Trump’s plan to shift the cost burden

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Trump’s plan to shift the cost burden

By Michael Johnsen - 12/06/2016

Make healthcare affordable — again.

That’s the mandate many Americans have for President-elect Donald Trump’s first 100 days in office. In fact, as many as 76% identified health care as the leading policy issue they’d like to see addressed by the new administration and a Republican-controlled Congress, according to a PricewaterhouseCoopers Health Research Institute Consumer Survey conducted in September, though the economy (79%) and national security (76%) were leading concerns as well.

Specifically, 64% of Americans want their health insurance to be more affordable; 62% think lowering the cost of health services should be a priority; 56% support lowering prescription drug costs; and 33% would like to see regulatory impediments placed on insurance company profits.

Trump has already identified a number of ways in which to make health care affordable again, chief among which is the proposed repeal and replacement of the Affordable Care Act. “While the [ACA] has reduced the number of uninsured people and accelerated the shift to a more value-based healthcare system, it has struggled to lower costs, make care more affordable and win over a majority of Americans,” wrote PwC in an analysis following the election.

Trump’s nomination of Rep. Tom Price, R-Ga., to lead the Department of Health and Human Services and Seema Verma to lead the Centers for Medicare and Medicaid Services is a strong indication of the direction health care will take under a Trump administration. And those changes are expected to be implemented over two to three years, according to reports, giving the industry time to adapt new business models.

Price advocates the Republican party’s “Better Way” platform that calls for eliminating the individual mandate but keeping the pre-existing condition provision, and allowing young adults to remain on their parents’ plans up to age 26. That plan also calls for shifting Medicaid reform to the state level, which is Verma’s area of expertise. She is best known as the architect behind Indiana’s Medicaid expansion model — known as Healthy Indiana Plan 2.0.

The bottom line behind Trump’s proposals: The cost burden of the $3 trillion industry will shift away from the federal government and toward private enterprise, state government and consumers. Here are the key pieces of health policy change Trump is expected to make early on:

  • One of Trump’s campaign promises was to immediately repeal and replace the ACA, though some key patient-friendly provisions may be kept in place. Ultimately, this is expected to increase the number of uninsured by as much as 20 million patients, according to a September Commonwealth Fund study. That will significantly reduce spending on pharmaceuticals, as well as demand for healthcare services, which could negatively impact retail pharmacy.

  • Trump favors the delivery of healthcare services that mimic many retail offerings. This would be a boon for the retail pharmacy sector, as Trump’s focus on retail-oriented health care will attract investment. If Trump delivers on his pledge to reduce federal regulations, the additional reduction in go-to-market costs may spawn more disruptive innovation within the retail sector.

  • Trump advocates selling insurance across state lines in an effort to reduce the cost of insurance premiums. Selling insurance across state lines would necessitate broad provider networks to be established by insurers and providers.