Well, Donald Trump winning the presidential election is a surprise if you paid attention to the media, polls, and political consultants. But what will Trump’s win mean for healthcare, specifically, Medicaid?

Trump’s plans for healthcare include repealing and replacing the Affordable Care Act and Medicaid expansion and funding Medicaid though block grants, a lump-sum payment from the federal government. Right now, Medicaid is funded jointly by the federal and state governments. Block grants would allow states to provide care to beneficiaries as they see fit—it could be through a system of free clinics—for example. However, critics claim the funding easily could be diverted for other purposes.

With block grants, the initial funding is based on the most recent budget for a program, but the grants rarely provide for changes, such as population increases, and resources can dwindle over time if Congress doesn’t step in and make new appropriations.

“Block grants’ basic structure makes them especially vulnerable to funding reductions over time,” according to a study conducted by the Center on Budget and Policy Priorities. “Block grants generally give state and local governments very broad flexibility over their use of federal funds. As a result, the funds are used in diffuse ways and their impact is hard to document. Often, it is difficult even to track in detail how the money is used.” (Center on Budget and Policy Priorities: Funding for Housing, Health and Social Services Block Grants Has Fallen Markedly Over Time, March 24, 2016).

With the launch of the health insurance exchanges and Medicaid expansion, the national uninsured rate dropped from 15 percent in July 2013 to 10 percent in January 2016, with the number of Medicaid beneficiaries increasing from approximately 62 million to 75 million (Decision Resources Group data, accessed Nov. 9, 2016).

If states chose to repeal the expansion outright, hospitals would sustain financial losses from treating those who lost health insurance coverage they had obtained through the expansion. Hospitals, in turn, likely would shift those costs onto patients with commercial insurance, which would result in higher premiums.

If changes are to be made to Medicaid, a less disruptive approach would be for Trump to seek the guidance of his running mate, Vice President-elect Mike Pence, on this matter. As governor of Indiana, Pence received a Medicaid expansion waiver that relies heavily on conservative-friendly ideas, such as dedicated health accounts, personal responsibility, and a strict plan for member noncompliance. The federal government approved the alternative expansion, named Healthy Indiana Plan 2.0, in late January 2015. In addition to providing premium assistance to residents who have access to employer-sponsored insurance but cannot afford it, HIP 2.0 includes the Plus and Basic benefit packages (Indiana Medicaid Profile, 2016).

This would allow Medicaid beneficiaries insured under the expansion to keep their health insurance coverage while having some “skin in the game,” as some conservatives like to say.

Needless to say, the stock market has taken notice of the changes that might happen in the sector. Among the largest Medicaid managed care organizations the day after the election, Centene’s stock was down 19 percent from Tuesday’s closing, Molina’s was down 16 percent, and WellCare’s was down almost 9 percent. However, UnitedHealthGroup’s stock was down less than 1 percent, and Anthem’s was up 1.5 percent.

For more market access insights, follow Joyce Caruthers on Twitter: @JCaruthersDRG

 

Interested in hearing more expert analysis on the healthcare implications of the outcome of the 2016 U.S. election? Register for our live webinar, taking place on Thursday, January 19, 2017 at 10 a.m. EST, and receive a complimentary ebook with key take-aways.

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