Today, Donald Trump officially becomes our nation’s 45th president. Leading up to this day, President Trump has not been shy about his promise and priority to overturn the Affordable Care Act (ACA) as soon as he clocks in for duty. It has been reported that scrapping Obamacare in its entirety without a framework for a new plan in place would leave at least 18 million Americans without insurance in the first year, 32 million by 2026, and many Americans in a position of not being able to afford health care or be approved to receive coverage ever again.
As we inched closer to inauguration day, Trump himself toned down the rhetoric, perhaps understanding the consequences of an appeal with no plan in place. Trump stated recently that a replacement plan should go hand in hand with repeal efforts.
In an effort to bring readers up to speed, here’s a recap of the latest developments in the probable ACA repeal and what some key industries within healthcare can expect from this big move now that Trump is President.
Recent votes make ACA repeal likely
Last week U.S. Representatives Patrick McHenry and Mark Meadows joined North Carolina’s U.S. senators, Richard Burr and Thom Tillis, voting in favor of a budget resolution that calls for the repeal of the ACA, making more certain that the landmark healthcare law will indeed be replaced. The resolution, which passed the House on a 227-198 vote, enables Congress to revoke the ACA with a majority vote, ending the chance of a Democratic filibuster.
Given the constant stream of chatter from Republican legislators and Trump himself, this recent resolution is not surprising. Yet the lack of specifics as to what may replace Obamacare is leaving many across the healthcare industry, and the country, uneasy.
New report reveals wide gaps in ACA repeal
A recent report from the Congressional Budget Office (CBO) on the consequences of passing and implementing the Republican ACA repeal bill has unearthed some significant findings and a few red flags. According to the bipartisan report, approximately 18 million people would lose or drop their health insurance in the first year of a repeal. Within 10 years, 32 million more people would be without health insurance. Premiums would increase by another 20 to 25 percent in the first year.
The CBO report findings are based on if the Republican legislation from 2015, the Restoring Americans’ Healthcare Freedom Reconciliation Act (H.R. 3762), were enforced. In addition to disappearing health coverage for Americans and premium hikes, “the bill would eliminate Medicaid expansion under the ACA and subsidies for individuals who purchase health insurance through an ACA marketplace” according to a recent article from Becker’s Hospital Review. This would remove a much-needed safety net for millions of vulnerable adults and children.
The CBO report further projects that in the year following the elimination of Medicaid expansion and marketplace subsidies the individual market would jump about 50 percent. By 2026, it’s estimated that premiums would double.
A waiting game
Much of the healthcare industry is playing a waiting game to see how, if in fact the ACA repeal is passed, their sector will be affected now that Trump officially serves as President of the United States.
Pharma has been relatively quiet amidst the noise surrounding the repeal. A recent article suggests that’s because the Pharma industry was prepared for, and perhaps largely expecting, a Clinton victory. Yet, Trump’s barrage at a January press conference when he said that Pharma “has been getting away with murder” undoubtedly set the tone that perhaps there will be a fight ahead for the industry under the new administration.
Part of the unease may also be due to the fact that the ACA did not bring significantly negativ echanges to the Pharma industry. In fact, “Pharma agreed not to oppose the ACA and, in turn, the ACA did not contain major provisions negatively affecting Pharma.” If anything, the increase in health coverage that the ACA fostered increased access to drugs, ultimately benefiting Pharma. So what does the future look like for Pharmaceuticals under a partial ACA repeal?
According to a PwC Health Research Institute report, repealing the ACA will end both the expansions in coverage and simultaneously eliminate many of the reductions in reimbursement, which were enacted to pay for the coverage expansion. The report states this could be a benefit to Pharma in that industry taxes and lower payment rates would be repealed as a result. However, the loss of coverage for millions of people would reduce revenues—fewer patients equals less prescription coverage. The report goes further— health insurance plans that cover less would potentially reduce demand for services and increase bad debt.
For the medical device community, some took Trump’s win as a “slight positive” for medtech. Wells Fargo senior analyst, Larry Biegelsen, noted the potential repeal of the medical device tax and more industry-friendly leadership at FDA and CMS as wins under a Trump presidency.
MD+DI reported in November that the immense complexity of a “full-scale” ACA repeal could also perhaps benefit the medical device industry “because just as its implementation was seen as a positive for procedure volumes, a cut in the number of insured people might potentially hurt volumes.”
The PwC Health Research Institute report also suggests that under Trump, medical device innovators will be looking at a healthcare industry that mirrors more traditional retail sectors. According to the report, this is a positive for medtech in the sense that a retail focus could provide a “natural bridge” for consumer-facing products. Further, with fewer regulations, which Trump has indicated he favors, “new entrants may find easier paths to break into the highly regulated areas, especially around medical devices and new therapeutics.” Yet, fewer regulations could also backfire, negatively affecting larger companies who will face increased industry competition with a lower barrier to market entry.
More questions than answers
Uncertainty surrounding health care will undoubtedly dominate during Trump’s first few weeks in office. What all parties can likely agree on is that under this new administration, nearly every sector of the healthcare industry will be impacted in some way.
As the latest developments show, at the very least a partial repeal of the ACA repeal is likely. But without a greater grasp of which provisions will remain intact and what plan will be implemented in its place, what the future holds for healthcare remains a guessing game.