Summary

It is vitally important for the health system board, as well as certain of its key committees, to receive an introductory briefing as soon as possible on the health policy implications of last week’s Presidential and Congressional elections, as they are currently understood.

In Depth

It is vitally important for the health system board, as well as certain of its key committees, to receive an introductory briefing as soon as possible on the health policy implications of last week’s Presidential and Congressional elections, as they are currently understood.

The board’s familiarity with such implications will help position it to exercise informed oversight and decision making, and to fully engage with management on health policy-prompted issues and opportunities.

Such a briefing, which management can provide, could incorporate the following issues, among others:

1. ACA Repeal – The President-elect and congressional Republicans campaigned clearly and vocally on repealing the Affordable Care Act (ACA), and since winning the election, both have renewed promises to advance repeal legislation early in 2017. The Affordable Care Act (ACA) was much more than just increasing insurance coverage for uninsured and underinsured individuals, so it is important to understand what ACA opponents mean when they say they intend to repeal the ACA. Generally speaking, Republicans’ first priority in repeal will be to eliminate the mandate that individuals purchase insurance and reduce or eliminate subsidies for that purchase. Although any repeal is likely to have a delayed effective date, if enacted, these changes could upset the insurance markets almost immediately and disrupt access to insurance for millions of Americans.

Of course, Republican leaders likely will work to advance alternative policies that achieve comparable results through different means. What that replacement will ultimately look like is uncertain, and there are various procedural pathways in Congress that will need to be considered. Nonetheless, boards should be informed that current insurance markets may be disrupted and changes could impact the number of insured individuals and revenues to the health system. Paired with elimination of expanded coverage in Medicaid, this would be a real game-changer in payer mix and revenue sources.

2. Medicaid Expansion and Reform – The ACA also expanded access to health insurance for low-income individuals by providing financial incentives to states to adopt expanded eligibility standards. If “repeal the ACA” means eliminating these financial incentives or reverting to pre-2014 eligibility standards, millions of Americans would no longer receive coverage through Medicaid, further increasing the number of uninsured.

However, as with the ACA repeal discussion above, Republican leaders are likely to look for ways to minimize disruptions and to build in a transition period. Even so, potential changes may cause disruption and at least some dislocation. The President-elect also has promised to “block-grant Medicaid” and turn more authority over to states to design Medicaid programs.

3. Medicare Reform – The President-elect has promised to “modernize Medicare.” What this means precisely is hard to predict at this juncture. However, inferences can be drawn from previous Republican proposals to reform Medicare.

Republicans have previously and repeatedly called for Medicare to be converted to a premium support model, where beneficiaries would be given a credit or voucher to purchase insurance on the open market. Republicans also have called for increasing the Medicare age of eligibility from 65 to 67. Republicans also strongly favor the Medicare Advantage program, and could seek policy changes to buttress those options and incentivize seniors to enroll in managed care over traditional fee-for-service Medicare. Notably, Republicans have routinely called for these changes to be phased in over years, so it is unlikely that any disruptions for health systems caused by these changes would be felt immediately.

4. Alternative Payment Models – The Obama Administration has also championed health system modernization by linking Medicare and Medicaid payments to various performance metrics and incentivizing risk-sharing models, like Accountable Care Organizations (ACOs) and bundled payment models. Notably, these efforts have traditionally enjoyed bipartisan support, so it is less likely that Republican leaders would seek to entirely undo these programs.

A new administration probably will maintain a commitment to advancing change to achieve more savings. Health systems will likely want to continue to ready themselves for the new programs rolled out by the Center for Medicare & Medicaid Innovation, including MACRA, but they also may want to re-examine physician alignment strategies and investments in ACOs, among other things, to align such strategies with potential changes.

5. Medicare Fee-for-Service Payment – The new administration and congressional leaders also are likely to consider entitlement spending reductions to both fund other federal policy priorities, such as defense and infrastructure investment, and reduce the federal deficit. Health systems should brace for program payment cuts under traditional Medicare that could negatively impact revenues. Medicare fee-for-service payment changes are often replicated by commercial payers, so the implications could be felt beyond just Medicare.

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