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President Donald Trump recently announced his “Great Healthcare Plan,” which promises to lower drug prices, reduce insurance premiums, and maximize price transparency.
The announcement comes at a time when many Americans are concerned about rising health care costs. January 1st kff survey found that health care costs are the biggest financial concern for many Americans, with two-thirds (66%) saying they are at least somewhat worried about affording health care costs – this is higher than the percentage who are worried about affording food and groceries, utilities, housing costs and transportation expenses.
But will Trump’s plan actually make health care more affordable? Here’s what an expert thinks.
Why won’t Trump’s plan save Americans meaningful money?
Trump’s plan focuses on several strategies: reducing prescription drug prices through pharmacy benefit manager (PBM) reforms, implementing “Most Favored Nation” (MFN) pricing for some drugs, providing insurance premium relief, and expanding healthcare price transparency.
While each of these measures can generate savings, Peter Besica, founder of 360 Smarter Care – A company focused on reducing health care costs said the overall impact would be modest if spread across the population.
He said, “For the sake of discussion, let’s assume that PBM reforms and MFN reforms perform well under the 20% estimate – savings amount to $51 billion.” “Spread it out across the US population, and it would drop to $150 per American. While welcome, it doesn’t begin to move the needle.”
OTC drug changes will change costs – not reduce them
One proposal would move some prescription drugs to over-the-counter (OTC) status. On paper, this could lower drug prices and reduce visits to physicians’ offices, urgent care centers and emergency departments. In practice, Besica warned, the change could backfire.
“It’s a terrible idea,” he said. “Hospital care is the largest driver of health care spending at $5.1 trillion, and 25% of hospital visits could have been avoided if patients had taken their prescription medications as prescribed.”
Besica said medication adherence is closely linked to the relationship between patients and their primary care physicians.
“The lack of personal connection, the lack of trust in your physician, is directly related to the lack of adherence,” he said. “Moving some of the most common prescription drugs to OTC further weakens the concept of a trusted primary care physician-patient relationship.”
Which parts of the plan are most likely to be implemented
Besica is skeptical of Trump’s healthcare plan, but said it’s not a unique issue with this specific plan.
“How often do government programs keep their promises?” He pointed to past reforms like the Affordable Care Act, which were expected to lower costs but fell short.
That said, some elements of the proposal are more feasible than others.
Recent legislation has already codified PBM reforms, making them most likely to be effective. MFN pricing can also generate real savings – but only for a small number of the most expensive drugs. Conversely, moving drugs to OTC status could shift costs from insurers to consumers.
“Most prescription drugs are covered with some type of insurance,” Besica said. “Moving a prescription drug to OTC means there will be no insurance coverage, so the cost is shifted to the medical consumer.”
Why lower premiums and price transparency may lead to losses
Another proposal would attempt to reduce insurance premiums by sending money directly to consumers instead of insurers. Although the idea sounds attractive, Besica said its impact on the real world would likely be limited.
“In practice, health care consumers are likely to use subsidies to get an insurance company to pay their health insurance premiums,” he said. “In the real world, nothing changes.”
He said expanded price transparency is also unlikely to lead to significant savings.
“Because of the way the medical billing system is constructed, even a (basic medical) procedure will rarely cost over the posted price,” he said. “Think of it as the base price for a car with a long list of options. The price on the wall is $100, but the patient is diabetic, high blood pressure and overweight. Each of these conditions is actually a multiplier of the bill.”
Posting prices may be better than not posting anything, he said — but it’s unlikely to change what patients ultimately pay.
While Trump’s healthcare proposal includes ideas that seem promising, the overall savings may be limited for most Americans. Without major structural changes to the way care is provided, paid for and managed, Besica believes the plan is more likely to alter costs than significantly reduce them.
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