What to Expect in a Trump Administration
The election of Donald J. Trump as the nation’s 45th President, coupled with Republican control of the House and Senate, will bring a unified government for the first time in over a decade. As this unified government works to deliver on campaign promises to “repeal and replace” the Affordable Care Act (ACA), it will also pursue long-sought fundamental reform of both the Medicare and Medicaid programs. The precise form and content of these proposals are unknown, but the gridlock characterizing recent Congresses will be replaced by widespread and significant health policy activity.
The Players and the Politics:
In nominating Representative Tom Price, MD (R-GA), orthopedic surgeon and six-term Member of Congress, and Seema Verma, a health care consultant who worked with Vice President-elect Mike Pence to design Indiana’s Medicaid expansion plan, President-elect Trump selected “the dream team that will transform our healthcare system for the benefit of all Americans.” Both have substantial experience in working with Congress and states to achieve Republican health policy goals. Representative Price was one of the first Members of Congress to draft a full replacement to the ACA, and as Chairman of the House Budget Committee, he has been a leader in House efforts to draft and move legislation repeal and replace portions of the ACA. Ms. Verma’s work with other Republican-led states, such as Iowa, Ohio and Kentucky, to craft Medicaid expansion plans will provide useful experience in making Medicaid waivers more flexible and shifting control of Medicaid dollars to the states.
Republicans’ unified government does face some constraints in the Senate, where Republicans do not have a filibuster-proof majority, as 60 votes are needed to overcome a filibuster and bring a nomination or a bill to the Senate floor for a vote. As a result, passing legislation may require either the cooperation of Senate Democrats or the use of special legislative mechanisms such as budget reconciliation. There may be practical political reasons for Democratic cooperation on some health policy legislation, as Democratic Senators in 2018 will have to defend triple the number of seats as do Republicans, and 13 of those states were won by President-elect Trump.
ACA Repeal and Replace:
President-elect Trump and the new Republican Congress are committed to acting upon ACA “repeal” as soon as possible in 2017. “Repeal” is a fairly straightforward proposition that could be accomplished quickly, through the passage of the Fiscal Year 2017 budget resolution to instruct congressional health committees to write legislation, known as budget reconciliation bills, to rescind many key features of the ACA. Through these reconciliation bills, multiple committees will sort out the details regarding the structure and timing of “replace,” with the content of these reconciliation bills combined into a single bill to be considered under expedited procedures and not subject to filibuster in the Senate.
There are numerous congressional “replace” proposals, including the Empowering Patients First Act, authored by Representative Tom Price, and House Speaker Paul Ryan’s (R-WI) A Better Way to Fix Health Care. Congressional leaders are soliciting input from governors and state insurance commissioners as they work through the “replace” options in a manner that delivers health care without threatening coverage for the more than 20 million Americans that are covered either by exchange plans or through Medicaid expansion under the ACA. There are significant implications for pharmacy, as prescription drug coverage is counted as one of the ten “essential benefits” of ACA coverage.
President-elect Trump recently said in an interview with Time Magazine on Dec. 7, 2016: “I'm going to bring down drug prices. I don't like what's happened with drug prices…” There is a good likelihood that the new administration will continue to explore value based drug pricing arrangements and expanding value-based care to include prescription drug costs. President-elect Trump focus on drug pricing as a “populist” issue in a sense is likely to continue efforts to reduce prices begun under President Obama and the Congress.
Medicare, Medicaid, CHIP and Other Health Issues:
While much of the media focus has been on ACA “repeal and replace,” it is important to remember that the ACA contained significant changes to the Medicare and Medicaid programs. Congressional Republicans have long advocated structural reform to both the Medicare and Medicaid programs. Republican proposals focus on moving the current Medicare program from a defined benefit plan to a defined contribution approach, where beneficiaries are provided a fixed amount of money to purchase the health plan of their choice. Both HHS nominee Price and Speaker Ryan have extensive experience drafting and supporting legislation to make these changes, yet their fellow Republicans, particularly in the Senate, have not always agreed this approach. Further, President-elect Trump has not yet expressed support for Medicare reform, a program that beneficiaries generally perceive works well. Missing from the debate about Medicare reform, thus far, is any discussion of Part D, which remains a popular program in the Congress.
Medicaid reform may be more achievable in this Congress. Congressional Republicans, with the support of some governors, have proposed turning Medicaid back to the states in the form of a block grant or a per capita funding formula. President-elect Trump has supported proposals to block grant Medicaid, and Vice President-elect Pence has had direct experience with developing an alternative approach to traditional Medicaid. Since prescription drug spending generally comprises the largest budget item in any state Medicaid program, this debate will have implications for pharmacy.
In 2017, Congress and the Administration will also need to grapple with a number of other health care priorities:
Federal funding for the Children's Health Insurance Program (CHIP) is set to expire at the end of September.
A set of Medicare “extenders,” provisions enacted to extend various Medicare programs, contained in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), are set to expire at the end of the year.
The Prescription Drug User Fee Act must be reauthorized by the end of September. These user fees, which cover branded drugs, medical devices, biosimilars, and generic drugs, account for about half the Food and Drug Administration’s total budget.
Republicans hold the White House, the House, and the Senate for the first time in over a decade. There will be strong pressure to utilize these structural advantages to achieve some long-held health policy goals. President-elect Trump has nominated individuals with the knowledge and skill-set to advance major reform of health policy. We expect sustained health policy reform to take place not only in the first 100 days of the Trump Administration, but also over the first two years.
Wrapping Up the 114th Congress for “Lame Duck” Session of Congress
The 114th Congress returned to Washington after the elections to tie up some last minute items, including funding for operations of the federal government and passage of the 21st Century Cures Act.
First, Congress passed, and President Obama signed into law on Dec. 10, 2016, a continuing resolution to would fund the government through April 28, 2017, allowing the new Congress and the new President to develop and finalize federal government spending priorities for the remainder of Fiscal Year 2017, which ends Sept. 30, 2017. Also included in this continuing resolution was $170 million in funding to address water infrastructure and health needs in Flint, Michigan and $500 million for states to combat the opioid addiction crisis.
Second, with strong bipartisan support, Congress also passed, and the President signed into law, the 21st Century Cures Act. This legislation, designed to develop and deliver new treatments and cures for some of the most debilitating and life-threatening diseases, will direct $4.8 billion in funding to the National Institutes of Health over 10 years, to support precision medicine, President Obama’s cancer moonshot initiative, and regenerative medicine. The new law also would direct $500 million over nine years to the Food and Drug Administration and $1 billion to states over two years to help fight prescription drug abuse. The 21st Century Cures Act also incorporates a number of provisions to improve mental health treatment nationwide.