United States: Looking Ahead To A Trump Administration: Health Care And Life Sciences Industry Perspectives

Observers are digesting what the Trump Administration will mean for the health care and life sciences industry. Forecasting is more challenging for this incoming Administration than most given the relatively sparse policy details released during the campaign and the lack of a government service record to examine for clues. Today President-elect Trump's transition team released a one-page statement on health care policy, but many questions remain. Nevertheless, we offer below our initial observations and issues to watch in the months to come.

  • Potential Sea Change. Uncertainty is, as some like to say, the "obvious comment" that characterizes the whole prospective Trump Administration. Other than an intended "repeal and replacement" of the Affordable Care Act (ACA), President-elect Trump has provided relatively few details on a proposed health care agenda. Until these policies are fleshed-out, expect an environment where some business decisions and investments may be delayed, with a resulting impact on merger and acquisition activity. That said, other transactions may become more likely, as the threat of new restrictions under a Clinton administration are removed, along with the prospect of potential regulatory relief under a Republican-controlled federal government.
  • Affordable Care Act Repeal and Replacement. Trump has repeatedly indicated his desire to repeal and replace the ACA, including a vow to summon Congress into a special session for this task. If the law is repealed, however, what would take its place, and how would Congress address the roughly 20 million Americans currently covered in some way under the ACA (and the potential rise in uncompensated care costs that also would result)? Despite the call for repeal, certain parts of the law are popular. For instance, President-elect Trump noted on the campaign trail that he was in support of the ACA's prohibition against the use of pre-existing health conditions to deny coverage (or as a basis for premium-setting). Other proposals offered by Trump as candidate include allowing for the sale of health insurance across state lines as long as plans comply with state requirements, various tax benefits, and more transparency in health care pricing. In today's policy statement, President-elect Trump added support for high-risk pools, which he characterizes as "a proven approach to ensuring access to health insurance coverage for individuals who have significant medical expenses and who have not maintained continuous coverage." Congressional Republicans have offered a number of alternatives that are likely to be a springboard for reform, most notably the "Better Way" plan proposed by House Speaker Paul Ryan. In fact, according to the Speaker's office, "in the 114th Congress alone, House Republicans have introduced more than 400 individual bills that would improve our nation's health care system" – demonstrating that Congress is not reticent about legislating on health care issues. The new Senate's Republican majority will not have the 60 votes required to override a potential Democratic filibuster of legislation to fully repeal the law. While Congress could use budget reconciliation authority (which requires only 50 votes in the Senate) to make significant changes, the drawn-out pace of the budget process may not satisfy those who want quick action in this area. Regardless of the legislative vehicle, after years of calling for Obamacare repeal while President Obama was in office, the Republican Congress will be under tremendous pressure to act quickly – even if it is a "down-payment" on reform — now that Republicans will control the presidency and the Congress.
  • Medicaid Impact. Trump has called for transforming Medicaid into a block grant system – which also has been advocated by Republican health policy reformers. However, such a huge change in this major state-federal program—which provides coverage for over 70 million people—is not likely to happen quickly. Most notably, the formula for what amounts states would receive under a block grant program, as well as the requirements that states would need to satisfy for the block grants, are far from settled. Numerous parties would be intensely interested in any such reform, including individual states (and their respective congressional delegations), health care providers, manufacturers, health insurers, and patient groups. More immediately in the context of ACA repeal and replacement, there is a question as to how Congress will address the increased federal match in Medicaid expansion states and how states will respond.
  • Fraud and Abuse. We don't expect reforms to fraud and abuse laws to be a high priority for health industry associations and lobbyists, given that no one wants to be perceived as "soft" on health care fraud. We do not anticipate that the crushing fraud and abuse environment will change nor do we expect that the federal False Claims Act (FCA) provisions contained in the ACA will be repealed. Indeed, Trump Administration likely would want to continue the associated revenue stream, and in practice it would be hard to dismantle FCA provisions given that there are likely hundreds of cases filed by whistleblowers that are currently in the pipeline, under seal. Furthermore, certain champions of a hard line against health care fraud – such as Senator Chuck Grassley – will remain in Congress and are unlikely to change course.
  • Drug Pricing. Initial market reaction would suggest that drug manufacturers are better off under a Trump Administration, given Secretary Clinton's campaign promises regarding reforms of drug pricing mechanisms for federal health programs. That said, the Trump campaign website states that while "the pharmaceutical industry is in the private sector, drug companies provide a public service," and proposes to allow "consumers access to imported, safe and dependable drugs from overseas...." Mr. Trump has also spoken about potentially negotiating drug prices. In light of public perceptions surrounding this issue, we believe the industry should expect some changes—although these could be relatively benign (e.g., clearing FDA's backlog of generic drug approvals).
  • Future of CMS Innovation Agenda. While innovation center reforms did not draw significant opposition when they provided voluntary opportunities to reap rewards for delivering care more efficiently, CMS's pivot to mandatory bundled care arrangements (e.g., the Comprehensive Care for Joint Replacement program and proposed Episode Payment Models) have drawn the opposition of many providers and more recently prescription drug manufacturers in light of proposed Medicare Part B drug payment reforms. House Republicans have called for repeal of the Center for Medicare and Medicaid Innovation (CMMI) reform authority; even without repeal, however, the new administration is likely to scale back the scope and pace of innovative "mandatory" Medicare payment reforms.
  • Device Tax. The ACA device tax is currently suspended for 2016 and 2017, and it would not be surprising if this tax were permanently repealed as part of reform of the ACA.
  • Broader Regulatory & Statutory Action. A new Administration (particularly when it ushers in a party change) often results in a call for a regulatory review or moratorium, which presents an opportunity to reshape pending policies. This could include, for example, delaying action on pending rules or even postponing the effective date of recent rules. Furthermore, while we have no direct clues yet, a new administration and Congress always present opportunities to revisit perennial health law issues such as reinstatement of the Stark Whole Hospital Exception, the long-term care hospital (LTCH) 25% rule and moratorium on new LTCHs, the inpatient rehabilitation facility (IRF) 65% rule, off-campus provider-based site-of-service differentials, and many other contentious subjects of debate. There also could be pressure from physicians to roll-back complex reforms to physician payment policies set to go into effect in 2017 under the Medicare Access and CHIP Reauthorization Act of 2015. Republican lawmakers may be motivated to revisit the compromise Congress reached on the sustainable growth rate and seek to simplify the pending implementation of the Merit-based Incentive Payment System (MIPS) or participation in an Advanced Alternative Payment Model (APM). In other areas, President-elect Trump today very generally committed to advance health care research and development, reform the Food and Drug Administration "to put greater focus on the need of patients for new and innovative medical products," "modernize" Medicare," and "protect individual conscience in healthcare."
  • Congressional Republican Priorities. One clue as to Republican health care objectives is found on the "A Better Way" website, which provides the following exchange: Thus, the Congressional agenda could be fairly ambitious. However, repealing features of the ACA that were scored as saving federal funds, like the IPAB, will be scored as revenue losers, requiring offsetting revenues/savings under congressional budget rules.

    Q: Does this plan give back the more than $800 billion that Obamacare raided from Medicare?

    A: Our plan rescinds the most damaging changes Obamacare made to Medicare, including IPAB [Independent Payment Advisory Board], the CMMI, and Medicare Advantage. It was designed with the looming insolvency of the program in mind. That's why our plan targets relief in the Medicare Advantage program.
  • Payor and Provider Consolidation. Aetna's $33 billion purchase of Humana has been blocked by the Department of Justice, which has filed suit to prevent the deal. Almost simultaneously, the Department of Justice sued to stop Anthem's proposed acquisition of CIGNA. On the provider side, the Department of Justice scored significant court victories in recent challenges to hospital mergers in Illinois and Pennsylvania. Will a Trump Justice Department view consolidation in the health care industry in a different light? Trump has at times viewed large mergers – particularly in the media industry – with suspicion.
  • State Legislative Response. As the Trump Administration and Congressional Republicans seek to repeal and replace the ACA,, state legislatures, particularly those controlled by Democrats, may become more active by attempting to preserve some aspects of the ACA and grappling with Medicaid expansion. While state legislatures are likely to be reactive to proposals first coming out of Washington, we've already seen an indication that individual states make take a different policy approach to health care coverage and spending. For example, California Senate President pro Tempore Kevin de León (D-Los Angeles) and California Assembly Speaker Anthony Rendon (D-Paramount) released a statement on the results of the President election broadly indicating that the state Democrats intend to pursue policy proposals more similar to those of the Obama Administration.

We will continue to report on major health policy developments as the Trump Administration takes shape.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.