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Of Healthcare Punditry and Crystal Balls: Anniversary Edition – Part 2

Of Healthcare Punditry And Crystal Balls: Anniversary Edition – Part 2

Last week, we bragged about our incredible success at predicting what would happen in the 2016 healthcare arena. We admitted that our clairvoyance was perhaps not as exceptional as one might think given some of the obvious predictions made. Nonetheless, we took high marks. Now, it’s time to sit down and stare into the crystal ball to tell you what we see happening in 2017.

The crystal ball is much cloudier, however, given the impending change in presidential leadership and the huge political tumult that is soon to occur in the town that L’Enfant built. We mean this with no disrespect to soon-to-be President Trump, but only to reflect the fact that we have not seen such promised political change since Ronald Reagan.

As we have said over the past few weeks, we do expect some radical proposals out of the White House and the GOP Congress. So here are our best guesses about what 2017 has in store for healthcare.

Affordable Care Act Repeal:

We do predict that a repeal will go through some time in 2017. Trump and the GOP have pretty much staked their political livelihoods on delivering a successful repeal effort. However, don’t expect radical changes soon. The repeal effort will not immediately end Obamacare. While a repeal law will pass, the program itself will be around for two or more years.

Obamacare Replacement Timing:

If Obamacare is repealed, don’t expect an immediate substantive replacement to occur either. While some members of Congress (especially in the House) desire repeal and alternatives to be adopted together, the more moderate and deliberative Senate will want to take its time fashioning a solution. It is possible to see the replacement passed in late 2017, but likely will be pushed off into 2018. Messaging will be all important, too, so as not to hasten the health plan exits from the Exchanges that began in earnest this year.

Obamacare Replacement Features:

The GOP has a real political problem on its hands. As much as Republicans want to repeal Obamacare, they also understand that between 20 million and 30 million people could see their coverage go away or change radically without passage of an adequate replacement. Consequently, the new Obamacare – or shall we say Trumpcare – may appear more different on its face than in reality. For any alternative to work, subsidies will have to stay. The GOP alternative could very likely keep subsidies in place (perhaps at lower levels) in the form of refundable, age-banded premium tax credits that may or may not be advanced directly to health plans. These credits likely will be tied to expansion of Health Savings Accounts. Too, some of the more popular features of Obamacare, such as child coverage to age 26 and certain consumer protections (e.g., annual limits, lifetime limits, and pre-existing condition) will likely stay. In addition, expect some important personal responsibility measures to be passed.

So what changes?

  • The extraordinarily rich benefit structure will go away in favor of lower actuarial value plans and high-deductible options.as well as a return to traditional state regulation of benefits.
  • Lower overall subsidies in many income brackets.
  • Selling across state lines will be easier.
  • The Exchange infrastructure we see today will likely end.
  • Major support of state high risk pools will take place to deal with the potential impact to the very sick populations that would otherwise return to the ranks of the uninsured. As we have said in the past, the history of high-risk pools in many states was not good, despite major subsides from states and health insurance policyholders.

Mind you, much as we believe the current construct is on the brink of financial collapse, what we are predicting may or may not work. It could take years to get the Obamacare alternative right.

In the meantime, we also predict that the Trump administration will quickly see how much they can remake Obamacare in the short-term through regulation. To help maintain plans in the system as repeal takes shape, the administration will likely use regulation to impact the richness of the benefit and its actuarial value, provide additional benefit, product and rating flexibility to plans, and back away from some of the more severe regulatory requirements that are emerging (e.g., network adequacy, benefit requirements, etc.).

Medicare:

As we have said recently, we think a vigorous debate about entitlements is not a bad thing, so we believe that Medicare reform will be put on the table in 2017. It could take many forms. We think a GOP Congress and White House will likely expand private Medicare options, a boon for private insurers. We don’t think, however, that the vigorous compliance and quality regime will change much as Democrats and Republicans alike have largely endorsed these policies. Watch for a massive expansion of compliance and quality monitoring in 2017, with the timeliness monitoring program made permanent, the new provider network and medication therapy management pilot audits taking off, and outreach monitoring taking shape.

Under a Health and Humans Services led by Secretary Tom Price, some of the Medicare fee-for-service reforms could be scaled back given criticism from hospitals and physicians. That would be unfortunate. Whatever their ultimate fate, the experiments are worth it to begin to change the focus from transactions to quality.

A premium support alternative to the traditional defined benefit model will likely be put on the table as well. But “senior politics” is likely to weigh heavily on the minds of both parties. The AARP will quickly ramp up its opposition to any changes and lawmakers would likely settle for less controversial changes, if any. Again, we don’t agree here and hope we are wrong. The current model is not sustainable. We think a mixed model, where the system converts to a premium-support model over time (with private delivery), is the only way to sustain the program as America’s Baby Boomers age.

Medicaid:

While Medicare changes may not be radical, expect Medicaid transformation to happen – and happen in a big way. The GOP has been planning for changes here for years and will seize the opportunity. Expect some sort of a block grant funding concept, with all the traditional and expensive regulatory strings lifted. These reforms could go into force rather quickly – perhaps as early as 2018. It could also be part of the Obamacare transformation, where Medicaid funds are “freed up” to support more uninsured (admittedly with skimpier coverage).

But smart states should try to drive for protections in the outyears. As other program changes have shown, what is a short-term windfall in the form of flexibility and sometimes even more money, often turns into a cost shift from the federal government to states over time.

Special Needs Plans (SNPs):

These darlings of CMS got the ultimate endorsement this year with changes on the financial and quality rating front. We expect the Centers for Medicare and Medicaid Services (CMS) to continue their nurturing of SNPs as they see them as the secret to reducing costs over time in Medicaid and Medicare across both the acute and long-term care arenas. At the same time, we expect CMS to look closely at the compliance (via audit) and quality these plans are delivering.

Healthcare Mergers:

OK, we got this one wrong last year, but here we go for 2017. We expect one or both of the mergers to go through, whether through a win in court or an out-of-court settlement. To us, the more likely win is Aetna-Humana.

Like all good prognosticators, we close this post – and this year – wishing all of our blog readers good fortune in the future. When you come back in January, make sure you are firmly strapped in. We are on one of those mega-coasters in 2017.

Happy New Year!

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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