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Will President-Elect Trump Repeal the Affordable Care Act?

Updated: Jun 25, 2020

Written by: Jeff DeWaal

A few months ago, Avalere’s Dan Mendelson produced a report entitled “Experts Predict Sharp Decline in Competition across the ACA Exchanges.” Mendelson made light some issues that we will continue to see in 2017, especially as the Trump Administration settles in. There have been many healthcare analyses produced since the election, and all of them say basically the same thing, “we know what the media knows, and at this point, that is very little.” With insurers jumping ship, open enrollment signing beneficiaries left and right, and a new HHS secretary to assume office, there is one thing we can all be sure of, 2017 is going bring a tumultuous healthcare battleground.

The Centers for Medicare and Medicaid Services (CMS) released its first bi-weekly enrollment snapshot for, and since November 1st there have been millions of beneficiaries that are either renewing, shopping for, or selecting new plans for 2017. In a variety ways, over one million Americans have already selected coverage for next year, which is frightening considering that, according to Avalere, 36% of exchange regions have only one insurance carrier; 55% have only two. Unsustainable losses have resulted in insurance carriers jumping ship, and with Trump’s success in the election, and his campaign trail filled with talk of “repealing Obamacare,” why would payers not jump ship even more?

With the potential repeal of the ACA and coverage disappearing, the leverage of Medicaid’s large population will start to lose its weight. Open Enrollment has been busy the first two weeks; currently, there are over 73 million beneficiaries covered under Medicaid. Nearly a quarter of the 1.2 million customers who signed for coverage in the first 12 days of Open Enrollment were new customers. And that number, according to Sylvia Burwell, is predicted to grow; the current HHS Secretary said, “The American people are demonstrating how much they continue to to want and need the coverage the Marketplace offers.” 73 million beneficiaries cannot be ignored by a pharmaceutical manufacturer.

The repeal of the ACA could bring the medicaid beneficiary count down to 56 million, still a large number, but small enough for some manufacturers to walk. Medicaid is a difficult market; when you’ve seen one Medicaid program, you’ve seen one Medicaid program. That takes time and resources to manage. The market is highly competitive and littered with generics so rebates can skyrocket sometimes 70-90 percent, and even with the new push for Value Based Purchasing, low adherence and comorbidities make value difficult to quantify and measure in a Medicaid population. There is a bottom line emerging; Medicaid is a high cost, low benefit market.

Trump seems to have found his favorite for HHS Secretary, Rep. Tom Price MD, a former orthopedic surgeon who has already authored “The Empowering Patients First Act” which could replace the ACA. A growing fear from non-Trumpees is that 15-20 million beneficiaries currently covered by Medicaid Expansion would be left without coverage. In an article to the National Review, Price briefly outlines his strategy for those patients, “while Obamacare thrusts these Americans into government-run programs like Medicaid, H.R. 2300 instead provides them with deductions, tax credits, refundable tax credits, or advanceable refundable tax credits. This ensures that all Americans will have the financial wherewithal to purchase the kind of coverage they need, not what the government forces them to buy.”

As we look forward to the new year, and check our inboxes, news feeds, and Linkedin updates for a clue as to what our contingency plans should look like, we should keep some important concepts in mind:

  1. The Trump Administration WANTS to repeal the ACA, he needs 60 Senate votes to block a Democratic filibuster, and that only holds true IF republicans allow a filibuster.

  2. Even if Trump fails to repeal the ACA, he can still change and reform policies to make it look the way he wants.

  3. 73 million beneficiaries is a colossal amount of lives that manufacturers simply cannot ignore. A drop in 15-20 million lives in Medicaid could weaken the incentive of high volume, low margin sales that make Medicaid a worthwhile market.

  4. And most importantly, with payers suffering from substantial losses who are leaving the marketplace for 2017 will cause higher out-of-pocket costs for beneficiaries. Legislation that outlines how patients should be empowered, offers more than a few tax incentives, and personalized coverage across state lines will gain public support.

We are all eagerly awaiting this dramatic change; we know there will be an attempt to repeal the ACA, we know there will at least be SOME reform, we know that the Medicaid market will change, and we know that if, in some alternate dimension, nothing changes, beneficiaries will have higher out-of-pocket costs due to fewer coverage options. Velocity BioGroup is planning for a dramatic change, and we are all waiting for the specifics along with you. With change being inevitable, we will be strategizing and making plans as each new policy is recommended. We hope you join us and offer feedback along the way.

#ACA #Trump #PresidentElect

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