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December 2, 2016 Bob Ehrlich0

President-Elect Trump nominated Georgia Congressman and physician Tom Price to head Health and Human Services. This move proves Trump is very serious in his goal of dismantling Obamacare. Dr. Price has offered a plan in the past very different from Obamacare. I think this is move in the right direction and will eventually improve quality at lower cost.

In Price’s plan Americans would have more free market options to shop for coverage. They would be able to buy insurance across state lines, increasing their choices and hopefully getting lower premiums. There would be tax credits for health insurance purchases differing by age. All the government mandates on what a policy must cover would go away.

Bob Ehrlich
“Americans would have more free market options..”
-Bob Ehrlich

Consumers could choose a bare bones catastrophic plan or pay for a comprehensive one. Health savings accounts would increase to shift health care decisions to consumers. In Dr. Price’s view consumers would still be able to purchase coverage with pre-existing conditions but at a premium if they currently do not have coverage. His goal is to encourage continuous coverage and not to have people buy insurance only after they are sick.

Dr. Price basically wants to take the Federal government out of the insurance business by creating more options using free markets. Medicare would stay but Dr. Price wants to allow participants some options to go outside of the system. Critics worry that any options to use money outside of Medicare approved providers would weaken the system. Any inkling that Medicare might be privatized scares Democrats greatly. Republicans want to look at options for younger people knowing that Medicare may not be sustainable long term.

Of course Dr. Price will need to alter his past proposals to whatever Mr. Trump and Congress will agree to. There is no evidence Mr. Trump wants to change Medicare. He also has said recently he likes certain provisions of Obamacare on pre-existing conditions and children up to 26 staying on their parent’s policy.

It is very clear that we will see Dr. Price be implementing a consensus plan that reduces Federal involvement and loosens requirements for policies. The Price philosophy is to give consumers more responsibility for their coverage and they will have more involvement in cost/benefit of care. The idea that someone else pays has created much unnecessary care. We have never really had a free market for health care in recent times. A true free market where consumers have transparency in what they are paying for and at what price will help control costs.

The fear that consumers will be without any coverage is overblown. People who currently have coverage on exchanges will likely have several years to convert to the free market system. While it is true that many Americans can now get subsidized coverage, we as taxpayers are footing a high bill that is rising rapidly. Those who buy on the exchanges who are not subsidized are seeing very large premium increases. Things need to change.

Whether the Trump plan is the answer to providing quality care at reasonable prices will be tested. I do know that the Obamacare plan needs to be dramatically changed as it is unaffordable. Trying free market solutions will get consumers to care much more about what medical services they need and at what cost. More involved consumers using their own money will hopefully lead to a wiser use of services and force providers to compete more on price/quality.



November 11, 2016 Bob Ehrlich0

It is finally over. We have a new President elect. We have a relatively unchanged Senate and House. What does this mean for the DTC Industry? Both candidates were critical of the drug companies during their campaign. President-elect Trump has not said anything about DTC, but he has called for price negotiations with drug companies for Medicare. That would greatly affect drug company profit margins and result in R&D and marketing cuts.

My fear is that there will be lots of bi-partisan support for negotiating price. It may be too hard to say no from a Congress anxious to show its populist bent. The drug lobby may be able to convince Trump that cutting their prices through government negotiations has negative consequences on R&D investment. I doubt Mr. Trump has given the drug business much thought beyond his general comment that billions can be saved through tough negotiations.

Bob Ehrlich
“DTC will survive any changes instituted by President Trump.”
-Bob Ehrlich

The good news for drug companies is there will be a move towards less regulation. I also expect an FDA that is quicker to act on drug approvals. Clearly Trump will want both drug companies and device makers to get cost effective drugs out to the marketplace faster.

Now what about Obamacare? It has proven to be a difficult program to afford for many Americans. Despite the high cost, most of those insured under it will still want access to insurance. Trump will push for more free market options including opening up the insurance market nationally. He will likely have a subsidized program for Americans with pre-existing conditions.

DTC will survive any changes instituted by President Trump. While prices may be pressured to stay lower, I do not think Trump and his business advisors want to kill the drug industry through punitive regulations. Trump is not Bernie Sanders who wanted to punish “evil” drug companies. I am hopeful that a free market oriented approach to health care will be good for America. Opportunities will be plentiful for companies promoting evidence based approaches to delivering care more efficiently.

The Republican Senate and House should be relatively drug company friendly as long as they are not seeing sharply rising prices. The drug companies must exercise some restraint by keeping price increases related to inflation or other justifiable costs. A Trump presidency is highly unpredictable so I expect drug makers to face some uncertainty in the short term.