President-Elect Trump & Healthcare

November 10, 2016

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So the election-with-no-end is finally over and the nation is starting to sort out what the results will mean for a wide range of concerns including healthcare. While the candidates staked out very different positions, they spent very little time detailing their plans for healthcare. Now, President-elect Trump has begun the process of filling in the blanks while also choosing a team to lead what is almost certain to be an era of change and retrenchment. Between now and Trump’s inauguration on January 20, there are three key choices the President-elect will be making in the coming days and weeks:

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1. Appointments. Trump’s first major task will be to choose a Cabinet, including a new Secretary of Health and Human Services (HHS). Once a Secretary is in place, he or she will work with the White House to choose sub-Cabinet officials to run key agencies in the Department including the Centers for Medicare Medicaid Services (CMS), Food & Drug Administration (FDA), Centers for Disease Control & Prevention (CDC), National Institutes of Health (NIH) and so on. If tradition holds, most Obama Administration appointees will be asked for their resignations on Inauguration Day.

It’s difficult to predict who Trump might choose to run HHS but a few names have been bandied about in Washington gossip mills. Florida Gov. Rick Scott has a deep background in healthcare as a former CEO and an adamant opponent of the ACA. Retired neurosurgeon Ben Carson, who ran against Trump during the GOP primaries, is another possibility, as is Sen. John Barrasso (R-WY), an orthopedic surgeon and Chairman of the Senate Republican Policy Committee, who has a small bandwagon of GOP Senators promoting his candidacy. Finally, Gov. Chris Christie (R-NJ), who is heading Trump’s transition team, doesn’t get the job he wants – Attorney General – HHS could be his reward for endorsing Trump earlier this summer.

Trump has named Andrew Bremberg to head his transition team at HHS. Bremberg is an experienced Washington policy insider who has advised both Senate Majority Leader Mitch McConnell (R-KY) and Wisconsin Gov. Scott Walker. He spent eight years at the Department under President George W. Bush, working for Secretaries Tommy Thompson and Mike Leavitt. Bremberg will be part of the domestic policy team headed by former Ohio Secretary of State Ken Blackwell, who is now a senior fellow at the Family Research Council.

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2. Budget. One of the first tasks of a new President is to submit a budget for the fiscal year ahead. President Obama likely will send a lameduck budget to Congress in January but Trump will replace it with his own blueprint for taxes and spending in fiscal 2018, which starts October 1, 2017. The budget will provide the public with the details on his promised tax and spending cuts as well as investments in things like biomedical research at NIH as well as expedited drug and device approval by FDA. An important thing to watch for is whether or not Trump proposes new cuts to Medicare. Traditionally, Presidents in both parties propose a series of steps to rein in cost growth in the mammoth healthcare entitlement program. During his campaign, Trump departed from GOP tradition and said he “won’t cut” Medicare or Social Security. That will be a hard promise to keep if the President-elect wants or needs savings to pay for other spending. Finally, like Republicans dating back to Ronald Reagan, Trump pledged to turn Medicaid, the health program for low-income and disabled Americans, into a state-run block grant. Currently, the states and feds share the cost of Medicaid but it remains an entitlement to those poor enough or disabled enough to qualify.

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3. Obamacare. Trump’s budget will also contain his plan to “repeal and replace” the Affordable Care Act. Trump has promised to repeal the Act “on day one” of his Administration. While that is impossible it will be an early focus of his Administration. Despite now having a Republican majority in both the House and Senate repeal of the ACA will not be easy for the President-elect. Total repeal would be filibustered in the Senate and Trump would have very little chance of getting the 60 votes he would need to break that logjam. A partial repeal of key provisions of the Act would be more likely but still not certain. Using a process known as budget reconciliation, the Senate could take up a repeal measure and would only need 50 votes (plus the VP’s vote) to pass a bill that repeals provisions that include the mandate that Americans have coverage, 100% federal funding of Medicaid expansions made by 29 states to date, tax credits that help millions of Americans buy coverage in the Insurance Marketplace, and taxes on health insurance, medical devices and other parts of the healthcare sector. Key questions going into such a debate:

  • What will be repealed and what will be left on the books? For example, will the individual mandate requiring most Americans to have insurance be repealed along with the subsidies? What about the money being paid to states that expanded Medicaid (several of which are run by GOP governors)? And the insurance market reforms that prohibit insurers from denying coverage or charging significantly more to people with pre-existing conditions?
  • When will repeal take effect? Immediate repeal would disrupt markets and families. Proposals made by Congressional Republicans in 2016 had a two-year transition to repeal of coverage. The debate will begin just as open enrollment for 2017 ends. The final numbers released in January may have some influence on the debate. If the total number of covered lives drops that will fuel repeal. If it somehow rises (in a year with rising prices and falling choices) will it cause the GOP to reconsider some items?
  • What of delivery system reform? The ACA includes many provisions that are designed to improve the efficiency and effectiveness of the U.S. healthcare delivery system by moving away from our costly reliance on fee-for-service and toward bundled payments and accountable care organizations. In the past, these have had bipartisan support but now carry the “taint” of the ACA. Will Trump push to get rid of the entire law or leave some things in place. For example, the Center for Medicare & Medicaid Innovation is funding a set of payment reforms designed to reduce cost growth and improve quality. Similarly, the Patient Centered Outcomes Research Institute (PCORI) was set up to fund research on the comparative effectiveness of procedures, drugs, devices, etc. Will these remain and, if so, for how long?
  • Will “replace” ever happen? Repealing Obamacare may be easier than replacing it. There has been talk of keeping subsidies of some kind in place for lower income people and families but those are expensive. Trump promised greater focus on health savings accounts and allowing insurers to sell across state lines but those won’t have a major impact on coverage.

Industry Leaders Face Challenges

After eight years of working with an Obama team that was constantly looking for ways to expand the government’s role and influence on healthcare, industry leaders will need to build relationships with a new cast of characters and a new set of policies. From the tax code to the healthcare law, Trump’s detail-light campaign makes it difficult to predict the directions his administration will take. Pharma is a key market to watch. Despite his promise to have Medicare negotiate drug prices – anathema to industry leaders – Trump is expected to take a more hands-off approach to regulating the industry.

If we learned anything from the just-ended campaign is to never assume. But one thing is certain, it won’t be dull.