugs. “When you allow borders to be open to imports by going around secure distribution chains, you inevitably will have drugs that come from other countries that do not have nearly the consumer protections we have in the United States,” she says. “Consumers are at great risk of receiving contaminated, counterfeit, or expired drugs that may not have been handled properly or don’t contain the main active ingredient.”
Both Trump and Clinton's policy on drug prices would be disastrous for medical research and patients, Pipes says. Clinton's plan would cap monthly prescription drug spending at $250. “The cap would severely limit pharmaceutical companies' ability and willingness to develop new medicines,” she says.
Trump's policy on drug prices would be no less advantageous for medical innovation. He promises to let the government negotiate prices directly with manufacturers for drugs dispensed through Medicare Part D. He claims he could save $300 billion-more than the entire nation spends on drugs annually. “But a buyer the size of the government doesn’t negotiate prices, it dictates them,” Pipes says. “The effect on medical research would be catastrophic, and it would hinder patients' ability to acquire the latest drugs that could prolong their lives.”
Turner also opposes having the government negotiate prices for Medicare Part D. “Experience shows that there is genuine and robust private competition in this market that works to get seniors the best prices with broad choices,” she says. “If the government comes in with heavy handed price controls, seniors will face higher prices and likely shortages of drugs-the worst of both worlds.”
Under Clinton's proposal, the government would essentially dictate drug prices, says Pipes. Presumably, these prices would be lower than they are now, so insurers might pay less for drugs. “But some drug companies may respond to Clinton's price controls by refusing to sell certain drugs to Part D plans at the government-dictated price,” Pipes says. “That price may be too low for them to recoup the billions they invested in research and developing their drugs. Consequently, insurers may not be able to offer as many drugs to consumers as they can now. Patients may not be able to find Part D plans that cover the drugs they need.”
Issue #4: Survival of big federal health programs
Clinton touts Medicare and Medicaid as good programs. “Although they may be costly, she wants to maintain them,” Joseph White, PhD, Luxenberg Family Professor of Public Policy, Department of Political Science, Case Western Reserve University, Cleveland, Ohio. Meanwhile, Paul Ryan, Speaker of the U.S. House of Representatives, and the U.S. Senate want to abolish these programs. Instead of Medicare they want a voucher system and instead of Medicaid, a block grant system.
“Some insurance companies may think the GOP agenda is attractive because it could give them a good book of business,” White says. “Providers may also find it appealing, at least in the short run, because it might free them of Medicaid’s fee schedules.” The intent of the GOP plan is to reduce the flow of funds into the medical industry, transferring costs back to sick people who will either have to pay higher costs or forgo care, says White. If they do the latter, healthcare providers’ income will drop dramatically.
Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.