US healthcare reform scenarios: how might the current system be impacted?

By Katya Svoboda, senior principal and Kristen Foote,
senior analyst pricing and market access, ICON

In an effort to control healthcare costs, provide healthcare to the uninsured and underinsured, and improve health outcomes, there has been growing interest among politicians and the public for significant change of the US healthcare system.

Democrats have announced various proposals this year to expand government-sponsored healthcare coverage, popularising the phrase “Medicare for all.” Some proposals are based on Medicare expansion, while others target Medicaid expansion. Some completely eliminate commercial insurance with all Americans covered under a government-run programme, and others maintain employer-sponsored coverage as an option.

In an effort to further understand how the commercial insurance model may change given the implementation of these proposals, ICON’s Pricing and Market Access team interview formulary decision makers to analyse potential outcomes for US healthcare.

ICON assessed three scenarios based on actual proposals:

1. Medicare buy-in at 50: An extension of Medicare where 50-64 year olds would have the option of purchasing Medicare coverage: Medicare Part A and B, Part D prescription drug plan, or Medicare Advantage.

2. Public option: Government insurance would be available through the Affordable Care Act (ACA) exchanges during open enrolment, regardless of age. This option would not replace, but compete with exchanges run by private insurers. Employers could continue to offer private health insurance if it met federal benefits requirements.

3. “Medicare for all”: The entire healthcare system would be transitioned into a government-run single-payer model, eliminating private insurance and all federal programmes other than Medicare. Every American would receive comprehensive coverage including dental, vision, reproductive health services, mental health, and long-term care with most deductibles and coinsurance requirements eliminated.

Scenario 1: Medicare buy-in at 50

The impact of allowing those 50 and older to buy into Medicare will ultimately depend on the attractiveness to consumers compared to their current situation. Those currently covered under commercial insurance may shift to Medicare if it offers a lower premium and more comprehensive coverage than what they are currently receiving.

If successful, movement of the 50-64 age bracket would reduce the size of the commercial population, leaving a younger, generally healthier risk-pool. The Medicare risk-pool would also benefit with the ‘sickest’ patients in commercial becoming the ‘healthiest’ patients in Medicare.

A shift in population may drive payers to refocus their utilisation management efforts. Utilisation of medications for diseases more prevalent in the older population (eg diabetes, cardiovascular disease, rheumatoid arthritis) may decrease, reducing the need to manage these therapeutic areas as tightly in the younger commercial population. This would open the door for drugs that historically have not received much attention.

“We might focus more on haemophilia and managing drugs that are on the backburner now because we just don’t have time,” one regional payer said.

In addition, the decrease in volume of some products due to a shift of older members to Medicare may drive a reassessment of the details of contracts and may even result in a change in benefit design.

“We might streamline our benefits more to get single branded options or highly genericised formularies because they may not use as much drugs. Manufacturers may actually have to compete more,” a PBM we spoke to said.

Payers indicated that manufacturers could help in this scenario by educating them on the best use of their product in a younger population versus in an older population.

Scenario 2: Public option

The public option would have a similar impact on the industry as the Medicare buy-in scenario. However, it is harder for payers to predict how their population would change and the impact on their plan since this option is not restricted to older Americans. If private payers administer the public option, their willingness to participate would be highly dependent on financial feasibility driven by premium levels and service offering requirements. Unlike Exchanges, which vary based on state and marketplace, the public option is likely to follow national regulations and be consistent across states, which may add complexities.

The approach of independent technology assessments such as Institute for Clinical and Economic Review (ICER) or Economic Cycle Research Institute (ECRI) and their influence on payer coverage and management decisions are not expected to change as a result of this or the previous scenario. However, payers acknowledge these organisations are becoming more influential in general as cost-effectiveness is growing in importance.

Scenario 3: “Medicare for all”

Lastly, ICON explored the single payer model, which would most drastically change the current business model.

Payers believed there would still be a reduced role for private insurers and PBMs if “Medicare for all” were implemented. In a true single-payer model, such as the plans proposed by Bernie Sanders or Pramila Jayapal, payers saw the need for insurers and PBMs to take on the role of third party administrators (TPAs). They acknowledged this might put smaller and regional plans out of business if they could not handle the large volume of claims.

ICER and other independent technology assessment organisations could play a larger role in a single payer system. With national coverage determinations, there will need to be a formal HTA body to ensure value is considered consistently in coverage decisions.

“Whether it’s an external body or universities that are being contracted to provide these services, or we start our own version of NICE – it’s hard to say,” one national payer said.

Although our research advisors were relatively optimistic about the continued need for private health insurance companies in the future, there has been significant pushback from the industry, especially related to the “Medicare for all” option. The Partnership for America’s Health Care Future (PAHCF) recently issued the following statement from executive director Lauren Crawford Shaver in response to a “Medicare for all” proposal:

“We can all agree that every American deserves access to affordable health coverage and high-quality care, but this proposal – whether you call it Medicare for all, Medicare buy-in, single-payer or a public option – moves us toward a one-size-fits-all health care system that is wrong for America… we should come together to build upon all that is working and fix what is broken in our current system.”


The current US healthcare system is fragmented and complex and there is clearly opportunity for reform.

  • Will the reform be incremental, through Medicare or Medicaid expansion?
  • Will an overhaul of the healthcare system occur?

The options discussed in this research shift the risk from commercial payers to the government. It is interesting to speculate how these may be implemented, but these options cannot be viewed in isolation. Proposals to drive down healthcare costs through reform of pharmaceutical pricing and rebating have the potential to cause major overhaul of the current system, including the role of PBMs, the manufacturer contracting process, and payer formulary decision drivers.

There is still a lot of uncertainty in what a future healthcare model looks like, but the need to control healthcare costs will only gain more attention. If the currently fragmented US healthcare system is consolidated through Medicare expansion or a single payer system, the government will have more leverage to negotiate reduced costs with manufacturers. Manufacturers will need to demonstrate economic value to justify pricing, and government and private payers will need the ability to evaluate products based on their economic value.

1.      The Partnership for America’s Health Care Future’s website. Statement: Partnership Statement On Introduction Of Medicare For All-Style Proposal. February 2019. Accessed April 12, 2019.

About the Authors

Katya Svoboda

Katya Svoboda is a senior principal, global pricing & market access at ICON. Katya has over 15 years of experience as a market access strategy consultant, assisting pharmaceutical, biotech and medical device manufacturers in gaining product access and reimbursement. Her interest in market access began during an internship with the National Health Service in London, and prior to joining ICON she held positions with Deloitte and Arthur Andersen, providing strategic consulting services to hospitals and other providers.

Kristen Foote

Kristen Foote is a senior analyst, global pricing & market access at ICON. Kristen has three years of experience in market access consulting. She has conducted research with various stakeholders including payers, physicians, patients and caregivers and her experience spans across numerous therapeutic areas. Prior to joining ICON, she was at Real Endpoints, a boutique market access firm.

About ICON

ICON plc is a global provider of outsourced drug development and commercialisation solutions and services to the pharmaceutical, biotechnology, medical device and government and public health organisations. The company specialises in the strategic development, management and analysis of programmes that support clinical development – from compound selection to Phase I-IV clinical studies. With headquarters in Dublin, Ireland, ICON currently operates from 90 locations in 37 countries and has approximately 13,680 employees. Further information is available at

For more information on ICON Commercialisation and Outcomes Services visit:

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