Trump versus Biden on the Affordable Care Act and Medicare

GlobalData Healthcare 5 October 2020 (Last Updated October 16th, 2020 10:23)

Trump versus Biden on the Affordable Care Act and Medicare

The contrast between US President Donald Trump and the Democrat nominee Joe Biden’s stances on healthcare is quite stark. During his presidency, Trump has been trying to repeal and replace the Affordable Care Act, known colloquially as Obamacare, with a plan that includes weaker protections for individuals with preexisting conditions, reduced assistance with premium fares, elimination of the Medicaid expansion, and a cap on all federal funding for Medicaid. However, Republicans have barely mentioned the Affordable Care Act so far during the 2020 US presidential campaign. Additionally, despite many promises to produce a new healthcare plan, Trump has not yet done so. In contrast, Biden proposes to build on the Affordable Care Act by increasing premium assistance and creating a Medicare-like public option plan that would be available to anyone and would automatically cover people with low incomes in states that have not expanded Medicaid. Biden’s proposed plan would make coverage more affordable for a significant number of people, but the federal spending would be much higher, with some estimates from Biden’s campaign stating federal spending would double over 10 years.

If Trump does come up with a new healthcare plan as promised, one of the immediate ramifications for the pharma industry would be that the number of insured patients would decrease. This would lead to lower diagnosis rates for many conditions and a decrease in the size of the drug-treated population, resulting in decreased revenues for drugmakers. However, without the pricing pressures from the Affordable Care Act, there could be a drive toward using more expensive brand drugs rather than generics. Additionally, people without insurance would use expensive emergency rooms as a substitute for primary care, which increases costs for everyone. Although Trump emphasised the need to address high drug prices, there have been very few policies put in place to do so.

If Biden is elected and puts his plan into action, more US patients would be visiting doctors due to having more comprehensive insurance coverage. This may drive the diagnosis rate up and increase the size of the drug-treated population, leading to increased revenues for the pharma industry. On the other hand, pricing pressure from the Affordable Care Act could drive toward using generic drugs instead of newer, more expensive drugs. Additionally, Biden’s plan would give the federal government the authority to negotiate drug prices for Medicare and other public and private purchasers. A price cap would be put in place based on the drug prices in other high-income countries. Biden also proposed eliminating tax breaks for drug advertising expenses, putting a cap on out-of-pocket Medicare drug costs, and allowing consumers to import drugs.

Due to conflicting drivers and barriers emanating from two different sets of policies, it is not immediately clear whose policies would benefit pharma players more. However, it appears that the pharmaceutical industry has a clear favourite, as it donated more to Biden’s presidential campaign than to Trump’s, with $5.9M versus $1.5M, respectively.