Top Trump administration officials laid out a set of recommendations aimed at loosening rules — and in some cases, fortifying regulations and requirements — with the intent of driving broader choice and competition in the U.S. healthcare market.
The secretaries of Health and Human Services, Treasury and Labor — Alex Azar, Steven Mnuchin and Alexander Acosta, respectively — outlined the steps in a new report delivered to the White House on Dec. 3.
"Government policies have suppressed competition by reducing the available supply of providers and restricting the range of services that they can offer," the secretaries said in a letter to their boss, President Donald Trump.
The report was the work of a group of staff members from HHS, Treasury, Labor, the Federal Trade Commission and various offices within the White House, including its counsel's office, the Office of Management and Budget, the Council of Economic Advisers, the National Economic Council, the Domestic Policy Council and the Office of Information and Regulatory Affairs.
It was compiled in response to Trump's Oct. 12, 2017, executive order "to facilitate the development and operation of a healthcare system that provides high-quality care at affordable prices for the American people by promoting choice and competition," the secretaries said.
That order was largely opposed by insurers and patient groups.
In the report, the authors targeted federal and state rules in four areas of the healthcare sector — workforce and labor, providers, insurance and consumer-driven care.
Specifically in the administration's bull's-eye were mandates and requirements enacted under the Affordable Care Act — a law Trump has repeatedly called on Congress to repeal, though his fellow Republicans have failed to do so.
In its report, the administration said the ACA's requirement for the so-called 10 essential health benefits — ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management and pediatric services — "reduces consumer choice and represents a hidden cost on the majority of consumers by forcing them to pay for more coverage, and the corresponding expense, than many customers would otherwise choose to buy voluntarily in insurance packages."
"Excessive mandates hinder innovation in plan design and greater access to coverage; they also limit public efforts to assure affordability without substantial government subsidies," the authors of the report stated.
Such requirements leave "significant swathes of consumers with coverage that includes numerous items they do not want or need and contributes to pricing others out of the market, including some of the 6.5 million people who paid the penalty for not having minimum essential coverage under the ACA," they said.
Polls, however, have shown the 10 essential health benefits are popular with Americans.
The administration called on Congress to repeal the ACA mandate requiring employers to offer affordable insurance to their workers — a request Trump included in his fiscal 2019 budget proposal.
They also want lawmakers to repeal the ACA's changes to physician self-referral law that limited physician-owned hospitals, insisting those institutions "provide patients with high quality care."
In addition, the administration wants Congress to pass legislation that would expand the availability of health savings accounts, including to people enrolled in Medicare, and allow Americans to make larger contributions to those accounts and to use them to help cover the costs of their premiums.
Laws impeding competition
The authors of the report took particular aim at certificate-of-public-advantage, or COPA, and certificate-of-need, or CON, regulations, saying the statutes that created those requirements should be repealed or significantly scaled back.
COPA regulations allow healthcare providers to enter into cooperative agreements that might otherwise be subject to antitrust scrutiny and can cover a wide range of provider collaboration and merger activity.
But the Trump administration insisted the schemes "displace competition in favor of state regulatory oversight and may, under the state action doctrine, immunize provider activity for conduct that might otherwise violate federal antitrust laws."
CON laws require healthcare providers to obtain permission from a state or its authorized agencies to construct new healthcare facilities, expand existing ones or offer certain healthcare services.
While states initially put CON laws into place as mechanisms to control costs and ensure access to care, the Trump administration said they are "frequently costly barriers to entry for healthcare providers."
"Not only may CON laws impose costly barriers to provider entry, but by interfering with market forces that normally determine the supply of facilities and services, they can suppress supply, misallocate resources, and shield incumbent healthcare providers from competition from new entrants," the authors of the Dec. 3 report wrote. "In addition, incumbent firms may use CON laws to thwart or delay entry or expansion by new or existing competitors. CON programs have also facilitated anti-competitive agreements among competitors."
They noted the FTC and the Department of Justice's Antitrust Division have called for states to repeal or retrench their CON laws.
Closer watch on nonprofits, consolidations
The authors of the report also called on the administration to address potential antitrust and provider consolidation, saying it should continue to monitor market competition, especially in areas that may be less competitive and thus more likely to be affected by alternative payment models.
It should also ascertain the impact of horizontal and vertical integration among provider practices on competition and prices, they said.
"Given the strong evidence of consumer harm from some transactions that have been shown to diminish competition, these concentration trends highlight the need for continued vigilance by the antitrust authorities to identify and prevent anti-competitive activity," the authors wrote.
Additionally, Trump officials want Congress to extend the FTC's jurisdiction over nonprofit healthcare entities — an action the administration said would prevent unfair methods of competition.
"The inability to regulate conduct by various nonprofit entities has prevented the agency from taking action against potentially anti-competitive behavior of nonprofits engaged in business," the report authors stated.