If you’re in the U.S. health care industry, congratulations! You can throw out every long-term or medium-term plan you’ve made for your hospital, new drug, ACO or health plan – because the legal/regulatory structure of American healthcare is about to be broken, with a large part thrown away and the rest put in a blender of uncertainty.
President-elect Trump has only the barest outline of a healthcare policy other than swift repeal of the Affordable Care Act and replacement with “something terrific.” And the GOP Congress has its own wishlist for healthcare reform in the wings.
In the immediate term, 2017 health plans already on the market will be unaffected. Trump and his new GOP Congress may be persuaded to let the ACA exchanges serve their function through the 2017 plan year, awaiting his promised “replacement” for Obamacare. But for 2018, healthcare in America will look very different.
But let’s look at the larger picture of what will go into the blender when the ACA is repealed, based on Trump’s and the GOP’s stated plans for healthcare reform.
INDIVIDUAL and SMALL GROUP INSURANCE: Obamacare’s minimum requirements for what health insurance must cover in individual and small-group plans will be eliminated. The ~8.5 million who depend on subsidies to buy insurance through the exchanges will lose those subsidies. Trump/GOP proposals create HSAs and a tax deduction for this instead, which is little help for low-income purchasers. Insurers will again be free to set dollar limits on coverage, exclude certain conditions, medically underwrite plans, and charge whatever their state’s insurance department will allow, with no limit on profit-taking.
Foreseeable upshot: Coverage will become unaffordable to millions of Americans on the individual market. Cheaper, bare-bones health plans will be available, with significant gaps in coverage that leave individuals and hospitals financially vulnerable. Fueled by bad debt from hospitals covering the uninsured and under-insured, annual premium increases in the overall group market will return to pre-Obamacare double-digit levels.
COVERAGE ACROSS STATE LINES: Touted as a measure to increase competition, it merely subverts the state insurance regulation system that attempts to keep the private health insurance market and local health providers in balance.
Foreseeable upshot: State regulators will have little power to enforce coverage quality or prevent abuse and excessive profits. The Blue Cross Blue Shield plans will find it hard to enforce rules against cross-border competition.
MEDICAID: Medicaid’s expansion covering those under 250 percent of poverty level will be gone, eliminating coverage for 13 million of the nation’s 58.5 million Medicaid enrollees. Further, the GOP will likely push its plan to make Medicaid into a block grant program, sending the states a check with little or no requirements on how they must spend it to deliver healthcare to the poor, or who must be covered.
Foreseeable upshot: Medicaid benefits will differ significantly state-to-state, and may not require coverage of “all medically necessary” treatments (as Medicaid has required since its inception), but only what each state’s legislature is willing and able to pay for. Medicaid MCOs are already taking a hit on the stock market.
MEDICARE: Politically more hazardous, the GOP’s ideas for Medicare reform include turning the program into a voucher system, which would send seniors a check and allow them to purchase private health coverage on the individual market. Medical loss ratio limits for Medicare Advantage plans will be eliminated.
PRESCRIPTION DRUGS: Trump has advocated the free importation of prescription drugs from other countries, a non-starter for the Pharma industry that will likely be killed in Congress. Likewise, his promise to negotiate prices for Medicare Part D drugs will create full employment for Pharma’s army of lobbyists.
HEALTH SYSTEM REFORM: Mandates within the pay-for-quality, electronic health record and payment reform initiatives of Obama’s Dept. of Health and Human Services will likely come to an end, leaving the evolution of the system to the free market.
These are just the immediately foreseeable changes likely, and their first-level impacts. The potential disruption from this these changes will touch every part of the healthcare sector, and everyone served by it.
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