As happened with cars in the 1960s, price competition among brand-name drugs is hard to find.
Before 1973, when the Arab oil embargo upended the U.S. auto industry, Americans witnessed an annual ritual by carmakers. In the late summer, the Big Three — Ford, Chrysler, and General Motors — would release sticker prices for their products, always showing increases, of course.
Almost always, the increases from each company for similar models were nearly identical. If one company’s was out of line — substantially bigger or smaller than its erstwhile competitors’ — it quickly made an adjustment. Explicit collusion to fix prices was never proven, but the effect for consumers was the same.
Now, researchers report that something very similar seems to be occurring for big-market brand-name drugs, including anti-diabetic medications and blood thinners.
Average wholesale prices for products in five classes — direct-acting oral anticoagulants (DOACs), P2Y12 inhibitors, glucagon-like peptide-1 (GLP-1) agonists, dipeptidyl dipeptidase-4 (DPP-4) inhibitors, and sodium-glucose transport protein-2 (SGLT-2) inhibitors — increased in “lock-step” each year from 2015 to 2020, according to Joseph Ross, MD, of Yale University in New Haven, Connecticut, and colleagues writing in JAMA Network Open.
These increases ranged from annual averages of 6.6% for DDP4 inhibitors to 13.5% for P2Y12 inhibitors — far outpacing not only inflation in general, but even the 2.1% average for all prescription drugs.
Within each class, Kendall τb correlation coefficients for average wholesale prices were as follows:
DOACs: 0.98
SGLT-2 inhibitors: 0.98
DPP-4 inhibitors: 0.96
GLP-1 agonists: 0.92
P2Y12 inhibitors: 0.75
“These results suggest there was little price competition among the sponsors of these products,” Ross and colleagues wrote.
Although the analysis came with significant limitations — it didn’t account for rebates or other discounts, for example — the researchers said some patients must suffer from these increases.
“Rebates, list prices, and net prices have been growing for brand-name medications, and rebate growth has been shown to positively correlate with list price growth, thereby impacting costs faced by patients paying a percentage of (or the full) list price,“ the group noted. “Therefore, the lock-step price increases of brand-name medications, without evidence of price competition, raise concerns and would be expected to adversely affect patient adherence to medications and thus clinical outcomes.”
For the car buyers, the solution to lock-step price increases was imposed from outside: soaring gas prices in the mid-1970s prompted demand for vehicles with better fuel economy than domestic makers were prepared to sell. That opened the market to Japanese cars that not only got better mileage, but were also more reliable and (in many cases) cheaper than Big Three products. Thus ended Detroit’s ability to set prices.
How to rein in Big Pharma is less clear. For their part, Ross and colleagues suggested policies to limit such lock-step price hikes, shortened patent exclusivity periods, and faster introduction of generic equivalents.
President Biden is scheduled to take executive actions as early as Thursday to reopen federal marketplaces selling Affordable Care Act health plans and to lower recent barriers to joining Medicaid.
The orders will be Biden’s first steps since taking office to help Americans gain health insurance, a prominent campaign goal that has assumed escalating significance as the pandemic has dramatized the need for affordable health care — and deprived millions of Americans coverage as they have lost jobs in the economic fallout.
Under one order, HealthCare.gov, the online insurance marketplace for Americans who cannot get affordable coverage through their jobs, will swiftly reopen for at least a few months, according to several individuals inside and outside the administration familiar with the plans. Ordinarily, signing up for such coverage is tightly restricted outside a six-week period late each year.
Another part of Biden’s scheduled actions, the individuals said, is intended to reverse Trump-era changes to Medicaid that critics say damaged Americans’ access to the safety-net insurance. It is unclear whether Biden’s order will undo a Trump-era rule allowing states to impose work requirements, or simply direct federal health officials to review rules to make sure they expand coverage to the program that insures about 70 million low-income people in the United States.
The actions are part of a series of rapid executive orders the president is issuing in his initial days in office to demonstrate he intends to steer the machinery of government in a direction far different from that of his predecessor.
Biden has been saying for many months that helping people get insurance is a crucial federal responsibility. Yet until the actions planned for this week, he has not yet focused on this broader objective, shining a spotlight instead on trying to expand vaccinations and other federal responses to the pandemic.
The most ambitious parts of Biden’s campaign health-care platform would require Congress to provide consent and money. Those include creating a government insurance option alongside the ACA health plans sold by private insurers, and helping poor residents afford ACA coverage if they live in about a dozen states that have not expanded their Medicaid programs under the decade-old health law.
A White House spokesman declined to discuss the plans. Two HHS officials, speaking on the condition of anonymity about an event the White House has not announced, said Monday they were anticipating that the event would be held on Thursday.
According to a document obtained by The Washington Post, the president also intends to sign an order rescinding the so-called Mexico City rule, which compels nonprofits in other countries that receive federal family planning aid to promise not to perform or encourage abortions. Biden advisers last week previewed an end to this rule, which for decades has reappeared when Republicans occupied the White House and vanished under Democratic presidents.
The document also says Biden will disavow a multinational antiabortion declaration that the Trump administration signed three months ago.
The actions to expand insurance through the ACA and Medicaid come as the Supreme Court is considering two cases that could shape the outcome. One case is an effort to overturn rulings by lower federal courts, which have held that state rules, requiring some residents to work or prepare for jobs to qualify for Medicaid, are illegal. The other case involves an attempt to overturn the entire ACA.
According to the individuals inside and outside the administration, the order to reopen the federal insurance marketplaces will be framed in the context of the pandemic, essentially saying that anyone eligible for ACA coverage who has been harmed by the coronavirus will be allowed to sign up.
“This is absolutely in the covid age and the recession caused by covid,” said a health-care policy leader who has been in discussions with the administration. “There is financial displacement we need to address,” said this person, who spoke on the condition of anonymity to describe plans the White House has not announced.
The reopening of HealthCare.gov will be accompanied by an infusion of federal support to draw attention to the opportunity through advertising and other outreach efforts. This, too, reverses the Trump administration’s stance that supporting such outreach was wasteful. During its first two years, it slashed money for advertising and for community groups known as navigators that helped people enroll.
It is not clear whether restoring outreach will be part of Biden’s order or will be done more quietly within federal health-care agencies.
Federal rules already allow people to qualify for a special enrollment period to buy ACA health plans if their circumstances change in important ways, including losing a job. But such exceptions require people to seek permission individually, and many are unaware they can do so. Trump health officials also tightened the rules for qualifying for special enrollment.
In contrast, Biden is expected to open enrollment without anyone needing to seek permission, said Eliot Fishman, senior director of health policy for Families USA, a consumer health-advocacy group.
In the early days of the pandemic, the health insurance industry and congressional Democrats urged the Trump administration to reopen HealthCare.gov, the online federal ACA enrollment system on which three dozen states rely, to give more people the opportunity to sign up. At the end of March, Trump health officials decided against that.
During the most recent enrollment period, ending the middle of last month, nearly 8.3 million people signed up for health plans in the states using HealthCare.gov. The figure is about the same as the previous year, even though it includes two fewer states, which began operating their own marketplaces.
Leaders of groups helping with enrollment around the country said they were approached for help this last time by many people who had lost jobs or income because of the pandemic.
The order involving Medicaid is designed to alter course on experiments — known as “waivers” — that allow states to get federal permission to run their Medicaid programs in nontraditional ways. The work requirements, blocked so far by federal courts, are one of those experiments. Another was an announcement a year ago by Seema Verma, the Trump administration’s administrator of the Centers for Medicare and Medicaid Services, that states could apply for a fundamental change to the program, favored by conservatives, that would cap its funding, rather than operating as an entitlement program with federal money rising and falling with the number of people covered.
“You could think about it as announcing a war against the war on Medicaid,” said Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation.
Dan Mendelson, founder of Avalere Health, a consulting firm, said Biden’s initial steps to broaden insurance match his campaign position that the United States does not need to switch to a system of single-payer insurance favored by more liberal Democrats.
The orders the president will sign “are going to do it through the existing programs,” Mendelson said.
Hospitals are now required to disclose the prices they secretly negotiate with insurers.
But many are dragging their feet on the new regulations, which were passed under President Donald Trump and could very well stay in place under President Biden.
The rules went into place Jan. 1, but hospital compliance is spotty.
“Hospitals are playing a hide-and-seek game,” said Ge Bai, an expert on health-care pricing at Johns Hopkins Bloomberg School of Public Health.“Even with this regulation, most of them are not being fully transparent.”
Hospitals lost a bruising court battle last year to stop the rules, which require them to publish a list of prices for goods and services. The point is to bring more transparency to prices for medical goods and services — information that has long been inaccessible to consumers. The new rules were a centerpiece of Trump’s promise to inject more price transparency in the health-care system and curb surprise billing.
But Nisha Kurani, a policy analyst at the Kaiser Family Foundation who is tracking hospital responses to the new rule, said she’s seen the full gamut.
MedStar in Washington posted its prices in an Excel sheet on its website, but other hospitals only posted price estimates, uploaded files in difficult to use formats, or promised to release information only after someone inputs their insurance, Kurani said.
A Gothamist investigation found that only one of five major New York hospitals posted a list of their negotiated services to their website, and even then, not for all procedures. The fine for not complying with the new rules — $300 a day — is a drop in the bucket for many hospitals.
The rules probably aren’t going away anytime soon.
The Biden administration hasn’t taken any public position on the rules — and right now, officials are focused on reversing dozens of other Trump administration regulations they believe are damaging to health insurance and costs in the United States.
Revising the hospital transparency rules — if that’s even something the new administration wants to do — would likely be far down on the priority list, despite heavy lobbying by the hospital industry to suspend enforcement of the new rule.
Plus, price transparency is broadly popular among the public and was one of the planks of a joint health policy plan developed by a task force Biden formed with Sen. Bernie Sanders (I-Vt.) after the 2020 primary elections.
The American Hospital Association says staff who would help with compliance are stretched thin.
Molly Smith, the association’s group vice president for public policy, said many of the staff members who would normally be tasked with compiling and formatting the price data are the same people being asked to help set up patient registries and vaccine tracking systems in response to the pandemic.
“We’ve got a lot of hospitals that are at or beyond capacity,” Smith said.
A lawyer for the hospital association said that it is considering petitioning its legal case to the Supreme Court. Meanwhile, the lobbying group has been pushing the Biden administration to suspend enforcement of the new rule.
Consumer advocates like the transparency rules designed to protect patients and drive down health-care costs.
“In the past there was absolutely no power for the consumer. It was like highway robbery being committed every day by the health-care system,” said Cynthia Fisher, head of the nonprofit Patient Rights Advocate, which pushes for price transparency.
But now, Fisher says, “it’s the American consumer who is going to drive down the cost of care.”
But the effect might be modest.
Experts in health-care economics hotly debate whether the price transparency rules will, in fact, drive down costs. Even those who support the changes say the effect might be incremental.
“I don’t think it’s going to be an earthquake in terms of pricing, but it’s a first step in the right direction,” said Bai.
There are several reasons the new price transparency rule may not have a massive effect on hospital prices. Perhaps the biggest, and one often cited by the hospital lobby, is that most Americans are not going to pay the negotiated price for a procedure. Instead, they are likely to pay co-pays or coinsurance that amount to a fraction of this price.
This isn’t always true, of course. Those with high-deductible plans may pay the negotiated rate, and for those without insurance paying out of pocket, it can be helpful to get a peek behind the sticker price. But even for these patients, it may be challenging to extract useful information from unwieldy spreadsheets full of obscure billing codes.
Bai said that she is hopeful that third parties may make some of the pricing information easier for consumers to use. And some self-insured employers may start identifying cheaper providers and incentivizing patients to use them. The rules also require hospitals to provide cost-sharing estimates for commonly used procedures in an easily navigable format.
Still, price competition works only if there are players to compete.
The market for health care has become increasingly consolidated as hospitals merge and buy up physician practices. If a hospital is the only health-care provider in town, then there’s not a whole lot patients can do about high prices, even if they think they’re unfair.
“I don’t think transparency will fundamentally change the power balance between the payer and the hospital in many markets,” Bai said.
As one of his first official actions upon taking office Wednesday, President Biden signed an executive order implementing a federal mask mandate, requiring masks to be worn by all federal employees and on all federal properties, as well as on all forms of interstate transportation. Yesterday Biden followed that action by officially naming his COVID response team, and issuing a detailed national plan for dealing with the pandemic. Describing the plan as a “full-scale wartime effort”, Biden highlighted the key components of the plan in an appearance with Dr. Anthony Fauci and COVID response coordinator Jeffrey Zients.
The plan instructs federal agencies to invoke the Defense Production Act to ensure adequate supplies of critical equipment, including masks, testing equipment, and vaccine-related supplies; calls for new nationalguidelines to help employers make workplaces safe for workers to return to their jobs, and to make schools safe for students to return; and promises to fully fund the states’ mobilization of the National Guard to assist in the vaccine rollout.
Also included in the plan is a new Pandemic Testing Board, charged with ramping up multiple forms of COVID testing; more investment in data gathering and reporting on the impact of the pandemic; and the establishment of a health equity task force, to ensure that vulnerable populations are an area of priority in pandemic response.
But Biden can only do so much by executive order. Funding for much of his ambitious COVID plan will require quick legislative action by Congress, meaning that the administration will either need to garner bipartisan support for its proposed “American Rescue Plan” legislation, or use the Senate’s budget reconciliation process to pass the bill with a simple majority (with Vice President Harris casting the tie-breaking vote). Even that may prove challenging, given skepticism among Republican (and some moderate Democratic) senators about the $1.9T price tag for the legislation.
We’d anticipate intense bargaining over the relief package—with broad agreement over the approximately $415B in spending on direct COVID response, but more haggling over the size of the economic stimulus component, including the promised $1,400 per person in direct financial assistance, expanded unemployment insurance, and raising the federal minimum wage to $15 per hour.
Some of the broader economic measures, along with the rest of Biden’s healthcare agenda and his larger proposals to invest in rebuilding critical infrastructure, may have to wait for future legislation, as the administration prioritizes COVID relief as its first—and most important—order of business.
Beyond the initiatives directly tied to COVID relief, President Biden’s healthcare agenda includes a broader bolstering of the protections and coverage mechanisms in the Affordable Care Act (ACA), as well as the rollback of several of the previous administration’s regulatory changes. We’ve outlined that agenda in the graphic below, as well as highlighting key members of the Biden healthcare team.
While much will depend on how the COVID pandemic continues to unfold, and how successful Biden is at striking bipartisan compromises with a closely divided Congress, we’re watching closely for the answers to several key questions:
(1) how aggressive can and will the new administration be in unwinding Trump-era reforms, particularly regarding Medicaid work requirements;
(2) what will be the thrust of Biden’s antitrust policyin the healthcare space;
(3) how hard will Biden be willing to push for expanded subsidies for individuals purchasing insurance on the ACA exchanges;
(4) how will the Biden team build on the transparency measures implemented by the Trump administration; and
(5) how will the new administration use payment reforms and other regulations to address racial and other disparities in healthcare?
All of that preceded by one burning question that has us holding our breath: who will Biden pick to run the all-important Centers for Medicare and Medicaid Services?
On January 14, 2021, Planned Parenthood Southeast and the Feminist Women’s Health Center filed a lawsuit challenging the Trump administration’s approval of Georgia’s waiver under Section 1332 of the Affordable Care Act (ACA). The lawsuit was filed in federal district court in DC. This post summarizes that legal challenge as well as parts of President Biden’s recent proposed pandemic relief package that relate to the ACA and coverage. The $1.9 trillion American Rescue Plan includes several coverage-related proposals and would follow the pandemic relief passed by Congress in December 2020.
Advocates Challenge The Approval of Georgia’s 1332 Waiver
Regular readers know that the Trump administration—through the Centers for Medicare and Medicaid Services (CMS) and the Treasury Department—approved a broad waiver request from Georgia under Section 1332 of the ACA. The approved waiver authorizes the state to establish a reinsurance program for plan year 2022 and eliminate the use of HealthCare.gov beginning with plan year 2023. CMS and Treasury approved the waiver application on November 1, 2020. The history of Georgia’s waiver application and approval is summarized in prior posts as well as in the complaint filed in the lawsuit.
The reinsurance portion of the waiver is straightforward; of the 16 states with an approved Section 1332 waiver, all but one state has established a state-based reinsurance program. But the second part of the waiver application, known as the Georgia Access Model, is far more controversial. This is the broadest waiver yet to be approved under Section 1332 and relies on interpretations of Section 1332 made in much-criticized Trump-era guidance from 2018.
Critics have long argued that Georgia’s proposal fails to satisfy Section 1332’s procedural and substantive guardrails, meaning it could not be lawfully approved by the Trump administration. Given this controversy, legal challenges to the waiver approval were expected.
The Lawsuit
Planned Parenthood Southeast and the Feminist Women’s Health Center—represented by Democracy Forward—filed a lawsuit in federal district court in DC on January 14, 2021. The lawsuit alleges that the Trump administration’s 2018 guidance and approval of Georgia’s waiver are unlawful because these actions violate Section 1332 of the ACA and the Administrative Procedure Act (APA). The lawsuit also cites many of the Trump administration’s ongoing efforts to undermine the ACA as evidence that the 2018 guidance and waiver approval are part of a pattern of ACA sabotage.
In particular, the plaintiffs argue that the 2018 guidance and waiver approval are contrary to Section 1332, exceed the scope of the agencies’ authority (by allowing states to waive non-waivable provisions of the ACA), and are arbitrary and capricious. They also argue that the waiver approval failed to satisfy procedural requirements under the ACA and APA because Georgia and the Trump administration “rushed through the process without adequate time for public comment and without adequate clarification of how the state intends to approach key issues.” Here, the lawsuit points to the fact that Georgia went through four iterations of its waiver application, that its application was incomplete, and that only eight comments (less than one half of one percent) of the 1,826 total comments submitted during the most recent federal public comment period were in support of the Georgia Access Model.
As such, the plaintiffs ask the court to vacate both the approved waiver and the 2018 guidance and declare that they are unlawful. They also ask that the federal government be enjoined from taking further action on Georgia’s waiver or considering other waivers under the 2018 guidance. The plaintiffs acknowledge that the reinsurance portion of the waiver is uncontroversial and that the focus of the lawsuit is on the Georgia Access Model; however, the plaintiffs challenge approval of the waiver as a whole and ask the court to set aside the waiver in whole or in part. The plaintiffs have not sued Georgia, although it is possible that Georgia may ask to intervene in the litigation to defend its interests.
Much of the lawsuit turns on how the Trump administration interpreted the statutory guardrails under Section 1332 and long-standing concerns about direct enrollment and enhanced direct enrollment.Federal officials can grant a Section 1332 waiver only if a state demonstrates that their proposal meets certain statutory “guardrails.”These guardrails ensure that a waiver proposal will 1) provide coverage that is at least as comprehensive as ACA coverage ( “comprehensiveness” guardrail); 2) provide coverage and cost-sharing protections that are at least as affordable as ACA requirements (“affordability” guardrail); 3) provide coverage to at least a comparable number of residents as under the ACA ( “coverage” guardrail); and 4) not increase the federal deficit. The Obama administration issued guidance in 2015 on its interpretation of these guardrails.
In 2018, the Trump administration replaced that guidance and adopted its own interpretation, which manyargued was inconsistent with Section 1332. The 2018 guidance tried to pave the way for the Trump administration to approve waivers where only some coverage under the waiver (instead of all coverage) satisfied the comprehensiveness and affordability guardrails. Under this view, waivers could be approved even if only some coverage under the waiver was as comprehensive, as affordable, and as available as coverage provided under the ACA. The 2018 guidance would also allow waivers to expand access to plans that do not have to meet the ACA’s requirements. (Separately, the Trump administration issued a final rule to codify the 2018 guidance’s interpretations into regulations.)
The lawsuit argues that the Georgia Access Model violates all four statutory guardrails because it will “drastically underperform the ACA.” The waiver proposal could lead to net enrollment losses in Georgia, which violates the coverage guardrail. The waiver could lead some consumers to enroll in non-ACA plans (such as short-term plans) with benefit gaps, which violates the comprehensiveness guardrail. And consumers will have to pay higher premiums and out-of-pocket costs through higher broker commissions, reduced competition, and adverse selection against the ACA markets, which violates the affordability guardrail and potentially the deficit neutrality guardrail (since higher ACA premiums mean higher federal outlays in the form of premium tax credits).
As health care providers in Georgia, Planned Parenthood Southeast and the Feminist Women’s Health Center allege they will be harmed for several reasons. They argue that the Georgia Access Model will make it more difficult and expensive for their patients to obtain health insurance. Fewer patients with health insurance will result in higher levels of uncompensated care. More uncompensated care will strain the plaintiffs’ resources and limit other services, such as community outreach. The loss of coverage resulting from the waiver will leave their patients in worse health and develop more complex treatment needs, making it more expensive for plaintiffs to treat those patients as a result. And approval of the waiver will make it more complicated for the plaintiffs to assist their patients with enrollment.
What Happens Next
The lawsuit was assigned to Judge James E. Boasberg of the federal district court for DC. Health policy watchers know Judge Boasberg as the judge who repeatedly invalidated the Trump administration’s approval of state Section 1115 waivers with work and community engagement requirements. He is thus no stranger to assessing the legality of waiver approvals under the APA and other federal statutes.
The lawsuit will proceed, and the Biden administration will be responsible for filing a response in court. One potential option could be for the Biden administration to ask the court for a stay while it revisits the approved waiver and perhaps holds another round of public comment on the most recent version of the waiver (which, as the lawsuit points out, was never submitted for public comment). The Biden administration could consider any new comments in reevaluating approval of the Georgia Access Model.
If the federal government newly concludes that the proposal fails to satisfy the substantive guardrails, it could have grounds to amend, suspend, or terminate Georgia’s waiver, so long as certain procedures are followed. This is because the terms and conditions of the waiver agreement between the federal government and Georgia (as well as implementing regulations) always give the federal government “the right to suspend or terminate a waiver, in whole or in part, any time before the date of expiration, if the Secretaries determine that the state materially failed to comply with the terms” of the waiver.
Georgia’s waiver agreement includes some unique terms and conditions relative to waivers in other states. Those terms seem designed to limit the federal government’s ability to suspend or terminate Georgia’s waiver. But the federal government can do so as long as it complies with relevant procedures. This includes notifying Georgia of its determination, providing an effective date, and citing reasons for the amendment or termination (i.e., why the Georgia Access Model fails to satisfy Section 1332’s substantive guardrails). Georgia would have 90 days to respond, with the possibility of providing a corrective action plan to come into compliance with the waiver conditions. Georgia must also be given an opportunity to be heard and challenge the suspension or termination.
Alternatively, the Biden administration could regularly assess and monitor the state’s compliance with the terms and conditions and its progress, or lack thereof, in implementing the Georgia Access Model. Federal officials do this with all waivers. Under the waiver approval, Georgia must, for instance, satisfy requirements related to funding, reporting and evaluation, development of an outreach and communications plan, and operational standards for eligibility determinations. If Georgia fails to comply with these terms and conditions, that too would be grounds to initiate the process to amend or terminate parts or all of Georgia’s waiver.
Coverage Provisions In Biden’s American Rescue Plan
On January 14, a few days before taking office, President Biden issued a 19-page fact sheet outlining his proposed American Rescue Plan to contain the COVID-19 virus and stabilize the economy. The announcement praised the bipartisan package adopted in December 2020 as “a step in the right direction” but notes that Congress did not go far enough to fully address the pandemic and economic fallout. Following Inauguration Day, Biden is expected to lay out an additional economic recovery plan.
Among many other initiatives, the comprehensive $1.9 trillion plan would provide funding for a national vaccination program, create a new public health jobs program, provide funding for schools to reopen safely, extend and expand emergency paid leave, extend and expand unemployment benefits, raise the minimum wage, and deliver $1,400 in support for people across the country. The Biden plan also calls for preserving and expanding health insurance, noting that 30 million people were uninsured even before the pandemic and that millions may have lost job-based coverage in 2020.
First, the American Rescue Plan calls for Congress to provide COBRA subsidies through the end of September. Presumably, these subsidies would be available from the beginning of 2021, rather than subsidizing premiums from 2020. COBRA subsidies during an economic emergency are not new. Congress subsidized COBRA premiums during the 2008 recession, with mixed results. Full COBRA subsidies were included in the original Heroes Act passed by the U.S. House of Representatives in May 2020, although not in the revised Heroes Act that was passed by the House in October 2020. But neither bill was ever taken up by the U.S. Senate. It is not clear from the fact sheet whether the Biden administration is aiming for full COBRA subsidies where the government would pay 100 percent of the premiums for COBRA coverage for laid-off workers and furloughed employees—or some other amount (e.g., 80 percent of premiums).
Second, the American Rescue Plan would accomplish one of candidate Biden’s key campaign promises by expanding and increasing the value of premium tax credits under the ACA. Democrats in Congress have repeatedly passed legislation that would accomplish what the American Rescue Plan fact sheet seems to call for. For instance, the Patient Protection and Affordable Care Enhancement Act—passed by the House in July 2020—would have expanded the availability of premium tax credits to those whose income is above 400 percent of the federal poverty level and made those credits more generous by reducing the level of income that an individual must contribute towards their health insurance premiums to 8.5 percent for those with the highest incomes. This subsidy expansion and enhancement would improve the affordability of coverage for millions of Americans who purchase coverage in the individual market.
Beyond COBRA and ACA subsidies, the American Rescue Plan calls for additional funding for veterans’ health care needs and for the Substance Abuse and Mental Health Services Administration and the Health Resources and Services Administration to expand access to behavioral health services. The proposal would also increase the federal Medicaid assistance percentage (FMAP) to 100 percent for the administration of COVID-19 vaccines to help ensure that all Medicaid enrollees will be vaccinated. The proposal does not appear to otherwise mention Medicaid, which is serving as a key safety net as incomes have dropped for millions of Americans, despite bipartisan support for an enhanced FMAP during the pandemic.
Neighborhoods in cities like Chicago are rapidly becoming places where people can’t fill medical prescriptions locally because their drugstores have shuttered or don’t accept Medicaid.
Why it matters:The pandemic has accelerated the growth of “pharmacy deserts” as unprofitable and less-profitable stores have closed. It’s a worrisome trend for the urban poor, who are less likely to try online pharmacies and more likely to let their drug regimens lapse when they can’t get medication locally.
Driving the news: Effective Dec. 1, Medicaid patients in Illinois — of which there are 400,000, per the Chicago Tribune — could no longer get their prescriptions filled at Walgreens, a prevalent chain headquartered in a Chicago suburb.
The change came because Aetna, which provides contracts with the state of Illinois to serve Medicaid recipients, dropped Walgreens as a provider. CVS — a top Walgreens rival — owns Aetna as well as the pharmacy benefits manager CVS Caremark.
CVS “has no pharmacies in five key West Side neighborhoods,” per the Tribune.
Illinois state Rep. La Shawn Ford called Aetna’s decision “pathetic” and told the Tribune, “It’s an attack not just on Black people, but on those that are struggling during the pandemic.”
The backstory:Researcher Dima Qato coined the term “pharmacy desert” in a 2014 article that found there were far fewer pharmacies in Chicago’s Black neighborhoods than in white and mixed neighborhoods.
Medicaid policies like the one in Illinois “are all over the country, where Medicaid dictates where and where you can go fill your medication,” Qato tells Axios. “And that leads to certain pharmacies having less patients in them, which leads to less profits, which leads to closures.”
Qato — who recently took a post as a professor at the University of Southern California, and is in the process of moving from Chicago — said that the new Medicaid policy in Illinois is generating “a lot of outrage in the community right now.”
Per Qato’s definition, people live in a “pharmacy desert” if they can’t fill a prescription within a half-a-mile of their homes (for low-income people without cars), and a mile for others.
“We’ve estimated it for Chicago at a third of the city’s population, with substantial difference by racial composition,” Qato says.
Between the lines:Because pharmacies get the lowest reimbursements for filling Medicaid prescriptions, they’re more likely to close stores in low-income neighborhoods and open them in wealthy ones, notes Antonio Ciaccia, chief strategy officer of 3 Axis Advisors, a consultancy focused on the drug supply chain.
“We’re seeing a general retreat from impoverished areas,” said Ciaccia, who serves as an adviser to the American Pharmacy Association.
Of note:Studies draw a direct line between pharmacy closures and people stopping their vital medications — with terrible health outcomes.
Adults over 50 were more likely to drop their cardiovascular pills after their local drug store closed, according to a study published in the Journal of the American Medical Association in 2019 (of which Qato is the lead author).
Benjy Renton, the Middlebury College senior who has been closely tracking the COVID-19 outbreak, noted on Twitter that pharmacy deserts could hold back the administration of vaccines.
What’s next:While “food deserts,” where inner-city residents lack access to fresh and healthy groceries, are a bigger problem in places like New York City, pharmacy access is a growing concern. The number of drugstores has declined 20% in NYC since 2016, according to Jonathan Bowles, executive director of the Center for an Urban Future.
“I for one will miss the 70 Duane Reades that closed this year,” was the headline of an an article that New York Magazine’s “Curbed” ran on Dec. 30. (Duane Reade is owned by Walgreens.)
/cdn.vox-cdn.com/uploads/chorus_asset/file/18046968/web_1863137.jpg)
HENRY KOTULA 