Top 3 healthcare policy changes Trump’s victory could bring

November 21, 2016

Following the GOP’s success on Election Day, the nation is quickly tuning in to what this all means for healthcare coverage.

A political truism exists that it is easier to run against something than run for something.  Look no further than the consensus by the Republican party and President-elect Donald J. Trump to repeal the ACA.

MorganFollowing the GOP’s success on Election Day, the nation is quickly tuning in to what this all means for healthcare coverage, as illustrated by the over-100,000 new ACA insurance sign-ups on the day after the election, according to the Obama administration.

Even before a new HHS secretary is named, Trump is indicating that he wants to minimize the disruption to those currently insured and retain some of the more popular ACA provisions.

Whatever the final strategy, the Trump administration’s changes will add volatility to the existing healthcare industry, which has already endured plenty of changes since the ACA was passed.

Here are three of the biggest changes the industry could experience:

1. ACA repeal

We don’t have many details about what the replacement will be, but we’ll soon find out what legislation will look like to “repeal and replace” the ACA.  House Speaker Paul Ryan presented an outline in June with broad topics but lacked specifics, and the House and Senate Republicans sent a primer to President Obama knowing it was certain to be vetoed (and it quickly was) Now, the GOP is certain to act to change the ACA, but exactly what changes will occur are up in the air.

2. Removal of subsidies and taxes

Arguably the strongest attack the GOP could level on the ACA would be to end funding for subsidies for insurance plans.  These subsidies are the backbone supporting the newly-insured through Medicaid expansion and the low-cost insurance plans sold on the health insurance exchanges.  One reason why increased premium rates haven’t dramatically impacted the newly-insured is because of these subsidies, and turning off the federal funding spigot will decisively change the affordability of these health plans.

The Trump Administration has signaled it will move toward block grants for states to provide extended health insurance coverage, but this poses financial risks for states (such as California, Illinois, and Ohio) that expanded Medicaid coverage without having to navigate a federal reimbursement cost ceiling.

Observers generally predict Congress will use budgetary measures to reduce the opportunities for Democrats to scuttle the ACA changes.  Republicans are also expected to stop all taxes added by the law such as the never-triggered employer mandate tax and lesser-known taxes like the surtax on investment income on families making over $250,000.

Next: The third thing that could change

 

 

3. Insurance across state lines

The idea to allow insurance companies to sell plans across state lines is appealing to the general public, and one of the most commonly cited campaign promises by Trump.  As with all policy-vs-politics, the devil is in the details.  There is no federal law prohibiting insurance companies from selling across state lines-it is generally a state-law issue-and more often dependent upon physician credentialing and financial investment.  As noted in an August 31, 2015 New York Times article, “The barriers to entry are not truly regulatory, they are financial and they are network.”  Yet this policy focus will undoubtedly be part of any TrumpCare legislation.  

The impact on managed care


Moving Medicaid funding toward block-grants for states will likely reduce their top-line federal resources and reducing the federal government’s Medicaid match will only exacerbate the move towards managed care coverage for state Medicaid plans.

The insurance markets have been able to absorb the millions of people added to insurance roles in large part due to increased federal funding. Without this funding, States and insurance companies are expected to tighten their belts even further-reducing covered services, reimbursement rates, and stricter claims denials.

This is likely to disproportionately harm hospitals by reducing federal funding further. States that have adopted the Medicaid expansion (32 including D.C.) and those that have not (19) will have to wait for a resolution on this issue until Congress elevates a final bill.

Any healthcare changes are likely to take years to be fully implemented, but the healthcare sector will be holding its collective breath until those changes are clarified. Whatever the future for healthcare in the United States, “status quo” is not likely to be part of it.

Bob Morgan is special counsel at Much Shelist. He is a healthcare regulatory and policy attorney with extensive experience in the still-developing cannabis industry. His email is rmorgan@muchshelist.com.