Tump’s TikTok video is more hype than serious reform
President Donald Trump made a major healthcare announcement last week — calling his reform the “The Great Healthcare Plan.” The plan was more of a skeletal framework, but themes do tie to policy priorities in either the House or Senate GOP caucuses, which could pass in 2026. What Trump announced would need congressional action and likely will be included in a second reconciliation bill being prepared by the GOP caucuses.
What are the main tenets of the president’s proposal?
- Codifying both the concession deals he gained from 16 of 17 big drug makers and his proposed Medicare and Medicaid drug price models adopting most-favored-nation (MFN) pricing — The negotiated discounts with 16 of the 17 largest brand drug makers have major price concessions in Medicaid, which match most-favored-nation (MFN) prices. In addition, drug makers agreed to drastically reduce prices for self-pay customers. Finally, the drug makers agreed to have MFN pricing for all new drugs released. However, the deals do not otherwise lower drug costs in Medicare and commercial. The Medicare and Medicaid drug models do move to MFN over time. The Medicaid 5-year model has MFN on all drugs on a voluntary basis, but most discounts in place now come close to MFN. On Medicare Part B and D, the 5-year models would cover 25% of enrollees and have MFN pricing on certain drugs. Cost-sharing would be 20% of the new lower net price. As well, the second year of Medicare drug price negotiations occurred under Trump and net price reductions were 44% — double Biden’s first year of negotiations. Novo Nordisk GLP-1s were in this round but negotiated prices were not as aggressive as what Trump got from direct negotiations.
- While details are scarce, existing subsidies in the Exchanges appear as if they will go directly to Americans in need as opposed to health plans. Few details were provided on the exact mechanism here and whether existing Exchange and ACA mandates will remain. It is unknown if the subsidies are just for Exchange enrollees or a broader group of Americans. The assumption is they will go into Health Savings Accounts (HSAs). It is unknown if the subsidies will match existing base and/or recently sunset enhanced subsidies. The argument here is that going direct to consumers will control costs, but it is possible health plans will hedge and increase prices more given the fact that they will not know membership and severity year to year. It is also unclear how the move ties exactly into healthcare premium reimbursement ICHRAs, direct primary care, and more. This would come in any legislation.
Other proposals
- Expanding over-the-counter and generic drug introduction.
- The cost-sharing reduction subsidies would again be appropriated after Trump himself zeroed it out in Trump 45. The move would save taxpayers at least $36 billion and reduce the most common Obamacare plan premiums by over 10%. While this hurts some enrollees between 200% and 400% of FPL (because their subsidies will go down and create net higher premiums), it does lower overall premiums for those above 400% of FPL by eliminating so-called “Silver loading.”
- The plan would “end the kickbacks” from pharmacy benefits managers (PBMs) that are paid to what Trump calls the large brokerage middlemen “that deceptively raise the cost of health insurance.” This is a reference to big GPO buying firms, the largest owned by some of the biggest PBMs.
- The plan also would expand insurer transparency, including on medical claims denials, claims payments, wait times, prices, and more.
- Insurers would need to provide rate and coverage comparisons upfront on their websites in “plain English” to help consumers more easily shop for plans.
- Disclosure of medical loss ratios would also be mandated.
How would all this get done?
The GOP caucuses would likely include some or all of the recommendations by Trump in a second reconciliation bill. The reconciliation process does not need 60 votes in the Senate but there are some limits on what can and cannot be included in such measures.
The House (via the Republican Study Committee, the largest caucus of conservatives in the House) is working on a bill that is said to include the following and could be expanded:
- Exchange subsidies would migrate from going to health plans in the Exchange to Health Savings Accounts (HSAs). This mirrors Trump’s proposal.
- Cost-sharing reduction subsidies in the Exchange would be appropriated again, although that was ruled out of compliance with the Senate’s Byrd rule on the One Big Beautiful Bill Act (OBBBA) passage in 2025. This mirrors Trump’s proposal.
- Pharmacy benefit manager (PBM) reform would be implemented.
- Penalties would be assessed on states that do not prohibit immigrants in the country illegally from enrolling in Medicaid.
- Other new regulations and cuts to Medicaid would also be included.
The Senate is working on a bipartisan compromise to extend the expired enhanced Exchange premium subsidies. At one time, there was a 50-50 likelihood of an acceptable compromise. But those odds appear to be diminishing by the day, including because of GOP conservative opposition to an extension, an unwillingness of Democratic leaders to cede a political issue and compromise, and a row over abortion coverage in the Exchanges.
However, there are some elements that are proposed to be included in the compromise bill that are informative as to where the Senate GOP may be on other healthcare reforms.
- Anti-fraud and enrollment protections above and beyond those in the OBBBA to address rather legitimate concerns regarding improper enrollment. Many of the OBBBA reforms tackling phantom enrollment were indeed legitimate, something Democrats unreasonably cast aside. Some wonder if the fact that enrollment has held up reasonably well so far is a signal that the phantom enrollees remain on health plan rosters.
- Appropriating cost-sharing subsidies again.
- Further expansion of employer coverage reimbursement known as ICHRAs.
- Expansion of Health Savings Accounts (HSAs) and individual options.
- Some expansion of alternative coverage, including Association Health Plans (AHPs), limited duration plans, direct primary care (DPC), and more.
In addition to the compromise bill that could include Trump’s proposals, other lawmakers have proposed expansion of HSAs, including HELP Chairman Bill Cassidy, R-LA, and Rick Scott, R-FL. The HSA options could go from the small to large. As an example, the Senate compromise bill dovetails with something proposed by Cassidy where the subsidy enhancement monies that expired would be directed in part to HSAs and only available to Exchange enrollee. The compromise framework might introduce the option to receive a subsidy through an HSA (unknown if both the base and enhanced portion) beginning in 2027.
Other proposals would remove direct premium subsidies to health plans altogether and fund HSAs more broadly for those in need. A proposal by Scott would allow states to seek a waiver to allow Exchange subsidy dollars to be used even for non-ACA compliant coverage that sets higher premiums for people with pre-existing conditions.
While expansion of HSAs is not a bad thing overall, depending on what is being done it could certainly impact enrollment and the risk of members in the Exchanges. The Exchanges could become even more adverse, and we could see what actuaries call a death spiral in rates.
As I have said, Trump’s announcement is anything but a plan and skeletal at best. It is not well thought out, either. It falls short. Trump is more about the headlines here and casting blame on others for the unaffordability of healthcare. The proposals overall do little to fundamentally change costs in the system – with one exception. President Trump deserves a great deal of credit on drug price reform. Those changes are meaningful. But I do hope he goes further and tackles commercial and employer prices as well.
Otherwise, the framework does not tackle the true reason for a lack of affordability – price in the market. HSAs and pushing people to buy on their own will not fix that.
#healthcare #healthcarereform #healthinsurance
— Marc S. Ryan
