How will Trump’s policies tackle rising healthcare costs?

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For our industry, the previous seven years have been very disruptive — in fact, some of the most turbulent in recent history. The challenges we have all faced, namely the introduction of new regulations and requirements of the Affordable Care Act, required significant energy and capital to implement, adopt, or adjust to, depending on your views.

The first 100 days of President Donald Trumps’ administration have been equally challenging in terms of trying to predict policy direction. In an effort to advise our clients, we are trying to stay on top of the latest news out of Washington while also using our vast, collective experience at Benefit Advisors Network to forecast what employers and their workers will likely face.

Worth noting, Trump’s policy goal to “lower the cost of healthcare” is very vague on the details. Anyone who has worked in the industry long enough understands that the cost of healthcare has basically two components: the price of medical and prescription drug services; and the number of services that are consumed. These two components, when aggregated, represent the cost of healthcare. For example, if the price of services goes up and the number of units consumed does not go down by an equal factor, the overall cost will increase.

Also see:10 key 5500 facts benefit pros need to know.”

There are also a several factors that impact the number of units consumed in the healthcare system. If the government mandates that men older than 50 are required to have a colonoscopy, whereas there was no mandate previously, then men will receive colonoscopies and the cost to the system will increase. The principles of supply and demand are in play to some degree.

Other factors
Beyond mandated benefits, other factors that will impact costs may include a person’s behavior and lifestyle. A risk taker, for example, is more likely to consume healthcare resources than a risk-adverse person. An older person will tend to consume more healthcare resources than a younger person. There are unique factors to consider when studying males and females, as well ethnic considerations and patient compliance when it comes to treatment.

What policy recommendations will be made to lower the price of healthcare resources other than a strategy of price controls? And what will be done to lower the consumption of healthcare resources without introducing a rationing and scheduling que systems to delay services being rendered?

Also, a key talking point is the creation of a patient-centered health system. Over the next several months, I will be looking for details on how the patient-centered system is defined and its impact on the provider systems.

How will President Trump’s developing policies truly bring about healthcare cost reduction rather than insurance premium reduction or stabilization? We will wait and see.

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