The machine chugs along

Chip Somodevilla/Getty Images

The health care industry has feasted on the public regardless of who is in the White House. It gobbles up the savings, wages, and tax dollars of patients and workers everywhere. Prices for hospitalizations, surgeries, checkups, devices, and drugs remain higher here than in the rest of the world.

This was true across every president over the past three decades — Clinton, Bush, Obama, Trump, and Biden — and there is no indication that will change now that Trump is back. The dread of getting a medical bill in the mail is as strong as ever.

Here’s a tighter snapshot: In 2015, national health care spending hit $3.2 trillion, or $10,000 per person. This year, we’re expected to spend $5 trillion, or more than $15,000 per person. Yes, per capita health care spending has gone up 50% in the past decade.

Health care has often seemed like an afterthought for Trump this time around, but he has unequivocally supported big businesses and deregulation. Trump’s permanent corporate tax cuts, passed in 2017, created a huge windfall for health care companies. The Republican failure to repeal and replace the Affordable Care Act also retained a major part of the status quo. That’s overall been good for the industry. But for patients and consumers, there’s little reason to think the machine won’t continue to hum along and threaten their financial well-being.

medicare advantage

Full steam ahead, but possible reforms?

My colleagues Rachel Cohrs Zhang, Tara Bannow, and I looked at how various industries and programs could change in Trump’s second term. One of the most important to watch is Medicare Advantage, which is expected to cost taxpayers well above $500 billion next year

Republicans tend to favor the program, even though concerns about overpayments and inappropriately denied care have been documented time after time after time. But Wall Street is optimistic about what a Trump presidency means for large Medicare Advantage players — the stocks of UnitedHealth Group, Humana, and CVS Health rallied on Wednesday on the presumption that, overall, payments will be better and scrutiny won’t be as intense.

The Biden administration gave Medicare Advantage insurers friendly payment rates early on. But over the past two years, the Biden administration has cut baseline payments and eliminated medical codes insurers commonly misused to drive up payments. The Trump administration previously was kind to the MA industry, but “political appointees for the regulatory agencies will dictate whether support for MA is unfettered or if it comes with nuances and constraints,” analysts from investment and policy firm Capstone wrote last week.

Conservative groups like Paragon Health Institute are pitching reforms designed to rein in Medicare Advantage that others, like the Medicare Payment Advisory Commission, also have recommended.

To be clear, Republicans still adore Medicare Advantage, and it’s not going anywhere. In fact, the conservative Heritage Foundation’s Project 2025 roadmap wants to “make Medicare Advantage the default enrollment option” — a radical position that would privatize the entire Medicare program. Trump has distanced himself from Project 2025, but it can’t be ignored.

medicaid

The insurance program Republicans want to cut

Republicans have never been shy about wanting to cut Medicaid, and the program covering the poor very well could be a target again as they look to fund a plan to extend Trump’s 2017 tax cuts, my colleague John Wilkerson writes.

The Trump administration could resurrect previous ideas of block-granting Medicaid and implementing work requirements, both of which have the effect of taking away people’s Medicaid coverage. “I think that all adds up to Medicaid being a top target for really deep, really damaging cuts,” Edwin Park, a research professor at Georgetown University, told John.

However, Medicaid’s transformation to a program mostly run by private insurers adds an influential industry to its list of guardians, alongside the rural hospitals that rely on the program to balance their budgets. Read more from John on what to expect for Medicaid.

hospitals

Site-neutral on the table?

Hospitals are going into a second Trump term with a lot of financial power. Profits for many hospital systems are up this year as more patients are seeing their doctors for surgeries, procedures, tests, and checkups.

But the Trump administration previously displayed a willingness to take swings at hospitals, some bigger than others. For example, price transparency rules for hospitals rolled out under Trump. The same with cuts to their federal drug discounts (although those were eventually reversed).

The biggest threat to hospitals may be the growing bipartisan support in Congress for “site-neutral” payments — the idea that hospitals’ outpatient clinics should get the same rates as independent physician clinics. Trump previously embraced the concept and finalized a narrow version of site-neutral payments, which faced a torrent of hospital lawsuits before taking effect. But that regulation only covered about 2% of Medicare’s outpatient spending.

insurance

The employer plan black hole

With Republicans in control, it’s extremely possible the ACA’s expanded premium subsidies will expire at the end of next year, which would result in millions of people dropping their ACA coverage and insurance companies losing billions of dollars in taxpayer funds. (You can read more about the ACA subsidies here.)

But outside of the ACA and the other government programs previously mentioned, insurers still have a huge chunk of their business tied to the health coverage that people get through their jobs. Trump didn’t really touch the employer coverage market last time, like most other administrations, and the result continues to be an expensive, flawed system that workers say traps them in their jobs.

How expensive? If you’re by yourself, you and your employer shelled out $9,000 on average for coverage this year, according to health policy research group KFF. If you have a family, you and your employer paid almost $26,000. Those numbers have only gone up since KFF started tracking them in 1999, again agnostic to whoever is president. And it doesn’t matter which major survey you look at — it’s only getting worse for 2025. Employers have hardly moved the needle on their own.

Trump has never mentioned proposals to change the employer insurance market, and outside of championing health savings accounts, Republicans haven’t really touched the subject either. Politicians are petrified to touch people’s employer plans because of the tax breaks associated with them, and unless Republicans rope the issue into tax reform, which is far from certain, very little will change.

antitrust

Where the DOJ and FTC could go

Trump’s Department of Justice and Federal Trade Commission showed less appetite to take up antitrust cases initially — for example, the Department of Justice allowed Cigna to acquire Express Scripts. But in 2020, federal agencies completed the second-highest number of merger investigations over the past decade.

While antitrust officials are still expected to go after anticompetitive behavior regardless of who sits in the White House, there are degrees. The industry has decried the Biden administration’s antitrust enforcement, and Trump being in the White House will likely embolden health care companies to at least pursue more deals. Wall Street analysts are already expecting a flurry of mergers and acquisitions among hospitals and, potentially, insurers. The biggest one to watch will be if Cigna pulls the trigger and attempts to buy Humana, despite the large market share of their pharmacy benefit managers.

The personnel will matter a lot, too. If it’s anything like the last time, Trump’s top leaders will generally be friendlier to deal-making. The Trump administration official who led the DOJ's antitrust division, Makan Delrahim, was no Jonathan Kanter. Delrahim — who lobbied on behalf of Anthem when it tried to merge with Cigna in 2015 — routinely allowed large mergers to proceed.

And while Trump FTC Chair Joseph Simons made an aggressive antitrust move against Facebook, Lina Khan’s FTC has been more aggressive in more cases, including an ongoing one against the “Big 3” PBMs.

The picks for these agencies will go a long way to determining the antitrust agenda, and it’s worth pointing out Vice President-elect JD Vance has at least spoken highly of Khan.

regulation

The post-Chevron world

Over the summer, the conservative Supreme Court significantly weakened the ability for federal agencies to regulate industries and put out new rules based on their best interpretations of the law.

That has shifted a lot of power away from HHS, CMS, and FDA, and directed a lot more power toward the courts and the industries that are regulated. This is what conservatives wanted, but now that the Trump administration will run those agencies again, trying to repeat previous regulatory reforms like making cuts to 340B drug program or hospital outpatient payments could, ironically, be more difficult.

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Industry odds and ends

CVS Health has hired Steve Nelson, the former CEO of UnitedHealthcare, to run Aetna. At UnitedHealthcare, Nelson built up the Medicare Advantage operations, which is the exact area that CVS has been having trouble with.
Aetna and Optum have tentatively agreed to a settlement with employer plan members over the infamous “dummy codes” case (you can read more about it here). They hope to finalize the settlement by Jan. 31, 2025.
Sutter Health CEO Warner Thomas donated $50,000 to Vice President Kamala Harris’ presidential campaign this fall, despite the fact that Harris initiated an investigation more than a decade ago that ultimately led to a half-billion-dollar settlement for the hospital system.
A new study quantifies a pretty scandalous development: Medicare Advantage plans are enrolling veterans and getting billions from the federal government even though those people are getting care covered by the VA, Tara reports.
Astrana Health is buying the medical groups, the California health plan, and a California hospital from the private-equity-backed Prospect Medical Holdings for $745 million.
CarePoint Health is a nonprofit, three-hospital system in New Jersey that was formed by Vivek Garipalli, the co-founder and former CEO of publicly traded Medicare Advantage insurer Clover Health. Garipalli bought the bankrupt, nonprofit CarePoint hospitals starting in 2008, converted them to for-profits, then canceled their insurance contracts and charged some of the highest prices in the country. Garipalli, who reaped millions of dollars from his role, also made sure CarePoint’s hospitals were in-network with Clover. He got out in 2022, and CarePoint reverted back to being a nonprofit. So, what’s the status of CarePoint now? Filing for bankruptcy, again. “The resulting accumulation of debt has become unmanageable,” the bankruptcy declaration states.
A man in Oregon is suing a local ambulance provider, alleging the ambulance hit him while he was riding his bike and then charged him $1,862 for the ambulance ride to the hospital, Aimee Green of The Oregonian reports.

The Meme Ward

Health Care Inc. Meme - Issue 118

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bob.herman@statnews.com

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