Trump Administration’s ‘Great Healthcare Plan’ to Lower Costs, Address ACA Subsidies
TL/DR –
The Great Healthcare Plan, introduced by the Trump administration, aims to address the recently expired ACA subsidies and lower healthcare costs. The plan includes provisions for codifying prescription drug price deals, authorizing more over-the-counter drugs, implementing cost-sharing reductions for ACA plans, reforming PBM payments, and promoting price transparency for insurers and providers. However, the plan’s ACA proposal could potentially increase primary deficits by up to $350 billion, depending on the design of the provision related to the ACA subsidies.
Trump Great HealthCare Plan to Lower Costs and Address Expired ACA Subsidies
The Trump administration’s Great Healthcare Plan aims to decrease healthcare costs while addressing the expired ACA subsidies. The plan outlines cost-reducing provisions that could lower primary deficits by approximately $50 billion over a decade, and ACA amendments which could either save more or increase primary deficits by up to $350 billion.
Key Provisions in The Great Healthcare Plan
The plan proposes various measures to cut healthcare costs:
- Making Most Favored Nation prescription drug price deals official: The plan seeks legislative backing for agreements that set drug prices at the lowest offered in other countries.
- More Over-the-Counter Drugs: The proposal includes increasing the availability of over-the-counter pharmaceuticals, potentially reducing premiums and federal subsidies.
- Implementing Cost-Sharing Reductions for ACA plans: The plan suggests funding Cost-Sharing Reductions (CSRs) under the ACA, reducing gross premiums and premium subsidies for plans on the ACA exchanges.
- Reform Pharmacy Benefit Manager payments: The plan also proposes reforms to PBM payments that could lead to cost savings.
- Better price transparency for insurers and providers: The plan calls for providers who accept Medicare or Medicaid and insurers to present clearer pricing information, which could modestly reduce overall healthcare costs.
Great Healthcare Plan’s Potential Fiscal Impact
Combined, these changes may save about $50 billion. However, the plan’s ACA proposal could have a significant cost. According to the fact sheet, the plan aims to stop major insurance companies from receiving billions in extra taxpayer-funded subsidy payments and instead distribute this money directly to eligible Americans. The proposal resembles recent proposals to allow ACA subsidy money to be deposited into health savings accounts or other mechanisms where the money could be spent on premiums or out-of-pocket healthcare costs. If this refers to the current law “base” ACA subsidies, the provision could modestly reduce costs. However, if the plan is to use funds that might otherwise go to “enhanced ACA subsidies”, doing so could cost up to $350 billion over a decade.
While the Great Healthcare Plan presents ideas that could modestly reduce healthcare costs, authorizing up to $350 billion of additional subsidies would significantly increase costs. If health subsidies are to be revived or introduced, they should be thoughtfully designed and have sufficient offsets to cover the costs and reduce overall healthcare spending and deficits. Adopting site-neutral payments, reducing overpayments to Medicare Advantage plans or implementing reference pricing could help reduce costs for consumers and taxpayers.
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