Uncertain Consequences for U.S. Health Care Post-Election

Uncertain Consequences for U.S. Health Care Post-Election

Kalorama Information offers an in vitro diagnostic-relevant overview of recent regulatory changes in the United States inUnited States Market for In Vitro Diagnostic Tests.

Incoming Republican congressional majorities and an administration of president-elect Trump have injected plenty of uncertainty into the U.S. healthcare system. Dismantling the Affordable Care Act (ACA) will be a legislative priority of the new regime, but could take years to accomplish. Which ACA provisions are kept and how coverage is preserved for newly insured individuals are currently open questions. The scope and priorities of government-funded research have also yet to be articulated by the next administration.  Shedding all or the majority of over 20 million Americans newly insured through the ACA is unlikely, but providers and industry suppliers should be prepared for reduced healthcare utilization if national coverage dips. Slashing of medical research budgets is likewise doubtful, but high-profile initiatives such as the Cancer Moonshot remain vulnerable amid probable reductions or freezing in discretionary federal spending.

The approach to be taken by Trump in removing the ACA is far from decided at this stage, but will likely begin with the Act’s least-popular component in the individual mandate. The GOP-controlled Senate can use the reconciliation process to avoid filibuster and effectively eliminate the individual mandate, federal subsidies for exchange-purchased insurance, and Medicaid expansion under the ACA. Without replacement or remediation of coverage loss, such actions would deprive millions of accessibility to routine health care. Still, even an aggressive course will likely take years for such actions as the federal government develops new coverage options and seeks to mitigate systemic shock in health care.

Trump has publicly voiced support for the ACA provisions that guarantee eligibility to patients with pre-existing conditions and allow children under 26 years old to remain on their parents’ insurance. Preserving the former provision in the absence of an individual mandate could severely destabilize insurance marketplaces and ultimately make them unviable. Premiums could skyrocket without the enrollment of healthy individuals promoted through the individual mandate and federal subsidies. Trump has proposed state-administered high-risk insurance pools to handle patients with pre-existing conditions, but they would require billions in government support potentially difficult to procure from a Republican congress. Replacement options for ACA-provided marketplaces proposed so far are unlikely to be effective in preserving gains made in the U.S. insured population, but could staunch severe losses in the national insured population.

Medicaid coverage expansion under the ACA is also likely to be on the chopping block and with it potentially millions of recently insured. Block grants proposed to replace ACA-provided Medicaid funding would have fewer stipulations, but their relative strength to maintain current coverage levels remains unknown. Broad political support for state-engineered Medicaid expansion may ensure the 12 million newly covered remain under the program, but again uncertainty remains and some states seek additional restrictions not allowed under the ACA Medicaid expansion.

The fate of preventative care service provisions of the ACA, including the obligation of insurers to pay for USPSTF-recommended services without copay, is uncertain at this time. The inclusion of services has been a boon to certain in vitro diagnostic (IVD) markets and suppliers as higher patient volumes and more routine care boosted demand for select screening tests.

The more fundamental concern for IVD companies and other healthcare suppliers would be the decline of healthcare utilization in the United States as millions lose coverage with a partial repeal of the ACA. Spending on core lab systems and consumables demonstrably rose among clinical laboratories between 2013 and 2015 in anticipation of ACA implementation. Positive effects on core lab test demand or the volume of tests ordered as part of routine care and treatment episodes would dissipate or disappear if substantial numbers of Americans lose insurance. Core lab IVD segments would return to previously modest to marginal growth rates, if not decline in the wake of significant regulatory shocks.

The Trump administration’s stance in regards to basic, translational and medical research is far from evident. The need to cut discretionary spending to reduce federal deficits, particularly if income tax cuts are enacted, would almost certainly have an effect on the funding available to the National Institutes of Health (NIH). President-elect Trump has voiced disproval of the NIH, though advisors such as Newt Gingrich have been supportive of the organization. Already struggling to find funding from a Republican congress, the Cancer Moonshot initiative begun by the Obama administration is unlikely to reach its potential and may remain limited to private-public partnerships and projects.

The implications of a Trump presidency also relate to product regulation. Government pressure on pharmaceutical pricing is unlikely under the Republican-controlled federal government. Deregulation has been promised broadly by Trump, but where and to what extent it materializes is not yet clear. There have been indications that he could loosen or streamline approval processes under the Food and Drug Administration (FDA) for new drugs and devices. Under Trump, the FDA may also be inhibited from its current track in seeking oversight over laboratory developed tests (LDTs).