What Medicare Advantage Changes Would a Trump or Harris Administration Make?

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Experts also predict next administration’s potential moves on the ACA, drug price negotiations

by
Shannon Firth,

Washington Correspondent, MedPage Today,


August 15, 2024

Policy experts and former health officials cast their predictions on what health policy changes to expect from the next administration during an online panel discussion hosted by the healthcare consulting and advisory firm Avalere Health on Wednesday.

Medicare Advantage, Medicare

Former HHS Secretary Alex Azar argued that Democrats may soon regret some of their attempts to rein in Medicare Advantage, noting that cuts the Biden administration finalized in April “may come back to haunt them on October 15, when [the] open enrollment period comes, and we see either increased cost-sharing, reduced benefits, [or] increased premiums, as a result of what they’ve done.”

If there is a second Trump administration, Azar said Republicans have historically been all in when it comes to Medicare Advantage. He pointed to a recent analysis from the Medicare Payment Advisory Commission (MedPAC) highlighting overpayments to Medicare Advantage plans — with Medicare paying 22% more for Medicare Advantage enrollees than traditional Medicare — as “nonsense,” arguing in a follow-up discussion that the analysis relied on faulty assumptions, including that Medicare Advantage plans draw healthier beneficiaries.

Azar cited a Health Affairs editorial authored by current and former MedPAC members that questioned the program comparison methodologies used in the MedPAC analysis. These authors suggested that the analysis “likely overestimate[s] the effect of favorable selection” in Medicare Advantage plans.

Still, skepticism around Medicare Advantage has been growing among modern populist Republicans, with some characterizing the plans as “corporate welfare,” Azar said. “So, I think, depending on who staffs a [potential] Trump administration, you could see different approaches.”

Weighing in on the MedPAC analysis, Sean Creighton, MSc, managing director for Avalere and a former official for the Centers for Medicare & Medicaid Services (CMS), noted that “there’s almost nobody who has worked in the industry, or who understands the industry, or who looks at the margins that are reflected in the bids [or estimates of expected costs for an average enrollee] that CMS approves, who believes that the coding intensity plus selection bias amounts to a 22% overpayment.”

However, he said that he didn’t expect a “radically different” approach from either a Republican or Democratic administration, stressing that, based on his experience, “when it comes to payment integrity … Republican administrations care about that just as much as the Democratic administration.”

Dan Mendelson, CEO of Morgan Health, a JPMorgan Chase division focused on employer-sponsored healthcare, and the previous CEO of Avalere Health, agreed. Neither party will give Medicare Advantage plans “a free pass” and will likely dig into payment rates to identify “excesses,” he said.

Of note, Medicare Advantage plans now account for 54% of the eligible Medicare population.

“I don’t think anybody wants to reverse that [growth], but the use of risk adjustment in some of these other practices is widely seen as out of control up on the Hill, and I don’t think that either presidency would do a whole lot to stop” attempts to correct that problem, Mendelson said.

As for traditional Medicare, Mendelson anticipates that a Democratic administration would support adding dental and vision benefits to the base of Medicare.

Azar said that under a Trump administration, he would anticipate a focus on site-neutral payments, in which beneficiaries pay the same rate regardless of whether services are rendered in an outpatient or ambulatory setting or a freestanding physician’s office. He also anticipates fee-for-service “cuts” or “reforms” where services are overpaid, which both Democratic and Republican budgets have proposed.

Affordable Care Act, Medicaid

Azar said he doesn’t expect “any serious effort” to repeal and replace the Affordable Care Act (ACA). “I think that’s rhetoric at this point,” he noted.

Instead, he said he anticipates “the typical Republican alternatives to the ACA” to be resurrected, including association health plans, short-term limited-duration plans, health reimbursement arrangements (HRAs), and health savings accounts.

Azar pointed out that the Trump rule on HRAs was one rule that the Biden administration did not toss. The Trump administration forecasted that it would add 12 million people to the ACA exchanges.

If Trump is elected and there’s a Republican Congress, Azar predicted that there is unlikely to be a renewal of the ACA’s enhanced subsidies, which are expected to sunset at the end of 2025. The subsidies help Americans purchase ACA plans by capping premiums at a percentage of their annual income.

On that point, Mendelson disagreed. “It’s one thing to say, ‘Well, we don’t like Obamacare.’ It’s another thing to realize the extent of these subsidies and how that’s really created this place where people who are in between jobs can go to actually find insurance,” he said.

As for Medicaid, Mendelson suggested that a Trump administration would look to give states more flexibility and could revive the push for Medicaid block grants — allocating lump-sum payments to states to spend as they see fit, within broad guidelines.

Meanwhile, a Harris administration would seek to exert “more centralized control,” he said.

Azar said that under a President Trump, he would anticipate efforts to “normalize” the ACA’s expanded coverage, including for the federal Medicaid match rate for the expansion population (adults with incomes up to 138% of the federal poverty level).

In addition, “Medicaid work requirements absolutely will be something that they try to bring back,” Azar added, acknowledging a lack of success on the litigation front with those measures.

Medicare Drug Price Negotiation

On drug prices, Democrats are sure to highlight the impacts of the Inflation Reduction Act (IRA), panelists said. The IRA caps out-of-pocket costs for seniors at $2,000 annually and insulin copays at $35 per month. The bill also enables the HHS Secretary to negotiate the price of certain prescription drugs. CMS unveiled the first 10 negotiated drug prices on Thursday.

Ashley Flint, a principal for Avalere Health, said that she expects a Harris administration to explore ways to expand the law, such as capping insulin copays on the commercial market — currently only Medicare beneficiaries benefit from the caps — depending on the makeup of the next Congress.

The list of the next 15 drugs slated for price negotiation is expected by Feb. 1, 2025 — less than 2 weeks after the presidential inauguration. If Trump is elected, Flint said she suspects that the Biden administration will release the list early.

As for a possible second Trump administration, Azar noted that former President Trump has said he will revive his “most favored nation” proposal, which called for Medicare to pay no more than what other developed countries pay for the top 50 physician-administered drugs.

While some conservatives and, unsurprisingly, the pharmaceutical industry fought against the IRA, Azar does not see repeal in the cards if Trump is elected.

Instead, “he might try to out-IRA the Biden-Harris administration on negotiating [drug prices]. I think it will be a point of pride if he could get better deals than they get,” he said.

Trump might also make some technical fixes, such as tweaking the rules around orphan drugs.

Under the current price negotiation rules, orphan drugs are restricted from eligibility, but if these drugs gain a follow-on indication, they are sent right back into the negotiation pool, Azar explained in the follow-up discussion. “It creates a major disincentive to invest in rare and orphan diseases.”