Health care reform

Perspectives

American Health Care Act (AHCA): Health reform and Affordable Care Act (ACA) repeal and replace

Impacts on health plans, health systems, life sciences companies and state health agencies in the health care marketplace

Stay informed about the latest developments in health care reform, the AHCA and the ACA “repeal and replace” discussions.

Anticipating the impacts of ACA “repeal and replace” to the health care landscape

The central theme in the current debate is a shift towards state-based solutions and private markets and away from federal centralization. This will have an array of impacts on stakeholders. 

No one knows yet how ongoing health care reform efforts, frequently referred to as attempts to “repeal and replace” the Affordable Care Act (ACA), are going to play out, or how executive and congressional actions might impact the health care industry. Market disruption prompted by legislative and regulatory change is likely to be a top issue for health systems, health plans, states and stakeholders across the health care continuum. During this time of uncertainty within the U.S. health care arena, industry leaders with a considered and practical understanding of the key issues, complex dynamics and anticipated impacts will be more likely to lead their organizations to success in a disrupted and potentially reshaped marketplace.

Health industry leaders should be prepared to be nimble and think through strategies today to plan for the potential scenarios and impacts of tomorrow. 

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Implications for health plans

The rising cost of health care – and cost of health insurance specifically - drove much of the rhetoric around ACA repeal and replace discussions. As such, much effort has been focused on health insurance, and health plans have much to gain and many challenges ahead. Health plans that participate in Individual and Medicaid markets will likely face the most disruption. ACA “replacement” proposals under debate could loosen some of the provisions guiding the current structure of policies and provide tax breaks. Current replacement efforts eliminate the individual mandate but propose a continuous coverage requirement that would enable plans to charge higher premiums to those with a gap in coverage. 

ACA “replacement” proposals under debate could provide tax breaks and loosen some of the provisions guiding the current structure of policies. Current replacement efforts eliminate the individual mandate but propose a continuous coverage requirement that would enable plans to charge higher premiums to those with a gap in coverage. 

Health plans today should be proactive in assessing their risk tolerances across the various scenarios to understand the opportunities, costs and impacts. And importantly, should consider the market consequences of their decisions. 

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Implications for health systems

Many ACA “repeal and replace” policies under discussion have the potential to affect hospital finances. As various Medicaid options are discussed, health systems could be faced with a changing landscape in terms of the covered population at a time when they are also focusing on – and substantially investing in – value based care payment models. 

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Implications for life sciences

Approximately 20 million people gained health insurance coverage via the ACA either through the exchanges or Medicaid expansion. In both cases, prescription drugs and medical technology are covered services that people might not be able to afford if uninsured. If coverage is less comprehensive in “repeal and replace” policies, demand for life sciences products could be lower. Similarly, the payer mix across Medicaid, Medicare, exchanges, and commercial in state markets may shift, also impacting patient access to prescription drugs and medical devices. On the other hand, some industry taxes and fees that were created as part of the ACA, such as pharmaceutical industry fees and the medical device excise tax, may be removed as part of “repeal and replace” overhauls. For life sciences companies, ACA impacts ultimately will need to be assessed in light of the other health policy priorities of this administration that are likely to have significant impact – positive and negative ¬– to life sciences companies: FDA modernization, drug price negotiations, tax reforms and trade agreements. 

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Implication for states

The ACA’s impact has varied widely from state to state on many key fronts, depending on states’ exchange participation and implementation, Medicaid expansion, population and health system dynamics, among other measures. In much the same way, the implications of ACA repeal and replacement efforts could have varying impacts on states. As re-reform efforts are focused on devolving federal authority and funding to the state level, variation across states may increase.

State Medicaid programs and insurance departments could see reduced federal roles and strings, and an increase in their flexibility and responsibilities. ACA “repeal and replace” bill on the table have proposed elimination of the “enhanced” federal match of Medicaid expansion and overhaul Medicaid funding.  Additionally, most states currently depend on the healthcare.gov exchanges. Winding down the federal exchange role and capabilities would have implications across many states and the political, budgetary, and technical hurdles should not be underestimated. There are concomitant issues and uncertainties in every state capital.

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How we can help

Health systems, health plans and state government agencies will likely face significant disruption as a result of the shifting health policy landscape. Deloitte can serve as strategic advisors as organizations navigate the reshaping of core elements of the U.S. health ecosystem. The players left standing strong will likely be the ones that strategically understand and plan for potential scenarios and impacts starting now.

Read additional Deloitte insights on health reform initiatives, impacts, and how health plans, health systems, life science companies and state agencies can ready themselves for the changes to come.

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For more information about how Deloitte can support your efforts to respond to health reform changes, please contact our team at ushealthrereformnervecenter@deloitte.com.
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