Health Insurers Dodge Trump's Pricing Crackdown, For Now

In mid-December, President Donald Trump — fresh off a deal that saw nine more major pharmaceutical companies promise to lower drug prices — said he’d pressure health insurers to do the same.

"I want to meet with them, and I want to say, ‘I want you to cut your rates way down, way, way down,’” Trump said. “And maybe if they do that, we'll be able to not cut them out.”

More than a month later, no meeting has taken place and the president has not publicly demanded they lower premiums, as he did five times between mid-December and early January. Instead, the White House offered Congress a health care framework that calls for reduced prescription drug prices, more pricing transparency and government subsidies to go toward health savings accounts.

That plan, which has little chance of mustering the votes it needs in the Senate, offers insurers a reprieve, sparing them the direct hit to their bottom lines that Trump threatened at the end of last year.

“We think it's a win anytime there's a focus on health care affordability, because that's our mission, and we are partners with policymakers in both parties who want to tackle health care affordability,” Mike Tuffin, the CEO of the leading health insurance trade group, AHIP, said of Trump’s plan in an interview with POLITICO.

Tuffin said insurers appreciate Trump’s focus on slashing drug prices and “welcome discussions” on his other proposals: building on existing price transparency requirements for insurers and expanding Americans’ access to tax-advantaged health savings accounts.

While Trump’s ire can return on a whim, the prospect of an Oval Office dressing down appears, for the moment, off the table, two people familiar with the status of the meeting said.

“I mean, [insurance companies] were definitely shitting themselves, for lack of a better phrase, but they are still preparing as if they could be in the crosshairs, because they understand how it goes,” said one person close to the White House, granted anonymity because they're not authorized to publicly discuss the topic.

“The president's still going to have to almost hold them accountable, or at least bring them into a room with cameras, and make it seem like he's getting something out of them as well, because that's another part of the element,” the person said.

A White House official, granted anonymity to discuss the president’s thinking, rejected the idea that Trump has moved on from the insurance companies, instead framing the Great Healthcare Plan as part of a “very thoughtful approach” to working with the companies to fix a broken system.

“There's been pretty decent follow-up on our end, such as by proposing major legislation that would get at what he was essentially referring to” in past comments about insurers, the official said. “This premise here, that this is supposed to be a net zero, we have to beat down on the insurance companies, and they have to unilaterally take a haircut to give us what we want, is not necessarily how things work.”

But tossing the ball to Congress comes with its own risks, not least of which is the very real possibility that the effort stalls, another victim of partisan gridlock.

“As far as legislation is concerned, there's no political pathway for any major change to how the health insurance industry works,” said Cynthia Cox, senior vice president and director at the nonpartisan health research organization KFF.

Even after members of Congress showed clear bipartisan frustration with major health insurance CEOs at a hearing last week, Democrats and Republicans remain too polarized on the issue to do anything, Cox said. “I mean, the midterms could change that balance, but in the meantime, I don't think much is going to happen.”

Some Trump allies wish the president would do more.

“I want them to go much further, much further than what is in the Great Healthcare Plan. And they can, they've got tons of levers at their disposal that they could pull,” said Joel White, a Republican strategist who works on health care issues.

White urged Trump to use the administration’s authority to break up the insurance companies, prohibiting them from simultaneously owning physician practices and pharmacies.

But he maintained confidence that the president would “circle back” to the issue.

“It's naive to think that the president just, you know, put some stuff out and now he's going to let it go,” White said. “I just don't think that's going to happen.”

Trump’s plan arrives on the Hill after he told Republicans he wants the party to lead on health care — an issue that Democrats have traditionally had the upper hand on — or risk losing the midterms. It also comes as millions of Americans who rely on Obamacare face increased premium prices of up to 114 percent, after Congress let pandemic-era tax credits expire at the end of last year.

The Trump administration did take one step to rein in health insurers this week: proposing an essentially flat pay increase for Medicare Advantage plans in 2027. The proposal enraged insurers, who had been hoping for an increase similar to the $25 billion bump the Trump administration finalized for the privately run alternative to Medicare in 2026.

But the proposal doesn’t tackle their pricing or what consumers pay for coverage. And it may even raise prices for Americans as insurers have argued the flat funding could force them to drive premium costs higher.

As far as the plan Trump released in mid-January, insurers haven’t publicly gone so far as to say they are relieved. But the private companies have more broadly applauded the proposal and its focus on targeting drugmakers’ prices.

An official at one of the major insurers who regularly works with policymakers called the toplines of the plan “completely fair and reasonable.”

“There are things that we are already doing, but there are other things that really would need further definition for us to understand,” said the industry official, granted anonymity to describe candid response to the plan.

The plan is also a long way away from becoming law, which gives health insurance companies time to lobby Congress over the various details.

“We would need to, you know, hopefully participate in those discussions,” the official said.

For insurers, it could’ve been much worse: Trump could’ve asked Congress to go after the company’s pricing, similar to how he asked lawmakers to codify his drug pricing deals with pharmaceutical manufacturers. He also could’ve pressured insurers to further cap their profits. Under the Affordable Care Act, insurers are required to spend either 80 or 85 percent of premium revenue on medical care.

Instead, Trump’s Great Healthcare Plan calls for modest changes to price transparency requirements, which insurers have supported, and expanding the use of HSAs — a policy idea that has gained some traction among Republicans on the Hill but is unlikely to garner enough bipartisan support to come to fruition.

It also focuses on other levers of the health care system more heavily, including pharmaceutical companies and hospitals.

“From what I've seen in that Trump plan, I don't see it materially curtailing health plans’ ability to pursue whatever their agendas happen to be,” said Paul Markovich, who leads the parent company of nonprofit insurer Blue Shield of California, in an interview.

Markovich was one of five insurance CEOs who testified before two House committees on Thursday.

Meanwhile, the insurance companies are pushing Trump and lawmakers in Congress to keep their eye on other private entities in health care — namely hospitals and drugmakers — and the prices they charge for medical care.

“Insurer premiums are built for the prices we are charged by pharmaceutical companies, hospitals and other actors in the system,” Karen Ignagni, the former longtime president of AHIP and current board chair of New York-based insurer EmblemHealth, told POLITICO.

Alex Gangitano contributed to this report.