Trump’s Health Plan Puts The Blame On Industry For High Costs

Republicans finally have a health care plan.

Conservatives who sought free-market solutions to America’s exorbitant medical bills in an era before President Donald Trump, and struggled to come up with a plan to replace Obamacare in his first term, would be surprised to see what’s in it.

On Thursday, Trump unveiled a sweeping blueprint pressuring Congress to cement many of his executive actions on health care into law. Interspersed with invective aimed at longtime GOP allies in industry, the plan asks lawmakers to codify the administration’s deals with drugmakers to lower drug prices, to put taxpayer money in low-income people’s health savings accounts, and to require more transparency from insurers Trump accuses of using “complexity to make it difficult for Americans to hold them to account.”

Republicans, on their heels after letting Obamacare premiums spike this month, sounded ready to embrace a plan to drive down costs that puts the blame on private industry. Trump’s plan, notably, does not include free-market ideas in a bill House Republicans passed in December. That bill, for example, would have allowed small businesses to band together to drive harder bargains with insurers.

Trump’s plan “would be a massive redefinition of the relationship between the United States government and the health care system and the American people,” said Ryan Ellis, a Republican lobbyist and president of the Center for a Free Economy. “Today was about resetting the vision and resetting the conversation so Republicans can talk on offense.”

The Great Healthcare Plan, as Trump called it, is scant on details. It re-ups a push in his first term to require hospitals and insurers to disclose their prices. Health care costs have continued to soar despite those rules.

Republicans for years vehemently opposed government efforts to pressure drugmakers to lower the prices they charge Medicare. No Republican voted for the Inflation Reduction Act, a Democratic budget reconciliation bill signed into law by former President Joe Biden in 2022 that ordered price talks. Trump’s taken the negotiations up a notch. He’s boasted of the prices he’s negotiated not just in Medicare using the authority the Democrats created, but broadly, and this month plans to launch a direct-to-consumer website with discount rates. His plan calls on Congress to write into law aligning U.S. drug prices with the lower ones paid in foreign countries with socialized medical systems.

Lauren Stewart, senior federal affairs liaison at Americans for Prosperity, a conservative group that has campaigned heavily against Obamacare, said the plan marks a “fundamental line in the sand” in Republican thinking on health care reform.

“The Paul Ryan Republican conference…it was repeal and replace, and there was no other plan…In terms of health care, this Republican Party looks a lot more innovative, a lot more open, and a lot more, quite frankly, forward-looking and aspirational,” she said.

Ryan was the free-market-minded speaker who led the House at the beginning of Trump’s first term.

Trump’s announcement comes as Republicans remain divided over whether to revive the enhanced Obamacare subsidies, which were created by Democrats in 2021 and expired in December, and as voters grow increasingly frustrated with the high cost of living ahead of the November midterms, a race that will define Trump’s remaining two years in power.

Paragon Health Institute, a think tank with ties to Trump that has long promoted diverting Obamacare funding from insurers to patients, called Trump’s plan a “forward-looking blueprint.”

While health care providers cheered the administration’s intention to lower prices and improve transparency, they warned that the plan does not address the spike in premiums facing Americans from the expiration of the Obamacare subsidies. “We absolutely understand why we need to be moving in this direction. It just does not resolve the immediate, short-term, devastating impact of millions of individuals losing coverage,” said Mary Mayhew, head of the Florida Hospital Association.

Anti-abortion groups, already upset by Trump’s call for lawmakers to be “flexible” on federal spending on abortion in Obamacare negotiations, expressed alarm that no anti-abortion provisions were included in the plan.

“Any plan that does not prevent American taxpayers from being forced to fund abortion is indefensible, whether it comes from White House or the halls of Congress,” said Gavin Oxley, a spokesperson for Americans United for Life.

Health care lobbyists, analysts and industry executives, meanwhile, expressed doubt that Congress will be able to pass Trump’s plan.

“Trump’s ‘new’ plan is a retread of previously advocated positions, and there is no legislative path forward for much of it in our view,” said Chris Meekins, a Raymond James health care analyst and a former health official in the first Trump administration. In December, every Democrat opposed the free-market-focused House bill and rejected a Senate GOP bill that, like the Trump plan, would have put taxpayer money into health savings accounts that can be used to pay medical bills with pre-tax dollars.

A senior administration official granted anonymity to discuss the plan nonetheless told reporters on a press call that the Trump administration expects both Republicans and Democrats on Capitol Hill to support provisions of the package.

Here’s what’s in the Trump plan:

Drug pricing

Trump wants Congress to codify his most-favored-nation drug pricing deals in legislation to ensure they continue once he leaves office, according to Centers for Medicare and Medicaid Services Administrator Mehmet Oz.

Trump, in defiance of Republicans’ longtime preference for freer trade, has used the threat of tariffs to bring 16 major drugmakers, including Pfizer, Eli Lilly and AstraZeneca, to the negotiating table. They’ve signed agreements for tariff exemptions in return for domestic manufacturing commitments and for offering many of their medicines to Medicaid and through direct-to-consumer programs at lower prices. Those firms have also committed to launching future medicines in the U.S. at similar price points to what they charge other nations.

TrumpRx.gov, a website that is expected to refer Americans to pharmaceutical company direct-to-consumer sale programs, is expected to launch later this month, Trump said Thursday in a video discussing his health care plan.

Drug pricing experts have critiqued the voluntary agreements because they might not survive after Trump leaves office — a vulnerability the president seems keen on addressing. The pharmaceutical industry has opposed Trump’s most-favored-nation push, arguing that it could weaken the dominance of the U.S. in biotech innovation and reduce future investment into novel treatments.

“Imposing broad-based price controls does nothing to address insurance barriers and would instead threaten access to breakthrough treatments and undermine critical investments that strengthen the U.S. economy,” Pharmaceutical Research and Manufacturers of America spokesperson Alex Schriver said in a statement.

If Congress were to turn Trump’s drug pricing deals into law, it would mark a “radical departure” for the free-market Republican Party of a decade ago, said Jonathan Burks, Ryan’s former chief of staff who now serves as executive vice president of economic and health policy at the Bipartisan Policy Center, a think tank.

“The least traditional piece of the package, from a Republican perspective, is the most-favored-nation provisions around drug pricing,” he said.

The National Taxpayers Union, a conservative group, warned against the codification of Trump’s most-favored-nation plan, saying it would lower innovation and make patients sicker.

“While government-mandated price controls may appear to lower health care spending in the short-term, restricting the pipeline of innovative drugs will leave patients sicker for longer, only increasing the medical expenditures that they — and taxpayers — must shoulder in the long-run,” NTU President Pete Sepp said in a press release.

Cost-sharing reductions

Trump did keep to GOP health orthodoxy with his push to reimburse insurers for cost-sharing reductions, which insurers must give to low-income Obamacare consumers to pay down out-of-pocket costs like deductibles and co-pays.

Several Republican health plans last year called for using taxpayer money to fund the payments to help insurers keep premiums down, including the December bill from Sen. Bill Cassidy (R-La.) that would have expanded health savings accounts, and the health package House Republicans passed last month.

Trump and the broader GOP’s embrace of the payments is a major about-face from eight years ago, when Trump during his first term called such payments “bailouts” to insurers.

Former President Barack Obama funded them without a specific appropriation from Congress, sparking a legal fight with lawmakers. A federal court ruled that the reimbursements needed an appropriation, meaning Trump’s new proposal will likely need congressional approval.

There is another big reason Republicans are in favor of funding the payments now.

The lack of funding for the payments is “driving up premiums for unsubsidized enrollees and increasing taxpayer costs,” GOP health strategist Joel White said in an email statement earlier this month.

White is referring to the tactic insurers and states have used to cover their costs, a workaround that exploited the subsidy structure of Obamacare. In almost all states, insurers dramatically increased premiums for one of their silver-tier health plans. Because the premium for that silver plan determines how much the government pays in subsidies, government costs rose.

This tactic, called “silver loading,” has drawbacks. For one, people who earned more than four times the federal poverty level were not eligible for any government subsidy, and had to pay the higher silver plan premium. They became eligible for subsidies in 2021, after the enhanced premium tax credits Democrats created that year removed the income cap. With the subsidies’ expiration, they’re stuck again.

If Congress funds the cost-sharing reductions, silver loading will likely go away. An estimate from the nonpartisan Congressional Budget Office for the House’s December health bill estimated it would have lowered premiums by 11 percent, but increased the number of people without insurance by 300,000 per year from 2027 through 2035.

Price transparency requirements

Trump’s plan proposes beefing up existing price transparency requirements for insurers and providers — an idea that’s long been championed by Republicans as a market-based solution to lowering health care costs.

Making health care prices public was a signature health policy from Trump’s first term, but implementation has been shaky. Insurers and hospitals are required to publicly post machine-readable files of pricing for health care services, but compliance levels with the federal rule remain low among hospitals and uneven across insurers. The data files can also be large, complex and difficult for patients to understand and compare prices — a key goal of the policy that Trump believes would help drive health care costs down.

In December, the Trump administration proposed a new rule to strengthen the price transparency requirements and simplify the way the data is reported to make it easier for consumers to understand.

Trump’s new health care plan seems to build on that effort by “requiring health insurance companies to publish rate and coverage comparisons upfront on their websites in plain English — not industry jargon — so consumers can make better insurance purchasing decisions.”

Trump’s proposal would have insurers publish on their websites the percentage of claims they reject and average wait times for routine care. Some plans voluntarily post their denial data, but no federal mandate exists requiring they post rejection rates or wait times.

Trump also wants insurers to post medical loss ratios — the percent of premiums they spend on medical care versus overhead administrative costs — on their websites. Obamacare mandates insurers spend a minimum of 80 percent of premium revenue on medical care. The companies report the ratio each quarter in earnings reports, but aren’t required to publicly post the figure on their websites.

Insurers say they’re encouraged that Trump’s plan is largely focused on transparency and slashing health care prices.

“We look forward to continuing to work with Congress and the Administration to deliver more information, more choices and lower costs for the American people,” David Merritt, Blue Cross Blue Shield Association’s senior vice president of external affairs, said in a statement.

The proposal to lower drug pricing will help open up conversations about requiring hospitals and providers to slash their prices — which can be a top driver of health insurer premiums, said Karen Ignagni, the former president and CEO of AHIP, the largest trade group for health insurers.

“It gives an opportunity, politically, to really get to the issue of affordability in a big way, because it is about the prices,” said Ignagni, who is now the executive board chair of New-York based insurer EmblemHealth.

Alice Miranda Ollstein contributed to this report.