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2019 Diagnosis

Top 5 Health Policy Predictions for 2019

As cost of health care continues rising, states and industry set to act

Morning Consult illustration by Czarina Divinagracia

Health policy experts predict major health reform faces near-impossible odds of getting through a divided Congress next year, but even without substantive legislative action coming out of Washington, there is plenty of opportunity for change at the state and industry level.

Here are five health policy trends experts foresee taking center stage in 2019.

Affordable Care Act

A ruling from a federal judge finding the Affordable Care Act unconstitutional has cast uncertainty on the future of the nation’s health care system — and reframed national debate on health reform ahead of the 2020 elections.

For now, without an injunction, this is a declaratory judgment “with no immediate impact, except for throwing the insurance markets into even further chaos,” said Wendy Epstein, a law professor at DePaul University.

A coalition of Democratic attorneys general plan to appeal the decision to the Fifth Circuit, where many legal experts expect the decision to be swiftly overturned.

Abbe Gluck, a law professor at Yale Law School, said if the Fifth Circuit throws out the case as meritless, there is a good chance the Supreme Court won’t see the need to take it up.

But given the tumultuous politics that have always endangered the ACA, nothing is off the table. As legal battles ensue, strategists expect Democrats to triple down on their 2018 midterm campaign vows ahead of the next election season, arguing that Republicans will continue whittling at the ACA until it splinters.

CMS waiver guidance

Armed with a majority, House Democrats are poised to probe how the Trump administration has handled the ACA during the last two years — including interpretation of the statute that allows states to reform their own insurance markets by using waivers to promote short-term plans or implement work requirements.

The Centers for Medicare and Medicaid Services in November unveiled new guidance on Section 1332 State Innovation waivers — renamed State Relief and Empowerment Waivers. Among other things, the new waiver concepts allow states from January to use federal subsidy dollars to promote short-term health plans that don’t comply with the ACA — though experts don’t expect to see waivers proposed or implemented any time soon.

Christen Linke Young, former principal deputy director of CMS’ Center for Consumer Information and Insurance Oversight and current Brookings Institution fellow, said the administration’s move to weaken the statutory criteria will likely not go unchallenged; states considering submitting waiver requests could face litigation from a city or county.

“One of the main thrusts of their recent guidance is to say that a 1332 waiver will be judged not based on whether residents actually have comprehensive and affordable coverage, but rather if they have comprehensive affordable coverage that is ‘made available’ to them,” Young said. It is “a real stretch of the text of the ACA, and I think likely to be unsuccessful in court.”

CMS has held the new waiver concepts increase states’ flexibility in catering to their population’s unique coverage needs, in part by expanding access to short-term plans.

Drug-pricing policy

Addressing the cost of prescription drugs is sure to continue dominating health priorities in 2019, although there is a long road from bipartisan commitment to reducing prices — to bipartisan consensus on how best to do so.

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This is an administration that has shown a willingness to use its authority, and stretch its authority, to achieve its goals.

Some policymakers are mulling direct Medicare negotiation with drugmakers or allowing third parties — including plans and providers — to do the government’s bidding for them. One proposal from the administration seeks to align Medicare payments for select Part B drugs with lower prices negotiated in other similar countries.

But according to Matt Brow, president of Avalere Health, stakeholders will likely challenge the administration’s authority to try the Part B “demonstration” project, which has garnered opposition from free-market Republicans and the pharmaceutical industry.

Those hoping for dramatic legislation on Medicare negotiation or reference pricing will likely be disappointed. But with the unlikely alliance between Democrats and the Trump administration, and Sen. Chuck Grassley (R-Iowa), an outspoken critic of the pharmaceutical industry, poised to helm the powerful Senate Finance Committee, drugmakers are bracing themselves for smaller but significant regulatory changes.

These may include increased approval of biosimilars and mandates to include price information in direct-to-consumer advertisements.

“This is an administration that has shown a willingness to use its authority and stretch its authority to achieve its goals,” Brow said. “I think we should expect that to continue.”

Shift toward value-based payment structures

Increasing pressure on hospitals, which contributed to one-third of total health care spending last year, could drive a shift toward value-based payment models next year — a top priority in the Department of Health and Human Services’ Choice and Competition 2018 report.

While the report itself lacks regulatory authority, it’s a helpful window into what the administration is thinking for providers, said Alexandra Campau, director of health policy at Cozen O’Connor Public Strategies and former special assistant to President Donald Trump for health policy at the White House.

Hospitals already have the legislative mechanisms to move toward value-based approaches, with the ACA and the Medicare Access and CHIP Reauthorization Act of 2015. And the motivation is there: It’s becoming increasingly difficult for hospitals to squeeze out profit margins, said Andrey Ostrovsky, a doctor and former chief medical officer at CMS.

Analysts expect physician-led Accountable Care Organizations, which reward providers for desirable patient outcomes, to continue growing in 2019. To compete with these financial incentives, hospitals will themselves need to implement value-based payment structures, Ostrovsky said.

In pharma, value-based payment structures offer a middle-of-the-road solution to reducing costs while rewarding innovation, said Ostrovsky, motivating drugmakers to invest in medications with optimal patient outcomes. Oklahoma and Michigan have won approval from CMS to implement value-based Medicaid drug payment systems — and other states may follow their lead, he said.

Digital therapeutics and e-health

After years of being just within reach, digital therapeutics and e-health initiatives stand to finally emerge in in the industry and transform care delivery next year.

Ben Isgur, health research institute leader at PwC, identified 2019 as “the year the health care economy joins the rest of the economy” — and that includes consumers’ growing need to use technology.

The Food and Drug Administration has already approved some digital therapies, such as an inhaler with embedded digital sensor technology that tracks medication adherence.

Next year, the FDA’s Digital Health Software Precertification Program — launched in July 2017 and designed to expedite the approval process for digital health products — is expected to begin greenlighting software-based medical devices.

The sector will face questions about security, privacy and regulatory oversight, though the FDA has already begun updating its regulatory framework in preparation.

Powerful new entrants, from Apple Inc. to Amazon.com Inc., will force biopharmaceutical manufacturers and traditional payers to adjust their strategy, Isgur said. Analysts said health systems will likely prioritize hiring from the technology industry to ensure they are well-equipped to meet new consumer demands.