First Thoughts On TrumpCare
Healthcare leaders woke up this morning to a changed future. A Trump Administration coupled with continued GOP Congressional control will likely alter the industry landscape. While it is much too early to predict with certainty the course that will be set by President-Elect Trump, Murer Consultants is forecasting some potential changes.
1. Repeal, Replace and Rename the ACA.
We can certainly expect a repeal of the ACA as one of Trump’s initial acts. He campaigned on an immediate repeal and replacement of the legislation with “free market principles.” This likely means elimination of the mandatory insurance requirements of ObamaCare, selling insurance across state lines and promoting high-risk pools. Subsidies will be difficult to eliminate in their entirety but expect them to be reduced and restructured. Likewise, significant political bipartisan support will likely implement legislation guaranteeing that children may remain on their parents’ insurance until age 26. People with pre-existing conditions may still be guaranteed insurance through more expensive high risk pools. In any event, ObamaCare as we know it will be gone or unrecognizable.
2. Medicare Remains Largely Unchanged.
Donald Trump has pledged not to cut Medicare. This commitment to keep the program strong is both politically expedient but good news for millions of America’s seniors dependent on this benefit. Expect Medicare to be edited but Trump will honor this as a contact with Americans. Simultaneously, look for the privatization of the Medicare Advantage programs to be encouraged by legislation relaxing restrictions in the marketplace. In this way, Trump and Congress could lay the ground work for Paul Ryan’s premium-support model as an end game.
Both candidates in the 2016 presidential race stressed infrastructure improvements as key portions of their respective platforms. Donald Trump revisited this theme early in his acceptance speech and specifically cited hospitals:
We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.
While specifics are not yet known, a Trump Department of Health and Human Services could reverse the stagnant growth of Medicare reimbursement for hospital capital costs and realign reimbursement rates to better reflect hospital capital costs. There may also be a loosening of interpretations as to what constitutes “new hospital” development for the purposes of new hospitals qualifying for 85 percent of its allowable Medicare inpatient hospital capital-related costs for at least two years of operation.
3. Medicaid: Control Back to the States.
President-Elect Trump and GOP Congressional leaders may seek to convert the existing Medicaid program into a block grant program. Under former block grant programs, each state would be allocated a set amount to spend annually on beneficiaries through a state-administered program. Block grant proponents have stressed the benefits of innovation which may flow from such a funding structure and the ability of the states to identify and meet the needs of their citizens.
Critics of the block grant approach cite funding concerns from both federal and state standpoints. Federal funding must keep pace with costs and states must individually be positioned and willing to meet their financial obligations and any shortfalls. Critics contend that beneficiary enrollment and scope of service could be curtailed as a result.
4. Specific Program Winner and Losers.
Within the healthcare landscape, the fate of Federally Qualified Health Centers (“FQHCs”) which specifically service migrant communities under their Section 330 of the Public Service Act grants is unknown. Donald Trump’s campaign focused on an immigration selection policy toward those who are able to be “financially self-sufficient” and pledged to turn off the “benefits magnet.” FQHCs whose federal grants are dependent on serving migrant communities may receive heightened scrutiny in the guise of broader immigration policy reforms.
Conversely, we expect fewer restrictions on the use of telehealth. In fact, as part of Trump’s plan to improve veteran healthcare, he advocates for the use of telehealth tools to better serve patients. Presently, Medicare restricts payment for telehealth except in rural or bundled payment situations. We believe Trump and Congress will be supportive of eliminating present reimbursement barriers to telehealth.
5. Continued Scrutiny for Mergers and Acquisitions.
It is likely that Trump will continue a general “hands-off” policy toward the FTC and antitrust enforcement. Elected as an economic populist, opposing big business fits with his public statements. Moreover, if ObamaCare is repealed, the financial justification for integrated delivery systems and size seems somewhat less compelling. Mergers and acquisition activity may be impacted by various positions of his administration which are yet to be developed.
6. Support for Medical Marijuana.
Many have called last night’s election a tipping point in the battle to legalize marijuana. For his part, President-Elect Donald Trump has previously expressed support for this position, telling Bill O’Reilly in February that he is “in favor of medical marijuana 100%.” Recent Gallup polls have shown nationwide support for legalization efforts at as high as 60% of the population. Although he has not expressly called for federal legalization, Mr. Trump has supported the states’ right to decide how to legislate its use and they voted strongly in favor of legalization last night, with efforts passing in at least seven states. As a result, twenty-nine states have now legalized medicinal marijuana, with seven (and Washington D.C.) also permitting marijuana for recreational use.
We expect these results to compel our new president to revisit federal legalization efforts after the DEA recently denied two petitions to reschedule marijuana under the Controlled Substances Act-where it is currently classified as a Schedule I Controlled Substance, along with more dangerous drugs such as heroin, LSD and bath salts. A rescheduling of cannabis as a substance with known medical uses would ease the federal tax burdens and banking restrictions that have forced this multi-billion dollar industry to largely operate on a cash basis, while also ushering in formal regulation at the federal level. Hospitals and healthcare providers will be presented with increasing opportunities to integrate medical marijuana in their treatment.
While Murer Consultants does not possess a crystal ball, we are mindful of the necessity to anticipate changing healthcare legal, regulatory and reimbursement environments to the best of our ability. Our firm is based on fostering compliant healthcare operations as a means of sound business practices as well as being the correct thing to do. We welcome all opportunities to discuss the evolving healthcare environment with provider governing boards, executive leadership, counsel and operational professionals. Sound strategic planning based on up-to-date knowledge coupled with innovation is our calling card. Please do not hesitate to contact us to discuss the past, present or future of healthcare as all are impactful to successful organizations.