2016 Health Care Year in Review

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Top Lines

    David Squires and David Blumenthal look at health care in 2016
    2016 health care in review: Trump and Republicans ascend, uninsured rate drops, and more

This was a tumultuous year in health care and elsewhere. Wherever we looked, the improbable and unbelievable became true and believable: from Brexit to a President-elect Trump to alleged foreign sabotage of our political institutions. Historians will dissect the remnants of these events for decades. For us, for now, let’s focus on health care, which is plenty.

Trump (and the Republicans) emerge ascendant.

President-elect Donald Trump will take the oath of office on January 20, 2017, joined by Republican majorities in both houses of Congress, 68 of 99 state legislative chambers, and 31 of 50 governorships.

The Republican Party’s commitment to repealing and replacing the Affordable Care Act could not be clearer, but stubborn political realities and technical issues are already forcing Congress to consider delaying the effective date of any repeal by up to four years. Though Republicans can accomplish a repeal without any help from Democrats (using the budget reconciliation process), patching together a replacement package will require eight Democratic votes in the Senate. That will be a challenge, as will managing the transition and finding consensus among divided Republicans on how or whether to cover the more than 20 million Americans who will likely lose insurance if the ACA is repealed.

Next year is likely to be fascinating for national health policy, both technically and politically. More important, the lives of tens of millions of Americans will be deeply affected by what the new Republican majority tries to do—and is able to accomplish.

Uninsured rate hits historic low.

During 2016, the proportion of Americans lacking health insurance reached an historic low: 8.9 percent. Since 2010, the number of Americans without insurance has fallen by more than 20 million. The result: fewer medical bill problems and more accessible and affordable care for patients, and less uncompensated care for providers.

Premium increases and insurer exits raise concerns about ACA marketplaces.

This was a turbulent year for the individual health insurance market. A number of high-profile insurers exited the marketplaces created under the Affordable Care Act. Double-digit premium increases in some marketplaces added to concern about their stability. However, the impact of these premium spikes on marketplace customers was dampened by federal subsidies that absorbed the costs for more than 80 percent of purchasers. And some of the premium growth likely reflected one-time adjustments to the expiration of time-limited federal programs (reinsurance, risk corridors) that had buffered insurers against unpredicted health expenditures among their new customers. While fears of marketplace collapse are overblown, these developments do signal the need for reforms in the ACA, should it survive the swelling efforts to repeal it.

Another point to keep in mind: in the employer-sponsored insurance market, where the majority of Americans get their insurance, premium growth has actually slowed since the passage of the Affordable Care Act.

With MACRA looming, value-based payment spreads.

The Centers for Medicare and Medicaid Services issued the final regulation implementing the Medicare Access and CHIP Reauthorization Act (MACRA) in 2016. MACRA will transform how Medicare pays clinicians and accelerate trends toward value-based payment, which is designed to pay for the value rather than the volume of services. As of early 2016, 30 percent of Medicare payments were tied to “alternative payment models,” as were 25 percent of private insurers’ payments. Whether the new administration will be as committed to payment reform as the departing one remains to be seen.

CMMI takes off the gloves.

One player driving this payment transition assumed a more prominent role in 2016. The Center for Medicare and Medicaid Innovation (CMMI), created under the ACA, has broad authority to experiment with how our largest public insurance programs pay for services. This year, they took a fair amount of heat for making providers’ participation in some of their payment experiments mandatory rather than voluntary, and were forced to abandon one demonstration reducing payments for medications under Part B of Medicare.

Rep. Tom Price (R–Ga.), Mr. Trump’s nominee for Secretary of Health and Human Services, has been a vocal critic of CMMI and its mandatory payment demonstrations. He seems likely to scale back some of its programs, and a repeal of the ACA could eliminate CMMI altogether. However, a Secretary Price might also find some of CMMI’s broad authorities to be useful once he settles into his new office.

Bipartisan bill reforms FDA, increases R&D.

The 21st Century Cures Act, a rare bipartisan initiative, was passed by Congress and signed by President Obama in 2016. The bill increases funding for the National Institutes of Health, including for pioneering cancer and genomic research, and reforms and boosts funding for the Food and Drug Administration’s approval process for pharmaceuticals and medical devices. The new law also dedicates $1 billion over the next two years to fight the opioid scourge devastating much of the country. Little-heralded features of the law promote interoperability among electronic health records, and consumers’ access to their own digital health records.

Insurer mergers prompt an antitrust reckoning.

Four of the country’s largest insurers are trying to become two, but not if the current Justice Department has anything to say about it. In July 2016, U.S. Attorney General Loretta Lynch sued to block the Humana-Aetna and Anthem-Cigna mega-mergers, arguing that they would reduce competition and raise prices for consumers.

Outrage over drug pricing yields smoke, but no fire, at least not yet.

Sovaldi, Daraprim, Epipen—a spate of drug-pricing stories continued to grab headlines in 2016. Resulting congressional inquiries yielded numerous verbal floggings for drug company executives, but no concrete action to quell Americans’ rising anger over their out-of-pocket spending for pharmaceuticals. President-elect Trump has pledged to control drug prices. Polls show that large majorities of the American public favor having Medicare negotiate drug prices, allowing drug reimportation from Canada, and other aggressive policies to reduce the growth in pharmaceutical spending. However, with Republicans in the majority, and pharma’s lobbying muscle undisputed, the prospects of new legislation to deal with drug costs remain uncertain at best in 2017.

Americans’ lives are shortening.

Finally, we learned this month that our life expectancy is going in the wrong direction. Though the change was small—a decline of about one month—it is just the latest evidence of disturbing deterioration in the general health of Americans, particularly working-class whites. The idea that for the first time in U.S. history our children may be less healthy than we are is deeply alarming, and should make improving the health of Americans a major national priority.

Here’s hoping for a happy, productive, and HEALTHIER new year.

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Publication Details

Publication Date:
December 28, 2016
Authors:
David Squires, David Blumenthal, M.D.
Citation:
D. Squires and D. Blumenthal, "2016 Health Care Year in Review," To the Point, The Commonwealth Fund, Dec. 28, 2016

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