Pence, Price & Ryan PC: The Guiding Principles of the New Healthcare Partnership

With key appointments in place, the direction for U.S. healthcare policy is clearly in the hands of three key leaders to whom President-elect Trump will delegate its future. He promised to Repeal the Affordable Care Act, protect Medicare, bring down drug prices, improve Veterans’ Health and prohibit insurers from denying coverage due to pre-existing conditions. He’ll look to this trio to advance his policies and replace Obamacare with something else.

  • Mike Pence, a lawyer by training and former member of the House of Representatives, is Vice President. As Governor of Indiana, he was one of seven states chief executives that sought a federal waiver to expand the state’s Medicaid program that required enrollees to participate in out of pocket payments. 
  • Tom Price, MD, is Secretary of Health and Human Services. He practiced as an orthopedic surgeon in Atlanta prior to winning Newt Gingrich’ Georgia Congressional seat in 2004. Since 2009, he has advocated for reforms, introducing his Empowering Patients First Act that privatizes Medicare using tax credits and curtails coverage for abortion and family planning. In the House of Representatives, he served as Chairman of the House Budget Committee and as a member of the Republican Doctors Caucus.
  • Paul Ryan (WI) is Speaker of the House, former Chair of the House Ways and Means Committee and a proponent of replacing Medicare with a premium support model and raising its age for eligibility.

The three served in the House of Representatives together for a decade. They voted for Repeal of the Affordable Care Act many times and supported the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) that replaced the sustainable growth rate formula whereby Medicare sets its rates for physician pay. Now they’re center stage in defining the changes ahead for U.S. healthcare. 

The context for replacing the Affordable Care Act
The trio will tackle their replacement duty in a dicey context: 

Cost containment is the dominant issue. Medicare is key. Health spending increases will increase 5% annually for the next decade. Last year, they were up 5.8% due to increased Medicare enrollment, higher utilization, and escalating drug costs. Healthcare is 31% of the federal government’s expenditures—double what’s spent for defense and well above Social Security--so federal policymakers will look for ways to rein in federal spending, especially for Medicare which adds almost 10,000 new enrollees every day.

Industry consolidation is reality. The structure of the U.S. healthcare market is rapidly changing. One in three physicians is now a hospital employee. Mega deals in insurance (Aetna-Humana), hospitals (Dignity-CHI) and in virtually every sector point to the significance of scale as a competitive advantage. And, in the majority of communities, local hospitals are affiliated with a national chain. When compared to other industries—banking, transportation, telecommunications, et al, healthcare remains a highly fragmented industry. Its transition to bigger, more diversified businesses is an important consideration to policymakers.

Physicians aren’t happy and hospitals are worried. The vast majority of physicians believe health reforms have compromised their role as their patient’s advocates and mandates to use electronic health records an unnecessary encroachment on their autonomy. Hospitals fear further cuts in reimbursement by Medicare and policies that benefit private insurers, device and drug manufacturers at their expense. Together, physicians and hospital comprise the hub for healthcare delivery and consume more than 60% of total spending.

The GOP controlled Congress is divided over healthcare. With 235 GOP seats in the House, new legislation to replace Obamacare can get through the lower chamber with ease, but in the Senate, passage will be more challenging. The GOP has 52 seats: it will need 60 to pass major elements of its reforms.  Finding common ground with moderate Democrats in the Senate will be necessary to advancing a replacement agenda, lest hostile partisanship derails upcoming confirmation hearings for Supreme Court, federal court and cabinet appointees. 

Public opinion about healthcare is strong and split. There is no national consensus about how the U.S. health system should be structured or funded. The public is divided about the worthwhileness of the Affordable Care Act and uncertain about its replacement.  The chasm between those believing healthcare should be a fundamental right versus those approaching it as a market-based industry is widening: an “occupy healthcare” movement is taking shape in the U.S. especially among Millennials who believe the system is fundamentally flawed and in need of replacement. Policymakers are aware that radical changes in healthcare are virtually impossible given the public’s dissonance about how healthcare should be governed.

This backdrop will be the context for what’s ahead. Replacement of the Affordable Care Act will be one of the three acid tests in the Trump administration along with building the wall and bringing jobs home. It will fall to Pence, Price & Ryan to figure it out.

Pence, Price & Ryan PC: The Core Beliefs about the U.S. Healthcare System that will Guide their Actions
Though there are more similarities than differences in the views of the three about how the U.S. health system should be governed and operated. They boil down to five core beliefs: 

  1. Healthcare in the U.S. is a fundamental right for which citizens should act responsibly. Healthcare, they believe, should not be a giveaway program. It should protect those that are most vulnerable but require all to do their share. No exceptions.
  2. U.S. healthcare should be run as a private system. Organizations should compete to provide goods and services, and the federal government’s role should be limited to stimulate competition, growth and innovation. There will be winners and losers in every sector. Employers need not be in the middle. Insurance should be an individual choice and let the chips fall where they may.  Physicians, they believe, should be at the center of reforms that protect their patient relationships. And ultimately, individuals should make their own decisions about the care they need and the costs they pay.
  3. Healthcare in the U.S. should be overseen and managed by states. The federal role should be less. Akin to transportation, education, insurance, banking and other industries. Regulatory oversight of healthcare should be the role of governors and their legislatures.
  4. The U.S. taxpayer should be the primary beneficiary of U.S. healthcare innovation. Funding for and policies that support advances in drug discovery, medical devices, information technology and others should benefit U.S. interests first. U.S. taxpayers should not pay more than others for the same products and services, and offshore profits and jobs should be restricted. 
  5. Reducing the national debt by spending less on healthcare is imperative. Deficit spending by the federal government cannot be allowed. For that reason, a fundamental change in Medicare is needed, transitioning the program from a defined benefit to defined contribution program over time. The long-term interests of America necessitate tough choices about government spending: our solvency and liquidity is at risk unless healthcare spending at every level is curtailed.

These beliefs are strongly held. They’re shared to varying degree by one in three Americans who self- identify as Republicans or Conservatives, but not by the rest who call themselves Independents, Democrats or Progressives. The notion of privatizing Medicare using a voucher program is opposed by three in four, especially seniors. It failed to help the Romney-Ryan Presidential ticket in 2012 so it faces an uphill battle. Pushing healthcare programs like Medicaid and health insurance company oversight to the states is an easier sell, but lends to uneven, restricted access and a spike in the numbers of uninsured.  And there’s healthy skepticism about the notion that consumers can navigate the health system sans the role employers and private insurers have played in structuring choices on their behalf.

What’s ahead?

These beliefs compose the doctrine embraced by Pence, Price & Ryan as they set about the task of transforming the U.S. health system. They envision a market-driven view of the health system marked by competition, transparency and an active role for consumers as the key decision-makers . They’re betting big that governors and state legislators can do what central government can’t, and they’re confident a majority of voters will see the wisdom of their ways. Stay tuned.

Paul