Trump's Medicare & ACA

President-elect Trump and the 2024 Republican platform have committed to “protect Social Security and Medicare with no cuts” (RNC, 2024). However, the trajectory of federal healthcare spending necessitates some form of federal reform. ?According to projections by the Congressional Budget Office (CBO), net federal subsidies for insured individuals are expected to amount to $2.0 trillion in 2024. By 2034, this annual figure is projected to rise to $3.5 trillion, representing 8.5 percent of the gross domestic product (GDP) (Minicozzi and Masi, 2024). Over the decade spanning 2025 to 2034, total subsidies are anticipated to reach $27.5 trillion. Costs are on the rise in federally subsidized and commercial plans alike. (See Trump's Medicaid reforms).

Premium Tax Credits

The enhanced subsidies under the Affordable Care Act (ACA), which have significantly reduced premium payments by nearly 50% and have led to a doubling of enrollment, are scheduled to expire at the end of 2025. If Congress does not take action to extend the Premium Tax Credit, these critical subsidies will lapse, resulting in an average increase of 79% in net premium payments (Towfighi, 2024). President-elect Trump has made vague statements regarding the future of the Affordable Care Act (ACA) and its subsidies. During his 2024 campaign, he did not explicitly support extending the enhanced Premium Tax Credits introduced during the Biden administration. Trump’s administration will face a decision next year on whether to back an extension of these subsidies.

Competition & Choice

The administration aims to inject more competition into the Affordable Care Act (ACA) marketplaces (Trump, 2020; Cohen, 2024). This could involve enabling consumers to purchase more health plans that do not comply with ACA consumer protections and allowing insurers to charge higher premiums for sicker individuals. ?

• HSAs. Both JD Vance and President-elect Trump have expressed support for Health Savings Accounts (HSAs) and Medical Savings Accounts (MSA) as part of their healthcare policies (Trump, 2020; Cohen, 2024). Both leaders see HSAs as a means to empower consumers, reduce healthcare costs, and provide more personalized healthcare options. Vance believes that HSAs can help reduce overall healthcare costs by encouraging consumers to make more cost-conscious decisions. Vance has also highlighted the importance of HSAs in providing a tax-advantaged way for people to save for medical expenses, which can be particularly beneficial for those with high-deductible health plans.
• Essential Benefits. While neither Trump nor Vance has explicitly called for the elimination of essential health benefits, their support for increased flexibility and reduced regulatory requirements suggests a potential shift away from the comprehensive coverage mandated by the ACA. This could result in more limited insurance plans that do not cover all the essential benefits currently required.
• Short-Term Plans. A short-term health plan is designed to provide coverage for a limited period, typically ranging from a few months to a year. These plans generally have lower premiums and cover basic medical services (i.e., doctor visits, ED, IP, Rx), but are not designed to support pre-existing chronic conditions. Trump advisors have suggested bringing back short-term limited duration insurance (STLDI) plans into the portfolio of options (Severino, 2024).
• Medicare Advantage the Default Enrollment Option. Default enrollment means that new Medicare beneficiaries would be automatically enrolled in a Medicare Advantage plan unless they choose otherwise (Severino, 2024). This would streamline the enrollment process and potentially increase participation in MA plans, which often offer more comprehensive benefits than traditional Medicare.
• Site neutrality in Medicare payments emphasizes the need to eliminate the inpatient-only list and expand the ambulatory surgical center (ASC) covered procedures list. Medicare payments should be the same regardless of whether a medical service is delivered in a physician’s office, clinic, or hospital setting. Eliminating the inpatient-only list, which currently restricts certain procedures to inpatient hospital settings, would allow more procedures to be performed in outpatient ambulatory surgical centers (Severino, 2024).
• Reference pricing models set a standard price for a particular medical service or procedure, which serves as a benchmark for consumers and providers (Severino, 2024). A reference price is established for a specific service, such as a knee replacement. This price is based on the average cost of the service in the market or a negotiated rate with providers. If a patient chooses a provider that charges at or below the reference price, their insurance will cover the full cost. If they choose a provider that charges more, they must pay the difference out of pocket. This model encourages consumers to shop around for the best price, promoting competition among providers and helping to control healthcare costs. It also provides transparency, allowing consumers to make more informed decisions about their care.

Chronic Disease & Prenatal Care

To support active and healthy living, Republicans will prioritize chronic disease prevention, PCP-based home long-term care for seniors, and prenatal care using flexible benefit coverage (i.e., deregulated essential benefits) (RNC, 2024). Benefit flexibility means a system that allows for more personalized and adaptable health insurance plans.

• Customization of Coverage: Benefit flexibility means that individuals and families can tailor their health insurance plans to better meet their specific needs. This could involve choosing or dropping different levels of coverage for various types of care, such as maternity care, prescription drugs, or behavioral mental health care, rather than being confined to a one-size-fits-all plan.
• Increased Choice and Competition: This aims to increase competition among insurance providers (i.e., commercial plans versus Medicare Advantage choice). This competition can lead to more innovative and cost-effective insurance products, giving consumers a wider array of options to choose from. This policy also means letting hospitals and ambulatory surgical centers compete with location neutrality for payments.
• Financial Efficiency: This means helping individuals manage their healthcare expenses more effectively. For example, Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) allow people to set aside pre-tax dollars for medical expenses, providing a financial cushion for out-of-pocket costs.

Fraud & waste

President-elect Trump’s healthcare advisor is Brian Blasé who runs the Paragon Institute. The Paragon Institute's research has show the Biden administration has relaxed eligibility reviews and incentivized individuals to misestimate their income to qualify for larger subsidies (Blase and Gonshorowski, 2024; Blase, 2024). Blase and Gonshorowski estimates that fraudulent enrollment for individuals with incomes between 100% and 150% FPL could involve upwards of four to five million people in 2024, potentially costing $15 to $20 billion. They propose limited automatic re-enrollment into exchange plans, advancing price transparency regulations, and allowing the enhanced subsidies to expire after 2025. There will be a strong emphasis on reducing fraud and waste within the healthcare system (Trump, 2020; Cohen, 2024). This could involve stricter oversight and more efficient management of healthcare programs, including the slashing funds for enrollment outreach.

Health Equity

Whole person care, defined as non-medical social services, will be eliminated (Hinton, Diana, and Rudowitz, 2024). This includes Health Related Social Needs (HRSN), Social Determinants of Health (SDoH) and health equity. An Executive order will be issued baring any Diversity Equity Inclusion (DEI) in federal programs. Federal dollars will no longer be available for health disparities reporting. Trump has expressed opposition to Diversity, Equity, and Inclusion (DEI) initiatives. He has called for ending DEI programs in government institutions and using federal funding as leverage to discourage such efforts. Trump has also criticized DEI policies, suggesting they create division rather than unity.

Risk Pools

Senator JD Vance has proposed the use of high-risk pools for individuals with pre-existing conditions as part of his healthcare plan (Kenen, 2024). During the vice-presidential debate, Vance emphasized his commitment to protecting health insurance coverage for people with pre-existing conditions and also suggested placing these individuals in high-risk pools, separating them from healthier individuals (Kenen).

Vance also outlined a plan to deregulate health care: “You also want to implement some deregulatory agenda so that people can choose a health care plan that fits them, the best way to do that is to actually promote some more choice in our health care system and not have a one-size-fits-all approach that puts a lot of people into the same insurance pools, into the same risk pools, that actually makes it harder for people to make the right choices for their families” The VP-elect also said, "We’re going to actually implement some regulatory reform in the health care system that allows people to choose a health care plan that works for them. What that will also do is allow people with similar health situations to be in the same risk pools.” (Kenen, 2024).

The overall goal of the Vance risk groups is to enhance the accuracy and fairness of the risk-adjustment system in Medicare Advantage, and possibly exchange plans. By incorporating a retrospective reimbursement approach and establishing common pools, the proposed reforms aim to better support plans that enroll sicker beneficiaries, reduce gaming of the system, and ensure equitable distribution of costs (Severino, 2024). The plan would organize the retrospective risk-transfer pools on a state or regional basis, with oversight by state insurance regulators. The government currently adjusts payments to MA plans based on enrollees’ age, sex, institutional status, and Medicaid status. Health status is also considered, but it is determined prospectively using past claims data. ?The prospective approach that is proposed uses historical claims data to predict future costs, which works well for chronic conditions but fails to account for unexpected costs or sudden changes in health status (Severino, 2024).

Health Information Technology

During the first Trump administration, Congress continued to advance network to network interoperability and consumer-directed data exchange. Interoperability will likely continue to be a priority so it can facilitate the move towards the privitization of Medicaid towards managed care carriers. Roger Severino (2023), a former HHS executive, further elaborates on the role for HIT in advancing the reduction of the Medicaid program: "The current system’s IT development 90/10 matching rate should be allowed for improvements in states’ current fraud and abuse and eligibility systems. Innovative programs that show a positive return on investment for both the state and federal governments should be allowed without the onerous waiver process." (Severino, 2023).

• Telehealth Locus of Service. The proposal to legally define the locus of service in telehealth could impact care delivery (Severino, 2024). Locus of Service is the location where the provider is situated during the telehealth visit, rather than where the patient is located. This definition would clarify regulatory and licensing requirements, ensuring that providers are subject to the laws and standards of the state where they are located. States would retain their authority to set standards for licensure and scope of practice for healthcare providers. This allows states to maintain control over healthcare regulations while accommodating the flexibility needed for telehealth services. This approach aims to streamline licensure requirements, promote continuity of care, and support the expansion of telehealth, particularly in areas with provider shortages.
• The Medicare Coverage of Innovative Technologies (MCIT) rule is designed to expedite Medicare coverage for breakthrough medical devices. These are devices that offer more effective treatment or diagnosis for life-threatening or irreversibly debilitating conditions. The rule aims to provide national Medicare coverage for FDA-designated breakthrough devices as soon as they received market authorization (Severino, 2024).
• The Medicare Coverage of Innovative Technologies (MCIT) rule aims to streamline Medicare coverage for innovative medical devices (Severino, 2024).

Regulations & Demonstrations

Roger Severino (2024), a former CMS executive and advisor to president-elect Trump, has advocated for Medicare regulatory reports that promotes patient choice of coverage and care. Here are the proposed regulations and demonstrations:

• The Risk Adjustment Data Validation (RADV) rule ensures the accuracy of payments made to Medicare Advantage Organizations (MAOs). The RADV rule aims to recover improper risk adjustment payments made to MAOs when the medical diagnoses submitted for payment are not supported by the beneficiary’s medical records (Severino, 2024).
• The Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) demonstration is designed to test whether exempting Merit-based Incentive Payment System (MIPS)-eligible clinicians from MIPS reporting requirements and payment adjustments would increase or maintain their participation in certain payment arrangements with Medicare Advantage Organizations (MAOs). The demonstration aims to encourage clinicians to participate in payment arrangements similar to Advanced Alternative Payment Models (APMs) with MAOs, potentially transforming care delivery and changing utilization patterns (Severino, 2024).
• The Global and Professional Direct Contracting (GPDC) model a voluntary Accountable Care Organization (ACO) model designed to improve the quality of care for Medicare beneficiaries while reducing costs. The GPDC model aims to provide greater attention to beneficiaries’ health needs, reduce administrative burdens for providers, and reward high-quality care. It offered two risk-sharing options—Global and Professional. The Global option involved 100% risk-sharing for savings and losses, while the Professional option involved 50% risk-sharing (Severino, 2024).

Summary

The biggest change by the new administration has to do with the potential expiration of enhanced Premium Tax Credits under the Affordable Care Act (ACA) and the implications for premium payments if Congress does not extend them. Trump administration's focus on increasing competition in ACA marketplaces is a priority. Trump has stated his opposition to Diversity, Equity, and Inclusion (DEI) initiatives, proposing an executive order to eliminate DEI programs in federal institutions. Additionally, Trump has declared support for Health Savings Accounts (HSAs) and the potential reintroduction of short-term health plans.

Sources

Blase, B. (2024). In 2024, over half of federal exchange enrollees claimed income below 150% of the federal poverty level. Paragon Institute, downloaded from https://paragoninstitute.org/paragon-pic/in-2024-over-half-of-exchange-enrollees-have-income-below-150-of-the-federal-poverty-level/

Blase, B., and Gonshorowski, D. (2024). The great Obamacare enrollment fraud. Paragon Institute. Downloaded from https://paragoninstitute.org/private-health/the-great-obamacare-enrollment-fraud/

Cohen, J. (2024). Vance suggest health insurance changes could raise premiums for those with pre-existing conditions. Forbes. Downloaded from https://www.forbes.com/sites/joshuacohen/2024/10/02/vance-suggests-changes-to-health-insurance-that-may-raise-premiums-for-those-with-preexisting-conditions/

Hinton, E., Diana, A., and Rudowitz, R. (2024). Medicaid waiver priorities under the Trump and Biden-Harris administrations. KFF. Downloaded from https://www.kff.org/medicaid/issue-brief/medicaid-waiver-priorities-under-the-trump-and-biden-harris-administrations/

Kenen, J. (2024). How JD Vance reopened the health care fight. Politico, downloaded from https://www.politico.com/newsletters/politico-nightly/2024/09/19/how-jd-vance-reopened-the-health-care-fight-00180154

Minicozzi, A., and Masi, S. (2024). CBO publishes new projections related to health insurance for 2024 to 2034. Congressional Budget Office. Downloaded from https://www.cbo.gov/publication/60383

RNC (2024).? 43rd Republican National Convention: The 2024 Republican Platform. https://prod-static.gop.com/media/RNC2024-Platform.pdf

Severino, R. (2023).? Mandate for leadership: The conservative promise. Project 2025 Presidential Transition Project of the Heritage Foundation. Downloaded from https://static.project2025.org/2025_MandateForLeadership_CHAPTER-14.pdf

Towfighi, J. (2024). Millions of Americans could lose out on more than $700 in healthcare benefits if Congress doesn't keep these tax credits. Business Insider, downloaded from https://www.businessinsider.com/millions-americans-lose-health-insurance-subsidies-congress-presidential-election-2024-9

Trump, D. (2020). Executive order on an America-first Healthcare Plan. White House. Downloaded from https://trumpwhitehouse.archives.gov/presidential-actions/executive-order-america-first-healthcare-plan/