President Trump and the Future of U.S. Healthcare Regulation and

ReimbursementPresented by: Harry Nelson

I. Understanding Obamacare as a Prelude to What Comes Next

II. Anticipated Signature Trump Healthcare Initiatives

III. Implications for Healthcare and Life Science Providers

I. ACA Overview

Medicaid Expansion: Coverage For Low-Income Individuals

To 138% FPL

Employer-Sponsored Coverage (mandated 50+ FTEs)

Exchange Marketplaces: Subsidies for Moderate

Income Individuals 138-400% FPL w/o

access to employer-sponsored insurance

IndividualMandate

Health Insurance Market Reforms

Patient Protection and Affordable Care Act Goal: Universal

Coverage

ACA-RelatedCost Reduction-Quality Improvement Initiatives• Readmission Penalties

• ACOs• Bundled Payment Initiatives • MACRA – Shift to Value-Based

Reimbursement

2010-2015:ACA Political Drama

• Over 60 Repeal Attempts by Republicans in Congress

• 3 Supreme Court Challenges (ACA upheld but recognizing religious rights of objection)

Coming Soon:Repeal/Roll Back of the ACA

•  Unpopular elements to be unraveled:• State exchanges• Individual and employer mandates• Medicaid expansion• Minimum essential benefit requirements

• Popular components to be retained/replaced:• guaranteed issue irrespective of preexisting

conditions• Keeping kids on parents’ policies until age 26

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Scaling back of Medicaid

• Cap on federal contributions to the states to fund Medicaid coverage for low-income Americans via a “block grant” model• Program design flexibility at state level• Jockeying at state level for grant funding

• Substantial losses of coverage for 20m+ able-bodied adults in “Expansion” States (No change in “Hold-Out” States”)

• Big question: Which states will fill the void? California/Colorado? Illinois? New York? 7

Signature Trump Initiative #1: Global Medicare Capitation • Paul Ryan alternative to Obamacare: • Medicare“premium support” model • Raised eligibility age to 67

• Cap on federal contribution. Pressure on states to determine whether to expand benefits. • Big questions ahead for end-of-life care and

expensive chronic conditions that exceed personal limit: Who will cover costs? 8

Signature Trump Initiative #2:Expansion of Health Savings Accounts

 • Incentivize employees to control healthcare costs by allowing them to keep unspent funds. • 2016: HSA holders can save up to $3,350

individual/$6,750 family (+$1,000 if over 55) - 100% tax deductible/tax free distribution for qualified expenses. • (Note: More extreme GOP alternative - overhaul

of IRS Code to eliminate deductions and special credits generally)

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GOP Vision: HSAs and HDHPs • Strategy- control costs by incentivizing more

consumer-driven employee behavior - value-oriented shoppers for cost-effective health care --onus on individual

• Shift to high-deductible health plans (HDHPs)

• Elephant in the room: Even with employer funding of HSAs, numbers don’t come close to cost for catastrophic events or chronic conditions

Signature Trump Initiative #3

• National insurance underwriting in place of current state-by-state regulation.

• Big questions: • Legally permissible? (Federal/State

Question)•Will it make a meaningful difference? 11

Questions Ahead: Value-Based Care Initiatives?•Will President Trump continue (or

accelerate) Medicare risk shifting to providers via value-based care initiatives? • Bundled Payment for Care Initiative

(BPCI)• Comprehensive Care for Joint

Replacement (CJR) program •MACRA

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• Policies were medically underwritten

• Many policies excluded benefits such as prescription drugs and maternity care

• Policies typically had high cost sharing (deductibles)/Premiums were unsubsidized leaving them unaffordable for many

• Insurers prohibited from discriminating based on health status

• Policies must cover “minimum” essential benefits: hospitalization, outpatient medical, emergency care, rx drugs, maternity, mental health, rehab, lab tests, preventive services, pediatric dental, vision

• Consumer out-of-pocket spending reduced but not eliminated

Questions Ahead: Status of coverage rules?

Pre-ACA Post-ACA

Winners and Losers?Worst Impact Most Promising

Acute Care Hospitals Home Care

Post-acute/Skilled Nursing Facilities

Assisted Living Facilities

Home Health Agencies Outpatient ___________

Pharmacies Telehealth/Telemonitoring

Workplace Wellness14

Questions Ahead re: FDA• Historically greater GOP deference to markets in setting

drug prices. Possible populist exception: enabling Medicare to negotiate prices for high-cost, low-competition drugs?

• Anticipated FDA changes – subject to leadership choice• Reduction of FDA biologic exclusivity period (currently

12 years)• Prioritized, expedited review of FDA to biosimilar

applications with limited competition in the marketplace,• Accelerated approval process for generics and other drug

applications• Mobile health applications?

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Questions Ahead re Marijuana

• Summer 2016: DEA rescheduling of marijuana to Schedule II Controlled Substance did not happen.• Will Congress loosen banking laws for more

investment, finance, tax revenue collection in decriminalized states?• Will delegation to states continue (with growing

decriminalization) or will a more hardline AG Sessions roll back liberalization on cultivation and dispensaries? • Status of Marijuana research 16

Ahead next political cycle: Single-Payor?

• Democratic campaign: Hillary Clinton lambasted Bernie Sanders for advocating the costly expansion of Medicare into a universal, single-payer healthcare program

• For Democrats, Obamacare was always a compromise postition

• Democratic opposition platform likely to shift to single-payer “public option” in 2020 and 2024 17

Prediction: Continued stalemate in DC

• 3-Headed GOP Monster:• President Trump• Speaker Ryan• Senate Leader McConnell

• After the initial roar to repeal the ACA, stalemate in DC is a reasonable bet…

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Inside Healthcare Transformation

• Consolidation• Coordinated

Care• Competitive

Landscape• Precision

Health

• Bundled Payment Value-Based Care

• Shared Risk• Pay for Performance• Preauthorization

• Digital Health• Alternative

Care Settings• Physician

Extenders

• Consumer-Driven• Underinsured• Aging

Evolving Patient

Demand

New Care

Delivery Models

Re-Alignmt

New Financial Models

Questions? Comments? Airing of grievances?Harry NelsonNelson Hardiman, LLP310.203.2800hnelson@nelsonhardiman.com