What did Trump do healthcare-wise last time?
At a high level, the Trump Administration implemented these notable healthcare policies and themes:
- More transparency - and price transparency - in healthcare pricing on both consumer facing and back-end payor-provider negotiations;
- Messed around with the ACA (enrollment shrank from 2016-2020) and allowed for the selling of 'skinny' short-term health plans and ending the individual mandate resulting in a lawsuit to repeal and replace the landmark healthcare bill;
- Let the states decide more healthcare policies and pushed for policies including Medicaid block grants, Medicaid work requirements (and of course contentious social issues like abortion), and the infamous public charge rule; and
- Passed ICHRA which ironically builds on top of the ACA;
- Expanded and supported Medicare Advantage plans;
- Expanded the role of HSAs; and
- Facilitated the No Surprises Act.
While there are plenty of others, I feel like the above are most notable when it comes to tangible policy undertaken by Trump and his administration.
So what might happen in healthcare this time around?
TL;DR - more of the same. Support for MA (we all saw the spike in managed care stock prices) and therefore the downstream MA ecosystem, more uncertainty around the ACA (and the 2025 enhanced subsidies deadline) and therefore payor mix problems for providers exposed to ACA-heavy markets. Finally, expect significant thawing of the M&A markets, with valuation as the main barrier to future deals in 2025.
The common thread here is that consolidated players will fare well in an era of regulatory uncertainty. My community held an 'emergency press conference' discussion late Thursday, and one of the main takeaways from this discussion was…the less 'stroke of pen' risk you have, the better off you're likely to be. Scale kills during uncertain periods, and the diversified players will survive and thrive.
What Should we Expect for Healthcare in a Trump and Republican-Led Regime?
In general, Republican led or dominant healthcare regimes and policies are less friendly toward healthcare providers, which is why we saw most publicly traded hospital operators tick lower after the Trump win and Republican flip. If Republicans control all bodies of Congress and the Presidency, then it increases the likelihood of more landmark action potentially being taken. If there's a divide, expect incremental progress.
Here's what could be on the horizon, and what to pay attention to.
The Affordable Care Act - Subsidies and the Future of Obamacare
Nearest Term is the ACA's Future: What's the future of the ACA under a Republican-heavy regime? After a failed lawsuit to repeal and replace the healthcare bill, the ACA is even more established than ever in 2024, but there is plenty of rhetoric that seems to be taking place around changing it once again. From that NBC article:
- House Speaker Mike Johnson took a dig at Obamacare at an event in Pennsylvania on Monday, telling a crowd there would be "massive" health care changes in America if Donald Trump wins the election. "Health care reform's going to be a big part of the agenda. When I say we're going to have a very aggressive first 100 days agenda, we got a lot of things still on the table," Johnson, R-La., said in Bethlehem as he campaigned for GOP House candidate Ryan Mackenzie, according to video obtained by NBC News. "No Obamacare?" an attendee asked Johnson, referring to the law Democrats passed in 2010, also known as the Affordable Care Act. "No Obamacare," Johnson responded, rolling his eyes. "The ACA is so deeply ingrained, we need massive reform to make this work, and we got a lot of ideas on how to do that."
My 2 cents? It's all hot air, and the ACA is safe. The ACA is decently politically popular on both sides of the aisle so it's not going anywhere. Nobody wants 20 million Americans to lose coverage. Hospitals saw great growth in ACA-related admissions (folks switching over from Medicaid) which boosted payor mix and therefore margins. So any changes to the ACA affects many powerful healthcare stakeholders - payors, hospitals, and provider groups - negatively.
But do keep in mind that ACA enrollment decreased during Trump's previous regime. We can look at what the Trump Admin did with the program to get a sense of possible changes. Last time around, Trump implemented certain policies to dissuade enrollment in ACA plans - "Rather than extending coverage to the uninsured as promised, the Trump administration has prioritized skimpy coverage sold through association health plans and short-term, limited-duration insurance…
- "…At the same time, the Trump administration has erected barriers to obtaining comprehensive plans through the marketplaces by cutting funding for initiatives to inform uninsured people about coverage options, scaling back enrollment assistance programs, and shortening the annual HealthCare.gov open enrollment period. Total enrollment across all states' marketplaces has fallen over the past few years, from 12.7 million people in 2016 to 11.4 million people in 2020."
This was slightly before my time writing Hospitalogy (and entering the healthcare scene in 2016) so it's possible there's context beyond Trump-initiated policies I don't know about, so take those comments with a grain of salt.
TL'DR - the ACA should be safe, unless new gov't gets pretty ambitious and risky.
Alright, so assuming the ACA sticks around, what might be at stake within its confines?
Current enhanced subsidies for the ACA are set to expire in 2025. This is the nearest term issue in healthcare. These subsidies - combined with Medicaid redeterminations - have led to record enrollment in the ACA and helped stabilize the marketplace risk pools to a certain extent. From my community conversation, it's possible Trump (1) uses the enhanced subsidies expiring as leverage for negotiation in 2025 or (2) doesn't deem it worthy of supporting in the first place, and lets them expire.
Assuming Congress lets subsidies expire, pretty much everyone on exchange plans will pay markedly higher premiums, and the uninsured population will rise as a result. After the election, Oscar Health, which holds a strong presence in the ACA Exchange, fell 15% if that gives you a sense of investor sentiment and expectations surrounding continued support for subsidies. Still, ICHRA is/was a Republican-led idea and is perceived as a competitive market initiative. Overall, ICHRA growth relies on stability of the overall ACA.
Make America Healthy Again (MAHA) - Legit Movement, or RFK Pet Project?
This part is probably the most sensationalized portion of the Trump healthcare regime.
What will RFK Jr.'s involvement in healthcare be, and is MAHA real?
Already there is rhetoric around "Making America Healthy Again." Which involves things like cutting back on ultra processed foods, trying to ban pharma TV advertising and…wanting to remove fluoride from the water supply in America. While I can appreciate the sentiment around these topics, it's hard to know at this point whether these initiatives will gain any traction, and what kind of weight RFK Jr. will carry in the White House to do anything at all.
- "In some categories … there are entire departments, like the nutrition department at the FDA … that have to go, that are not doing their job, they're not protecting our kids," Kennedy said during an interview on MSNBC.
Most likely RFK Jr. will act as some sort of advisor or Czar to healthcare agencies though with the government how it is, it's not out of the question that he gets some type of Senate-confirmed appointment. I'm not a political commentator so we'll just have to see how it plays out. My bold prediction is that healthcare agencies set up some kind of 'Longevity Center' for RFK to mess around with and spearhead less traditional, more fringe initiatives in healthcare without becoming a bull in a China shop. But what do I know. Tomorrow they'll probably announce him as the head of HHS which would be … interesting.
At the same time, RFK Jr. hits on serious issues within healthcare. People are suspicious of the FDA. The CDC. How money flows in healthcare. Pharmaceutical advertising. How dietary and nutritional guidelines are created, and who is funding those initiatives. It is a growing problem, so hopefully some good can come from all of this.
Khan is Gone and the End of the M&A Russian Winter?
Will Lina Khan stick around at the FTC? Most folks think Khan is getting the boot. A Republican government will result in a thawing out of the M&A markets with shakeup in leadership there, though Vance has voiced support for Khan in the past. A looser M&A environment will of course, accelerate consolidation in healthcare and perhaps provide some relief to PE-backed players holding the bag on large rolled-up assets.
During Khan's FTC, nobody knew what deal might pass or might get challenged. Goal posts moved constantly, and while I can understand the sentiment behind 'consolidation is bad,' it quickly turned into 'every deal is bad.'
Medicare Advantage gets a Lifeline
Medicare Advantage will continue to be supported - and I suppose the question is now to what extent will Trump support the entitlement program? CVS, UnitedHealth, Cigna, Humana, and others all traded up significantly after Trump won the election. MA support also holds downstream ramifications on enablement players and those taking on risk in Medicare Advantage populations.
Future of Supplemental Payments
Directed payments are not expected to change much and should stay as they are based on what I've read, but there's still uncertainty surrounding them given they're changed via administrative action and not by Congress. Like I mentioned in my Ardent Health write-up, Ardent as a publicly traded for-profit health system in mid-sized MSAs holds the most exposure to any potential change in supplemental payment programs. In general Ardent holds a lot of exposure to future potential policy changes - both here and with an ACA-heavy payor mix.
Agency Crackdown in an Era of Efficiency?
In general Republicans have been talking about a more efficient government, and Elon Musk, friend to the Republicans in 2024, discussed implementing the Government Efficiency Agency - don't forget Elon cut 80% of Twitter's (X's) workforce upon acquiring the social media platform - but this draconian behavior may not be very applicable to government processes. Still, what might this 'get lean' sentiment mean for the various agencies, and the future of something like, for example, CMMI that hasn't yet 'proven' out its value from a pure financial standpoint?
Anything is on the table for any healthcare agency - NIH, CDC, FDA, and more.
Free Market?
Policies that could Gain Traction
In general Republicans tend to favor free market concepts and competition (which is nigh on impossible to do in healthcare). Trump has proven in the past he's not afraid to shake things up a bit in healthcare (e.g., price transparency rules). Some potential proposals out in the wild along those same lines include:
- PBM reform and more transparency within PBMs;
- End to the moratorium on physician owned hospitals;
- Dismantling of CON regulations;
- Limiting the power of non-compete agreements in healthcare;
- More adequate and better support to physicians (e.g., fixing the inflation problem in professional payments);
- Site-neutral payment reform (and there's precedent for Trump to do something here considering his admin implemented a site-neutral policy in 340B that was eventually shut down by the Supreme Court)
- Continued movement on transparency and consumer-facing policies; and
- Better access through driving AI-friendly policies that hold an outsized effect on healthcare given progress (and increasing funding for innovation and creating new pathways for advancing technology in healthcare).
My Quick Thoughts and Wrapping up
The chronic theme plaguing us in healthcare is a simple one: costs continue to rise, and health insurance continues to cover less and less. Because healthcare took a big back seat in this election (despite the fact it's a fifth of the economy…) we don't really know what's next for TrumpCare. Still, hopefully this provided you guys with a decent outline of what may take place.
I personally think Trump will continue to push for transparency in healthcare and try to implement more free-market competitive forces into the industry - and a Trump-led healthcare administration will likely try to cut funding or introduce potentially onerous programs in Medicaid while supporting seniors on Medicare Advantage.
Finally, you should all also know that the election was NOT fundamentally about healthcare. Therefore, we have no idea how Trump's healthcare policy will play out. The election was about inflation, open borders, foreign policy, and the economy. Healthcare has taken a back seat in elections for a while now beyond abortion.
With a new Congress and President, anything is on the table, so let's hope for some positive progress and thoughtful regulation over the coming 4 years.
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