The White House released a report showing that the economic benefits of recent administration and congressional actions on health coverage will total $450 billion over ten years. The report analyzes the economic effects of the administration’s rules on association health plans, short term limited duration plans, and repeal of the mandate. This is the first comprehensive analysis of these important regulatory changes. It finds that, contrary to those who argue that these actions would harm consumers, Americans will benefit significantly from these consumer-friendly policies.

Two years ago this month, President Trump promised the American people that he would stop drug companies from “getting away with murder” with their annual ritual of price increases. Since then, his historic actions on drug pricing have produced historic results. One official measure of drug price inflation was actually negative in 2018, for the first time in almost 50 years.

Medicare’s costs for outpatient prescription drugs are rising quickly, and there is a growing sense that part of the problem lies in the incentives structure that Medicare Part D creates. Last week, the Trump Administration announced plans for a new, voluntary Part D payment model intended to lower Medicare expenditures on prescription drugs. The model’s basic idea is to increase plans’ liability for the part of the program where costs are rising the most, changing their incentives. These changes are a move in the right direction, but any benefits will likely be limited. More sweeping changes to the program’s structure, such as what AAF’s Team Health has proposed in the past, are needed to contain costs.

Report Highlights:

  • Regional associations launched 71 percent of new AHPs
  • Vast majority of new regional associations are chamber of commerce-based
  • 4 out of 5 new AHPs are insured through a third-party insurance company as opposed to self-funded
  • Maximum savings claims average higher for self-funded plans than fully-insured plans, though both are in double digits
  • Half of new AHPs offer medical savings account options such as a HSA
  • Multi-state professional association health plans in planning but taking longer to reach market
  • Half of new AHPs are limited to companies of 2-50 employees
  • 43 percent of new AHPs are available to sole proprietors and the self-employed
  • Benefit information trends toward comprehensive health coverage that includes items such as mental health benefits and prescription drug coverage alongside mandated benefits such as maternity

The Trump administration is rolling out the policy specifics for a central promise in its plan to lower drug prices—taking on the system’s middlemen. Health and Human Services Secretary Alex Azar has long had his eye on pharmacy benefit managers (PBMs) and the rebates that are their bread and butter. The proposal HHS unveiled yesterday would essentially ban those rebates in Medicare and Medicaid, forcing PBMs to collect a flat fee for their work.

Price controls prevent drug companies from even having a chance to profit, thus destroying the incentive to invest.  Developing a new prescription drug is an extremely risky endeavor, typically taking up to 15 years and $2.6 billion. The failure rate is extremely high; about 9-in-10 experimental drugs that enter clinical trials never receive regulatory approval. Investors are only willing to fund this risky research because they might profit if a drug is successful. Artificially capping drug prices would also discourage research and the development of tomorrow’s miracle drugs.

Short-term plans are temporary insurance plans that provide health coverage for individuals and families for a limited period—and can be renewed for up to three years. Short-term plans can be purchased at any time, unlike other plans available on the individual market which restrict enrollment to open enrollment periods or following a life-changing event. Coverage usually begins within a few days compared to other medical coverage that can take several weeks to begin. Because short-term plans are not subject to all of the same federal regulations as plans in the individual market, premiums are far more affordable and insurers can offer more customized choices. So why would nearly a dozen states ban them?

The CMS issued a proposed rule on Thursday that would cut Affordable Care Act user fees and laid the groundwork to eliminate “silver-loading.” 

In its proposed notice of benefit and payment parameters for ACA exchanges in 2020, the agency proposed reducing the exchange user fee that is charged to health insurers to fund the health insurance exchanges. That would help lower premiums in 2020, the agency said. 

In October, the Trump administration proposed a new rule that would expand the ways employers can use health reimbursement arrangements (HRAs) to provide their employees with high-quality, low-cost health coverage. The United States Department of the Treasury estimates that once the new rules go into effect, 800,000 employers will take advantage of HRAs, which could affect coverage for more than 10 million employees.

The Trump administration is readying guidance that could let states remodel their Medicaid programs to more closely resemble block grant proposals favored by Republicans during their failed effort to repeal the Affordable Care Act, according to people familiar with the discussions.

States would still have to adhere to certain requirements but could get far more leeway in how they design their programs, likely in exchange for some type of cap on federal funding, the people said. The guidance would lay out how states could satisfy federal requirements to get waivers to pursue the changes, they said.