Affordable Care Act Could Be Expanded, Invalidated or Struck Down – Smaller, Bipartisan Reforms are Most Likely to be Enacted, According to L.E.K. Consulting Report

BOSTON, October 27, 2020 – The 2020 election could reshape the U.S. healthcare landscape. But the biggest changes – including the future of the Affordable Care Act – are the hardest to predict.

The Affordable Care Act could be expanded, invalidated in whole or in part, or struck down, depending on which party wins the White House and Senate, and the composition of the Supreme Court as it hears arguments November 10 on a 2018 ACA challenge.

Other major initiatives such as prescription drug price reductions likewise depend on the outcome of the election. More incremental policy changes – those that have bipartisan support – are the only ones that seem to be safer bets.

Those are among the conclusions of Election 2020: The Next Phase of the U.S. Healthcare War, a new report by global management consulting firm L.E.K. Consulting. The report ranks healthcare policies ― all of them well-defined in candidates’ agendas, or the subject of bills already introduced in either the House or Senate – and evaluates them based on how politically feasible they are and how big their impact would be on the nation’s healthcare landscape.

“The biggest wild card is the future of the Affordable Care Act, which could go in either direction, with results that are either limited or extreme” said Wiley Bell, Managing Director of L.E.K. and a co-author of the report. “Other policy initiatives are easier to forecast.”

“Major changes are certainly possible, not only in the ACA, but in pharmaceutical cost controls and Medicare enrollment,” said Jonathan Kfoury, Managing Director and a report co-author.  “But what direction those changes take will be unclear until the election is decided.”

The report also estimates the cost implications of several policy moves.

Possible policy changes ranked by impact

According to the report, the election and upcoming Supreme Court decision have the potential to produce these results ― listed in order of impact, from the biggest, most extreme and least likely to the most limited, incremental and most likely:

  • Invalidation of the Affordable Care Act (ACA) – The Supreme Court will hear arguments November 10 on a 2018 ACA challenge by 20 states. The court might strike down the entire individual mandate, and thus the law, or might uphold the law, or might invalidate only certain provisions. A ruling is expected next year. A Biden administration and a Democratic congress could act to change some provisions and take elements of the challenge off the table. Republican victories make that path harder. The end of the ACA would eliminate coverage for 25 million people but produce direct government cost savings of $90-100b.
  • Importation of foreign drugs with FDA approval – There’s already importation of foreign drugs, but not with FDA certification of the import program and not at large scale. The policy has bipartisan support, and some aspects of the program could be created by executive order. But safety remains a concern and Canada might restrict exports to maintain supply and protect its citizens. The report estimates the move would save $150-160b in government healthcare outlays.
  • Creation of an ACA public option and expansion of coverage – These two scenarios combined would effectively create a public health insurance plan, offered to all Americans on the ACA marketplace and available free to low-income Americans. This is likely to happen only if Democrats hold the White House and both houses of Congress, with a two-thirds majority in the Senate unless the filibuster is eliminated. Taken together, the two steps would add 10-20 million people to ACE and add $150-200b in federal spending.
  • Lowering the Medicare age threshold to 60 – Congressional Republicans have tried to raise the eligible age to 67, so their support is unlikely. Democratic support is strong but there are concerns about solvency. Lowering the age threshold is easier to implement than the ACA public option because it does not require new infrastructure or changes to benefits, and those aged 60-64 are unlikely to have more healthcare needs than the existing Medicare population. Five million people would be added to the Medicare rolls.
  • The Elijah E. Cummings Lower Drug Costs Now Act – The act aims to lower the cost of single-source drugs by letting HHS negotiate directly with manufacturers and sets limits on price ranges. It passed the House largely on a party-line vote in December 2019 but has been declared dead on arrival in the Senate. President Trump supported it before impeachment but then reversed himself. Passage will require a two-thirds Democratic Senate majority or a narrower Democratic Senate majority and the end of the filibuster. But a modified bipartisan bill could pass, given widespread public support for drug price regulation. Federal healthcare savings of $40-50b are projected.
  • End of surprise billing – The goal is to prevent patients from receiving surprise bills at out-of-network rates in cases such as emergency procedures where the patient has no control over what provider they see. President Trump has already issued executive orders that indirectly reduce the instance of surprise billing and has called on Congress to ban the practice. Former Vice President Biden has made an end to surprise billing part of his healthcare plan. Two Senate committees have issued a joint proposal and two separate bipartisan bills have been introduced in the House. Action seems likely. Cost reductions of $40b are projected.
  • Prescription Drug Pricing Reduction Act (PDPRA) – This aims to control drug prices by several avenues but unlike the Cummings act, it does not include direct price setting. Pharmaceutical price controls are broadly popular and are favored by the Trump administration, but pharmaceutical industry lobbying has limited Republican Congressional support. A Democratic sweep would improve its chances. Federal savings of $10-15b are the estimated result.
  • End of the pharmaceutical tax credit for direct-to-consumer (DTC) ads – The goal is to amend the IRS tax code so that pharmaceutical companies can no longer deduct their direct-to-consumer advertising costs. Sixteen Democratic senators co-sponsored legislation in 2019 and Biden has included the policy in his healthcare platform, but given bipartisan focus on reducing drug costs, Republicans may not object. Industry lobbyists are expected to oppose it, and the Supreme Court may weigh in on First Amendment implications. $5b in reduced government costs are foreseen.

“While we are only able to predict action on the more incremental measures, it’s possible there will be large-scale policy shifts as a result of the election,” said Kevin Grabenstatter, Managing Director of L.E.K. and a co-author of the report. “What we don’t know is what direction those policy changes will take. In healthcare as in other areas of policy, we anticipate that the next days or weeks will bring greater clarity.”

About L.E.K. Consulting
L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently make better decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global companies that are leaders in their industries — including the largest private and public-sector organizations, private equity firms, and emerging entrepreneurial businesses. Founded in 1983, L.E.K. employs more than 1,600 professionals across the Americas, Asia-Pacific and Europe. For more information, go to