Government & Law

The Election is (Mostly) Decided – How It Impacts Healthcare in North Texas

It’s been a week since the election, and many may be wondering how the results will change the healthcare industry, if at all. Clearly top of mind for many, a Deloitte study said that 26 percent of voters said healthcare was their top issue and three out of four voters who responded that way voted for Democrats.

We touched base with John McCracken, clinical professor of healthcare management at The University of Texas at Dallas Jindal School of Management and adjunct professor of family and community medicine at UT Southwestern Medical Center and Thaddeus Miller, associate professor in the University of North Texas Health Science Center’s Department of Health Behavior and Health Systems to get their thoughts on what the election could mean for the healthcare industry.

Continued Trends

Republicans did not lose control of the legislatures at federal or state levels, so major change is not expected. Pre-election trends will continue, though the experts say there is a chance that there will be some bipartisan movement in certain areas. McCracken sees a possibility that the parties could agree to limit drug prices, and Miller agrees. “Pharmaceuticals as the share of healthcare expenditures is growing disproportionate to the others as a piece of the whole healthcare market,” Miller says. “It get a lot of attention, and we are seeing some response.”

McCracken noted the chance that drug prices could be tied to 125 percent of the international price, and also thinks there could be some administrative changes that would allow pharmacists advise patients of acceptable generic alternatives, as they are currently forbidden to tell patients that there is a cheaper alternative.

Both McCracken and Miller see healthcare costs as unsustainable. “The healthcare system is racing along without a governor on the accelerator,” Miller says. “The money that we have available to spend is increasingly consumed by healthcare spending. Real household wealth between 2000-2010 was stagnant because of healthcare costs.”

One way to control costs that has so far had mixed results is Accountable Care Organizations, and their move toward bundling payments for an episode of care and using team based care rather than fee for service, as was done in the past. In addition, McCracken thinks that legislators will bring down costs by reducing reimbursements to providers, as is usually the strategy for reducing costs.

Local Impact

On a local level, Texas is the namesake in Texas v Azar a case where 20 Republican governors and attorneys general are suing to invalidate the entire Affordable Care Act because the individual mandate is no longer funded. The case would also void the preexisting protections, but a judge has yet to decide the case. The ruling could impact the healthcare exchanges and those with preexisting conditions.

Miller sees a continuation of healthcare consolidation as North Texas has seen in the past, as healthcare systems continue to find ways to reduce cost and provide top quality care. “We will see fewer and fewer independent physician offices,” he says. “As they brace themselves for payment reform and quality-based payments, which a favors larger more consolidated organization with more depth and market clout.”

Last week, three more states voted to expand Medicaid, and three more states elected Democratic governors where state legislatures had approved medicaid expansion that had been blocked by Republican governors. This could mean that up to 39 states could expand Medicaid, including conservative bastions Nebraska, Idaho and Utah this November. McCracken looks back to the original institution of Medicaid and Medicare, which took about 5 years for all the states to adopt, and sees increased pressure on Texas to expand it as well, especially considering how close some of the statewide elections were.

Future Changes

Though the divided government means that no major policy changes will happen quickly or anytime soon, both McCracken and Miller see the next decade as a time when healthcare spending will force society to a breaking point, causing major changes in the marketplace.

McCracken noted that every Republican president since Ulysses S. Grant has experienced a recession during the first term of their presidency, and that we are overdue for one now. A recession, he says, will cause Congress to act precipitously, which could shake up delivery and costs.

Medical care makes up around 20 percent of the nation’s GDP, and is closer to 30 percent for the state of Texas, and a recession would add pressure on the government to do something about it. “Healthcare inflation is something that has been talked about in policy circles, but hasn’t been felt in a tangible way by the citizens,” Miller warns. “It is a cliff that we are moving toward all the time.”

During a recession, McCracken says, for every percent the economy shrinks, the use of Medicaid increases by two percent, adding stress to the system. In the past, the federal government have pushed costs to the states as the states resisted having to pay more for public services, including healthcare.

The added pressure of a recession could cause more government ownership of healthcare. McCracken notes that there were eight bills introduced in the last congressional session that ranged from a single payer system on one extreme to a medicare public option, where people can purchase medicare as a health insurance option rather than another plan.

“Medicare can control costs with very restrictive provider payments,” McCracken says. “It would be highly disruptive, as medicare could underprice any private plan.”

A poll by John Zogby strategies this year showed that 57 percent of those polled think healthcare ought to be a government responsibility. But Senate Republicans are unlikely to vote for anything they think Trump would veto, so movement any time soon on that issue is unlikely, despite public opinion.

“Great social change is rarely absent of some catalytic event,” McCracken says. “Very seldom do we have some rational coherent idea debated. Its all fought with sound bites and attack ads.”

While a recession would be painful for many, it may lead to innovation and movement toward a solution.

Miller says Accountable Care Organizations may be responsible for innovation, taking more risk on the patients they serve and experimenting with care models. “It’s a nice business opportunity for agencies that are big and innovative,” he says.

“I see a period that is open to innovative thinking over the next five years,” Miller says. “Amazon killed the shopping mall, is the walk-in pharmacy next?”

“Healthcare is undergoing a decade long reengineering; from a craft organized around specialty to team-based care,” McCracken says.  “Some kind of major change or event is going to occur to cause a significant shift in the healthcare landscape.”


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