President-elect Donald Trump said he is putting the finishing touches on a plan to replace Obamacare. Although few details were available from the Trump camp, the new plan would have goal of providing “insurance for everybody.” In a speech a few days earlier, Trump said that he would force pharmaceutical companies to negotiate directly with Medicare and Medicaid over drug prices. In addition, it is generally expected that Trump will propose that health insurance companies be able to sell insurance across State lines. According to Trump’s spokesperson Sean Spicer, unleashing competition and market forces is central to lowering prices in Trump’s new health care plan.
Oddly enough, Trump’s announcement comes just a few days after Congress started laying the groundwork to dismantle Obamacare. Both the House and the Senate approved separate budget resolutions that would repeal major portions of Obamacare. The next step in this process is for committees to iron out the details. But now, after seven years of waiting to repeal Obamacare, it seems that that the Republicans are not in full agreement about how the law should be replaced.
“We’re going to have insurance for everybody,” Trump said in a weekend interview with The Washington Post. “There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.”
“[They] can expect to have great health care. It will be in a much simplified form. Much less expensive and much better,” Trump added.
But, while the GOP has not settled on one single replacement plan, it is clear that Trump’s plan is not the only plan floating around out there. Tom Price, Trump’s health secretary nominee has his own version of a replacement plan that does not seem to have coverage for everyone as one of its goals. In addition, House Speaker Paul Ryan has also promised to set out his own Obamacare replacement plan in the near future. Senator Rand Paul, who has broken ranks with Senate Republicans over how to replace Obamacare, has announced that he, too, has a plan to replace Obamacare. Paul further states that he is aware of around 50 other plans that have been floating around in recent years.
To be sure, some drug price negotiation already takes place with the Federal Government. For example, the Veterans Administration negotiates with pharmaceutical companies and generally gets healthy discounts. Drug companies either agree to some sort of discount in order to sell to the VA, or the VA simply does not purchase that particular drug. So, the VA does not have every drug available for sale in its approved formulary.
Medicare indirectly negotiates drug prices through health insurance companies as part of its Medicare Advantage program. Health insurance companies rely on pharmacy benefits managers to negotiate with drug companies annually. Sometimes this results in certain drugs being excluded from the formularies of certain health care plans. But, only about half of all Medicare beneficiaries choose to be covered under the Medicare Advantage program. The remainder is covered directly by Medicare where the prices of drugs are not negotiated directly with the Federal Government. Trump points out that, although the United States government is the largest purchaser of prescription drugs worldwide, it generally pays the highest prices for drugs and should not have to.
Trump’s comments up the ante and set the stage for what promises to be a battle royal over how and when Obamacare is replaced and what the prevailing health care law of the United States will be over the next decade or so—maybe longer. And, with football season winding to a close, the wrangling in Washington could provide a greater level of intrigue and entertainment as well.