By Grace Totman, co-head of Capstone’s Healthcare Practice

September 23, 2024

THE BOTTOM LINE

We believe the recent release of Vice President Kamala Harris’ Platform indicates that a win would benefit the women’s health industry and healthcare unions. Her platform would also improve access to healthcare broadly by strengthening the Affordable Care Act and Medicare. However, improved access would lead to financial strain on payors and providers. Here we walk through her priorities, likelihood of action, and notable impacts on industry.

• A Harris administration will benefit women’s health-related companies, including fertility providers, Affordable Care Act insurers, and related businesses. Harris emphasized her commitment to these initiatives in her first 100-day plan, on her recently published platform, and during the debate earlier this week. 
• Although Harris has emphasized her plan to build on Biden’s successes by expanding Medicare drug negotiations and extending negotiated prices into the commercial market, Capstone believes risks remain low as she is unlikely to have the Congressional support necessary to expand these provisions of the Inflation Reduction Act (IRA). While we expect Harris to continue supporting pharmacy benefit manager (PBM) reform, we believe she will deprioritize these policies below other healthcare priorities.
• Harris noted her intention to protect private insurance should she be elected, quelling concerns that Medicare for All might make a return, a material risk for private insurance. Her platform also mentions her intentions to strengthen Medicare by taxing the wealthy, though her plan is vague.

A DEEPER LOOK

The Harris campaign published its policy platform on September 8th, 2024, just before the presidential candidates debated for the first time on September 10th. Harris’ platform includes several notable healthcare topics, which are outlined below. During the debate, the Democratic nominee stuck to her platform almost word for word, doubling down on her plans and previous efforts to safeguard reproductive freedoms, lower drug prices, and strengthen the Affordable Care Act (ACA).

Harris’ Healthcare Agenda as President

Reproductive Rights at the Forefront

Harris states her commitment to restoring and protecting reproductive freedoms in her platform and emphasized this during the debate. She states that she will not allow a national abortion ban to become law and that she will sign a bill to restore reproductive rights once passed by Congress. Her platform also highlights Governor Tim Walz’s efforts to safeguard women’s rights in his home state of Minnesota post Roe v. Wade.

• Likelihood of Action: Harris and Walz have consistently fought to protect reproductive rights; however, despite federal support, Capstone believes the issue will be left up to the states as national protection would require congressional action and consensus. We think this is unlikely as abortion is an exceptionally partisan issue, and many Republicans believe it should be left to the states. Former President Trump reaffirmed this belief during the presidential debate earlier this month.
• Impact to Industry: We believe that efforts to protect reproductive rights will drive access to fertility services and abortion in states where it is legal, mainly benefiting provider entities like abortion and fertility clinics, fertility benefits managers, and tissue banks.

Doubling Down on Affordable Care Act

Harris’s plan includes extending enhanced ACA subsidies set to expire at the end of 2025 if Congress does not act. In 2021, the Biden-Harris administration passed the American Rescue Plan, which enhanced subsidies for individuals purchasing health coverage on the ACA exchanges. Now, Harris is proposing to make these tax credits permanent to enable savings through the ACA. Specifically, her platform highlights an average of about $800 of savings on insurance premiums. During the debate, former President Donald Trump, notably put an end to the repeal and replace narrative regarding the ACA, after making it a priority in previous years, adding to Capstone’s belief that the subsidies likely get extended in some way, shape, or form.

• Likelihood of Action: Enhanced subsidy extension hinges on Congressional control more than White House control. In every case, except tri-Republican control, Capstone expects at least a partial extension of enhanced subsidies, resulting in ACA enrollment stabilizing around 18 million individuals. The primary hurdle will be cost, as a full extension would cost over $300 billion over 10 years.
• Impact to Industry: The extension of ACA enhanced subsidies would significantly impact ACA enrollment. Capstone analysis indicates that with a partial extension, enrollment will decrease by about 15%; however, should the enhanced subsidies expire, we expect enrollment to fall by about 40%. A decline in enrollment of that scale would likely lead to more uncompensated care and financial strain for providers.

Pharmaceutical Industry Slated for Reform

In her first 100 days, Harris seeks to cap the cost of insulin and annual out-of-pocket spending for all Americans at $35 and $2,000, respectively. She also aims to revamp Inflation Reduction Act (IRA) drug negotiations and “crack down” on pharmaceutical companies and “middlemen” (including pharmacy benefit managers) to increase competition and demand transparency. In her plan, Harris touts her success in holding Big Pharma accountable and explicitly highlights how, as Vice President, she cast the tie-breaking vote for the IRA, allowing the Centers for Medicare and Medicaid Services (CMS) to negotiate lower drug prices with pharmaceutical companies, cap insulin at $35 for seniors, and cap annual out-of-pocket costs for Medicare Part D at $2,000 for seniors.

• Likelihood of Action: While the Harris campaign continues to applaud the success of the IRA, Capstone believes there will be limited ability to accelerate negotiations without Democratic Congressional control and a reconciliation bill. Other modifications to the number of drugs negotiated or the statutory minimum discounts are not achievable under the administration without Congressional action. Capstone believes there is little desire to do so as lawmakers continue to observe the impact of the IRA on drug availability, access, and affordability. Additionally, the Harris administration would continue the Biden administration’s progress in investigating PBM activities. Finally, we believe extending out-of-pocket cost caps to the commercial market is a non-start for most Republicans and even some Democrats, making it unlikely in the next administration.
• Impact to Industry: Harris’ proposals to lower drug and out-of-pocket costs for all Americans will improve access and potentially impact negotiations with payors. Conversely, the impact of pharmacy benefit manager (PBM) reform hinges significantly on who is appointed to be the chair of the FTC. The FTC’s interim report on PBMs was weak, although it is still in progress, and Congress has lamented PBM reform for several years. While the Harris administration is committed to supporting reform, PBM reform is not a top priority for the party.

Labor Friendly Approach to Build

Harris’s platform continues to embrace her role as a pro-labor candidate, noting that Harris will support pro-union legislation as president and work to raise the minimum wage. Her platform also notes that it will not tolerate unfair trade practices from China or other competitors jeopardizing American workers.

• Likelihood of Action: We believe Harris will continue to build on the Biden Administration’s release of pro-union rules (e.g. the 80/20 rule), which established a minimum pass-through benchmark for personal care providers to compensate direct care workers. However, we also believe reform is more likely to be passed through standard notice of proposed rulemaking, though Congress could also step in to block implementation. Notably, Harris’ record of policymaking in California relied heavily on the support of healthcare unions.
• Impact to Industry: Labor reform may increase labor costs for certain healthcare specialties, leading to financial strain among payors and providers who are required to increase labor costs. However, quality of care will likely increase, an overall positive for the industry.

Medicare to be Strengthened

Harris briefly touches on protecting and strengthening Medicare by raising taxes on affluent Americans in her platform; however, during the debate, she touted that she intends to keep private insurance options available, maintaining support, or at least indifference, for Medicare Advantage and commercial insurance.

• Likelihood of Action: While White House control is the most critical factor for Medicare solvency, the need for payfors may drive congressional reforms, especially under a more democratic Congress. Ultimately, we believe it will be very difficult to find the savings (likely taken from the healthcare industry) to further support Medicare solvency.
• Impact to Industry: Harris’s plan to strengthen Medicare by increasing taxes on wealthy Americans is ambiguous compared to her other healthcare policy initiatives; however, the program would experience tailwinds under her administration as access to care would likely increase.

Medical Debt Forgiveness Unlikely

The Harris-Walz administration will also seek to cancel medical debt by working with states to remove medical debt from the credit reports of nearly all Americans. In her proposal for the first 100 days, Harris proposed to leverage federal funding to purchase and cancel medical debt from providers. Again, Harris seeks to build on her previous work. Her platform highlights how she helped secure American Rescue Plan funds to cancel $7 billion in medical debt for up to three million Americans.

• Likelihood of Action: Capstone believes the cancellation of medical debt is unlikely. While CMS approved a similar initiative in North Carolina to relieve $4 billion in medical debt for about 2 million low—and middle-income individuals, similar efforts on the federal level would require congressional support. Additionally, we believe it would likely be unconstitutional for the federal government to simply extinguish debt. Instead, any program would likely enable hospitals and other providers to sell receipts at a significant discount.
• Impact to Industry: The cancelation of medical debt from providers will improve access to care; however, it may also lead to short-term revenue loss and, thus, financial strain for providers. They may have to cover the cost of care, leading to potential labor shortages and decreased quality of care.

What’s Next

Capstone will continue monitoring the Harris campaign for significant updates to the Harris-Walz healthcare policy agenda.

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