In the midst of a major consolidation period in the healthcare industry, a new report from the Trump administration sheds light on the current state of competition in the space.
The report takes a hard look at regulations and laws that govern the healthcare industry and attempts to weight their impact on competition, as well as the impact on making care more affordable and higher quality. It also specifically notes that the Affordable Care Act “moved the [healthcare] system in the wrong direction" and suggests several proposals to improve the healthcare space.
The report aligns with the Trump administration’s continued effort to deregulate the healthcare industry and undo many provisions of the healthcare law by claiming the ACA’s rules and regulations are harmful.
“Healthcare markets could work more efficiently and Americans could receive more effective, high-value care if we remove and revise certain federal and state regulations and policies that inhibit choice and competition,” the report reads.
Choice and competition
Lower competition leads to higher prices for consumers, while some government policies strain the healthcare workforce, according to the report. Market competition should lead providers to charge more competitive rates for healthcare services while also providing higher-quality care. More competition should also theoretically boost choices for consumers, but these incentives disappear when competitive pressures are missing.
Consolidation has rapidly intensified across the healthcare sector over the last several years, leading lawmakers to question the impact on Medicare prices. In markets with fewer insurers, prices for healthcare insurance premiums tend to be higher, according to research. The same is true of hospital prices in markets with less competition.
The report takes aim at rules and regulations that may “impede market forces,” including third-party payments that hide prices, metrics and shopping realities.
“The common claim that the healthcare sector as a whole cannot function under free-market principles is not true,” the report reads.
To improve the state of the healthcare industry as the government continues to spend more on services and care, the report outlined several ways to boost competition.
The report specifically addressed the healthcare workforce, recommending incentives like increasing reimbursement for telehealth and increasing the scope of what some practitioners can do. Regulatory changes would also provide more flexibility for licenses and enable telehealth across state lines.
Within the insurance markets, the report recommends scaling back ACA rules, including employer mandates. The administration also promotes expanding short-term, limited-duration health plans, which are not comprehensive and do not have to follow Obamacare requirements such as providing coverage for pre-existing conditions. The Trump administration recently expanded the use of these plans earlier this year––a decision that has been met with controversy.
The report further recommended changes in provider markets to repeal restrictions, namely around physician-owned hospitals, and allow the Federal Trade Commission (FTC) to monitor nonprofit providers.
The report was met with mixed reactions from industry associations.
“Based on our initial read, we are pleased by several of the proposals put forth in today’s report, such as those to broaden providers’ scope of practice and expand access to telehealth, which will improve access to care for patients,” Executive Vice President of the American Hospital Association Tom Nickels said in a statement. “At the same time, we strongly oppose attempts to loosen the current restrictions on physician-owned hospitals."
AHA also opposed the proposal to restructure graduate medical education funding that “would result in less federal support for physician training.”
Similarly, the Federation of American Hospitals opposed lifting restrictions on physician-owned hospitals, among other proposals.
“Too many elements of the Administration’s report resort to the same old bromides that got us here in the first place, and would reverse the progress hospitals and others are hard at work on,” FAH CEO and President Chip Kahn said in a statement. “Further, the report ignores that a key to patient access is to ensure community hospitals have the resources they need to provide lifesaving care for anyone who walks through our doors 24/7.”
HHS prepared the report along with the Departments of the Treasury and Labor, the FTC and other White House offices.
Find the full report here.