Trump Executive Order Bolsters Medicare, MA to Compete Against Medicare for All Proposals

In response to Democratic calls for a Medicare for All system, President Donald Trump has issued an executive order (EO) that the administration says protects Medicare and bolsters Medicare Advantage (MA), which is offered by private insurers.

The EO directs the secretary of HHS to propose regulation that allows Medicare to provide “more diverse and affordable plan choices.” Some of the actions included in the EO were to reduce barriers to obtaining Medicare Medical Savings Accounts, promote innovations in supplemental benefits and telehealth services, and create a payment model that allows beneficiaries to share directly in savings from supplemental MA benefits.

“President Trump’s Executive Order delivers on the clear promise he’s made to Americans about their healthcare: protect what works in our system and fix what’s broken,” HHS Secretary Alex Azar said in a statement.

The EO also takes aim at what is considered burdensome regulatory billing and other requirements that “limit professionals from practicing at the top of their profession.” The HHS secretary is also directed to propose reforms that ensure appropriate Medicare reimbursement for the time providers are spending with patients.

Notably, the EO seeks to ensure that traditional fee-for-service Medicare is not "advantaged or promoted over MA with respect to its administration."

The order effectively continues what has been the approach of CMS under Administrator Seema Verma, who last year implemented changes that allowed step therapy within MA plans, despite protests from physician groups, including oncologists.

“All of these steps together will help create a healthcare system that puts patients at the center,” said Azar. “These kinds of improvements, rather than a total government takeover of the healthcare system, are the path to our ultimate goal: better health for all Americans.”

While the Trump administration has been more aggressive in its approach toward MA than the Obama administration, the use of managed care increased in both Medicare and Medicaid under Obama as well, especially in the population that was newly insured through Medicaid expansion. Today, 39 states administer at least some part of Medicaid through managed care. About a third of Medicare beneficiaries, or 22 million seniors, receive benefits through MA.

The EO comes at a time when the term "Medicare for All" has received lots of attention among the Democratic candidates for president, especially Senator Bernie Sanders, I-Vermont, who has sponsored legislation to enact it, which would bar private insurers and employers from offering coverage that competes with benefits offered through the publicly funded system that would evolve from Medicare. The transition would occur over a 4-year period. For financing, Sanders initially said it would be paid for through taxes on extreme wealth, but his office has released other options that include a premium tax on household incomes above $29,000.

While "Medicare for All" seems popular among voters, polling by the Kaiser Health Tracker Poll has found that the term means different things to different people. Support in one Kaiser poll dropped from 56% in favor to only 37% in favor of Medicare for All dips when people are told it could mean they would have to give up their current health plan. To some voters, and in some plans put forth by Democrats, Medicare for All would simply give consumers the ability to seek coverage through Medicare as one choice among many, a so-called "public option."

This approach was reflected in the statement from Senate Finance Committee Ranking Member Ron Wyden, D-Oregon, and Senate Finance Committee member Sheldon Whitehouse, D-Rhode Island, issued after Trump's speech:

“The American people aren’t buying Donald Trump’s scare tactics on health care. Democrats want people to have choices for their health care — whether that’s Medicare Advantage or allowing Americans under 65 to join the program if they choose. Trump and Republicans in Congress are creating a smokescreen to keep pushing junk insurance and manipulating the courts to take away protections for pre-existing conditions. Democrats have a long record of protecting and strengthening Medicare, while Trump recently proposed cutting Medicare by hundreds of billions to pay for a tax windfall for the wealthiest Americans and corporations.”

It's not just the wealthy and health plans who are wary of Medicare for All. Today, Medicare and especially Medicaid reimbursement rates are far below those paid by commercial insurers, so phyisican groups fear that converting the entire healthcare system to lower rates would stifle innovation and impact their ability to deliver quality care. A March 2019 report from MedPAC warned Congress that Medicare payments translate into an average margin nearly —10% for hospsitals, while Stanford University researchers found that losses could reach nearly 16% if the Medicare rate was applied across the board.