Tariffs: President Trump announced that most of the recently enacted tariffs would be paused for 90 days. However, he also announced that tariffs would be increased on Chinese goods to 125%. The fallout from the tariff news this week was lower stock prices and higher bond prices. Both indicators were interpreted by market watchers as warning signs for a potential recession or more serious economic problems (e.g., financial crisis). For example, JP Morgan CEO Jamie Dimon called a US recession a “likely outcome”. In terms of health specific effects, Modern Health reported that if the tariffs returned to the initial proposed levels that medical equipment costs could increase by 18% by the end of the year.
Pharmaceutical Tariffs: President Trump also reiterated his goal of having tariffs on pharmaceuticals. While pharmaceuticals were exempted by the last week’s tariffs, President Trump called on drug specific tariffs to be instituted. It’s unclear if those tariffs would apply to finished products or active ingredients, which makes estimating their potential impact very difficult. If applied though it would likely affect generic drugs especially and potentially lead to higher prices and shortages.
Congress: The House approved the Senate’s version of the reconciliation bill blueprint. The blueprint provides key goals that would need to be met. Several House Republicans have been insisting on having larger required cuts as part of the final.
ACA State Actions: Given the potential for large net premium increases due to the scheduled expiration of enhanced subsidies states are exploring different policy levers to pull. Politico reported that several states, such as California, Washington, Colorado, and Maryland are considering creating/expanding subsidy programs in the Marketplace. Other states are considering allowing for farm bureau plans states to be sold. Lawmakers in Alabama, Florida, Maine, Missouri, and Ohio are considering a plan that would allow farm bureau plans to be sold. Farm bureau plans do not need to comply with the ACA’s ban on underwriting and therefore offer cheaper plans. However, they can weaken the risk pools in the ACA individual and small group markets.
