Personnel Is Policy: Understanding the Factors that Would Set the 2021 Playing Field after a Trump Reelection - McDermott+Consulting

Personnel Is Policy: Understanding the Factors that Would Set the 2021 Playing Field after a Trump Reelection

As the campaign heads into the final weeks, it presents an opportunity to ask a question: what happens if President Trump wins reelection? What happens if, for the first time in American history, a fourth consecutive president wins a second term? Given the relationship the Democratic Party has had with President Trump, it is challenging to imagine significant bipartisan legislation occurring in 2021. Healthcare policy stakeholders should focus more heavily on the regulatory space and most particularly on which players are on the field in Congress and the Administration if we start a second Trump term.

The Playing Field

A Trump reelection would bring with it a significant probability that the Senate remains in Republican hands. In 1984, 2004 and 2012, the reelected president’s party kept the Senate. The exception is the reelection of President Clinton in 1996. Democrats lost the Senate two years earlier and did not retake it with President Clinton’s reelection. The outcome in the Senate could be exceedingly close. It could easily end up a 50–50 split, requiring the vice president to break ties in the Senate. A split Senate outcome would present a policymaking nightmare for Republicans, requiring them to secure party unanimity on every vote.

The House of Representatives would likely see significant change after a Trump reelection. The Democratic leadership in the House would likely be replaced. While not an absolute certainty, it seems probable that most, if not all three, octogenarians at the top of the Democratic leadership in the House might be replaced in favor of younger leadership. That new leadership in the House would be highly unlikely to be given to deal-making with President Trump. And with new personnel in those positions would come the opportunity to see new policy preferences on display.

Lame Duck

When does a reelected president become a lame duck? In 2005, between the controversial Social Security reform battle and then the failed Hurricane Katrina response, the window for President Bush closed very quickly. In 2013, President Obama was arguably a lame duck before taking the oath of office for his second term. After the New Year’s Eve 2012 government funding deal, Speaker Boehner never made another outreach to make significant policy agreements with the president during his early second term. It is difficult to imagine that congressional Democrats would give a reelected President Trump much of an opportunity to consider significant policy during his second term. Frankly, it is easier to imagine another impeachment of the President in 2021 than major policy agreements.

The Legislative Healthcare Space

In a reelection scenario, we start 2021 with new players in certain key roles. Republicans would have new leaders for the Senate Finance Committee, Senate HELP Committee, and the House Energy and Commerce Committee. The position taken by these key leaders on key issues would have an impact on the ability of Congress to move legislation. The potential replacement of Senators Grassley and Alexander with Senators Crapo and Paul is significant. New personnel creates opportunity for new policy preferences.

Is legislation even possible given the easily predictable frosty relationship between the Trump Administration and congressional Democrats? History does not bode well for parties making concessions regarding the Affordable Care Act (ACA) after an election. After the election in 2012, Speaker Boehner suggested that a truce on the ACA was possible. He was quickly shouted down by members of his own party. While the outcome of California v. Texas could force the parties to the negotiating table, a policy middle ground on the ACA seems improbable with a Trump reelection. Given how much effort the Administration has put into undermining the structure of the ACA during its first term, Democrats likely would not engage in any conversations regarding the ACA without first demanding that the Administration roll back the actions already taken.

There’s no question that both parties share a commonality of interest around drug pricing. There was significant speculation that the White House, the House of Representatives and key Senators would come together to produce a drug pricing bill in 2019. Arguably the same commonality of interest would continue to exist in 2021. With the Prescription Drug User Fee Act (PDUFA) reauthorization looming in 2022, drug manufacturers may be interested in accepting limited concessions in 2021 to prevent drug pricing from affecting 2022 PDUFA negotiations.

Surprise billing is another major issue from 2019 that will likely enter 2021 unresolved. Momentum towards an agreement in 2020 was disrupted by the Coronavirus (COVID-19) crisis. While the political and policy complications that prevented a compromise from being achieved in 2019 will not have been resolved, it is difficult to imagine Congress being so close to agreement without achieving a successful compromise in the absence of another intervening event. However, any agreement will require the new House and Senate committee leaders to demonstrate their ability to achieve compromise.

Legislative action is more likely to occur in 2021 regarding policies related to COVID-19 response efforts. Telehealth certainly would be front and center as an issue that does not carry the political baggage that comes with higher profile issues. Providers will seek continuation of policies that they believe to be advantageous to beneficiaries during the public health emergency.

The Regulatory Environment

Looking ahead to 2021 and a second Trump term requires knowing who sits in which chairs. This Administration has not necessarily had a consistent ideology on healthcare throughout its first term. On the repeal and replace effort that dominated 2017, the Administration arguably has not found a position to support. On prescription drugs, the Administration’s priorities have often seemed to vary based on which staffers held the most prominent positions (Alex Azar versus Joe Grogan). Where the Administration seeks to use regulatory authority in the absence of ability to move legislation will likely be a function of the personnel in place in 2021.

For example, consider Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma. Will Administrator Verma stay in her current role? Will she succeed the Secretary of HHS if Secretary Azar decides to leave? If the answer to either of those questions is yes, the Medicaid Fiscal Accountability Regulation (MFAR) will most certainly return in some form or fashion. If the answer to the first question is no, the likelihood of MFAR returning may depend on her successor.

Regarding coverage issues, it is hard to see what more the Administration could do to further undermine the ACA (besides ending silver loading, perhaps). In a second Trump term, we would watch for CMS to work with states on waiver proposals allowing states to remake their insurance markets and Medicaid programs. We would expect those proposals to be ideologically conservative and draw significant pushback from Democrats.

The Administration had a robust regulatory agenda on prescription drugs during its first term, although several key proposals never moved through the approval process (e.g., pharmacy benefit manager rebates, International Pricing Index). Many considered these proposals to be threats intended to push Congress to act legislatively. If President Trump is reelected, we would expect the Administration to revisit the proposed regulations, although moving to finalize them would be a function of the personnel in place.

Finally, almost every major action taken by this Administration during the first term was challenged in the courts. We would expect that trend to continue during a second term.

Bottom Line

Predicting healthcare policy in the aftermath of a Trump reelection is complicated by the upheaval it would certainly bring. While it would be easy to predict massive gridlock based on historical precedent, that would ignore the reality that legislative and regulatory policy changes can occur during broader gridlock. New personnel in Congress will have an impact on the ability of Congress to achieve legislative outcomes. In a second-term Trump Administration with no distinct healthcare ideology and no major policies to implement—such as the second-term Bush Administration’s Medicare Part D benefit, or the second-term Obama Administration’s ACA—Administration personnel will have a tremendous impact on policy direction.


For more information, contact Rodney Whitlock.