How the U.S. election could impact the healthcare industries

Healthcare delivery has not been the hottest topic on the campaign trail this election season, despite sharp policy differences between the candidates and parties. However, issues such as drug pricing, the Affordable Care Act, Medicare, M&A and telehealth are still worth watching as significant changes could be on the horizon regardless of who wins in November.

These are several key threads to watch:

The 2024 election may determine the future of IRA price negotiations

The outcome of November's Presidential and Congressional elections could well determine the extent to which the federal government will continue its gradual encroachment into negotiations for drug prices under Medicare's Part B and Part D programs.

Since the government first created a Part D benefit with the Medicare Modernization Act of 2003 (MMA), Democrats have agitated for greater governmental input into the cost of prescription drugs for Medicare beneficiaries. The MMA placed price negotiations for Part D drugs under private plans, resulting in contracting between manufacturers and payers with rebates accruing to payers, not the government. The Inflation Reduction Act instead allows the Centers for Medicare & Medicaid Services to begin negotiating Fair Maximum Prices for a growing list of Part D (outpatient) and Part B (physician-administered) drugs that represent the greatest cost to the federal government.

In 2023, CMS selected the first 10 Part D drugs and the ensuing negotiations resulted in the MFPs for these 10 drugs being 59% below their current list prices, a Clarivate analysis found. Over the next five years, CMS is slated to select up to 90 additional Medicare Part B and Part D drugs for price negotiation as highlighted in the figure below.

Parties disagree on role of government in price negotiations.

Before the second batch of drugs for negotiations are selected, Americans will head to the polls to elect a President and Congress. Vice President Harris, who cast the tie-breaking vote in support if the IRA, has pledged to "accelerate the negotiations to cover more drugs and lower prices." In public speeches, she has suggested possibly expanding the program beyond Medicare, presumably to the commercial insurance market (covering 47% of all lives in the U.S.). Such a change would sharply increase the number of people covered under this program.

Former President Trump , whose platform calls healthcare and prescription drug costs "out of control," has not spoken on whether the price negotiations under Medicare would remain the law. However, recommendations from the Heritage Foundation's Project 2025 could influence policymaking under a Trump administration. This conservative think-tank has criticized the price negotiations and called for its repeal in favor of other insurance design reforms.

With control of Congress and the Presidency up for grabs, the IRA price negotiation program's future is likely to be decided next month.

The Affordable Care Act

The Harris plan for healthcare pulls back from the vice president's previous support of a Medicare-for-all system and seeks to build on Obamacare and enhancements passed during the Biden administration. With pieces of the Inflation Reduction Act's Medicare reforms still rolling out, a potential Harris presidency would oversee their implementation.

The Trump administration platform does not bring up the ACA. At campaign events, Trump has said he will keep Obamacare unless he could replace it with something better. During the Sept. 10 debate, Trump returned to repeal and replace rhetoric, offering that he has "concepts of a plan". A coherent Republic healthcare strategy could lean on a proposal from the Republican study committee, which would reduce exchange subsidies and seek to convert Medicaid to block grant funding, both longtime ideas in circulation among the Republican caucus that would likely reduce services and enrolment. Georgia's implementation of a partial ACA Medicaid expansion with an employment requirement could see renewed interest if Trump returns to the White House - many states explored or instituted work requirements during his previous term.

The immediate issue for whoever wins will be expanded subsidies extended by the Inflation Reduction Act, which are set to expire at the end of 2025. Loss of subsidies could cause spikes in insurance premiums and major losses in exchange enrolment. Extending them would require Congressional action. Congressional Democrats introduced legislation to make the subsidies permanent in September 2024, but the legislation has no chance of passage so close to the election. A Republican sweep of both chambers would imperil the expanded subsidies, although an expansion could conceivably pass as part of a larger "must-pass" spending bill. The issue will await November's victors and could affect tens of millions of Americans and their health coverage.

Medicare Advantage

While a Harris administration would not push Medicare-for-All, which the candidate once supported, it will likely continue on the same path as the Biden administration, which still has several phases of drug pricing negotiations to unfurl, with additional drugs - as well as Part B drug negotiations - coming online through 2029. A second Trump administration would like face pushback if it abandoned or overturned the drug-pricing reforms of the Inflation Reduction Act, which includes numerous pieces that will prove popular with seniors, even as the industry faces price negotiations on top drugs, long an industry non-starter. It would be hard to pull back key reforms such as a $35 monthly insulin cap and an annual $2,000 out-of-pocket maximum, which beneficiaries can spread over a 12-month period.

Medicare is likely to experience significant churn in 2025, as top payers pull back plan options and even leave some counties. Given the Trump administration push for Medicare Advantage plans, which successfully raised the MA share of all Medicare enrolments above 50 %, there could be a renewed focus on supplementary benefits and other enticements for beneficiaries if Trump returns to office. The popularity of Medicare Advantage makes it difficult to cut too deeply despite impacts from the program, so future changes will likely continue to be slight under either Harris or Trump.

Consolidation and M&A

Another obvious policy divergence between Harris and Trump is that of regulating mergers and acquisitions that accelerate concentration in the industry.

As California Attorney General from 2011 to 2017, Harris was a forceful opponent of healthcare industry consolidation, both vertical and horizontal, believing that mergers of hospitals, physician groups and insurers would damage competition and raise prices for care. As AG, she joined a federal lawsuit to block Anthem and Cigna's merger in 2016 .

These prior actions align with the Biden Administration's policy of strict antitrust enforcement, particularly concerning healthcare.

By contrast, the Trump Administration took a more laissez-faire approach to consolidation in the healthcare arena, both vertical and horizontal. It allowed the largest healthcare merger in history - that of CVS and Aetna in 2018 - requiring only minimal divestment. It also allowed within-market hospital mergers in several major markets including Chicago, Twin Cities, Houston and Atlanta.

President Biden specifically focused on healthcare mergers in his July 2021 Executive Order directing rigorous enforcement of antitrust laws "to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony" in the hospital, insurance and prescription drug markets.
While the FTC remains hampered by a lack of resources, its investigations and regulatory stance alone has discouraged certain types of mergers, such as those of hospital systems within the same territory. The Biden FTC also has been more exacting in the types of conditions, or settlement agreements, that it will accept to approve deals, according to legal analysis by the firm Kirkland & Ellis .

It has had less success reining in the rapid consolidation across the healthcare industry's segments: The Biden FTC and DOJ fought to prevent UnitedHealth Group's purchase of Change Healthcare, but lost in court, for example.

But given her direct experience and activism in challenging mergers that appear to harm consumers' access to affordable care, a Harris presidency could result in a renewed push against industry consolidation, testing emerging ideas in how to analyze and mitigate potential harms.

Other healthcare topics to watch:

Telehealth

About a dozen federal telehealth waivers put in place during the Covid pandemic are set to expire Dec. 31, 2024, and providers and payers are pushing for an extension. There are two ways telehealth waivers can be extended through 2025 - via The Centers for Medicare & Medicaid Rule and legislatively through 2026 via H.R. 7623. Telehealth has proven its worth and would likely be extended under Harris or Trump, but it's worth noting what's at stake if the waivers expire and Congress and/or CMS doesn't act.

• Pre-waiver, for behavioral health visits, patients were required to have received an in-person evaluation six months before initiating telehealth, followed by an in-person visit annually. Under the waiver, in-person evaluation is no longer required for these consults.
• Waivers enable access to medications for hundreds of thousands of patients nationwide for a variety of medical diagnoses including substance use disorder.
• The waiver allows patients to be seen across geographic lines and in any setting.

As of Aug. 6, 2024, 43 states, the District of Columbia and the Virgin Islands have pay-parity laws in place that will not expire regardless of election outcomes.

Chevron Doctrine Overturned

Beyond the presidency, the ACA and IRA are likely to face bigger challenges from the courts as a result of a seismic U.S. Supreme Court decision nixing the "Chevron defense" of federal regulation, thereby opening those regulations up to legal challenges. The Chevron Doctrine, a longstanding legal precedent that required courts to defer to reasonable interpretation by federal agencies in carrying out laws passed by Congress, was overturned in June 2024 by the court.

The ruling is likely to impact the healthcare industries, particularly around FDA decision-making on drug approvals, drug labelling and dietary supplements. Increased legal challenges could make it difficult for the healthcare industry to rely on new FDA interpretations and guidance, but the impact may be muted- the Chevron doctrine hasn't been cited in any Supreme Court cases for about a decade.

Key takeaways:

• The election outcome may determine the extent to which the federal government will continue its gradual encroachment into negotiations for drug prices under Medicare's Part B and Part D programs.
• Harris would likely continue the Biden Administration's M&A-dampening skepticism toward consolidation and negotiation of drug prices for Medicare recipients. The Trump administration took a more hands-off approach to M&A and would be unlikely to overturn drug pricing changes or key Biden Administration reforms, including a $35 monthly insulin cap.
• Trump has changed positions repeatedly on whether he would attempt to overturn the ACA. Harris has been a staunch supporter of the ACA, despite her previous position in support of a single-payer "Medicare for All" scheme.
• About a dozen federal telehealth waivers put in place during the COVID-19 pandemic are set to expire Dec. 31, 2024, and providers and payers are pushing for an extension. Overturning the Chevron Doctrine will make it tougher for federal health agencies to cut through red tape but is unlikely to have a major immediate impact on policy and regulation.

This post was written by Bill Melville, Lead Healthcare Research and Data Analyst; Roy Moore, Senior Healthcare Research and Data Analyst; Valerie E. Pillo, Senior Healthcare Research and Data Analyst; and Paula Wade, Lead Healthcare Research and Data Analyst. To learn more about how Clarivate helps life science companies, payers and providers navigate the market access landscape, please visit us here.

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