Life sciences companies must stay in front of the evolving barriers patients face around accessible, affordable healthcare. With President Trump’s recent Executive Order on healthcare and slashing of government subsidies, it is essential companies understand the impact on patients and provide support services to overcome the ever-complicating barriers associated with cost and coverage.
Though much is still left to be seen, it is expected the stability of the healthcare market will be affected. Patients will likely find themselves with fewer benefits and rising premiums, which will greatly affect access to medication and therapies, adherence, and patient outcomes as a whole. Let’s look deeper into the President’s directive to understand the potential impact and what life sciences companies can do in the immediate term to prepare.
Executive Order Promoting Healthcare Choice and Competition
The Executive Order directs federal agencies to modify how the Patient Protection and Affordable Care Act is implemented and includes the directive to end rules forbidding employers from using health reimbursement arrangements (HRAs) to pay individual insurance premiums. It aims to increase competition and consumer choice at lower prices, arguably giving millions of Americans more access to affordable coverage.
Associated Health Plans (AHPs)
Greater access to affordable coverage will be accomplished by making it easier for some to obtain association coverage, which is considered by some to be the best insurance to have. The order could expand association plans across state lines. Plus, AHPs can then be tailored matching consumers’ specific needs and desires as they do not have to adhere to all the ACA’s provisions, for example covering prescription drugs, mental health, and substance abuse.
Many groups, including the American Cancer Society, the American Hospital Association, and the American Academy of Family Physicians among others, have voiced concerns saying the move causes instability across the healthcare exchanges. Businesses that do not join associations might face higher premiums while individuals enrolled in these plans could lose consumer protections through exclusion due to pre-existing conditions or base rates determined by medical background.
By allowing association plans to deny coverage and set rates based on medical history, it effectively lures younger, healthier people away from the ACA exchange with cheaper plans containing fewer benefits and less protection. This is compounded by cross-state insurance purchasing where consumers can buy coverage at lower cost from states with fewer regulations. This is likely to raise premiums for the older, sicker population.
Short-Term Limited Duration Insurance (STLDI)
President Trump also expanded and extended short-term policies making them more broadly available. These plans, which are not required to adhere to the basic coverage requirements of the ACA, base coverage on medical history and are unrestricted in setting premiums. Again, they offer all together less comprehensive plans and attract healthy, young consumers as compared to insurance sold on the ACA exchange.
Health Reimbursement Arrangements (HRAs)
The Executive Order also directs agencies to expand the flexibility and use of employer-funded accounts, or Health Reimbursement Arrangements, to provide more coverage choices—i.e. premiums for individual market policies.
Elimination of Government Subsides
Hours after the Executive Order was signed, President Trump eliminated government subsidies—or cost-sharing reduction payments (CSR)-- to insurers that help pay out-of-pocket costs of low-income people as of November 12. The move is expected to raise premiums and potentially force companies from the insurance exchanges created under the ACA. Why? Because the ACA requires insurers to grant CSR to eligible buyers regardless of federal reimbursements.
The funding cut and the Executive Order could mean high premiums overall for ACA consumers and lower premiums for less regulated coverage. Individual and small group markets could face destabilization leaving many who require comprehensive coverage to manage chronic and pre-existing conditions without affordable options. Some worry women and the older, sicker population will be left footing the bill and largely unprotected with fewer options—something life sciences companies must be prepared to address as they continue to aim to increase access, drive adherence, and improve health outcomes.
The timing of this comes two weeks before open enrollment period for 2018, potentially leading some to forgo signing up for coverage they are legally required to hold. However, the ACA remains and most of the changes will not occur until federal agencies write and adopt regulations implementing them. The process, which includes a period for public comments, could take months. That means insurance coverage may not be greatly impacted next year, but could lead to major changes in 2019.
Life Sciences Must Prepare
In the immediate term, life sciences companies must evaluate current patient experience for potential areas of growing complexity--areas within the current and future healthcare system where the patient faces barriers, particularly around cost and coverage--and prepare accordingly. With clear understanding of patients’ as well as indirect influencers’ experience, companies can better inform an engagement strategy that supports the shifting healthcare environment.
In addition, life sciences companies should develop connected health strategies and design tactical activities to collaborate with payers and providers to advance the customer experience and reduce unnecessary barriers between them. The importance of the customer experience, including interoperability between systems, data, processes, experiences, and activities of stakeholders cannot be stressed enough. At Paragon, we understand it makes all the difference in solving healthcare problems and in improving patient outcomes.