Strong Market Bolsters Not-For-Profit Pensions

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S&P forecasts lower near-term statutory minimum requirements for defined benefit plans, which could help financial profiles for not-for-profit healthcare providers.

The nation’s not-for-profit healthcare sector has benefited from a boost in the funded status of its pension plans in fiscal 2017 due primarily to robust investment market returns, according to a report this week from S&P Global Ratings.

This boost is occurring, S&P said, despite lower assumed discount rates in recent years, which provide a more conservative liability measure.

In the near term, S&P said a higher funded status should mean lower statutory minimum contributions to defined benefit pension plans, which could help overall financial profiles as operating performance in the healthcare sector has come under stress.

“However, the projected benefit obligation for many plans has continued to increase and many have had to contend with updated mortality tables, which more accurately recognize longer lives — which leads to increased pension liabilities,” said S&P credit analyst Anne Cosgrove.

Cosgrove said many not-for-profit issuers have focused on lowering pension funding risks, including increasing annual contributions to improve the funded status, closing current plans to new participants, freezing plans, and in some cases terminating plans altogether.

S&P has tracked the funding levels of defined-benefit plans of not-for-profit hospitals and health systems since 2007, when, on average, they were at their highest level (at 90%).

Funded statuses declined sharply in 2008 and 2009, by 20 percentage points during the Great Recession and the cratering of global investment markets. After the recession, funded ratios were essentially flat at near 70% through 2012, despite hospitals’ healthy contributions to plans, S&P said.

Ascension and Providence St. Joseph Halt Merger Talks

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The two Catholic systems seemed like a good pair, but the details thwarted their potential union. Perhaps the timing just wasn’t right.

Had the potential merger between Ascension and Providence St. Joseph Health been finalized, the combined Catholic system would have surpassed HCA Healthcare as the largest hospital operator in the country.

But the two organizations halted their discussions about the deal, as The Wall Street Journal reported Wednesday, citing unnamed sources. The talks are not expected to resume any time soon.

“A merger of this magnitude may have been too big for either to handle while still amalgamating their own constituent parts,” Mark Cherry, principal analyst at Market Access Insights for Decision Resources Group, told HealthLeaders Media in an email.

 

“Ascension is only now putting common branding on its operations in Wisconsin, Michigan, and other states, while PSJ’s operations remain very region-focused,” he added.

News of the halted talks comes after Ascension said this week it would sell St. Vincent’s Medical Center in Bridgeport, Connecticut, to Hartford HealthCare. Last month, Ascension signed a definitive agreement to add Presence Health’s 10 hospitals to AMITA Health, a joint venture by its Alexian Brothers Health System and Adventist Midwest Health.

Providence St. Joseph, meanwhile, formed less than two years ago with the combination of Providence Health & Services and St. Joseph Health System.

So both systems are “still working out redundancies and efficiencies from their own earlier mergers,” Cherry said.

The Journal reported that Ascension’s directors backed “a new strategic direction to boost growth and labor productivity,” which was among the reasons cited for the proposed merger falling through. That could mean Ascension wanted to eliminate jobs, while Providence St. Joseph didn’t, Cherry said.

Ascension was already expected to cut about 600 jobs in Michigan, as The Detroit News and other outs reported earlier this month, citing a memo sent to employees.

All of this coincides with a flurry of M&A activity among major players in the hospital sector, including large Catholic systems.

After a year of negotiations, Catholic Health Initiatives and Dignity Health announced their merger plans in December. A merger between Advocate Health Care and Aurora Health Care received final regulatory approval this month, and a separate merger is in the works between Mercy Health and Bon Secours.

 

Health Care and the 2018 Midterms, Attitudes Towards Proposed Changes to Medicaid

Kaiser Health Tracking Poll – February 2018: Health Care and the 2018 Midterms, Attitudes Towards Proposed Changes to Medicaid

 

KEY FINDINGS:
  • Medicaid continues to be seen favorably by a majority of the public (74 percent) and about half (52 percent) believe the Medicaid program is working well for most low-income people covered by the program.
  • When asked about proposed changes to the Medicaid program, attitudes are largely driven by party identification. A large majority of Democrats (84 percent) and most independents (64 percent) oppose lifetime limits for Medicaid benefits, while Republicans are more divided in their views with half (51 percent) believing Medicaid should only be available for a limited amount of time.

    Poll: Public split on whether adding work requirements for Medicaid beneficiaries aims at reducing spending (41%) or lifting people out of poverty (33%) 

  • Party identification also drives views on what individuals believe is the main reason behind some states imposing Medicaid work requirements. A larger share of Democrats and independents believe the main reason for these work requirements is to reduce government spending (42 percent and 45 percent, respectively) than believe it is to help lift people out of poverty (26 percent and 31 percent). On the other hand, a similar share of Republicans say it is to reduce government spending (40 percent) as say it is to help lift people out of poverty (42 percent). Individuals living in states pursuing Medicaid work requirements are also divided on the main reason for these limits, even when controlling for party identification.

    54% of the public now holds favorable views of the Affordable Care Act – the highest share in more than 80 tracking polls 

  • The February Kaiser Health Tracking Poll finds a slight increase in the share of the public who say they have a favorable view of the Affordable Care Act (ACA), from 50 percent in January 2018 to 54 percent this month. This is the highest level of favorability of the ACA measured in more than 80 Kaiser Health Tracking Polls since 2010. This change is largely driven by independents, with more than half (55 percent) now saying they have a favorable opinion of the law compared to 48 percent last month. Large majorities (83 percent) of Democrats continue to view the law favorably (including six in ten who now say they hold a “very favorable” view, up from 48 percent last month) while nearly eight in ten Republicans (78 percent) view the law unfavorably (unchanged from last month).
  • The majority of the public are either unaware that the ACA’s individual mandate has been repealed (40 percent) or are aware that it has been repealed but incorrectly think the requirement is not in effect in 2018 (21 percent). Few (13 percent) are aware the requirement has been repealed but is still in effect for 2018.
  • More than twice as many voters mention health care costs (22 percent) as mention repealing/opposing the ACA (7 percent) as the top health care issue they most want to hear 2018 candidates discuss in their campaigns. Health care costs are the top issue mentioned by Democratic voters (16 percent) and independent voters (25 percent), as well as one of the top issues mentioned by Republican voters (22 percent), followed by repealing or opposing the ACA (17 percent).

2018 Midterm Elections

With still a few months until the midterm elections are in full swing, the latest Kaiser Health Tracking Poll finds health care costs as the top health care issue mentioned by voters when asked what they want to hear 2018 candidates discuss. When asked to say in their own words what health care issue they most want to hear the candidates talk about during their upcoming campaigns, one-fifth (22 percent) of registered voters mention health care costs. This is followed by a series of other health care issues, such as Medicare/senior concerns (8 percent), repealing or opposition to the Affordable Care Act (7 percent), improve how health care is delivered (7 percent), increasing access/decreasing the number of uninsured (6 percent), or a single-payer system (5 percent). Health care costs is the top issue mentioned by Democratic voters (16 percent) and independent voters (25 percent), as well as one of the top issues mentioned by Republican voters (22 percent), followed by repealing or opposing the ACA (17 percent).

Figure 1: Health Care Costs Are Top Health Care Issue Voters Want 2018 Candidates to Talk About During Their Campaigns

Battleground Voters

Health care costs are also the top issue mentioned by voters living where there are competitive House, Senate, or Governor races. One-fourth (23 percent) of voters in areas with competitive elections mention health care costs when asked what health care issue they most want to hear candidates talk about. Fewer mention other health care issues such as improve how health care is delivered (9 percent) or increasing access/decreasing the number of uninsured (6 percent).

2018 Midterm Election Analysis

As part of Kaiser Family Foundation’s effort to examine the role of health care in the 2018 midterm elections, throughout the year we will be tracking the views of voters – paying special attention to those living in states or congressional districts in which both parties have a viable path to win the election. This group, referred to in our analysis as “voters in battlegrounds” is defined by the 2018 Senate, House, and Governor ratings provided by The Cook Political Report. Congressional and Governor races categorized as “toss-up” were included in this group. A complete list of the states and congressional districts included in the comparison group is available in Appendix A.

The Affordable Care Act

This month’s Kaiser Health Tracking Poll finds a slight increase in the share of the public who say they have a favorable view of the 2010 Affordable Care Act (ACA). The share of the public who say they hold a favorable view of the law has increased to 54 percent (from 50 percent in January 2018) while 42 percent currently say they hold an unfavorable view. This is the highest level of favorability of the ACA measured in more than 80 Kaiser Health Tracking Polls since 2010.  This change is largely driven by independents, with more than half (55 percent) now saying they have a favorable opinion of the law compared to 48 percent last month. Large majorities (83 percent) of Democrats continue to view the law favorably (including six in ten who now say they hold a “very favorable” view, up from 48 percent last month) while nearly eight in ten Republicans (78 percent) view the law unfavorably (unchanged from last month).

Figure 2: More of the Public Hold a Favorable View of the ACA

Public Awareness of the Repeal of the ACA’s Individual Mandate

The February Kaiser Health Tracking Poll finds a slight uptick (from 36 percent in January 2018 to 41 percent this month) in the share of the public who are aware that the ACA’s requirement that nearly all individuals have health insurance or else pay a fine, known commonly as the individual mandate, has been repealed. Yet, misunderstandings persist. The majority of the public (61 percent) are either unaware that this requirement has been repealed (40 percent) or are aware that it has been repealed but incorrectly think the requirement is not in effect in 2018 (21 percent of total). Few (13 percent) are aware the requirement has been repealed but is still in effect for 2018.

Figure 3: Confusion Remains on the Status of the ACA’s Individual Mandate

Medicaid

In recent months, President Trump’s administration has supported state efforts to make changes to their Medicaid programs, the government health insurance and long-term care program for low-income adults and children. Seven in ten Americans say they have ever had a connection to the Medicaid program either directly through their own health insurance coverage (32 percent) or their child being covered by the program (9 percent), or indirectly through a friend or family member covered by the program (29 percent).

Figure 4: Seven in Ten Americans Say They Have Ever Had A Connection to Medicaid

Majority of the Public Holds Favorable Views of Medicaid and Thinks the Program is Working Well

Overall, the majority of the public (74 percent) holds favorable views of Medicaid, including four in ten who have a “very favorable” view. About one-fifth of the public (21 percent) hold unfavorable views of the program. Unlike attitudes towards the ACA, opinions towards Medicaid are not drastically different among partisans and majorities across parties report favorable views. However, a larger share of Republicans do hold unfavorable views (29 percent) compared to independents (21 percent) or Democrats (13 percent).

Figure 5: Large Shares Across Parties Say They Have a Favorable Opinion of Medicaid

In addition, more believe the program is working well than not working well for most low-income people covered by the program. This holds true across partisans with about half saying the Medicaid program is “working well” and about one-third saying it is “not working well.”

Figure 6: Larger Shares Say Medicaid Is Currently Working Well for Most Low-Income People Covered by the Program

Support for Medicaid Expansion in Non-Expansion States

One of the major changes brought on by the ACA was the option for states to expand Medicaid to cover more low-income people. As of February 2018, 18 states have not expanded their Medicaid programs.

Figure 7: Status of Medicaid Expansion Among States

Among individuals living in states that have not expanded their Medicaid programs, most (56 percent) say they think their state should expand Medicaid to cover more low-income uninsured people while four in ten (37 percent) say their state should keep Medicaid as it is today. Slightly more than half of Republicans living in non-expansion states say their state should keep Medicaid as it is today (54 percent) while four in ten (39 percent) say their state should expand their Medicaid program. Majorities of Democrats (75 percent) and independents (57 percent) say their state should expand their Medicaid program.

Figure 8: Democrats and Independents Are More Likely to Want Their State to Expand Medicaid Than Republicans

Proposed Changes to Medicaid

SECTION 1115 WORK REQUIREMENT WAIVERS

In January, the Centers for Medicare and Medicaid Services (CMS) provided new guidance for Section 1115 waivers, which would allow states to impose work requirements for individuals to be covered by Medicaid benefits. As of February 21, CMS has approved work requirement waivers in two states (KY and IN) and eight other states have pending requests.1 When asked what they think the reasoning is behind these proposed changes to Medicaid, a larger share of the public (41 percent) believe the main reason is to reduce government spending by limiting the number of people on the program than say the main reason is to help lift people out of poverty (33 percent). There are differences among demographic groups with a larger share of Democrats and independents believing the main reason is to reduce government spending, while Republicans are more divided with similar shares saying the main reason is to lift people out of poverty (42 percent) as reduce government spending (40 percent).

Figure 9: Republicans Are Divided on the Main Reason Behind the Trump Administration Permitting Work Requirements

There are also differences between individuals living in states that have either filed a Medicaid waiver for a work requirement or have had a waiver approved and those living in states that do not have Medicaid work requirement waivers pending or approved.2 Individuals living in states with pending or approved Medicaid work requirements are divided on whether the main reason for these limits is to lift people out of poverty (37 percent) or reduce government spending (36 percent). This holds true even when controlling for other demographic variables such as party identification and income that may influence beliefs.

Figure 10: Those in States with Medicaid Work Requirements Are Divided on the Main Reason Behind Them

SECTION 1115 LIFETIME LIMIT WAIVERS

In addition to work requirement waivers, five states are currently seeking waivers from the Trump administration to impose Medicaid coverage limits. These “lifetime limits” would cap Medicaid health care benefits for non-disabled adults. When asked how they think Medicaid should work, two-thirds of the public say Medicaid should be available to low-income people for as long as they qualify, without a time limit, while one-third say it should only be available to low-income people for a limited amount of time in order to provide temporary help. The vast majority of Democrats (84 percent) and most independents (64 percent) say Medicaid should be available without lifetime limits, while Republicans are divided with similar shares saying they favor time limits (51 percent) as saying they do not favor such limits (47 percent). Seven in ten (71 percent) of individuals who have ever had a connection to Medicaid say they do not support lifetime limits compared to three in ten (28 percent) who say it should only be available for a limited amount of time in order to provide temporary help.

Figure 11: Majorities of Democrats and Independents Say Medicaid Should Be Available Without a Time Limit; Republicans Are Divided

 

 

Poll: 44% Of Americans Skip Doctor Visits Because Of Cost

https://www.forbes.com/sites/brucejapsen/2018/03/26/poll-44-of-americans-skip-doctor-visits-due-to-cost/#31398d56f57e

Because of the high cost of healthcare, 44% Americans didn’t go see a physician last year when they were sick or injured, according to a new survey.

The West Health Institute/NORC at the University of Chicago national poll comes as policymakers and health insurance companies are predicting a jump in health premiums and out-of-pocket costs, particularly for Americans with individual coverage under the Affordable Care Act. The $1.3 trillion spending bill signed into law last week by President Donald Trump didn’t include reinsurance programs and money to restore Obamacare funds to help Americans pay co-payments and deductibles despite bipartisan support in the Senate.

Cost continues to be a barrier to treatment with 40% of Americans who say they “skipped a recommended medical test or treatment in the last 12 months due to cost.” Another 32% were “unable to fill a prescription or took less of a medication because of the cost,” the West Health/NORC poll of more than 1,300 adults said.

“The high cost of healthcare has become a public health crisis that cuts across all ages as more Americans are delaying or going without recommended medical tests and treatments,” West Health Institute chief medical officer Dr. Zia Agha said in a statement accompanying the poll results. The survey is being released at this week’s American Society on Aging 2018 Aging in America Conference in San Francisco.

The West Health-NORC poll is the latest national survey showing Americans continued frustration with high healthcare costs even as the U.S. spends more than $3.3 trillion annually on healthcare.

Several recent polls have indicated healthcare is back on the top of voters’ concerns as they head to the polls this November for mid-term Congressional and statewide general elections. A Kaiser Health Tracking poll published earlier this month ranked “health care costs as the top health care issue mentioned by voters when asked what they want to hear 2018 candidates discuss.”

 

 

 

Why DOJ must block the Cigna-Express Scripts merger

Why DOJ must block the Cigna-Express Scripts merger

Why DOJ must block the Cigna-Express Scripts merger

If one message is becoming clear, it’s that increased concentration is harming consumers and leading to less competition, decreased choice and higher cost. The need for corporations to compete is dampened when markets are dominated by a small number of firms. Worse, when consumers don’t have the ability to discipline markets there is a lack of transparency or accountability.

Nowhere is that more true than in the market for Pharmacy Benefit Managers (PBMs) — the unregulated entities that control the reimbursement of drugs. These little known, unregulated middlemen are able to ramp up the cost of drugs by demanding rebates and other payments from drug manufacturersand because of a lack of transparency and choice they are able to pocket much of these rebates, escalating the cost of drugs.

The Council of Economic Advisors, after a comprehensive review of rising drug costs, identified the lack of PBM competition as a major culprit. It found that only three PBMs controlled more than 85 percent of the market, “which allows them to exercise undue market power against manufacturers and against the health plans and beneficiaries they are supposed to be representing, thus generating outsized profits for themselves.”

The effect of market power on rebates and other payments to PBMs is clear. As one study found pharmaceutical manufacturer rebates skyrocketed 108 percent from 2011 to 2016 — rising from $66 billion to $127 billion in those five years.

Do skyrocketing rebates benefit consumers? Not much. As Health and Human Services Secretary Alex Azar has observed, “this thicket of negotiated discounts makes it impossible to recognize and reward value, and too often generates profits for middlemen rather than savings for patients.” Consumers pay more because their copays are based on list prices that are inflated by the rebates and other payments secured by the PBMs.

You do not need a Ph.D. in economics to figure out that the market is not competitive and that consumers are paying more than they otherwise would. FDA Commissioner Scott Gottlieb observed, “Kabuki drug-pricing constructs — constructs that obscure profit taking across the supply chain that drives up costs; that expose consumers to high out of pocket spending; and that actively discourage competition.”

Gottlieb identifies the lack of PBM competition and transparency as the real culprit. “The consolidation and market concentration make the rebating and contracting schemes all that more pernicious. And the very complexity and opacity of these schemes help to conceal their corrosion on our system — and their impact on patients.”

Now the two largest PBMs seek to merge with two insurance giants — CVS Caremark’s proposed acquisition of Aetna and Cigna’s proposed acquisition of Express Scripts. I have already observed how the CVS deal will harm competition and consumers. Adding another deal is like fighting a fire with gasoline.

These mergers rightly face tough scrutiny before the Antitrust Division of the Department of Justice. As the American Antitrust Institute’s recent comprehensive white paper documents in detail, these mergers significantly threaten competition in health insurance, pharmacy and PBM markets and must be blocked.

And as Rep. Rick Crawford’s (R-Ariz.) recent letter to Attorney General Jeff Sessions opposing the CVS/Aetna merger nicely emphasizes, such “vertical integration does not encourage competition or lower prices, but rather, could limit the choices and access for patients, driving out competitors while driving up prices and reimbursements for themselves.”

The reasons are straightforward and compelling. Many insurance companies want the service of an independent PBM — one not aligned with a rival insurance company. PBM services and the ability to control pharmaceutical costs are a crucial input for any insurance company, especially since the costs of drugs is an increasing part of the costs that need to be controlled.

Such reforms would include meaningful transparency and disclosure of rebates to payers, eliminating pharmacy gag clauses that prevent pharmacists from disclosing lower priced drugs, preventing PBMs from egregious reimbursement practices that force pharmacists to dispense below cost, and proper disclosure of pricing to pharmacists. As a basic first step both Express Scripts and Cigna must commit to pass through rebates to lower consumer costs as UnitedHealthcare has done.

But even these commitments are probably not enough. History tells a dismal story — past mergers have harmed consumers through less choice and higher costs as PBM profits have soared. No promises of good conduct can overcome the excessive concentration in the PBM market. The CEA recommended, “policies to decrease concentration in the PBM market … can increase competition and further reduce the price of drugs.” DOJ can begin this process by preventing the market from getting worse and simply blocking these mergers.