Tag Archives: Donald Trump

7 Reasons Why Health Premiums Are So High

As he blazed/thrashed/insulted his way to the White House, Donald Trump constantly claimed Obamacare was not working. According to Trump, it was a “disaster” that only he could fix. His criticisms have certainly been creative, such as this tweet about one of the perpetrators of the Boston Marathon bombing.

Whether Trump  can actually fix Obamacare remains to be seen, but he was right about one thing: Insurance premiums are on the rise. It’s estimated that in 2017 premiums will go up by approximately 24%.

Insurance companies like Aetna and UnitedHealthcare are pulling out of some markets after reporting significant losses, and other companies are significantly reducing the plans they offer.

But why exactly is this happening? What are the root causes?

While the issue is certainly complex, we do know some of the reasons costs keep rising. Here are seven primary reasons why Obamacare isn’t quite what everyone hoped.

Two Things You Need To Know

Before we depress you and make you worry about the future, let us give you two semi-good pieces of news. It’s not all gloom and doom.

The Increases Primarily Affect Those Who Purchase Their Own Insurance

First, it’s important to note that the rise in premiums primarily affects those who are purchasing their own insurance, like those who are self-employed. If you live in cubicle land or work for the man, you probably won’t feel the brunt of the increase in premiums.

Also, if you get your insurance through Medicaid, Veterans Affairs or Medicare, you probably won’t see much increase in your premiums.

However, those who shop in the insurance marketplace will find themselves staring at steeply increasing premiums. For now, you may be able to work from a beach while sipping a mojito, but soon you may need to start drinking Bud Light. Let’s hope that doesn’t happen. You may not be working for the man, but you’ll giving more money to the man.

Those Who Are Willing to Shop Around Will Probably Be Relatively Safe

If you get a government subsidy to offset the cost of your insurance premiums and are willing to shop around for a new plan, you may not be hurt by the increase in premiums. There are various plans available in the insurance marketplace, some more expensive than others. If you’re willing to switch to a new plan, you can probably find one that doesn’t gouge you so deeply.

But this is one of the problems with Obamacare. It usually covers a narrow selection of doctors and hospitals, and if you switch plans you may need to find a new doctor. If you’ve got challenging or complex health issues, this can be a big deal, especially if a particular doctor has been treating you for years. Unfortunately, this means that those who are in the worst health may get hit the hardest by the rate increases.

If you don’t want to switch plans, you always have the option of becoming independently wealthy. Of course, this can be a bit more difficult than switching plans unless you happen to have a rich relative.

See also: How to Push Back on Healthcare Premiums  

Now let’s talk about why premiums are going up.

Reason #1: Predictions Weren’t Very Good

Wait, you mean when the insurance companies and the government teamed up, they actually made some mistakes? But they both have such sterling reputations for efficiency!

It turns out that the health insurance companies underestimated how much it would cost them to insure those who weren’t already covered. A 2015 report found that insurance companies lost $2.7 billion in the individual market, in part because they had to cover more claims than expected. Insurance companies aren’t really in the business of losing money, and now they’re scrambling to make up for what they lost.

On top of this, those patients who are the sickest generate about 49% of the healthcare expenditures. This unequal distribution of costs complicates the estimates and means some companies are losing money.

Now that insurance companies actually understand the pools of patients, they’re adjusting premiums to account for the actual costs, which are way higher than they estimated.

Reason #2: Insurance Companies Are Bailing Out

Leading the way in the “Things That Aren’t Surprising” category is that many insurance companies are discontinuing plans that lose money. Additionally, some companies such as United Healthcare and Aetna are completely exiting some markets, leaving very little competition. In some states, there is a single insurance provider, allowing it to raise rates without consequence.

In 2017, it’s expected that the number of healthcare providers will drop by 3.9% in each state. As we all learned in introductory economics, less competition equals higher prices.

Reason #3: Healthcare Costs a Lot

Remember last year when the price of EpiPens started skyrocketing and people were saying, “We’ll die without them!” and the producer said, essentially, “Well, it stinks to be you!”? People got rightfully upset because that was a pretty low move to pull.

Unfortunately, rising medical costs aren’t just happening to EpiPens. Generally speaking, medical costs have been rising at about 5% each year, but some think they’re going to go up even more. Unfortunately, Obamacare is at least partially to blame for this.

Newer treatments tend to be very expensive, and now even the sickest people have access to health coverage. This, in turn, means that they have access to the pricey treatments they never had access to before. As their expenses are covered, overall costs for all people are increased.

As Sean Williams wrote:

The reason insurers are coping with substantially higher costs for Obamacare enrollees is actually pretty easy to understand. Prior to Obamacare’s implementation, insurers had the ability to handpick who they’d insure. This meant people with pre-existing conditions, who were potentially costly for insurers to treat, could be legally denied coverage. However, under Obamacare insurers aren’t allowed to deny coverage based on pre-existing conditions.

Now could be the time to begin experimenting with those homeopathic cures we’ve been hearing about all these years, like rubbing cucumbers on our feet or bathing in olive oil. Purchasing hundreds of gallons of olive oil is probably cheaper than premiums will be.

See also: More Transparency Needed on Premiums  

Reason #4: Some Government Subsidies for Insurers Are Ending

Since 2014, the government has provided some subsidies to marketplace insurers that cover higher-cost patients. These subsidies significantly reduced the cost to insurance companies and made them more inclined to work through the problems.

But this program is ending in 2017, and it’s expected that premiums will go up 4% to 7% as a result.

Reason #5: It’s Not Easy to Fix a Giant Market

Unfortunately, fixing a giant market like health insurance isn’t simple. This should surprise absolutely no one. First, the government is involved. Fixing anything government is always a nightmare, taking years of meetings, proposals and backroom deals. Second, the healthcare industry is involved, which is only slightly less unwieldy than the government.

Getting both of these entities to actually make progress is like trying to convince an elderly person that rock ‘n roll doesn’t sound like pots and pans banging together.

Lots of solutions have been proposed, but a single, straightforward solution has not been adopted.

Reason #6: The Market Is Smaller Than Expected

Chalk this one up to yet another miscalculation by the government. It turns out that significantly fewer people are enrolled in the insurance marketplace than expected. Like, 50% less.

Young adults in particular aren’t signing up, probably due to the fact that the penalty for not signing up has only been around $150.

A smaller market means that insurance companies can’t absorb the cost of particularly ill patients as easily. In larger cities, enough people may enroll to spread out the risks, but in smaller areas insurance companies are hit hard.

This, of course, causes insurance companies to pull out, increasing the problem even more.

Reason #7: The Rules Aren’t Helping Things

One of Obama’s big selling points for his healthcare plan was that insurance companies wouldn’t be able to deny coverage to those with preexisting conditions. This sounds great in the public square but doesn’t always work well in reality.

Currently, the government forces insurance companies to cover people but doesn’t offer the companies assistance when their costs exceed their revenues. If an insurance company doesn’t think it will make money, it will pull out faster than Donald Trump says something ill-advised.

See also: A New Way To Pay Long Term Care Insurance Premiums – Tax Free!  


It’s easy to be critical of Obamacare, but we should also recognize the great things it has achieved. Many people who would never have received medical coverage have been able to get the treatments they desperately wanted.

Will the problems be fixed? Let’s hope. But as we’ve seen, creating a solution that works for both consumers and insurance companies isn’t easy.

This article originally appeared at Life Insurance Post and has been republished with the permission of lifeinsurancepost.com.

What Trump Wants to Do on ACA

President Trump’s speech to a joint session of Congress on Feb. 28 covered his commitment to repeal and replace the Affordable Care Act. What did he say, what did he mean and what will be the impact on the ACA?

What He Said

The president said, “I am also calling on this Congress to repeal and replace Obamacare with reforms that expand choice, increase access, lower costs and, at the same time, provide better healthcare.”

Then, he proclaimed, “We must act decisively to protect all Americans. Action is not a choice — it is a necessity. So I am calling on all Democrats and Republicans in the Congress to work with us to save Americans from this imploding Obamacare disaster.”

He cited five principles that “should guide the Congress as we move to create a better healthcare system for all Americans.

“First, we should ensure that Americans with pre-existing conditions have access to coverage and that we have a stable transition for Americans currently enrolled in the healthcare exchanges.

“Secondly, we should help Americans purchase their own coverage through the use of tax credits and expanded Health Savings Accounts — but it must be the plan they want, not the plan forced on them by the government.

“Thirdly, we should give our great state governors the resources and flexibility they need with Medicaid to make sure no one is left out.

See also: What Trump Means for Health System  

“Fourthly, we should implement legal reforms that protect patients and doctors from unnecessary costs that drive up the price of insurance — and work to bring down the artificially high price of drugs and bring them down immediately.

“Finally, the time has come to give Americans the freedom to purchase health insurance across state lines — creating a truly competitive national marketplace that will bring cost way down and provide far better care.”

What He Meant

I hesitate to try interpret what the president means when he, well, uses words. We’re talking a moving target here. However, given the gravity of the speech, I assume what he said was thoroughly vetted and intentional. So, I’ll go try to interpret the president’s message. Full disclosure, however: Republicans are already fighting over the meaning of his five healthcare reform principles, so there’s clearly room for differing interpretations.

Pre-existing Conditions:

In the past, Trump has expressed the desire to keep the ACA’s guarantee-issue provisions that prevent insurers from declining coverage because of a consumer’s health status. Last night, however, he used different wording, stating that pre-existing conditions should not bar Americans from having “access” to coverage. These are two different things. The ACA requires that carriers accept consumers, even those with expensive medical conditions, into any plan for which the consumer is eligible. Calling for access means that, as an alternative, these Americans could be shunted into high-risk pools or plans designed specifically for high-cost insureds.

Offering access to high-risk pools means Americans with existing medical conditions would have fewer choices and limited benefits and would pay higher premiums than their healthier neighbors. In testimony before a California legislative committee, I once referred to high-risk pools as “a ghetto of second-hand coverage.” The author of the legislation establishing the state’s pool sat on the committee. Oops! But I stand by my description.

The president’s indicating a willingness to accept high-risk pools was good news for House Speaker Paul Ryan, who supports them. However, there are millions of Americans with pre-existing health conditions. How will they react to being removed from the “normal” market? And how will they, and their family and friends, express those feelings at the polls?

Tax Credits and HSAs:

Health Savings Accounts have long been a staple of Republican healthcare reform proposals. In a draft of Speaker Ryan’s Obamacare replacement bill, tax credits are the primary means of making health insurance premiums affordable. Conservatives have pushed back against tax credits, calling them a new, non-means-tested entitlement program. The president’s backing of this approach will give the speaker some leverage in negotiations with these members of the GOP caucus in the House.


President Trump’s call for giving governors more say in how their states implement Medicaid seems to support efforts to move federal payments for the program into block grants, which aligns the White House with Republicans in the House. Currently, states receive funds based on Medicaid enrollment (subject to a host of adjustments for a variety of factors, but let’s keep it simple for now). Block grants would give states a fixed amount to spend within very broad federal guidelines. This approach enables the federal government to cap their spending on the program and leaves it to states to manage the program.

Lowering the Cost of Care:

Too often, the debate over health insurance affordability ignores a harsh reality: The major driver of health insurance premiums is the cost of medical care. Most of the president’s principles concerning healthcare reform focus on healthcare coverage. But he’s also seeking to lower costs through malpractice reform and through taking steps to drive down the cost of prescriptions. That the president is addressing medical expenses at all is a good thing. Let’s hope that, as a replacement to the Affordable Care Act moves through Congress, there will be an even greater emphasis placed on reducing the cost of medical treatments and services.

Interstate Sales:

Trump and many Republicans invoke letting consumers buy out-of-state coverage with the same passion as Hogwarts students learning their first spells. Republicans proclaim out-of-state coverage will increase competition and lower premiums across the country. Like that school of witchcraft and wizardry, however, this proposal is, unfortunately, a fantasy. I’ll write a post on why soon, but for now consider just one factor: Virtually all health insurance policies sold today rely on discounts offered by “in-network” doctors, hospitals and other providers of care. Plans sold in State A may look good to a consumer in State B, but if that carrier doesn’t have a strong network in State B, what good is that policy?

The Impact

Let’s assume I’ve interpreted what the president said correctly. What will be the impact of his position on whatever Obamacare repeal-and-replace bill emerges from Congress and lands on his desk to sign?

See also: Is the ACA Repeal Taking Shape?  

First, it is very significant that the president’s healthcare reform principles align as closely as they do with those of Speaker Ryan. This gives the speaker a powerful card to play when herding his splintered caucus behind his preferred legislation.

Second, it seems to signal that the White House is ceding the responsibility to develop an ACA replacement to Congress. The president carved out no bold vision for what he wants, nor are his principles in conflict with longstanding Republican positions. The only exception is his call for federal action to lower prescription drug costs. But would Trump veto a bill that meets all of his principles except for this one? Doubtful.

Third, we’re only at the beginning of a long, arduous march to reforming or replacing the Affordable Care Act. Many more parties will be heard from, including Senate Republicans, insurers, pharmaceutical companies, doctors, hospitals and other special interest groups. The public will have a lot to say on this subject, too. Plus, any reform package will likely require support from Democrats, and negotiations for those votes have not yet begun.

As I’ve written previously, what Republicans are putting forward now may bear only a passing resemblance to the healthcare reform we will get at the end of what will be a very long, messy slog.

This article was originally posted on Alan Katz’s blog.

What Trump Means for Health System

SUMMARY: Like a chief executive hired to turn a failing company into a profitable one, president-elect Trump has said he will take an unflinching corporate approach to overhauling the U.S. healthcare system. For an industry that prefers stability to surprises—and one that has worked to adapt to the Affordable Care Act—Trump’s “repeal and replace” agenda may create new uncertainty and opportunity for healthcare leaders.

President-elect Donald Trump will likely enter the White House seeking to “repeal and replace” the six-year-old Affordable Care Act (ACA). While the law has reduced the number of uninsured people and accelerated the shift to a more value-based healthcare system, it has struggled to lower costs, make care more affordable and win over a majority of Americans.

Though complex, full repeal may not be a far reach for the president-elect. And even if Trump falls short of full repeal, he still may have congressional and regulatory paths to more targeted changes. For example, Trump could push Republican senators to defund the consumer exchange subsidies in a budgetary maneuver known as reconciliation.

If successful in repealing the ACA, Trump said he would implement long-held Republican policies, plus a few new to his party’s thinking, designed to shift control of the $3 trillion healthcare industry away from the federal government and toward private enterprises, state governments and consumers.

To push through his platform, Trump will likely have to navigate mounting pressure from macroeconomic forces— including rising healthcare expenditures and challenging Medicare financial and demographic projections—that may affect how he approaches his health reform agenda. Trump will likely need to mend relationships with congressional lawmakers—including Republicans who drew fire from him on the campaign trail. Consumers’ expectations for the evolving U.S. health system may also affect the Trump administration’s ability to negotiate with policymakers.

Americans view healthcare as a top issue. While the candidates did not make healthcare a top-tier priority until the last weeks of the campaign, 76% of consumers told PwC’s Health Research Institute (HRI) that it is important to them. For Trump, the challenge will likely be making healthcare more affordable for consumers while offering plenty of choices.

In interviews with HRI, health industry experts said they viewed Trump as a corporate chief executive—an image he projected on the campaign trail. As such, the Trump administration is more likely to rely on free market levers, such as price transparency for providers and open negotiations with pharmaceutical companies, than the traditional regulatory process. This approach could benefit consumers by giving them the tools they need to shop around for their care.

See also: What Trump Means for Healthcare Reform  

“The refreshing part of it is he is bringing in completely new people, and, presumably, they will re-evaluate everything that’s been done in terms of policies and building for the future,” said Chip Kahn, president and chief executive of the Federation of American Hospitals, a Washington, DC-based association that represents for-profit health systems.

For this report, HRI interviewed healthcare advisers and association executives to gain a clearer understanding of how Trump’s presidency will likely affect the industry. HRI also surveyed American consumers about healthcare policy issues that may emerge under the new administration. HRI assessed Trump’s proposals as he presented them during campaign speeches and on his campaign website from July through November.

Trump’s health policy priorities: From “repeal and replace” to “the art of the deal”

During his campaign, Trump promised to immediately repeal the ACA. He also unveiled a multi-point plan to overhaul the U.S. healthcare system, aiming to lower the cost of care through market, tax and legal reforms. His proposals include the expanded use of health savings accounts, cross-state insurance sales, increased transparency around provider prices and re-importation of medications, as well as allowing Medicare to negotiate with drug makers, giving tax credits to individuals who pay out-of-pocket for their care and block-granting Medicaid.

HRI conducted an analysis of Trump’s proposals based on industry, consumer and congressional sentiments toward the president-elect’s policy goals (see figure 1).

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Repeal of the ACA would greatly affect the healthcare industry

Repealing the ACA would be a major change to the current healthcare system, which has spent much of the past six years implementing its many moving parts. The industry has learned to live with and even, in many cases, embrace the law. Industry executives have questions about the implication of Trump’s policies to replace the ACA, which could increase the deficit in the long run and the number of uninsured by almost 20 million people, according to a Commonwealth Fund study.  Employers, who complained about the administrative costs of implementing the ACA, could find themselves spending money on changing employer policies and data systems to implement laws meant to replace the ACA, if it were repealed.

Repeal also ends popular ACA provisions, like the guaranteed issue of insurance, allowing young adults to remain on their parents’ health plans until the age of 26 and filling in the Medicare Part D donut hole. It is unclear from his proposals whether Trump would try to keep any of these ACA provisions intact.

The industry has other concerns about repeal, which would mean an end to revenue and tax provisions, including tax credits to offset premium costs. Medicaid expansion also would presumably be reversed, as would care delivery reforms that accelerated the move away from traditional fee-for-service payments to ones focused on quality and outcomes.

“‘Repeal and replace’ could be very tough on hospitals that worked in the last process in 2009 and 2010 to accept tremendous Medicare and Medicaid reductions to help health reform happen,” Kahn said. “It would be important for us to see if those two things go together. If you want to repeal, fine, but you have to repeal the whole thing. And that’s going to be hard.”

If attempts to fully repeal the ACA fall short, however, Trump and Republicans in Congress have other tools they can use to dismantle the law, including the use of reconciliation and the appropriations process, where Congress may be able cut spending to ACA programs. Some of those taxes have proven unpopular with health industry leaders. Under Trump, ACA foes in Congress now have an ally who is likely to push to remove those provisions.

Beyond repeal, Trump embraces a free-market approach to healthcare

Trump views healthcare as an industry that should look and feel like other industries, complete with market competition and consumer choice. From that perspective, Trump likely will first use traditional open-market levers to affect prices, a move that may be well-received by the public. According to the HRI survey, 62% of consumers said lowering the cost of health services should be a priority for the new president.

Trump likely will look to build on the momentum toward more transparent pricing in healthcare. Some of it is rooted in the ACA, which requires hospitals to make public their lists of charges for medical procedures. Some states, such as Ohio and Florida, already have passed price transparency laws that take the ACA’s provisions further.

The push for more transparent pricing is reflected by a growing number of consumers across the U.S. who are beginning to shop around for medical services. In 2015, 30% of consumers said they had contacted providers about prices, according to a survey conducted by HRI.  In turn, some hospitals and health systems have started offering more retail-like experiences around pricing, with at least one system offering to refund a portion of costs if patients are unhappy with their care.

Trump also said he aims to expand consumer use of tax-advantaged health savings accounts, or HSAs. HSAs would be allowed to be handed down from family member to family member. Sixty-two percent of employers already offer HSAs, while 21% are considering offering them to their employees.

See also: What Trump Means for Business  

Despite the wide availability of HSA plans, U.S. consumers have been slow to adopt these tax-advantaged accounts. That may be changing. According to a 2015 report by America’s Health Insurance Plans (AHIP), HSA plans participating in an AHIP survey experienced a 22% increase in enrollment between 2014 and 2015.

The art of the deal: What works in business may be challenged by Congress

On the campaign trail, Trump mentioned his skills as a business negotiator as crucial to how he would push through his policy agenda once elected.

Trump may need to fine-tune his pitch to Congress if he wants to push through major parts of his health reform agenda, including giving Medicare the power to negotiate directly with drug makers and allowing the re-importation of prescription drugs. Both proposals have been stalled in the past. Determining Medicare’s power to negotiate with drug makers has been difficult to define because Medicare deals only with private insurers, which design and sell Medicare Part D plans and already negotiate with manufacturers. And, drug safety is a looming concern with re-importation.

Even allowing insurers to sell coverage across state lines could face obstacles. Trump has positioned the idea as a way to lessen regulatory hurdles, lowering the cost of coverage for consumers and decreasing administrative burdens for insurers. But under a repeal scenario, there could be wide variations in how much insurers could charge enrollees and differences in benefits and premiums from plan to plan. Cross-state insurance sales may better meet the needs of younger and healthier individuals and lower standard benefit requirements, but it could also leave some consumers susceptible to higher out-of-pocket costs or lack of coverage for serious conditions.

Trump also has proposed giving consumers tax credits to defray the costs of their coverage. However, the costly proposal, estimated at $41 billion, would likely require spending offsets. Under repeal, providing tax credits in the individual market could undermine employer-provided health insurance and increase the number of uninsured.

Trump’s plans for Medicaid include turning it into a block grants program. A 2015 block grant proposal by House Budget Committee Chairman Tom Price found that it would reduce federal funding by $913 billion over 10 years. But the result could mean the loss of coverage for some people, a reduction in Medicaid benefit coverage or both. A major change in Medicaid, especially one that is intended to reduce federal spending, is likely to be opposed by the states that expect the largest losses from the proposed block grant program.

Trump also has said he may favor expanding Medicaid. This expansion likely would mirror the efforts by Vice President-elect Mike Pence to expand the program in Indiana through a waiver that reflected more GOP-leaning principles. The Healthy Indiana Plan requires individuals to pay into a “personal wellness and responsibility account,” which is used to cover a $2,500 deductible. The state pays a majority share, but individuals also are on the hook for some amount. If an individual’s healthcare expenses are less than $2,500 in a year, the balance rolls over to the next year. Enrollees also can take additional reductions if they complete wellness programs and use preventative services.

This model, with its personal responsibility flavor and focus on HSAs, might be popular with state Republicans. But not all waiver programs succeed. The Department of Human and Health Services (HHS) has denied some states’ Medicaid waivers. The federal government turned back Ohio’s Medicaid proposal because it required increased cost-sharing for beneficiaries and would have led to dropped coverage for those who could not pay. Yet these types of denials could change under a Trump presidency.

Macroeconomic healthcare trends will challenge the new president

Complicating Trump’s efforts are broader macroeconomic healthcare trends. Discussion of these forces was virtually non-existent on the campaign trail. But if Trump does not take steps to tackle these economic issues, he may have a hard time advancing his healthcare platform without reductions in mandatory spending on major health entitlements (see figure 2).

Mandatory spending on major health programs, such as Medicare and Medicaid, coupled with Social Security, are expected to account for 88% of the growth in federal spending over the next decade. The remaining 12%, the discretionary federal budget, which pays for such programs as defense, education and transportation, will likely be crowded out by healthcare spending. Unless Trump is willing to accept large increases in the federal deficit, he will likely be forced to look for ways to significantly reduce healthcare spending to make room for other domestic priorities.

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In addition, the Medicare Hospital Insurance Trust Fund, or the Part A trust fund, will be depleted by 2028, according to actuaries at the Centers for Medicare and Medicaid Services (CMS). The Medicare program is very popular with Americans. More than 70% of consumer survey respondents told HRI that it is an important policy issue.

The federal government won’t let either program become insolvent. Medicare is the nation’s largest payer of healthcare services. It sets policies that are replicated throughout the industry. But the new administration will likely face significant pressure to tamp down healthcare spending. From an industry perspective, providers and other parts of the healthcare sector may have to defend against proposals to slow Medicare growth by cutting their reimbursements.

The persistence of uninsured individuals is another unresolved issue for Trump. Although the number of uninsured Americans is at a historic low, 8.9%, so roughly 28.4 million people still lack coverage. The ACA exchanges have fallen short of earlier projections for enrollment (see Figure 3). Moreover, 19 states have yet to expand Medicaid to the levels set out in the ACA. The number of uninsured is expected to grow to about 50 million people with “repeal and replace.” Trump’s challenge will be to lower that number through his replacement proposals.

Medicare reform also looms large on Trump’s agenda. The new administration will be in charge during the first year of MACRA, the Obama administration’s overhaul of physician Medicare reimbursement. With MACRA, Medicare will double down on the shift from volume-based payments to value-based care. Trump likely will support the continued move to value-based care, which, in part, pushes hospitals, health systems and other parts of the industry to operate more like retailers. But the savings results from value-based reforms have been mixed, which means hospitals, physicians and health systems can expect more tinkering in their reimbursement programs.

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Implications for the health sectors

Trump’s health proposals would touch nearly every corner of the U.S. healthcare system. In keeping with his background, his approach likely will be more business-oriented. This could mean allowing the health sectors to operate with a freer hand and without overly burdensome regulations, or it could take the form of Trump delegating much of the health policy work to his administration.

See also: What Trump Means for Workplace Wellness  

HRI analyzed the impact of Trump’s proposals on the U.S. health sectors based on interviews with internal firm experts and external policy influencers. Proposals were taken from Trump’s campaign website, which HRI accessed multiple times between July and November.

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Trump’s candidacy raised more questions about his healthcare proposals than it provided answers. This uncertainty—if not addressed early in his tenure—could frustrate industry players, new and established. They will likely be looking for clear direction on how they should proceed. This uncertainty could stall efforts to shift to value-based payment models.

Trump’s corporate business tools will likely be challenged as he attempts to reshape the U.S. health industry, which does not operate like a typical business sector. “Repeal and replace” of the ACA may be difficult. Experts estimate that it could substantially increase the number of uninsured, reduce revenues to the healthcare sector and potentially drive up the federal deficit.

These economic uncertainties place significant cost pressures on industry stakeholders. The replacement proposals outlined address a patchwork of issues but not the loss of coverage that would result from a repeal of the law. Overall, Trump’s proposals present a new set of challenges and opportunities for an industry that already faces uncertainties over a burgeoning New Health Economy.

You can download the full report here. It was written with Kelly Barnes, Bob Valletta and Mike Swanick.

What Trump Means for Best Practices

On Tuesday, Nov. 8, 2016, the majority of a major minority of the people in this country opened the window, stuck their heads out and yelled just as Howard Beale instructed in Network: “I’m mad as hell, and I’m not going to take it anymore.”

The rest will be history. Power to the people!

As you and your organization move from yesterday, through today (2016) to tomorrow (2020), will you complete this “first term” into the future, be thrown out before your term is complete or be reelected by a landslide? The choice will be made by the marketplace.

Your performance is determined by your clients and prospects — your voters — not your measurements of “best practices” and “peer studies.” Best practices are the judgment of our peers comparing us with our “superior” peers. Best practices are inside baseball. They’re all about us – our industry.

In Tuesday’s election, despite all the best practices and peer studies that meant all the media “knew” that Hillary Clinton was the winner – SHE LOST!

The media knew she would win not from some impulsive whim but rather through history, polls, the wisdom of the elders of their tribes (Democrats, Republicans, independents) and those who had grown up in the industry of government – lobbyists, consultants, pollsters, elected officials, etc. As a practical matter, 16 of the most successful players in the Republican party scoffed during the primaries at the idea that a reality-TV star should be taken seriously.

On the other side, the Democratic party in its arrogance ignored millions of outsiders (the children of their insiders plus many of the alienated members of their tribe) who marched in protest behind and beside democratic socialist Bernie Sanders.

See also: What Trump Means for Workplace Wellness  

Now do you understand? THE MARKETPLACE HAS CHANGED!

Enough about politics. Let’s get back to real life – marketing in a dynamic and divided world. Tomorrow is not about the mass market of yesterday. It is about the narrow niches of tomorrow (left-handed diesel mechanics who smoke, or some other affinity group you’ve never considered), their affinity and your knowledge of and intimacy with them, their wants, needs expertise, culture, etc.

I recently worked with a non-profit organization that had it all: good people serving a marketplace that their peers would “die for,” plus a membership group with sophistication, economics and education that any niche would envy. The organization included a successful history of 50-plus years and, unfortunately, the baggage and culture problems that nearly always accompany such success. The organization had become “dumb, fat and happy,” focused internally in their comfort zone, and they had let their finger slip off the pulse of their individual members.

These very good folks in this organization had done what far too many folks do after an era of success. They existed in their comfort zone versus working to ensure that their clients were comfortable! Conversations about the “good old days” outnumbered asking “what if,” “what now,” and “what next?” They were looking internally at each other versus at the future!

Don’t believe me: Test this on your team! Gather your team or a cross section of your team for a futuring group meeting. Draw a circle large enough to hold the assembled group. Ask them to stand on the circumference of the circle to discuss the future. What will happen? Will most (or all) face each other, or will they turn their back on the “history” inside the circle and look at the possibilities on the horizon?

Whether you think the above is silly or provocative, the reality is this: Your current processes are perfectly designed to get the results they are already getting.

Twenty-three years ago, I naively suggested we “change the culture.” After I tried this a few times and had my rear end handed to me, I learned that to change the culture you must change the people. But this is a foolish fantasy in a world filled with humans with free will and the ability to sabotage change. (Remember Maxine’s wisdom, “Change is good as long as I don’t have to do anything different.”)

I then evolved to a more real model suggesting you work to maximize the results that can be obtained in the culture you have. Now with decades of scar tissue, I know better. In fact, Harvard Business Review in its April 2016 cover story, agreed with me – YOU CAN’T FIX CULTURE; just focus on your business, and the rest will follow.

See also: What Trump Means for Business  

I’ll wrap up this monologue with three slides from a recent planning retreat that acknowledge that you can’t fix culture — but that you can do other things:

  1. You can’t fix culture, but EACH OF US CAN GROW!
  2. You can’t fix culture, but ALL OF US CAN COLLABORATE BETTER!
  3. The final slide included seven words and one picture. The picture said it all, with a young woman with a “sad face” looking down and back over her shoulder to a yesterday of hurt and a “happy face” young lady looking up and out at the positive possibilities on the horizon! The words – “IT’S ALL ABOUT WHICH WAY YOU LOOK!”

What Trump Means for Healthcare Reform

With the (surprising) election of Donald Trump as America’s next president, I’ve been asked by quite a few folks what this might mean for the Patient Protection and Affordable Care Act, especially as it relates to individual health insurance. It’s been more than seven months since I posted anything in this blog (been busy launching a couple of companies), but I thought I’d use this space to provide my perspective.

For the impatient among you, that answer is: either a complete disaster or some modest fixes that actually improve the ACA. Dramatic, but non-lethal, changes are unlikely.

As for the details: Trump’s call to repeal and replace the ACA was core to his campaign. His official health care reform platform promised to:

  1. Repeal Obamacare in its entirety.
  2. Permit the sale of health insurance across state lines.
  3. Allow individuals to fully deduct their health insurance premiums.
  4. Promote health savings accounts (HSAs).
  5. Require all healthcare providers to publish their pricing.
  6. Provide block grants to states for Medicaid expenses.
  7. Remove barriers that delay the introduction of new drugs.

Some of these ideas, such as promoting HSAs and increasing pricing transparency, have merit. Some, like enabling carriers to sell across state lines, are nonsensical for several reasons I have described previously. None offer much solace to the 20 million-plus consumers in danger of losing their individual coverage if the ACA is repealed. Trump and his Republican allies in Congress will need to do more.

See also: What Trump Means for Workplace Wellness

I hesitate to predict how Trump will lead as president, but he seems to be  a “big picture guy” who leaves details to others. So let’s assume he lets Congress take the lead on repeal and replace. In December 2015, Republicans in Congress passed legislation aimed at gutting the ACA. President Obama vetoed the bill, but its major provisions are instructive:

  1. Repeal the federal government’s authority to run healthcare exchanges.
  2. Eliminate premium subsidies available to individuals purchasing through the exchange.
  3. Eliminate penalties on individuals for not buying coverage and employers who failed to offer their workers health insurance.

Combined with Trump’s campaign promises, these elements of the Republicans’ repeal-and-replace legislation give a glimpse to the starting point of GOP-style healthcare reform. Add House Speaker Paul Ryan’s call earlier this year for high-risk pools, and the hazy outlines of a possible reform package begin to emerge.

Given Trump’s commitment to start the repeal-and-replace process on the first day of his administration and Senate Majority Leader Mitch McConnell’s statement after the election that getting rid of the ACA was “pretty high on our agenda,” healthcare reform is coming — and soon.

Whether the result will be an outright, actual repeal of President Obama’s signature legislative accomplishment is no sure thing. Supporters of the ACA are already vowing to defend the law. And while Republicans will hold majorities in both chambers of the new Congress, they are a long way from having 60 votes in the Senate. And that’s problematic.

Senate filibuster rules require 60 votes to cut off debate and allow legislation to come to a vote. This means the most powerful person in Washington on healthcare reform may not be President Trump, Speaker Ryan or Senator McConnell, but the senator needed for that all-important 60th vote. Yes, the first through 59th supporters are important, but their support means little if a 60th vote is not found. As a result, the 60th senator can have a tremendous impact on the final language in the bill simply by offering (implicitly or explicitly) a favorable vote in exchange for whatever is important to that senator.

In 2017, the 60th senator for repeal and replace will be a Democrat. A Republican is expected to win Louisiana’s run-off election, giving the GOP 52 seats in the upper chamber. Assuming Republicans vote as a block — something they’ve become quite adept at in the past eight years — eight Democratic votes will be needed to end a filibuster. The requests of each of the first seven will need to be considered and addressed, but it’s the demands of the eighth senator, that 60th vote, that ultimately matters. Unless …

The Senate can temporarily eliminate the possibility of a filibuster against a bill under the rules of budget reconciliation. However, reconciliation bills must address the federal budget, a vague definition that Congress has interpreted with varying strictness throughout the years. Clearly, eliminating funding for exchanges, taxes and monetary penalties affect the budget. Much of the ACA, however, doesn’t. For example, requiring carriers to issue individual policies to all applicants regardless of their health conditions (what’s called “guarantee issue”) has no impact on the budget.

The situation in the Senate creates dangerous possibilities. Just one example: Republicans use the reconciliation process to eliminate penalties paid by consumers who fail to purchase health insurance but not the guarantee issue requirement. Under this situation, few consumers — especially young, healthy consumers — will likely obtain coverage until they get sick or injured. This adverse selection would be cataclysmic, and few, if any carriers, would want to participate in such a market. After all, insurers are in the business of spreading risk across a broad population. Guarantee issue without an obligation to buy coverage guarantees a concentration of risk across a narrow population.

See also: Why Can’t U.S. Health Care Costs Be Cut in Half?  

President Trump can significantly affect the Affordable Care Act through executive orders, but the risk is the same as a partial repeal through legislation. The ACA is a multi-faceted construct with interlocking pieces. The wrong changes can cause devastating unintended consequences.

Republicans in Congress and President Trump may not care. The ACA has taken on nearly mythic proportions as the symbol of all that is evil with the liberal, big-government side of politics. However, making careless changes would not only be irresponsible, it would risk the wrath of millions of voters tossed out of the individual market. Those votes matter. Keep in mind, Trump’s election was close. He lost the popular vote. His leads in Wisconsin and Michigan add up to a combined total of less than 40,000 (as of today).

Yet failing to repeal Obamacare after making it so central to their 2016 campaigns could be a political disaster, as well. Republicans jumped on replace and repeal in 2010, and over the past six years this position helped deliver durable GOP majorities in both houses of Congress. Many in their ranks may not care about the consequences of dismantling the law.

Assuming a desire to address healthcare reform in a responsible way will require the help of at least eight Senate Democrats. Fortunately for Republicans, 10 Democrats have an incentive to responsibly neutralize the ACA issue in 2017. All are up for election in 2018 and hail from red or nearly red states.

  • Sen. Tammy Baldwin of Wisconsin
  • Sen. Bob Casey Jr. of  Pennsylvania
  • Sen. Joe Donnelly of Indiana
  • Sen. Heidi Heitkamp of North Dakota
  • Sen. Tim Kaine of Virginia
  • Sen. Angus King of Maine (officially an independent, but he caucuses with Democrats)
  • Sen. Joe Manchin of West Virginia (and arguably the most conservative Democrat in the Senate)
  • Sen. Claire McCaskill of Missouri.
  • Sen. Debbie Stabenow of Michigan
  • Sen. Jon Tester of Montana

The important question, then, is not what Republicans want to replace the ACA with, but what will it take to get enough of these senators to come along? The task could be extremely difficult if new Senate Minority Leader Charles Schumer doesn’t make it politically impossible for many of these senators to break ranks.

Republican then have two choices:1) Go nuclear and gut the ACA through the reconciliation process, but keep in place market reforms like guarantee issue; or 2) pass something palatable to eight Democrats, but which they sell as “repeal” to their base. Clearly the first option is irresponsible, but these are not necessarily responsible times. Nuking the ACA will appeal to many in the party, both in Congress and in their districts.

The more responsible choice, repealing the ACA in name only, makes the law more palatable and workable. This last point is critical: once they repeal and replace the ACA, the GOP will own health care reform. It darn well better be clear by say, October 2018, that the new system is working.

Which result — destruction or refinement — is most likely? We’re in a new and wacky world. We’ll find out soon enough.