5 ways the election could upend digital health, according to 14 healthcare CEOs, investors, and policy experts

  • The 2020 presidential election could determine the future of digital health, healthcare investors and CEOs told Business Insider.
  • The pandemic contributed to the quick adoption of digital health services like telehealth and digital therapeutics, but it's not clear how permanent their success can be without lasting policy.
  • In addition to the Trump and Biden campaigns' diverging positions on the future of the Affordable Care Act, industry insiders are paying close attention to the candidates' positions on payment models and universal broadband access as key elements needed to support digital health companies.
  • The biggest concerns were over whether the ACA would remain intact, and what a surge of uninsured Americans could mean for the cost structures that digital health groups rely on.
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The outcome of the upcoming presidential election will have massive implications for a growing group of digital health companies.

Healthcare has remained a top campaign issue for several election cycles. There's a sense of urgency in the 2020 election, though, given the current administration's attacks on the Affordable Care Act and its failure to control the coronavirus pandemic, which has killed more than 220,000 Americans.

"I think the ACA is on the ballot, healthcare is on the ballot, and science is on the ballot," Menlo Ventures partner Greg Yap told Business Insider. "These are all things that are enormously impacted by the outcome of the election."

The pandemic has also prompted the rapid growth of digital health services, with many patients unable to visit their care providers in person due to coronavirus containment measures. The last two quarters have set investment records for the digital health startups, with last quarter's all-time-high amount clocking in at $8.4 billion. 

Read more: Meet the top venture capital firms fueling a record quarter for the hottest part of healthcare

With so much money on the line, investors and CEOs said they have been watching the campaigns closely for signs of how each administration would approach the growing digital health space. 

They are watching the promises made by President Donald Trump and his Democratic challenger Joe Biden around the ACA, the repeal of which could leave nearly 30 million people without insurance and impact how digital health startups do business with employers.

How much doctors are paid for virtual visits is also on the table, as well as how future administrations handle underserved communities' access to virtual care services and internet. Many are closely watching whether the campaigns' promises to act against rising drug prices are just promises, or if they have proposed policies to enact. 

Compared to other areas of healthcare, it's worth nothing that digital health enjoys a high degree of bipartisanship. Republicans and Democrats, for example, are both on board with information-blocking rules stemming from the 21st Century Cures Act, which are expected to boost healthcare startups.

In conversations with more than a dozen healthcare industry insiders, Business Insider discovered five ways the election outcome could impact the future of digital health.

Here's what's at stake for the hot digital health industry heading into November 3.

The fate of the ACA could be decided in the 2020 election

The ACA could be struck down entirely by the Supreme Court in a case known as "California v. Texas." It's up for discussion in November, with a ruling to follow later. If upheld, Republicans and the Trump Administration could still make good on their promises to repeal it or continue to weaken it with executive orders, bills, and other tools.

The status of the ACA is the pivotal issue for digital health heading into November 3.

"That will defund a lot of healthcare and innovation," said Stephanie Tilenius, the CEO of Vida Health, a startup that provides virtual care for chronic conditions and mental health. 

Many digital health companies work with health plans that offer plans on the individual exchanges established by the ACA.

Vida, for example, provides services to Centene and Florida Blue members covered under the ACA, Tilenius said. That business could presumably go away with its removal.

If Biden wins and gets a Democratic legislature, however, they'll work to strengthen individual exchanges, Steve Kraus, a partner at Bessemer Venture Partners, told Business Insider. 

"People are worried about the court case and the election but there is a glass-half-full scenario where the ACA is more robust coming out of this. That's good for the digital health sector," he added.

Founders and investors need stability in the healthcare market, plain and simple, in order to know which kind of businesses to build, said Bill Evans, the CEO of Rock Health, a digital health venture and advisory firm. 

"If I placed my bets, or if an entrepreneur built a business on the basis of something that was passed 10 years ago, but then it gets ripped out of the system, that's incredibly disruptive to all of the capital allocation and the lives that entrepreneurs have dedicated to the notion that they were pursuing on behalf of patient wellbeing," Evans said. 

Some direct-to-consumer brands could actually benefit from an ACA repeal, as more uninsured folks or people with high deductible plans shop around online for the best, cheapest care. 

Hims and Hers, for example, are cash-based platforms. And typical customers are uninsured folks or those on insurance plans that leave patients on the hook for large out-of-pocket expenses, Hims' head of public policy April Mims said. 

"What they like is that they have in Hims and Hers, a cash-based affordable option," Mims said.

A new way doctors are paid for how they care for patients may take a hit if federal funding goes away

The ACA created the Center for Medicare & Medicaid Innovation, which is piloting new payment models that pays providers for their effectiveness, not just how many patients they have or treatments they perform.

Iora Health, CityBlock Health, and Oak Street Health are all hot primary care startups that are paid on a monthly basis by people or insurance companies. They assume the risk, but profit if they make people healthier and get costs down.

Should the Supreme Court strike down the ACA, it could put those payments and CMMI in jeopardy. 

"If the Supreme Court decides that the whole law should be thrown out, what happens to CMMI?" Deanne Kasim, Change Healthcare's executive director of health policy, said. 

Biden could issue some executive orders to shore up some of the CMMI functions, but its funding is appropriated by Congress, she said.

Policy sets a tone, and companies build models in accordance with the broader regulatory landscape and what it says about the industry's future. A lot of business are focused on value-based care now, and the next generation of startups have a mind towards making medicine more proactive and less dependent on hospitals, Bessemer's Kraus said. 

"If the whole law is thrown out, the whole thing with value-based care is also thrown out," he added. "It would be a detriment to our industry."

Patients might be able to make better choices on care, but it could come with more tradeoffs

There's a disagreement between Democrats and Republicans over whether patients should be treated as customers.

Republicans generally believe that patients should have the ability to choose between multiple providers at different costs to find what best fits their care needs but also their budget. Patients could avoid unexpected bills, the thinking goes, and have more power over their care.

Democrats, on the other hand, have indicated they support a model that distributes that responsibility among insurance companies and care providers instead of patients themselves.

Both are supportive of patients being able to select where and how they get the care they need but disagree on what the federal government's role is in making sure their healthcare experience runs smoothly. 

"I'm not confident that the Republican platform will include robust consumer protections, but there will be deep protections in the Democratic platform," Flare Capital Partners' Michael Greeley said.

Mayfield partner Ursheet Parikh said he believes a Republican administration would support rolling back virtual care payments, for example, in favor of what he calls "the patient as the consumer."

The idea, he said, is that this model allows patients to shop for healthcare the same way they shop for everyday items online and pick what works best for their budget and needs. High-deductible plans are another example of the model, he said, and remain a popular option for some people.

"Even if the ACA gets hampered, the ability for consumers to continue getting healthcare quickly, through the phone or PC, and having a healthcare experience in the 21st Century will continue," Parikh said. "The question will be how much does the consumer pay versus how much will insurance reimburse."

Payments for virtual care could change

The drastic shift of in-person care to virtual care over the course of the pandemic has impacted the healthcare industry in two ways.

The first was that many patients simply put off going to the doctor, which left insurance companies with healthy balance sheets because they weren't paying for many procedures they otherwise would have.

The second was an emergency authorization that required insurance companies to cover virtual visits the same way they had covered in-person visits to decrease costs for patients.

That changed the game for telehealth companies. 

"We started out last year where telehealth didn't get great reimbursement from the payers, but then COVID happened and the insurance companies were flush with cash so telemedicine reimbursement was able to become on par with in-person care," Parikh said.

But insurers might not be willing to pay that much for virtual care forever. Some insurers have already begun rolling back coverage for virtual care leading into the election after the temporary emergency authorization ended on October 1. 

Without affordable options, the future of virtual care could be at risk.

"There will be a reckoning when the dust settles," Menlo Ventures' Yap said. "There were changes made, like reimbursements, that at the time were temporary or emergency and whether that continues to hold remains to be seen."

A Biden administration could pressure insurance companies to at least continue paying for virtual care as has been standard during the pandemic. The public option, which Biden has repeatedly indicated would be his preference, would exert pricing pressure on the insurance companies to continue covering virtual care.

"For example, you have the telehealth parity," Flare Capital Partners' Greeley told Business Insider. "Will those sessions be reimbursed the same as in person? That's debated even within the [Democratic] party. Both parties generally agree telehealth should exist, but there will be disputes around reimbursements."

Several digital health CEOS and Livongo's chairman Glen Tullman told Business Insider that there's bipartisan support for these telehealth payments. But Tullman said that a Democratic administration would be more aggressive on that front.

Should Biden win, it'll mean a change in leadership at CMS, which is currently overseen by Seema Verma. While the agency tends to operate somewhat outside of normal partisan politics — it's got to run Medicare and regulate private insurers irrespective of who runs the White House — Verma's put a stake in the ground over expanding telehealth.

"You can't take that for granted," Doctor on Demand CEO Hill Ferguson told Business Insider. "There could be other people in that position who may have been much slower to move, demanded more evidence, or wanted to see more limited rollouts."

A Biden administration might create better access to technology that keeps us connected to work, school, and now healthcare

Digital health CEOs and their heads of policy stopped short of telling Business Insider that they're actively lobbying Congress or state legislatures for better internet access. 

But some are expecting a Biden administration to make bigger moves in bridging the uneven access to internet, phones, and computers. These tools are becoming essential to education, jobs, and now healthcare. 

With more than 80% of clinical outcomes driven by social and economic factors, giving people internet is one step of many toward better care, Doctor on Demand's Ferguson said. 

"I think it's the right thing to do," Ferguson said. "And I think that it does open the door to more powerful clinical services to be delivered remotely."

Despite the prevalence of smartphones, 19 million Americans still lack internet access, many of whom are concentrated in rural areas that internet providers don't service. 

The current Trump-appointed chairman of the FCC, Ajit Pai, has launched major programs aimed at reaching rural communities, but the agency's committees are stacked with telecommunications executives who are keen on deregulation and focused on 5G rollouts.

There's also been some multi million-dollar programs allocated by Congress to pay for providers' telehealth services during the pandemic, which are run by the FCC.

Not all telehealth appointments require internet, per se. A lot of care can be done over text and phone calls. But some states actually require doctors to do their telehealth over video, which limits options for patients.

Ro, a direct-to-consumer health startup, is working with states to make those laws less restrictive, according to Adam Greenberg, Ro's general counsel. 

"It's not always easy to connect with your doctor on a video chat," he said. "You might not have great access to broadband. So it potentially disadvantages under-privileged and rural communities."

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