Don’t look now, but the President and Congressional Republicans are making progress on their promise to repeal and replace Obamacare with a more affordable, flexible, and dynamic health system.
This news will likely come as a surprise. As far as the news media is concerned, the failure to pass the American Health Care Act in the Senate means that health care has been a zone of failure for the President.
What they have missed is an administration-wide health reform effort, enhanced by congressional action, that will lower costs, increase access, and improve health outcomes.
Because this new strategy doesn’t fit the news media’s focus, it has been routinely ignored. The diverse nature of the many small steps underway has made it hard for analysts and reporters to understand how important they are.
It has always been a mistake to think the health system can be fixed in one giant step.
Health costs are about 18 percent of the largest economy in the world. Health is also the most deeply dependent on science and technology of any field of human endeavor. No one is smart enough to fix a system that big and that complex in one giant reform.
The Trump team has recognized that a broad-based approach that has many small steps moving in the same general direction is much more likely to succeed than staying focused on one giant step which, even if you could get it through the Congress, would still leave you needing many small reforms.
The results are already very impressive.
At the Food and Drug Administration, Commissioner Scott Gottlieb has introduced dramatic steps to speed the approval of generic drugs. Generic drugs dramatically reduce costs for patients. They account for about 90 percent of all prescriptions filled but only around 25 percent of total spending on prescription drugs. This means that speeding the approval of generic drugs is among the most effective ways to make medicine more affordable.
Under President Trump and Commissioner Gottlieb’s leadership, the FDA has moved away from a “first come-first serve” model of generic drug approval to prioritizing the applications of generics which would serve as alternatives to brand name drugs with fewer than three generic competitors. They are also prioritizing approval for generic alternatives to complex, expensive drugs as well as streamlining the overall generic drug approval process.
The efforts are clearly working. In October 2017, the FDA approved 101 generic drugs – more in a single month than ever before.
At the Center for Medicare and Medicaid Services, Administrator Seema Verma has taken additional steps to save consumers money on their co-pays and out of pocket costs.
Over the objection of the hospital lobby, CMS announced badly needed reforms to the 340B drug discount program. The program mandates that drug manufacturers sell participating hospitals Medicare Part B drugs (used to treat cancer and other serious conditions) at a discount. Medicare then reimburses the hospitals at full price, and the hospital gets to pocket the difference.
The intent of this program is noble – to help hospitals who serve poor populations. However, the program has dramatically expanded in recent years, and studies have shown that in many of the participating hospitals, very little of the savings are reaching poor patients.
CMS’s announcement that it would cut the reimbursement rate for those drugs will save taxpayers money, and it will also reduce co-pays for Medicare patients who usually pay a percentage of the price Medicare pays.
In addition, CMS introduced a proposed rule for Medicare Part D to ensure that any discounts that drug manufactures negotiate with pharmacy benefit managers are passed on to seniors in the form of lower out-of-pocket costs.
The administration has also taken steps to prevent future price gouging scandals like the infamous Martin Shkreli price hike of an AIDS drug from $13.50 a pill to $750, by identifying the drugs most vulnerable to pricing abuse.
President Trump has also moved beyond opposing Obamacare and has begun to develop a better system for the future. What replaces Obamacare is at least as important as voting to repeal it.
Replacing Obamacare requires a lot of specific steps to return to a market-based, decentralized system in 50 different states. The Trump Administration and its Republican allies in Congress have been working diligently in that direction.
At the Department of Labor, Secretary Alexander Acosta issued proposed rules which would dramatically expand the availability of Association Health Plans. These plans could be national and regional, allowing for the sale of insurance across state lines, but critically still maintain state autonomy in regulating insurance – which will help police against fraud. Some of the details of the rules may need to be improved to prevent insurance companies from cherry-picking healthy customers, but overall this represents a potentially game-changing reform that could have huge cost saving implications for small business owners and the self-employed.
The Trump Administration has also allowed insurers to continue offering “grandmothered” plans created prior to Obamacare, maintaining these lower cost plans for long-time customers. This saved many small businesses and self-employed people a lot of money and anxiety which would have been caused by the Obamacare plan to force them into the government system even if they were happy with their current plan.
In addition, the Trump Administration fixed a number of loopholes in the Obamacare enrollment rules, which some customers had been using to game the system to avoid paying their premiums and wait until they got sick to get coverage, by claiming they qualified for a “Special Enrollment Period.” This fraud drove up prices for everyone. The Trump Administration issued new rules that fixed a number of these problems.
President Trump also made it easier for people to shop for health insurance without using the Healthcare.gov website. For 2019 enrollment, customers can fully use the insurer websites, as well as aggregators like ehealthinsurance.com. All of this increases convenience, expands choice, and makes lower costs possible.
Finally, just last week, Congress enacted a key reform which flew almost completely under the media’s radar. The Continuing Resolution passed to reopen the government this week suspended the health insurance tax for one year, the device tax for two years, and delayed the Cadillac tax until 2022, all of which were part of Obamacare. All of these taxes were simply passed on to patients in the form of higher premiums, so each of these steps will save patients money.
A lot more reform is coming. For example, Republicans in Congress are working on a bipartisan basis to pass some additional market stabilization measures in the next few weeks. They were part of both the House and Senate versions of AHCA. This single step could lead to a 15 percent reduction in premiums for 2019 – another big win for the consumer and tax payer.
These steps show that just as the Trump Administration has an intense focus on jobs and take-home pay. It also is developing a clear focus on access, cost, and the quality of health care. The Trump team understands that it doesn’t work to have a tax cut and increased take-home pay if the cost of health care rises faster than take-home pay. The practical reality of developing new and better approaches to health and health care is a key to the general success of the Trump Administration.
In the long run, the 1,000-step approach of practical reform will prove vastly more effective than either Obamacare or Sanderscare with their focus on sweeping giant government bureaucracies.
This progress in health care is one more example of the impressive results of the Trump Administration’s first year.
Newt Gingrich is a former Speaker of the House and a Fox News contributor.