Election 2020: Trump and Biden’s starkly diverging views on healthcare

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Spoiler: the 2 nominees differ on almost everything.

President Donald Trump and Democrat nominee Joe Biden’s starkly contrasting views on healthcare were laid bare during this week’s chaotic debate. But some major industry executives noted at a recent conference they’ve done relatively well under Trump and could likely weather a Biden presidency, given his moderate stance and rejection of liberal dreams of “Medicare for All.”

The former vice president stresses incremental measures to shore up President Barack Obama’s landmark Affordable Care Act. Trump’s campaign website has no list of healthcare priorities, making his record even more relevant to attempts to forecast his future policies.

“I think a lot of the president’s second term agenda will be extensions of things he’s done in his first term,” Lanhee Chen, domestic policy director at Stanford University’s Public Policy program, said at AHIP in September.

Either way, the impact of whoever lands in the White House next year still matters for the industry’s future.

And 33 seats in the Senate are also up for grabs in November, complicating the outlook. Two scenarios would likely lead to health policy gridlock, according to analysts and DC experts: Trump wins regardless of Senate outcome, or Biden wins and Republicans maintain control of the Senate. A third scenario, where Biden wins and Democrats retake the Senate, would be the most negative for healthcare stocks, Jefferies analysts say, while the other two outcomes would be a net positive or mostly neutral.

Here’s a look at where the candidates stand on the biggest healthcare issues: the coronavirus pandemic, the Affordable Care Act, changes to Medicare and Medicaid and lowering skyrocketing healthcare costs.

COVID-19 response

Trump

Of all wealthy nations, the U.S. has been particularly unsuccessful in mitigating the pandemic. The U.S. makes up 4% of the global population, but accounted for 23% of all COVID-19 cases and 21% of all deaths as of early September.

Public health experts assign the majority of the blame to an uncoordinated federal response, with the president electing to take a largely hands-off approach to the virus that’s killed nearly 207,000 people in the U.S. to date. That backseat stance is unlikely to change if Trump is elected to a second term.

In March, Trump said a final COVID-19 death toll in the range of 100,000 to 200,000 Americans would mean he’s “done a very good job.”

Critics blame shortages of supplies like test materials, personal protective equipment and ventilators, especially in the crucial early days of the pandemic, on Trump’s approach. States and healthcare companies have also reported challenges with shifting federal guidelines on topics from risk of infection to hospital requirements for reporting COVID-19 caseloads.

Trump has also pushed unproven treatments for COVID-19, giving rise to concerns about political influence on traditionally nonpartisan agencies like the Food and Drug Administration and the Centers for Disease Control and Prevention.

These concerns have colored Operation Warp Speed, the administration’s public-private partnership to fast-track viable vaccines. The operation received $10 billion in funds from Congress, but administration officials have also pulled $700 million from the CDC, even as top health officials face accusations of trying to manipulate CDC scientific research publications.

Fears that political motivations, not clinical rigor, are driving the historically speedy timeline could lower public trust in a vaccine once it’s eventually approved.

Trump has also repeatedly refused to endorse basic protections like widespread mask wearing, often eschewing the face covering himself in public appearances. He’s consistently downplayed the severity of the pandemic, saying it’ll go away on its own while suggesting falsely that rising COVID-19 cases were solely due to increased testing.

While Trump’s list of priorities for his second term include “eradicating COVID-19,” the plan is short on details. His most aggressive promise has been approval of a vaccine by the end of this year and creating all “critical medicines and supplies for healthcare workers” for a planned return to normal in 2021, along with refilling stockpiles to prepare for future pandemics.

Biden

Biden, for his part, would likely work to enact COVID-19 legislation and dramatically change the role of the federal government in pandemic response first thing if elected.

The Democratic candidate says he would re-assume primary responsibility for the pandemic. He plans to “dramatically scale up testing” and “giving states and local governments the resources they need to open schools and businesses safely,” per an August speech in Wilmington, Delaware.

Biden says he’d take a backseat to scientists and allow FDA to unilaterally make decisions on emergency authorizations and approvals.

The candidate supports reopening an ACA enrollment period for the uninsured, eliminating out-of-pocket costs for COVID-19 treatment, enacting additional pay and protective equipment for essential workers, increasing the federal match rate for Medicaid by at least 10%, covering COBRA with 100% premium subsidies during the emergency, expanding unemployment insurance and sick leave, reimbursing employers for sick leave and giving them tax credits for COVID-19 healthcare costs.

Trump opposes most of these measures, though he did sign COVID-19 relief legislation that upped the Medicaid match rate by 6.2% and extended the COBRA election period, though without subsidies.

Biden has said he’d be willing to use executive power for a national mask mandate, though ensuring compliance would be difficult. He’d also rejoin the World Health Organization, which Trump pulled the U.S. out of in May.

Affordable Care Act

Trump

On his first day in office, Trump issued an executive order saying: “It is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act.” But after the Republican repeal-and-replace effort floundered in 2017, the administration began steadily chipping away at key tenets of the decade-old law through regulatory avenues.

Trump has maintained he’ll protect the 150 million people with preexisting conditions in the U.S. But despite publicly promising a comprehensive replacement plan on the 2015 campaign trail (and at least five times this year alone), Trump has yet to make one public. The president did in September sign a largely symbolic executive order that it’s the stance of his administration to protect patients with preexisting conditions.

The president doesn’t mention the ACA in his list of second term priorities. The omission could have been intentional, as Trump is backing a Republican state-led lawsuit seeking to overturn the sweeping law, now pending in front of the U.S. Supreme Court and scheduled for oral arguments one week after the election.

The death of liberal justice Ruth Bader Ginsburg puts the law in an even more precarious position.

And Trump’s health agencies have enacted myriad policies keeping the law from functioning as designed.

The president signed legislation zeroing out the individual mandate penalty requiring people to be insured in 2017. The same year, he ended cost-sharing reduction payments to insurers, suggesting that would cause the ACA to become “dead.” But the marketplace generally stabilized.

The administration has also increased access to skimpier but cheaper coverage that doesn’t have to comply with the 10 essential health benefits under the ACA. The short-term insurance plans widely discriminate against people with pre-existing health conditions, even as a growing number of Americans, facing rising healthcare costs, enrolled, according to a probe conducted by House Democrats this year.

Trump has also encouraged state waivers that promote non-ACA plans, cut funding for consumer enrollment assistance and outreach, shortened the open enrollment period and limited mid-year special enrollments.

​Despite his efforts, the ACA has grown in popularity among voters on both sides of the aisle, mostly due to provisions like shoring up pre-existing conditions and allowing young adults to stay on their parent’s insurance until age 26.

Biden

If elected, Biden would likely roll back Trump-era policies that allowed short-term insurance to proliferate, and restore funding for consumer outreach and assistance, political consultants say.

Building on the law is the linchpin of Biden’s healthcare plan. The nominee has pledged to increase marketplace subsidies to help more people afford ACA plans through a number of policy tweaks, including lowering the share of income subsidized households pay for their coverage; determining subsidies by setting the benchmark plan at the pricier “gold” level; and removing the current cap limiting subsidies to people making 400% of the federal poverty level or below.

Biden maintains as a result of these changes, no Americans would have to pay more than 8.5% of their annual income toward premiums. They could save millions of people hundreds of dollars a month, according to a Kaiser Family Foundation analysis. Commercial payers mostly support these efforts, hoping they’ll stabilize the exchanges.

But a second prong of Biden’s health strategy is deeply unpopular with private insurers: the public option. Biden’s called for a Medicare-like alternative to commercial coverage, available to anyone, including people who can’t afford private coverage or those living in a state that hasn’t expanded Medicaid.

The rationale of the public plan is that it can directly negotiate prices with hospitals and other providers, lowering costs across the board. However, market clout will depend on enrollment, which is still to-be-determined.

Critics see the plan, which by Biden’s estimate would cost $750 billion over 10 years, as a down payment on Medicare for All. And the private sector worries it could threaten the very profitable healthcare industry, which makes up about a fifth of the U.S. economy.

Medicare

Trump

Neither Trump nor Biden supports Medicare for All, dashing the hopes of supporters of the sweeping insurance scheme for at least another four years.

“It has a pulse — it’s not dead — I just don’t see it happening in any near term,” John Cipriani, vice president at public affairs firm Global Strategy Group, said at AHIP.

Trump has promised to protect Medicare if elected to a second term, and it’s unlikely he’d make any major changes to the program’s structure or eligibility requirements, experts say.

But Medicare is quickly running out of money, and neither Trump nor Biden has issued a complete plan to ensure it survives beyond 2024. Political consultants think it’ll teeter right up to the edge of insolvency before lawmakers feel compelled to act.

The president’s administration has allowed Medicare to pay for telehealth and expanding supplemental benefits in privately run Medicare Advantage programs, efforts that would likely bleed into his second term — or Biden’s first, given general bipartisan support on both, experts say.

Under Trump, HHS did pass a site-neutral payment policy, cutting Medicare payments for hospital outpatient visits in a bid to save money. But Democratic lawmakers have argued Trump’s calls to get rid of the federal payroll tax, which partially funds Medicare, could throw the future of the cash-strapped program in jeopardy.

The president has also signed legislation experts say accelerated insolvency, including the Tax Cuts and Jobs Act of 2017, the Bipartisan Budget Act of 2018 and the Further Consolidated Appropriations Act of 2020, which repealed the ACA’s Cadillac tax — a tax on job-based insurance premiums above a certain level.

Nixing that tax lowered payroll tax revenue, also dinging Medicare’s shrinking trust fund.

Trump’s proposed budget for the 2021 fiscal year floated culling about $450 billion in Medicare spending over a decade. And repealing the ACA would also nix provisions that closed the Medicare prescription drug “donut hole,” that added free coverage of preventive services and reduced spending to strengthen Medicare’s winnowing Hospital Insurance Trust Fund.

Biden

Biden has proposed lowering the Medicare age of eligibility to 60 years, with the option for people aged 60-64 to keep their coverage if they like it. The idea is popular politically, though providers oppose it, fearful of losing more lucrative commercial revenue.

It would make about 20 million more people eligible for the insurance, but could also add even more stress onto the program, experts say. Biden’s campaign says it would be financed separately from the current Medicare program, with dollars from regular tax revenues, and will reduce hospital costs.

Biden also says he’d add hearing, vision and dental benefits to Medicare.

Medicaid

Trump

Trump’s tenure has also been defined by repeated efforts to prune Medicaid. The president has consistently backed major cuts to the safety net insurance program, along with stricter rules for who can receive coverage. That’s likely to continue.

Republican lawmakers maintain the program costs too much and discourages low-income Americans from getting job-based coverage, and have enacted policies trying to privatize Medicaid. The Trump administration took a step toward a long-held conservative dream earlier this year, when CMS invited state waivers that would allow states to deviate from federal standards in program design and oversight, in exchange for capped funding.

So far, no states have enacted the block grants.

The administration also aggressively encouraged states to adopt work requirements, programs tying Medicaid coverage to work or volunteering hours. A handful of states followed suit, but all halted implementation or rolled back the idea following fierce public backlash and legal ramifications.

And repealing the ACA would ax Medicaid expansion, which saved some 20,000 lives between 2014 and 2017, according to the Center on Budget and Policy Priorities.

Biden

Biden, however, wants to preserve expansion, and would take a number of other steps to bolster the program, including increasing federal Medicaid funding for home- and community-based services. The roughly 4.8 million adults in states that elected not to expand Medicaid would be automatically enrolled into his public option, with no premium and full Medicaid benefits.

Additionally, states that have expanded Medicaid could elect to move their enrollees into the public option, with a maintenance-of-effort payment.

Lowering costs of drugs and services

Trump

Efforts to lower prescription drug costs have defined Trump’s healthcare agenda in his first term, and been a major talking point for the president. That’s more than likely to continue into a second term, experts say, despite a lack of results.

Trump did cap insulin costs for some Medicare enrollees, effective 2021. He also signed legislation in 2018 banning gag clauses preventing pharmacists from telling customers about cheaper options.

But despite fiery rhetoric and a litany of executive orders, Trump has made little if any concrete progress on actually lowering prices. One week into 2020, drugmakers had announced price hikes for almost 450 drugs, despite small price drops earlier in Trump’s tenure.

Trump has proposed several ideas either dropped later or challenged successfully by drugmakers in court, including allowing patients to import drugs from countries like Canada, banning rebates paid to pharmacy benefit manufacturers in Medicare and forcing drugmakers to disclose the list prices of drugs in TV ads.

The president has signed recent executive orders to lower costs largely viewed as pre-election gambits, including one tying drug prices in Medicare to other developed nations and another directing his agencies to end surprise billing. Implementation on both is months away. Trump has also promised to send Medicare beneficiaries $200 in drug discount cards before the election, an effort slammed as vote-buying that would cost Medicare at least $6.6 billion.

Both Trump and Biden support eliminating surprise bills but haven’t provided any details how. That “how” is important, as hospitals and payers support wildly different solutions.

Biden

Biden also has a long list​ of proposals to curb drug costs, including allowing the federal government to negotiate directly with drug manufacturers on behalf of Medicare and some other public and private purchasers, with prices capped at the level paid by other wealthy countries. Trump actually supported this proposal in his 2016 campaign, but quickly dropped it amid fierce opposition from drugmakers and free market Republican allies.

Biden would also cap out-of-pocket drug costs in Medicare Part D — but wouldn’t ban rebates, as of his current plan, allow consumers to import drugs (subject to safeguards) and eliminate tax breaks for drug advertising expenses.

He would also prohibit prices for all brand-name and some generic drugs from rising faster than inflation under Medicare and his novel public option. Biden would create a board to assess the value of new drugs and recommend a market-based price, in a model that’s shown some efficacy in other wealthy countries like Germany.

Both Biden and Trump say they support developing alternative payment models to lower costs. But they diverge on the role of competition versus transparency in making healthcare more affordable. In a rule currently being challenged in court, Trump’s HHS required hospitals to disclose private negotiated prices between hospitals and insurers, with the hope price transparency will allow consumers to shop between different care sites and shame companies into lowering their prices.

Biden, by comparison, says he would enforce antitrust laws to prevent anti-competitive healthcare consolidations, and other business practices that jack up spending. Trump has been mum on the role of M&A in driving healthcare costs, and inherited a complacent Federal Trade Commission that’s done little to reduce provider consolidation. Until a contentious hospital merger in February this year, the FTC hadn’t opposed a hospital merger since 2016.

 

 

 

 

The future of the ACA takes center stage yet again

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The 2020 ACA Reporting & Regulation Landscape for US Employers ...

Across four nights of a national convention that was anything but conventional, with the nominating process, acceptance speeches, and traditional pomp and circumstance forced into a virtual format due to the coronavirus pandemic, Democrats returned to the healthcare playbook widely viewed as successful in the 2018 midterm elections.

In addition to promising a more robust and concerted response to the COVID crisis gripping the nation, party leaders vowed to protect and expand the Affordable Care Act (ACA), rather than aiming to replace it with the more aggressive “Medicare for All” (M4A) approach that dominated much of the discussion during the primary campaign.

In his acceptance speech on Thursday, Democratic nominee Joseph R. Biden, Jr. promised “a healthcare system that lowers premiums, deductibles, and drug prices by building on the Affordable Care Act he’s trying to rip away,” referring to President Trump’s continued support for the full repeal of the 2010 healthcare reform law.

Earlier, progressive runner-up and vocal M4A advocate Sen. Bernie Sanders signaled a closing of the party’s ranks around Biden’s more moderate approach: “While Joe and I disagree on the best path to get to universal coverage, he has a plan that will greatly expand healthcare and cut the cost of prescription drugs. Further, he will lower the eligibility age of Medicare from 65 to 60.”

Several other speakers highlighted the need to protect the ACA’s guarantee of affordable insurance to those with preexisting conditions, most powerfully the prominent M4A crusader Ady Barkan, who suffers from amyotrophic lateral sclerosis (ALS).

“Even during this terrible crisis,” Barkan said, “Donald Trump and Republican politicians are trying to take away millions of people’s health insurance.”

 

 

 

 

Administration’s talking health care again, with 2020 in mind

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Tell us: How has Trump handled healthcare in his first 100 days ...

Polls show voters say Joe Biden would handle the issue better. And Trump is running short on options to make concrete changes before November.

President Donald Trump is suddenly talking about health care again.

He signed several executive orders on drug pricing on Friday. He vowed to unveil some new health plan by the end of next week, although he hasn’t provided specifics or an explanation of how he’ll do it. His aides are touting a speech in which Trump will lay out his health care vision. White House counselor to the president Kellyanne Conway has been calling Trump “the health care president.”

Yet it’s unlikely to amount to much in terms of policy ahead of the election. There’s almost no chance Congress will enact any legislation on the issue before November and policy specialists say the executive orders in question will make changes only at the margins — if they make any changes at all. Trump has also previously vowed to roll out a grand health care plan without following through.

That leaves Trump with mostly rhetorical options — even if he insists otherwise — cognizant that voters consistently rank health care as a top priority and say Joe Biden, Trump’s presumptive 2020 rival, would handle the issue better than the president. Meanwhile, Trump is running for reelection having not replaced Obamacare or presented an alternative — all while urging the Supreme Court to overturn the decade-old health law. And millions of Americans are currently losing their health insurance as the coronavirus-gripped economy sputters.

“I think politically, the main objective will be to have something he can call a plan, but it will be smaller than a plan. Just something that he can talk about,” said Drew Altman, president and CEO of the Kaiser Family Foundation, a nonpartisan health policy organization. “But it’s almost inconceivable that anything can be delivered legislatively before the election.”

Trump has long stumped on his pledges to kill Obamacare, the law his predecessor implemented that expanded Americans’ access to health insurance, set baseline standards for coverage, introduced penalties for not having insurance and guaranteed coverage for preexisting conditions. But conservatives say the law introduced too many mandates and drove up costs.

But after winning election in 2016, Trump failed to overturn the law in Congress — or even offer an agreed upon alternative to the law — despite holding the majority in both chambers on Capitol Hill. Democrats then retook the House in the 2018 midterms, essentially ending any chances the law, formally known as the Affordable Care Act, would be repealed.

Even some conservatives said the ongoing failure to present a concrete replacement plan is helping the Democrats politically.

Republicans, said Joe Antos, a health expert at the conservative American Enterprise Institute, “spent basically 2010 to today arguing that the ACA is no good. After 10 years, clearly there are some problems with starting all over again. I haven’t detected very strong interest, at least among elected officials, in revisiting that.”

But the coronavirus pandemic has added pressure to address health care costs, and Trump has lagged behind Biden on his handling of the issue in polls. Fifty seven percent of registered voters recently polled by Quinnipiac said Biden would do a better job on health care than Trump, while only 35 percent approved of Trump’s handling of health care as president. And on the issue of affordability, a CNBC poll found 55 percent of battleground voters favored Biden and the Democrats, compared with 45 percent who preferred Trump and the Republicans.

“At this point, there are two huge issues, jobs and the economy, and health care, i.e., the coronavirus. If anything that’s simply been magnified,” said David Winston, a Republican pollster and strategist. “Given the fact that it’s one of the top issues, it’s not like there’s a choice but to talk about it. If candidates aren’t making statements and proposing solutions around that, it’s a requirement. Both candidates have to address it.”

Biden has campaigned on expanding Obamacare while also promising to implement a “public option” similar to Medicare, which is government-run health insurance for seniors. On drug pricing, he and Trump embrace some of the same ideas, like allowing the safe importation of drugs from other countries where they are cheaper. Biden also supports direct Medicare negotiation of drug prices, a Democratic priority that Trump supported during the 2016 campaign before reversing course.

“Donald Trump has spent his entire presidency working to take health care away from tens of millions of Americans and gut coverage for preexisting conditions,” said Andrew Bates, a Biden campaign spokesman. “If the Trump campaign wants to continue their pattern of highlighting the worst possible contrasts for Donald Trump, we certainly won’t stop them.”

The Trump administration insists it can point to several health care victories during Trump’s term.

Trump frequently notes the removal of the penalty for Americans who do not purchase insurance as a major victory, falsely claiming it is equivalent to overturning Obamacare.

Trump also signed an executive order last year to fight kidney disease to encourage home dialysis and increase the amount of kidney transplants, and he expanded telehealth medicine during the pandemic.

More recently, the U.S. Court of Appeals for the District of Columbia upheld a Trump administration rule expanding the availability of short-term health plans, which Trump has touted as an alternative to Obamacare but Democrats deride as “junk.” The plans are typically cheaper than Obamacare coverage because they don’t provide the same level of benefits or consumer protections for preexisting conditions.

A federal judge in June similarly upheld another Trump administration rule requiring hospitals to disclose the prices they have negotiated with insurers. Price transparency in the health care system has long been a significant issue, with Americans rarely having clarity over how much their treatments will cost ahead of time. Trump called the win “bigger than health care itself,” in an apparent reference to Obamacare. It’s unclear whether transparency will force down health care prices, and hospitals opposing the rule have appealed the judge’s decision.

And on Friday at the White House, Trump held an event to sign four executive orders aimed at slashing drug pricing. The move aimed to tackle a largely unfulfilled signature campaign promise — that he would stop pharmaceutical companies from “getting away with murder.”

“We are ending the sellouts, betrayals and broken promises from Washington,” Trump said Friday.“You have a lot of broken promises from Washington.”

But the orders appeared largely symbolic for now, as they were not immediately enforceable, contained notable caveats and may not be completed before the election anyway. For instance, an order requiring drugmakers to pass along any discounts directly to seniors requires the health secretary to confirm the plan won’t result in higher premiums or drive up federal spending. But the White House had shelved that plan last summer over worries the move might hike seniors’ Medicare premiums ahead of the election and cost taxpayers $180 billion over the next decade.

Conway disputed that Trump had not made progress on issues like drug pricing.

“President Trump is directing the development of therapeutics and vaccines, has delivered lower prescription drug costs, increased transparency in pricing for consumers and is committed to covering preexisting conditions and offering higher quality health care with lower costs and more choices,” she said.

Yet a number of Trump’s other health care initiatives have faced hurdles — especially amid the coronavirus pandemic.

The opioid crisis, which the president had touted as a top priority and campaigned on in 2016, is getting worse. Drug overdose deaths hit a record high in 2019 and federal and state data shows they are skyrocketing in 2020.

“The overdose epidemic will not take a back seat simply because Covid-19 has hit us hard, and that needs to be reflected in policy,” said Andrew Kessler, founder and principal of Slingshot Solutions, a behavioral health consulting firm.

The president’s plan to end HIV by 2030 has similarly receded during the pandemic. And Trump’s proposal on improving kidney care — an issue that affects roughly 15 percent of American adults — is still in its early stages and will not be finalized until next year.

 

 

 

Taking a look at the Biden healthcare plan

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Now that the Democratic primary campaign has produced a clear front runner, it’s worth examining Joe Biden’s healthcare plan, which aims to expand the Affordable Care Act (ACA) by increasing access and affordability. As the graphic above highlights, former Vice President Biden has a broad—if at this point, still fairly high-level—proposal that includes a Medicare-like public option along with a variety of other ACA tweaks that aim to offer consumers more options and lower their healthcare costs.

These include allowing individuals in states without Medicaid expansion to join the pubic option premium-free, providing unlimited subsidy eligibility, and limiting drug price increases to the level of consumer inflation.

An independent analysis projects Biden’s plan would cost $2.25T and add an additional $800B to the deficit over 10 years. While large at first blush, these costs pale in comparison to Sen. Bernie Sanders’ Medicare for All plan, which would add a projected $12.95T to the deficit over the same period.

Of course, there are still many unanswered questions in Biden’s proposal, including how much consumers would pay under the public option, how much the public option plan would reimburse providers as a percentage of Medicare, and how the public option would impact competition among private insurers.

A public option offered at a significant discount has the potential to drive private plans out of business, which some project could eventually result in Medicare for All as an ultimate consequence. The devil will, as always, be in the details.

 

Two candidates remain: Mr. Medicare for All and Mr. Public Option

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Image result for Medicare for All and Public Option

The past week in Presidential politics has been momentous—but not clarifying—for determining both the eventual Democratic nominee and the healthcare platform of the party. Between the first ballots cast in South Carolina and the last votes counted in California, the field of viable candidates for the nomination has been winnowed to two: Vermont Sen. Bernie Sanders and former Vice President Joe Biden. The coming weeks will feature a knock-down, drag-out fight for delegates in the run-up to what is likely to be a contested convention in Milwaukee in mid-July, pitting Biden’s “establishment” wing of the party against Sanders’ “progressive” wing.

On the healthcare front, that means a continued debate between defenders of the Affordable Care Act (ACA), who want to extend coverage, as Biden does, using a government-run “public option” plan, and supporters of single-payer, “Medicare for All” (M4A) coveragewhich Sanders advocates. That’s the same argument Democrats have been having since the campaign started, and while healthcare remains the top issue of concern for primary voters, polls indicate that both plans are popular with the electorate.

We continue to believe that the public option plan is a far more likely outcome than M4A, but only if the Democrats win control of the Senate—a prospect which appears more possible given billionaire Mike Bloomberg’s post-Super Tuesday endorsement of Biden, and plans to devote his substantial campaign resources to support Democratic candidates across the ballot. Some of that money will surely be spent in Montana, where Gov. Steve Bullock is poised to announce plans to run against incumbent Sen. Steve Daines (R-MT), in a critical race that could be the most expensive Senate contest in history.

And for an indication of how the politics of a public option would play out, look no further than Colorado, where the Democratic legislature moved forward with its version of the plan this week, over the objections of the hospital and insurance lobbies.

Finally, looming over the general election campaign will be the pivotal Texas vs. California case, which the Supreme Court agreed to take up in this fall’s term. That case will ensure that healthcare will remain the centerpiece of American political debates regardless of who leads the Democratic ticket. Buckle up.

 

Learning to live on Medicare margins

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“If Democrats take back the Senate and win the White House, there’s a good chance they’ll implement some version of a public option or Medicare buy-in, and that would be devastating for the fragile economics of our health system.” That was the message delivered by the CEO of a system we were visiting recently, in her report to the board of directors.

That kind of alarmist message might seem career-limiting, but given the way the politics of healthcare are playing out at both the national and state levels (see Colorado and Washington State), it’s past time for executives to get beyond the rhetoric and begin to prepare for the real financial consequences of public option proposals.

That’s what this CEO had done—what followed the dire warning was a detailed analysis (which we helped assemble) of what would happen in various scenarios—what if one percent of our revenue shifted from commercial rates (around 250 percent of Medicare) to possible public option rates (somewhere between 140 and 180 percent of Medicare)? That’s a knowable number, and you can begin to make assumptions about how much business would shift under different scenarios, and how quickly.

The reality for health systems is that most of the margin comes from the 55-to-65-year-old population—who use more healthcare services but whose care is reimbursed at commercial rates. That cohort cross-subsidizes much of the rest of a typical hospital’s business.

The presentation to the board laid those economic realities out in concise detail—and provided a bracing wake-up call that the system needs to be prepared to live on a different level of margin than they enjoyed in the past.

That means radical cost controls, sharp reductions in “system bloat”, and a laser-like focus on shifting care to lower-cost settings. For years, hospital leaders have tossed around the notion that “we have to learn to live on Medicare margins”.

Given the rising popularity of public option policies (67 percent of Americans support the idea according to a recent poll, as do 42 percent of Republicans), that lesson may need to be learned sooner rather than later.

 

 

 

Health care is Iowa’s only winner right now

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Iowa Democrats reported last night that their biggest priorities were beating President Trump and health care — but the meltdown of their election reporting systems left their presidential choices unresolved.

Why it matters: We’ve been writing for months that Democrats have a major choice ahead, either picking an advocate of Medicare for All — and siding with the plan that’s less popular with the rest of the country — or a public option advocate.

  • The Iowa debacle means the path the party will take won’t be clear for a while longer.

By the numbers: Several polls — including ones by NBC News, the National Exit Poll and AP Votecast — found that around four in 10 caucus voters said health care was their top issue.

  • Previous polling has found that Medicare for All is less popular overall than a public option, but both were popular among Democratic caucus-goers last night.
  • Seven in 10 said they back a single-payer plan, and almost nine in 10 said they support a public option, per AP Votecast, which was conducted by NORC at the University of Chicago for The Associated Press and Fox News.

Yes, but: Caucus-goers said they prefer a Democratic candidate who can beat Trump over one that agrees with them on issues, CNN reports.

The big picture: Republicans are more than happy to talk about Medicare for All — and its subsequent tax increases and expanded government role in health care — instead of protecting and building on the Affordable Care Act.

  • Whereas the former gives them an opportunity to go on offense, the latter puts the GOP on defense against its 2017 repeal-and-replace efforts and ongoing lawsuit that would strike down the whole health care law, including its protections for pre-existing conditions.

 

The U.S. Spends $2,500 Per Person on Health Care Administrative Costs. Canada Spends $550. Here’s Why

https://time.com/5759972/health-care-administrative-costs/

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Whether it’s interpreting medical bills, struggling to get hospital records, or fighting with an insurance provider, Americans are accustomed to battling bureaucracy to access their health care. But patients’ time and effort are not the only price of this complexity. Administrative costs now make up about 34% of total health care expenditures in the United States—twice the percentage Canada spends, according to a new study published Monday in Annals of Internal Medicine.

These costs have increased over the last two decades, mostly due to the growth of private insurers’ overhead. The researchers examined 2017 costs and found that if the U.S. were to cut its administrative spending to match Canadian levels, the country could have saved more than $600 billion in just that one year.

“The difference [in administrative costs] between Canada and the U.S. is enough to not only cover all the uninsured but also to eliminate all the copayments and deductibles, and to amp up home care for the elderly and disabled,” says Dr. David Himmelstein, a professor at the CUNY School of Public Health at Hunter College and co-author of the study. “And frankly to have money left over.”

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Research has long shown that the U.S., which uses a disparate system of private providers and insurers, has higher administrative costs than other developed countries that use single-payer systems. But the Annals study puts a finer point on it: as the first major effort to calculate administrative costs across the U.S. health system in nearly two decades, the researchers found that the gap between the U.S. and Canada has widened significantly.

The U.S. now spends nearly five times more per person on health care administration than Canada does. The U.S. administrative costs came out to $812 billion in 2017, or $2,497 per person in the U.S. compared with $551 per person in Canada, according to the Annals study.

Along with Himmelstein, co-authors Steffie Woolhandler and Terry Campbell examined administrative costs for insurance companies and government agencies that administer healthcare, as well as costs in four settings: hospitals, nursing homes, home care agencies and hospices and physician practices. For each category, the researchers determined which costs were administrative and conducted analyses to adjust comparisons between relative costs in the U.S. and Canada.

Insurers’ overhead, the largest category, totaled $275.4 billion in the U.S. in 2017, or 7.9% of all national health expenditures, compared with $5.36 billion in Canada, or 2.8% of national health expenditures. The American number included $45 billion in government spending to administer health care programs and $229.5 billion in private insurers’ overhead and profits, which covers employer plans and managed care plans funded by Medicare and Medicaid.

This insurance overhead accounted for most of the total increase in administrative spending in the U.S. since 1999, according to the study. While the share of Americans covered by commercial insurance plans has not changed much, private insurers have expanded their role as subcontractors handling what are known as “managed care” plans for Medicaid and Medicare. The study notes that most Medicaid recipients are now on private managed care plans and about one third of Medicare enrollees now have Medicare Advantage plans. Both of these types of plans have higher overhead costs than the publicly administered alternatives.

“We were struck, and frankly hadn’t expected it until we delved into the data, by the huge increase in insurance overhead,” Himmelstein told TIME.

Other reports, including one by the Center for American Progress published last April, have identified ways to reduce administrative costs without moving the U.S. to a single-payer health care system. But Himmelstein says his study shows that a public option that preserves private insurance wouldn’t provide the same savings as a traditional single-payer system. “We could streamline the bureaucracy to some extent with other approaches, but you can’t get nearly the magnitude of savings that we could get with a single payer,” Himmelstein says, adding, “If the Medicare public option includes the Medicare Advantage plans, it’s actually conceivable that the public option would increase the bureaucratic costs.”

Most of the public option plans proposed by Democratic presidential candidates are not detailed enough to determine exact costs, Himmelstein says. But overall, he believes they won’t result in significant cost savings.

In addition to their research, Himmelstein and Woolhandler have been longtime advocates for single-payer health care. They co-founded the group Physicians for a National Health Program, which advocates for a single-payer system. They also conducted the initial health administrative costs study on 1999 data and have published other studies comparing hospital administrative costs in the U.S. and other countries.

Himmelstein says his team’s estimates of total U.S. administrative costs in the Annals study are likely conservative. When estimating physicians’ administrative costs, the researchers relied on a 2011 study of time spent by physicians and their staffs interacting with insurers. And he notes that while 2017 data was often the latest available when they were conducting this study, 2018 health spending numbers have since come out showing further increases in insurance overhead.

“We can afford universal coverage with a single payer plan, not just universal coverage but first dollar coverage for everybody in our country if we adopted a single-payer Medicare for all approach,” Himmelstein says. “If you’re going to cover everybody without getting those savings you’re going to have to spend more or you’re going to have to have big co-payments and deductibles that deter people from getting the care that they actually need.”

 

 

Hospitals and health systems: 6 trends and issues

https://www.beckershospitalreview.com/strategy/hospitals-and-health-systems-6-trends-and-issues.html

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This article discusses the current state and issues of hospitals and health systems for several different areas. First, this discusses types of hospitals and health systems. Second, it addresses what’s working and what’s not for health systems. Third, this discusses the mix of access, quality and cost as well as the shortages of different kinds of providers fourth. Fifth, this discusses policy issues and political issues. Sixth, we address threats and challenges.

1. 5,200+ acute-care hospitals. Currently, there are approximately 5,200 acute-care hospitals in the country. This number changes a little each year, with more closures than openings.

We view the landscape as one with seven core types of health systems. 

First, there’s what we think of as the very elite health systems, which are often academic medical centers. This usually includes the top 20 to 30 systems as ranked by U.S. News & World Report. These are typically great research institutions that provide great care in some of the most critical, life-threatening areas. This category may include hospitals like NewYork-Presbyterian, UChicago Medicine, Cleveland Clinic, Mayo Clinic, Northwestern Medicine and a number of other institutions that typically comprise the top 20 to 30 in the U.S. News & World Report’s Best Hospitals.

Second are regionally dominant systems. These systems are so important to a given area that they are often the focus point of care in said area. There are also situations where it’s very hard for payers and patients to go around these institutions — even if they wanted to. This might be an institution like Carilion Clinic or Sentara Healthcare in Virginia, Northwell in New York, Ochsner in Louisiana or NorthShore University Health System in the north suburbs of Chicago. It may be Advocate Aurora Health in the Chicagoland area and Eastern Wisconsin, Hartford HealthCare in Connecticut, Intermountain Healthcare in Utah and Idaho, and a number of institutions regionally strong in their areas.

A third type of system is the community hospital, typically the single- or two-hospital system. This could be rural, urban or suburban. Here, this may be a health system that has served as the core of primary care — and at one time tertiary care — for a community, but more and more has to have a certain reason for being, something that its really great at to remain relevant and open.

A fourth type of hospital is what we think of as a specialty hospital, usually built around a certain specialty like pediatrics, behavioral health, oncology or some other area. It is a hospital that has a specific focus and is just great at what it does, much like Hospital for Special Surgery in New York, which U.S. News & World Report has ranked as the No. 1 hospital in the country for orthopedics for the past 10 years.

National chains of hospitals and health systems make up the fifth type of system. This can be for-profit or nonprofit, and they come in a couple different varieties. First, they can pursue a strategy of being in lots of different markets, but regionally dominant in the markets they’re in. This has typically been the strategy for success. Second, they can pursue the strategy of having the most hospitals possible. This has typically not been a strategy for success. Market strength or market dominance and excellence in certain areas is far more important than having lots of different hospitals.

The sixth type of hospital that we think of as Kaiser Permanente. Here, we put Oakland, Calif.-based Kaiser Permanente in its own category. It is a regionally dominant system in certain parts, but more importantly it is vertically integrated with its own insurance plan. This has allowed Kaiser to do things in the cost savings areas and the efficiency area that many other systems have not been able to do. We have also found over the last decade that it is much harder for other systems to replicate what Kaiser has done, in terms of fully integrating insurance, than expected.

The seventh category of hospital we think of as the safety-net hospital. The safety-net hospital can really be in any of the above categories. We largely think of safety-net hospitals as those that are serving a huge percentage of Medicare and Medicaid patients. The safety-net hospital is a very important part of the fabric of American healthcare and the delivery system, and at the same time they often struggle to ensure they have the finances to make the system go.

2. What has worked the last 10 years? The three types of categories that have really worked the past 10 years are as follows.

First, one prescription for success has been to be regionally dominant. Whether a Novant Health or an Atrium Health, both based in North Carolina, or a system like Advocate Aurora in Wisconsin or ProMedica in Ohio, being regionally strong has been a prescription for success. It allows one to stack resources, invest in talent, invest in systems and get better and better.

The second prescription for success the last decade and for a long time is being an elite health system. As much as the world changes, these elite systems — whether Stanford Medicine, Mayo Clinic, Cleveland Clinic or UCLA Health — continue to be sought out for care and continue to recruit great physicians, researchers and providers. This may also include being elite in certain areas like Rush University Medical Center in Chicago in orthopedics, MD Anderson in oncology or a number of other actors that are elite.

The third type of category that has worked is clearly the Kaiser Permanente category. This is a situation where Kaiser is almost its own vehicle, led famously by the late Bernard J. Tyson. Over the years, Kaiser grew into being a great integrated system and was able to do things on the value-based side and make major investments to address social determinants of health that really no one else was able to do.

3. Access, quality and cost. There is constant discussion of access, quality and cost. As we look as things evolve, we see things as follows.

On the quality side, the American healthcare system seems to do a pretty good job of delivering pretty good care to a huge percentage of people. In essence, compared to other countries, the U.S. is providing care to more than 325 million people. While imperfect, it is pretty good. There are pockets of care in other countries that are certainly better and more advanced than it is here, but often in pockets versus an entire system.

In terms of access, the American healthcare system seems to be challenged in numerous ways. As shortages evolve, particularly among specialties and subspecialties, it is harder and harder to find access to the right type of provider when one needs that provider. Access can also be a challenge in many different ways for poor communities in our country and, of course, there is no quality without access.

A third issue in terms of the American healthcare system is cost. As costs continue to grow at a percentage higher than inflation, particular pockets of costs remain very challenging, specifically on the pharmaceutical side, technology side and labor side.

4. Shortages of doctors and allied health professionals. As we look at access challenges in the country, there is a perspective that it is very hard to solve without the minting of a great deal more of physicians and allied health professionals. Even as the ways care is delivered evolve, the physician shortage remains. We will see a shortage of up to nearly 122,000 physicians by 2032 as the population grows and ages and demand continues to grow faster than supply, the Association of American Medical Colleges.

There are different structural elements in place that make it hard to add on providers at a fast clip. For example, medical school, residency and fellowship take many years. In efforts to modernize medical education, there is a question as to whether that much education is needed. The American Medical Association is one body that is working with major institutions for accelerated programs, like a six-year model at University of California, Davis School of Medicine. The school offers a six-year path to practice — three years each of medical school and residency — in partnership with Kaiser Permanente Northern California.

As we look at our society, we probably need more incentive for people to go to medical school and graduate with medical degrees than are currently in place. The more one tries to attack some of benefits of being a physician, the harder it is to encourage the next generation to become physicians. In response, we do see a growing number of medical schools being opened, including those at Kaiser Permanente and Hackensack Meridian. We think this is absolutely critical. It is also critical that we develop more and more allied health professionals and those allied health professionals are largely able to practice at the top of their license.

Finally, there is this concept in medical school and in premed of “weed out” classes. We believe this is somewhat overdone and overemphasized, and many bright, talented people are weeded out that would be perfectly great physicians. As one resident at Stanford University School of Medicine put it, “Today we ‘weed out’ potentially wonderful doctors through a demoralizing maze of basic sciences that more often resembles the Hunger Games than a sensible recruitment process.”

5. Political polarization. In healthcare, and the hospital sector specifically, we see a great deal of political polarization. There are largely three different types of systems that people think about in terms of reform.

First, there is the “Medicare for All” perspective. While this would provide adequate “access” at a certain level for everybody in terms of health insurance coverage, there is concern from providers that reimbursement would be so low it would not encourage people to pursue medicine, thus flattening or denting the supply of physicians needed to provide the care that is needed.

Second, there is the concept of the “free market.” Here, the concept of a total free market and free market alternatives is somewhat illusory. In reality nearly 30 to 50 percent of most providers’ revenue comes from Medicare and Medicaid. Thus, you are never really dealing with a free market in healthcare. There are free market incentives — like health savings plans and transparency — that can help, but one is not in total dealing with a free market.

Third, is the concept of a public option. One way to think about a public option is to think about it as akin to the post office. One can either go to the post office to mail something via the United States Postal Service, or one could use UPS or Federal Express. The idea of a public option is that you would not have to buy insurance from an insurance company. Rather, you could buy into the Medicare program through a public option. Washington signed a public option into law this past summer and will launch it in 2021, becoming the first state to test the policy.

Whatever the answer is for healthcare reform, it is clear that the general public prefers two things. First, they like the concept that you should be able to buy insurance regardless of whether or not you have a pre-existing condition. Second, a large percentage of the public seems to prefer that there be some sort of public option to access care.

6. Threats and challenges. Some the challenges healthcare systems face today are as follows.

First, the strength of payers and the power they hold, especially as they diversify and broaden their scope of business. Under the UnitedHealth Group umbrella, for instance, is Optum, the Advisory Board and Equian, among other arms. In 2018, Cigna acquired Express Scripts, CVS Health combined with Aetna, and Humana and private equity firms acquired Kindred Healthcare. Highmark, one of the largest insurers in the country, acquired the West Penn Allegheny Health System years ago. Each of these forays into technology, consulting, payment, pharmacy benefit management, post-acute care and provider spaces make health insurers more prevalent in the industry.

A second great concern is the growing number of access points that are providing threats to health systems and their margins and revenues. This may be things like the CVS’, Walgreens and Walmarts of the world, which are expanding the medical services and health hubs in their stores to provide consumers with an alternative access point for chronic conditions and routine care. This fall, Walmart even revealed plans to build its own healthcare workforce.

Third, powerful payers are developing provider networks and providing alternatives to health systems and their delivery systems. Blue Cross Blue Shield Association, for instance, will launch a national provider network in 2021 that spans across 55 markets to help large employers better control medical costs.

Fourth is the total costs of bricks and mortar and labor that hospitals and health systems carry.

Fifth is the development of new types of insurance programs by companies like Haven, which is JPMorgan, Berkshire Hathaway and Amazon’s effort to serve their combined 1.2 million employees. Currently, commercial insurance and payments from employed people ultimately subsidize what hospitals and health systems receive from Medicare and Medicaid. Thus, if these efforts like Haven are successful at peeling off good-paying patients, this will have a big negative impact on hospitals and health systems.  

 

 

 

 

Warren’s path to Medicare for All is rocky

https://www.axios.com/newsletters/axios-vitals-e30baa47-bebc-4081-81a6-cb96115c5e55.html

Illustration of Elizabeth Warren holding out a health plus.

Sen. Elizabeth Warren’s two-part plan to pass a public option as a transition into “Medicare for All” — and then full-blown “Medicare for All” a few years later — has revealed the difficulty of appealing to both the pragmatic and progressive wings of the party.

The big picture: Warren’s already being criticized by progressives for not being a “Medicare for All” purist, and because of the realities of governing, they may have a point: Passing two major health reforms in one term is unheard of.

  • “In my first week as president, we will introduce Medicare for All legislation,” Sen. Bernie Sanders tweeted on Friday.

Details: Warren’s transition plan — which she said she’ll try to pass within her first 100 days in office — would allow anyone over 50 to enroll in an “improved Medicare program,” and “every person in America” could get coverage through a “Medicare for All option.”

  • Coverage under the public option would immediately be free for children under 18 and families making 200% of the federal poverty level or less. Over time, it’d become free for everyone.
  • Then, by no later than her third year in office, Warren would push Congress to pass full-blown “Medicare for All.”

Reality check: The political capital that it’d take to pass Warren’s public option, even through a special procedure called “budget reconciliation” that’d allow her to bypass GOP opposition, would be enormous.

What they’re saying: “Passing one major piece of health care legislation with a knock down, drag out fight, followed by another one three years later, sounds pretty difficult,” said the Kaiser Family Foundation’s Larry Levitt.

  • A more likely scenario is that a public option would pass, and be given time to work. Depending on how that debate went, Medicare for [A]ll could be a rallying cry for a reelection campaign.”