About Last (Election) Night
As the old saying goes, “may you live in interesting times.”
In what was one of the greatest political stunners in modern American history, the world awoke this morning to a President-elect Donald J. Trump. While some people are likely standing around the water cooler today reflecting on what this means for America and the world at large, for those of us working in the healthcare design field, we have to think about what this means for our businesses and our clients’ businesses.
So what does a Donald Trump presidency look like for healthcare? In a phrase: Buckle up. We’re in for an interesting ride.
Over the past six years our clients have been busy adapting to the world of the Affordable Care Act (ACA), value-based purchasing, and surviving in a world where the economics of what we do and how we do it has radically altered how healthcare is organized, financed, and delivered. All that’s about to change, yet again.
Probably the most profound effect on healthcare will be centered on the ACA. If President-elect Trump and the GOP-controlled Congress make good on their promise to repeal and replace the ACA, the disruption coming to our clients’ businesses will be impressive.
Tied to the ACA are a number of measures that have increased the number of insured Americans by over 28 million and reduced our uninsured rates to the lowest in the history of our nation. With the repeal of the exchanges, the following is at risk to go with it:
- Health insurance for over 28 million people
- Guarantees of insurance coverage despite pre-existing conditions
- Assurances that depending children can remain covered on their parent’s policies until age 26
- Guarantees of no lifetime limits on coverage due to a catastrophic condition
- Guarantees of coverage for preventable medical conditions
In short, what patients use, how and how often they use it, and how it all gets paid for is about to be turned on its head … again. And our clients will have to respond. Like with every industry change and evolution, there are going to be winners and there are going to be losers in this process.
Another major healthcare impact will be the rules governing health insurance carriers. President-elect Trump campaigned on a promise to eliminate the rules preventing health insurance providers from selling insurance policies across state lines. If the GOP eliminates this restriction, big changes are coming.
To assess what that means, we need to look at the effect of banking deregulation in the ‘90s. Once banks were permitted to operate across state lines, a massive wave of consolidation began. Today, the majority of Americans receive their banking services from a handful of mega-banks such as CitiBank, Bank of America, Wells Fargo, PNC Bank, and the like. What came in the wake of this merger mania was cost-shifting to consumers, reduced choice, and high barriers to entry for competition. If the rules governing the insurance providers are lifted, we can expect the same. But at this point, it’s too soon to tell what this really means.
For health systems such as Kaiser Permanente, UPMC, and Geisinger that operate their own health plans, the potential for rapid expansion of both their health plan and their health system cannot be understated.
Free to take their plans to consumers anywhere in the U.S., these systems and others like them are poised to strike out and expand rapidly. Smaller insurers will see themselves pushed out of the market, owning to weaker pricing strategies. We can also expect to see an accelerated wave of health system consolidations to drive higher negotiating power with fewer insurers and a reinvigorated push to focus on attractive market shares.
In the end, all of this spells a period of uncertainty in healthcare that may take years to sort through.
One thing that won't change is the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which is bipartisan federal legislation that was signed into law on April 16, 2015. The law does quite a few things, but at its core it establishes new ways to pay physicians for caring for Medicare beneficiaries. It’s possible that the new administration will evolve it, but it's here to stay.
So what does all this mean for healthcare design?
The rules of engagement in healthcare are about to change; our clients are about to go through a period of uncertainty and jitteriness, and we can expect that their capital investment strategies will either slow down or quickly evolve.
Design firms that have expanded their service offerings beyond simply architecture and traditional design—specifically those that are able to help clients navigate through uncertainty and change—are positioned well. Regardless, all firms will likely have to adapt as we learn more. I’m confident our industry will come out stronger in the end.
Manuel Hernandez, MD, MBA, FACEP, CPE, is health practice leader at CannonDesign. He can be reached at firstname.lastname@example.org.