by Jacob Luria

Forecasting Trump’s Health Care Plan

In the first 21 days after the Trump administration has taken office, many of us are still unsure about the direction and details of health care policies, executive actions, and enforcement regimes. With that being said, we can look to campaign statements and Tom Price’s confirmation hearing to tease out where we may be going.

  1. Affordable Care Act (ACA) Repeal

    The clearest go-forward path of Trump’s platform includes the repeal of the ACA. Given Republican House/Senate control, we can expect significant changes in the ACA implementation – most notably the individual mandate. With all of the policies being discussed – there is likely not to be an administrative change for plan years 2017 and 2018 as the majority of rate and benefit filings are complete, but there is an opening to relax enforcement of the individual mandate and/or subsidies and penalties based on the US Supreme Court Decision in June 2015 because of the “tax” designation.

    Importantly, the ACA impact will only be felt in the Exchange Insurance Marketplace and Medicaid Expansion. The delivery system reform (ACOs and demonstration projects) that were funded through ACA have been converted into MACRA components as part of the “Doc-Fix” bill (more on this in #2). The potential and/or actual repeal will slow or significantly limit investment in the ACA marketplace for the next two years. The most impactful market impact could be a withdrawal of insurers from the ACA marketplace due to the uncertainty around multiple components of the ACA marketplace (individual mandate, tax credits, and reinsurance programs).

  2. MACRA (“Doc-Fix” Bill)

In 2015, MACRA was passed as the replacement of the “Doc-Fix” bill that removed the Sustainable Growth Rate (SGR) payment limitations. MACRA is the law of the land with final rules being formalized in the Federal Register. The majority of health care system reforms will be driven by MACRA and not ACA. Importantly, to modify MACRA would add significant dollars to the deficit as the bill has been graded by (and designed to be) the Congressional Budget Office to be budget neutral. As such, it is not expected to have significant changes in the near future. The key component of MACRA is that providers have incentives to move towards value-based reimbursement where analytical and operational solutions for patient identification, patient coordination, and patient impactability are needed. Lastly, as Medicare moves, the commercial insurers will follow based on individual market dynamics. As clinically integrated networks and accountable care organizations are formed and exist to maximize MACRA payments (both AAPM and MIPS) we expect to see similar growth in the commercial insurer market for value-based reimbursement programs).

  1. Medicaid

    While the Trump administration has not provided details for Medicaid – it is largely expected that the “Block Grant” programs will move forward – providing significant flexibility to the states for Medicaid programs. This may create de-novo state Medicaid programs that may include previously discouraged components such member responsibility (premium payments) and work requirements. Importantly, many states (including MA and VT) had Medicaid waivers approved prior to the Trump administration being sworn in giving a template for the program design other states may follow. The state-by-state elements may create churn and transition for Medicaid members during a rapid implementation process. Estimates from the Center for Budget and Policy Priorities show significant cuts in federal Medicaid funds. In order to absorb these cuts, states will have to reduce member rolls and eligibility programs significantly increasing the number of uninsured individuals by 15-20% in the population with incomes that are less than 150% of the federal povery level.