When Donald Trump takes office in January as the 45th president of the United States, he’ll face enormous challenges domestically and globally. Health care will be among the challenges at the top of the list: He promised to repeal and replace the Affordable Care Act, and he pledged changes that strengthen the system in his campaign’s seven-point plan.
In this effort, his team will face harsh realities:
- Containing health costs will continue to be the dominant issue. Total health care spending will increase 6 percent annually for the next decade. Utilization is up. Demand is increasing and traditional reimbursement is not keeping pace with underlying costs. That’s not sustainable. Something has to give.
- The fundamental structure of the health system is shifting. Health care is no longer a cottage industry. Megadeals across the board are pending: the mergers of Anthem-Cigna, Aetna-Humana, Dignity-CHI and more. And in most communities, half the physicians are employed by hospitals that are affiliated with multihospital systems. The health system’s future will play out against new ways of competing.
- Alternative payment models, or APMs. are changing incentives for providers. With MACRA payments to physicians coupled with mandated bundled payments for heart failure, coronary artery surgery and joint replacements for hospitals coming soon, providers are anxious. What’s next? What’s their future?
- Competition from nontraditional entrants is increasing. Investors are flocking to startups that challenge the status quo in health care. Their ranks include retail clinics, micro-hospitals, telemedicine, urgent care centers, disposables, smart implantables, hybrid insurance models and others that challenge stakeholders to innovate faster and more effectively. It’s a huge field that historically has made its own rules and kept outsiders out. That’s changing.
- And the public is divided about the Affordable Care Act: Half believe it a necessary impetus for expanding insurance coverage and lower costs, and half feel it’s an overreach by federal bureaucrats that want a government-run health system.
The Trump agenda for the health care system: Repeal and replace the ACA
Details about the Trump health care agenda are not clear, but the campaign promised to repeal and replace the ACA on his first day in office. With majorities in both houses of Congress, the vehicle whereby the law can be changed is straightforward: The bigger questions are how it is to be replaced.
After the vote, it’s likely that a series of administrative orders and targeted legislation will follow to begin the process of undoing the ACA including …
- Dismantling Healthcare.gov and transitioning control of the marketplaces to the states.
- Negotiating with congressional budget officers and the Department of Health & Human Services for the transfer of Medicaid responsibility to the states via block grants.
- Expanding tax credits and high risk pools for individuals and allowing purchases of insurance across state lines.
- And through legislative negotiations, transitioning oversight and subsidies for its 12 million newly insured to states over a period of several months.
It’s likely that the Trump team will advance other proposals, like allowing for the importation of prescription drugs, but the mechanisms whereby these are enacted is problematic.
The first 100 days: Appointments, deals and posturing
Three major activities mark the initial 100 days of an administration: political appointments to the cabinet, key agencies and programs; deals with Congress to set a tone for lawmaking to see who’s in charge; and posturing to garner public opinion gains.
Appointments: A new administration has 4,000 political appointments to make, including more than 200 in key health care slots. Since cooperation with states will be central to the new administration’s health strategy, the HHS Cabinet position is likely to be filled by a former Republican governor with state health care officials filling many of the key slots. Surgeon Ben Carson, M.D., a former presidential candidate himself, is likely to play a key role along with other campaign operatives in the selection.
Deals: The new administration and Congress will advance bills to eliminate the Cadillac tax on employers and medical device tax as a start. With the composition of a supportive Congress, the low-hanging fruit includes ways to improve veteran’s health programs and potential legislation to control drug prices.
Posturing: The honeymoon for a new administration is short, particularly one elected in a bitter campaign season in which distrust for the leading candidates was the central issue. The Trump team is unknown on Capitol Hill, so uncertainty abounds. Confirmation of Cabinet appointments will reveal how battle line are drawn. The confirmation of the Supreme Court vacancy left by the death of Justice Scalia will be huge symbolically as ideologues flex their muscles.
Implications for Key Stakeholders
Campaign 2016 was far from ordinary. There remain many unknowns, especially about health care.
So, what does all this mean for the stakeholders in health care — the providers of services, the intermediaries who organize networks and negotiate rates, and the manufacturers of the drugs, technologies and “stuff” we use?
- The role of federal and state oversight will change in every aspect of our businesses.
- Cost containment will be table stakes as margins shrink. Health care spending will increase, but at a slower pace. There will be winners and losers in every sector.
- The line between financing and delivering care will fade as providers take on responsibility for insurance and affordability. Hospitals will become systems of health.
- The gaps between health services and human services and between physical and mental health will narrow as health is redefined.
- The business of health care will be exposed to greater scrutiny — how we operate, how we negotiate deals, how we are structured and who wins and loses. Transparency was a prominent pledge in the Trump campaign.
Campaign 2016 is now history. President-elect Trump’s business savvy will no doubt be the underlying theme of his administration. It will be put to the test at home and abroad, and especially in our health care system.