Trump’s Plan To Strong-arm Insurers Into Lower Prices Is Met With Skepticism

President Donald Trump plans to call health insurers to the table and demand lower prices as he seeks to allay voters’ concerns over affordability. But health policy experts, researchers and even some GOP members say it won’t be so simple.

Even if a deal materializes, there are reasons to be skeptical that voluntary cuts by insurance companies could bring significant, lasting health care savings for Americans.

“The answer is, could they shave some off it? Possibly. Is it going to be a significant reduction? No,” said Ed Haislmaier, a health policy research fellow at the Heritage Foundation, a conservative thinktank.

That’s because the biggest culprit in rising health care costs is the rates charged by hospitals and doctors’ offices, which are in turn covered by insurers, experts say. The cost of getting health care in the U.S. is higher, on average, than any other comparable nation.

“It's not going to be a significant reduction until there is a way that [insurers] are paying the providers less,” Haislmaier said.

The plan to strong-arm insurers, who Trump has targeted as "fat cats,” comes amid increasing pressure to relieve voters’ frustration with rising health care costs. If Republicans don’t agree soon on a plan to extend federal subsidies for Obamacare enrollees, millions of Americans will see huge spikes in their monthly premiums.

The president, seeking to assuage voters’ concern with his well-worn dealmaking playbook, says he can take matters into his own hands.

“I'm going to call a meeting of the insurance companies. I'm going to see if they get their price down, to put it very bluntly,” Trump said in late December. In early January, he said he’d be meeting with them “soon.” Major insurance companies and industry groups have so far declined to comment on any upcoming plans for a meeting.

But even close allies of the president like Sen. Rick Scott (R-Fla.), who lauded Trump as a “pretty good deal guy” capable of working something out with insurers, acknowledged that the biggest impact would come from bringing down hospital prices — which he knows from experience.

“Insurance companies are dependent on what hospitals charge,” said Scott, who was CEO of the giant hospital chain HCA Healthcare. “I used to run the largest hospital company so I can tell you, insurance can't charge a whole bunch less if the hospitals charge more.”

Scott said the president should take a holistic approach to bringing down prices.

“You got to look at how you operationally make things cheaper,” he said.

According to an August analysis by KFF, the nonpartisan health research group, the higher prices for care that Americans pay in hospitals and doctors offices account for 80 percent of the difference in spending between patients in the U.S. and other countries.

“Prescription drug spending and insurance company overhead and profits is a tiny slice of the pie compared to spending on hospitals and doctors,” said Cynthia Cox, senior vice president and director at KFF.

Redistributing high CEO salaries at major health insurance companies, for example, isn’t going to translate to lower premiums for a wide swath of Americans, Cox said.

“You can imagine cuts in any of these categories, but where the money is is inpatient and outpatient care,” Cox said.

Cox and Haislmaier, of the Heritage Foundation, both encouraged instead a focus on hospital and insurer price transparency, which Trump took up in his first term with heightened regulation.

The American Hospital Association, which represents hospitals nationwide, welcomed the president’s quest to bring insurance companies to the table, calling out “excessive and unnecessary commercial insurer red tape and paperwork” that add to administrative costs, like prior authorizations or claim delays that can make medical care more expensive in the long run.

“The practices of some commercial insurers have added to the cost of health care, making it harder for patients to access and afford care, as well as exacerbated strain on clinicians as they work to get needed care for patients,” said Lisa Kidder Hrobsky, AHA’s senior vice president of federal relations, advocacy, and political affairs. “It’s about time that commercial insurers are held accountable.”

The idea to browbeat insurers into lowering premiums came to the president extemporaneously, he said, as he sat in the White House and watched pharmaceutical executives, one by one, announce they’d slashed the prices of some of their drugs as a result of the administration’s “most favored nation” policy.

“You know, I'll bet you, if I called a meeting of the insurance companies … they would reduce their prices,” Trump said at a White House event in late December.

The policy won’t immediately lower drug prices for the vast majority of Americans who have private insurance, but could over time.

Still, the administration has rolled out each deal with much fanfare, as major corporations like Pfizer and Eli Lilly have largely succumbed to Trump’s demands.

There are indications that health insurance companies could follow a similar path.

“The perspective among some of the major payers is actually quite positive regarding the president’s invitation,” said Chase Kroll, a former Republican congressional staffer who now works as a lobbyist at TSG Advocates, which represents a large insurer in Florida. "The insurers are coming to the table prepared to show the White House what they are doing to control costs. We view the President as a dealmaker who is open to creative solutions."

Mike Tuffin, CEO of AHIP, a trade group representing insurers, said in a statement he “welcomed any opportunity to discuss common-sense solutions to lower costs for everyone.”

For some, that’s evidence enough that Trump can put the presidential bully pulpit to work on big corporations.

“In terms of what [the administration] can do, I mean, we saw what they did to the drug makers, right?” said Joel White, a Republican health care strategist and president of the Council for Affordable Health Coverage.

Though White acknowledged that the biggest cost-drivers in health care are coming from hospitals, doctors and drugs, not insurance costs, he maintained that Trump could still trim the fat in a meaningful way.

The options, White said, include going after insurers for exploiting a loophole in the Affordable Care Act’s regulation called medical loss ratio, which was intended to stop insurers from using more than 20 percent of the premiums people pay toward administrative costs or profit, rather than medical claims, but has in some cases resulted in insurers buying up clinics and being able to bank more profits.

White also advocated for breaking up the large insurance companies and demanding that companies pay the government back for instances where the government was subsidizing “phantom enrollees.”

As an added bonus, it would allow Trump to act on peoples’ frustration with the health care system.

“I think it's smart politically,” White said. “Most people don't like the insurance industry, and most people are fed up with high costs and a lot of friction with insurers.”

Democrats, who’ve pilloried insurers for years, criticized Trump for oversimplifying a complex problem.

Sen. Elizabeth Warren (D-Mass.) called Trump’s repeated claims that a meeting would lead to insurers dropping their prices “complete fantasy.”

“That would be great. But in the real world, where real families are facing real health care premiums, it's just nonsense. Donald Trump doesn't have a plan to help any family pay for their health care,” Warren said. “His only plan is to invade Venezuela and hope nobody notices that they can't pay their medical bills.”

Bharat Ramamurti, a former adviser to Warren and former deputy director of the National Economic Council under President Joe Biden, said he was “skeptical” that Trump could bring significant relief to a very complicated health care system.

“Maybe [insurers] come up with some way for the president to save face, you know, throw him a bone that's a little bit of cost savings, or maybe it's very temporary, or maybe there's some kind of small concession that they make, but it's not a way of addressing the underlying problem, which is that there is sort of structural forces that are pushing up the cost of health insurance,” Ramamurti said. “I think it's a specific strategy to sound very populist and for the common man in your public statements, while behind the scenes executing an agenda that is largely to the benefit of those exact companies.”

Others, like Sen. Ron Wyden (D-Ore.) said he hoped Trump would succeed — but he won’t hold his breath.

“Look, I'll work with anybody on anything that holds down premiums,” he said. “I wouldn't stay up waiting for insurance companies to come in voluntarily and say, we're interested in lowering our premiums.”

Kelly Hooper contributed to this report.