Hospital consolidation continues to gather momentum across the country, with one state in particular, Pennsylvania, seeing more merger and acquisition activity than any other.
Here are seven hospital and health system deals announced or completed in Pennsylvania so far this year:
1. Risant Health, part of Kaiser Permanente,acquired Danville, Pa.-based Geisinger Health, a 10-hospital system, on March 31. Oakland, Calif.-based Kaiser said Risant plans to acquire four to five more community-based health systems over the next four to five years.
2. Washington (Pa.) Health, a two-hospital system, joined Pittsburgh-based UPMC in June. UPMC will invest at least $300 million over the next 10 years to improve services at the two hospitals, which have been rebranded as UPMC Washington and UPMC Greene hospitals.
3. WellSpan Healthacquired Lewisburg, Pa.-based Evangelical Community Hospital, effective July 8. York, Pa.-based WellSpan now includes eight hospitals and more than 21,000 team members, including 2,000 employed providers.
4. Philadelphia-based Jefferson Health and Allentown, Pa.-based Lehigh Valley Health Network merged Aug. 1. The combination created one of the 15 largest nonprofit health systems in the U.S., with 32 hospitals and more than 700 sites of care.
5. Doylestown (Pa.) Health and Philadelphia-based University of Pennsylvania Health System in August signed a definitive agreement for Doylestown to become part of Penn Medicine, a six-hospital system. Pending final federal and state approvals, the systems aim to integrate clinical care and operations by early 2025
6. Franklin, Tenn.-based Community Health Systemsplans to sell its three Pennsylvania hospitals to nonprofit organization WoodBridge Healthcare. The $120 million deal is anticipated to close in the fourth quarter.
7. Los Angeles-based Prospect Medical Holdings and CHA Partnerssigned a letter of intent in August for CHA to acquire Upland, Pa.-based Crozer Health. The proposed deal would involve transitioning Crozer’s four hospitals back to nonprofit status. CHA, which owns five hospitals in New Jersey, is working to reach a definitive agreement for the acquisition of Crozer.
Here are 67 health systems with strong operational metrics and solid financial positions, according to reports from credit rating agencies Fitch Ratings and Moody’s Investors Service released in 2024.
AdventHealth has an “AA” rating and stable outlook with Fitch. The rating is based on the Altamonte Springs, Fla.-based system’s competitive market position—especially in its core Florida markets—and its financial profile, Fitch said.
Advocate Health members Advocate Aurora Health and Atrium Health have “Aa3” ratings and positive outlooks with Moody’s. The ratings are supported by the Charlotte, N.C.-based system’s significant scale, strong market share across several major metro areas, and good financial performance and liquidity, Moody’s said.
AnMed Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the Anderson, S.C.-based system’s strong and stable operating performance and leading market position in a sound service area, Fitch said.
Ann & Robert H. Lurie Children’s Hospital of Chicago has an “AA” rating and stable outlook with Fitch. The rating is supported by the system’s strong balance sheet with low leverage ratios derived from modest debt, Fitch said.
Atlantic Health System has an “Aa3” rating and stable outlook with Moody’s. The rating reflects the Morristown, N.J.-based system’s fundamental strengths, including strong operating performance with high single digit operating cash flow margins and favorable liquidity of over 300 days cash on hand, Moody’s said.
Avera Health has an “AA-” rating and a stable outlook with Fitch. The rating reflects the Sioux Falls, S.D.-based system’s strong operating risk and financial profile assessments, and significant size and scale, Fitch said.
BayCare Health System has an “AA” rating and stable outlook with Fitch. The Clearwater, Fla.-based system on June 30 moved to a new corporate legal structure, replacing a joint operating agreement between multiple hospitals that were responsible for the creation of BayCare in 1997. Fitch views the dissolution of the JOA and the move to the new structure as a credit positive.
Beacon Health System has an “AA-” rating and stable outlook with Fitch. Fitch said the rating reflects the strength of the South Bend, Ind.-based system’s balance sheet.
Bon Secours Mercy Health has an “AA-” rating and stable outlook with Fitch. The Cincinnati-based system has a favorable and stable payor mix, leading or secondary market share position in nine of its 11 U.S. markets with improving market share positions in eight, and adequate cash flows to support the system’s strategic plans, Fitch said.
BJC Health System has an “Aa2” rating and stable outlook with Moody’s. The St. Louis-based system reflects its reputation as a leading academic medical center with a long-standing affiliation with Washington University School of Medicine, Moody’s said.
Carle Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the Urbana, Ill.-based system’s distinctly leading market position over a broad service area and Fitch’s expectation that the system will sustain its strong capital-related ratios in the context of the system’s midrange revenue defensibility and strong operating risk profile assessments.
Carilion Clinic has an “Aa3” rating and stable outlook with Moody’s. The rating reflects the Roanoke, Va.-based system’s scale, regional significance as a tertiary referral system with broad geographic capture, and a highly integrated physician base with a well-defined culture, Moody’s said.
Cedars-Sinai Health System has an “AA-” rating and a stable outlook with Fitch. The rating reflects the Los Angeles-based system’s consistent historical profitability and its strong liquidity metrics, historically supported by significant philanthropy, Fitch said.
Children’s Health has an “Aa3” rating and stable outlook with Moody’s. The rating reflects the Dallas-based system’s continued strong performance from a focus on high margin and tertiary services, as well as a distinctly leading market share, Moody’s said.
Children’s Hospital Medical Center of Akron (Ohio) has an “Aa3” rating and stable outlook with Moody’s. The rating reflects the system’s large primary care physician network, long-term collaborations with regional hospitals, and leading market position as its market’s only dedicated pediatric provider, Moody’s said.
Children’s Hospital of Orange County has an “AA-” rating and a stable outlook with Fitch. The rating reflects the Orange, Calif.-based system’s position as the leading provider for pediatric acute care services in Orange County, a position solidified through its adult hospital and regional partnerships, ambulatory presence, and pediatric trauma status, Fitch said.
Children’s Minnesota has an “AA” rating and stable outlook with Fitch. The rating reflects the Minneapolis-based system’s strong balance sheet, robust liquidity position, and dominant pediatric market position, Fitch said.
Cincinnati Children’s Hospital Medical Center has an “Aa2” rating and stable outlook with Moody’s. The rating is supported by its national and international reputation in clinical services and research, Moody’s said.
Cleveland Clinic has an “Aa2” rating and stable outlook with Moody’s. The rating reflects the system’s strength as an international brand in highly complex clinical care and research and centralized governance model, the ratings agency said.
Cook Children’s Medical Center has an “Aa2” rating and stable outlook with Moody’s. The ratings agency said the Fort Worth, Texas-based system will benefit from revenue diversification through its sizable health plan, large physician group, and an expanding North Texas footprint.
Corewell Health has an “Aa3” rating and stable outlook with Fitch. The rating reflects the Grand Rapids and Southfield, Mich.-based system’s significant scale as a provider and payer in Michigan, Moody’s said. The organization also has good and stable financial performance and liquidity.
El Camino Health has an “AA” rating and a stable outlook with Fitch. The rating reflects the Mountain View, Calif.-based system’s strong operating profile assessment with a history of generating double-digit operating EBITDA margins anchored by a service area that features strong demographics as well as a healthy payer mix, Fitch said.
Froedtert ThedaCare Health has an “AA” rating and stable outlook with Fitch. The rating reflects the Milwaukee-based system’s solid market position, track record of strong utilization and operations, and strong financial profile, Fitch said.
Hoag Memorial Hospital Presbyterian has an “AA” rating and stable outlook with Fitch. The Newport Beach, Calif.-based system’s rating is supported by its strong operating risk assessment, leading market position in its immediate service area, and strong financial profile, Fitch said.
Holland (Mich.) Hospital has an “AA-” rating and stable outlook with Fitch. The rating reflects Holland Hospital’s stable and strong liquidity and capital-related metrics despite sector-wide operating pressures, Fitch said.
Indiana University Health has an “AA” rating and stable outlook with Fitch. The rating reflects the Indianapolis-based health system’s sustained track record of strong operating margins, ratings agency said.
Inova Health System has an “Aa2” rating and stable outlook with Moody’s. The Falls Church, Va.-based system’s rating is anchored by its role as one of the largest health systems in Virginia with a leading market position in a rapidly growing region with unusually high commercial business, Moody’s said.
Inspira Health has an “AA-” rating and stable outlook with Fitch. The rating reflects Fitch’s expectation that the Mullica Hill, N.J.-based system will return to strong operating cash flows following the operating challenges of 2022 and 2023, as well as the successful integration of Inspira Medical Center of Mannington (formerly Salem Medical Center).
JPS Health Network has an “AA” rating and stable outlook with Fitch. The rating reflects the Fort Worth, Texas-based system’s sound historical and forecast operating margins, the ratings agency said.
Kaiser Permanente has an “AA-” rating and stable outlook with Fitch. The Oakland, Calif.-based system’s rating is driven by its strong financial profile, bolstered by a large and diversified revenue base, Fitch said.
Mass General Brigham has an “Aa3” rating and stable outlook with Moody’s. The rating reflects the Somerville, Mass.-based system’s strong reputation for clinical services and research at its namesake academic medical center flagships that drive excellent patient demand and help it maintain a strong market position, Moody’s said.
Mayo Clinic has an “Aa2” rating and stable outlook with Moody’s. The rating reflects the Rochester, Minn.-based system’s preeminent reputation for clinical care and research, including new discoveries and cutting-edge treatment, Moody’s said.
McLaren Health Care has an “AA-” rating and stable outlook with Fitch. The rating reflects the Grand Blanc, Mich.-based system’s leading market position over a broad service area covering much of Michigan, the ratings agency said.
McLeod Health has an “AA-” rating and stable outlook with Fitch. The Florence, S.C.-based system maintains a leading and growing market position in its primary service area and is expanding the Carolina’s Forest campus in an area that is expected to experience rapid growth over the coming years, Fitch said.
Med Center Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the Bowling Green, Ky.-based system’s strong operating risk assessment and leading market position in a primary service area with favorable population growth, Fitch said.
Memorial Healthcare System has an “Aa3” rating and stable outlook with Moody’s. Moody’s said the rating reflects that the Hollywood, Fla.-based system will continue to benefit from good strategic positioning of its large, diversified geographic footprint.
Memorial Hermann Health System has an “Aa3” rating and stable outlook with Moody’s. The rating reflects the Houston-based system’s leading and expanding market position and strong demand in a growing region, Moody’s said.
Methodist Health System has an “Aa3” rating and stable outlook with Moody’s. Moody’s said the rating reflects the Dallas-based system’s consistently strong operating performance, excellent liquidity, and very good market position.
Monument Health has an “AA-” rating and stable outlook with Fitch. The ratings agency said the Rapid City, S.D.-based system has a dominant inpatient market position as the leading acute care provider in its geographically broad primary service area
Nationwide Children’s Hospital has an “Aa2” rating and stable outlook with Moody’s. The rating reflects the Columbus, Ohio-based system’s strong market position in pediatric services, growing statewide and national reputation, and continued expansion strategies.
Nicklaus Children’s Hospital has an “AA-” rating and stable outlook with Fitch. The rating is supported by the Miami-based system’s position as the “premier pediatric hospital in South Florida with a leading and growing market share,” Fitch said.
North Mississippi Health Services has an “AA” rating and stable outlook with Fitch. The rating reflects the Tupelo-based system’s strong cash position and strong market position with a leading market share in its primary services area, Fitch said.
Northwestern Memorial HealthCare has an “Aa2” rating and stable outlook with Moody’s. The rating reflects the Chicago-based system’s growing market position, single operating model and financial discipline, Moody’s said.
Novant Health has an “AA-” rating and stable outlook with Fitch. The ratings agency said the Winston-Salem, N.C.-based system’s recent acquisition of three South Carolina hospitals from Dallas-based Tenet Healthcare will be accretive to its operating performance as the hospitals are highly profited and located in areas with growing populations and good income levels.
Oregon Health & Science University has an “Aa3” rating and stable outlook with Moody’s. The rating reflects the Portland-based system’s top-class academic, research, and clinical capabilities, Moody’s said.
Orlando (Fla.) Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the health system’s strong and consistent operating performance and a growing presence in a demographically favorable market, Fitch said.
Parkland Health has an “AA-” rating and stable outlook with Fitch. The rating reflects Fitch’s expectation that the Dallas-based system will remain the leading provider of public (safety net) services in the vast Dallas County service area, supported by its tax levy.
Phoenix Children’s has an “AA-” rating and stable outlook with Fitch. The rating reflects the system’s strong cash flow generation that has significantly improved its balance sheet in recent years, Fitch said.
Presbyterian Healthcare Services has an “AA” rating and stable outlook with Fitch. The Albuquerque, N.M.-based system’s rating is driven by a strong financial profile combined with a leading market position with broad coverage in both acute care services and health plan operations, Fitch said.
Rady Children’s Hospital has an “Aa3” rating and stable outlook with Moody’s. The San Diego-based system’s rating reflects its well-established strengths, including an “extremely high” market share in all of San Diego County, Moody’s said.
Rush University System for Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the Chicago-based system’s strong financial profile and an expectation that operating margins will rebound despite ongoing macro labor pressures, the rating agency said.
Saint Francis Healthcare System has an “AA” rating and stable outlook with Fitch. The rating reflects the Cape Girardeau, Mo.-based system’s strong financial profile, characterized by robust liquidity metrics, Fitch said.
Saint Luke’s Health System has an “Aa2” rating and stable outlook with Moody’s. The Kansas City, Mo.-based system’s rating was upgraded from “A1” after its merger with St. Louis-based BJC HealthCare was completed in January.
Salem (Ore.) Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the system’s dominant marketing position in a stable service area with good population growth and demand for acute care services, Fitch said.
Sarasota (Fla.) Memorial Health Care System has an “AA-” rating and stable outlook with Fitch. The rating reflects the system’s leading market position in a growing service area, robust historical operating cash flow levels and strong liquidity position, Fitch said.
Seattle Children’s Hospital has an “AA” rating and a stable outlook with Fitch. The rating reflects the system’s strong market position as the only children’s hospital in Seattle and provider of pediatric care to an area that covers four states, Fitch said.
SSM Health has an “AA-” rating and stable outlook with Fitch. The St. Louis-based system’s rating is supported by a strong financial profile, multistate presence and scale with good revenue diversity, Fitch said.
St. Elizabeth Medical Center has an “AA” rating and stable outlook with Fitch. The rating reflects the Edgewood, Ky.-based system’s strong liquidity, leading market position, and strong financial management, Fitch said.
St. Tammany Parish Hospital has an “AA-” rating and stable outlook with Fitch. The Covington, La.-based system has a strong operating risk assessment and very strong financial profile supported by consistently robust operating cash flows, Fitch said.
Stanford Health Care has an “Aa3” rating and positive outlook with Moody’s. The rating reflects the Palo Alto, Calif.-based system’s clinical prominence, patient demand, and its location in an affluent and well-insured market, Moody’s said.
UChicago Medicine has an “AA-” rating and stable outlook with Fitch. The rating reflects the system’s strong financial profile in the context of its broad and growing reach for high-acuity services, Fitch said.
University Health has an “AA+” rating and stable outlook with Fitch. The San Antonio-based system’s outlook is based on the Bexar County Hospital District’s significant tax margin, good cost management, and strong leverage position relative to its liquidity and outstanding debt.
University of Colorado Health has an “AA” rating and stable outlook with Fitch. The Aurora-based system’s rating reflects a strong financial profile benefiting from a track record of robust operating margins and the system’s growing share of a growth market anchored by its position as the only academic medical center in the state, Fitch said.
University of Kansas Health System has an “AA-” rating and stable outlook with Fitch. The rating reflects Kansas City-based system’s flagship hospital’s important presence as the only academic medical center in Kansas and a major provider of many high end and unique services to a large geographic area, Fitch said.
UW Health has an “Aa3” rating and stable outlook with Moody’s. The rating reflects the Madison, Wis.-based system’s strong clinical reputation, high acuity services, and important role as the academic medical center affiliated with the state’s flagship public university, Moody’s said.
VCU Health has an “Aa3” rating and stable outlook with Moody’s. The rating reflects the Richmond, Va.-based system’s status as one of Virginia’s leading academic medical centers and essential role as its largest safety net provider, supporting excellent patient demand at high acuity levels, Moody’s said.
Willis-Knighton Medical Center has an “AA-” rating and positive outlook with Fitch. The outlook reflects the Shreveport, La.-based system’s improving operating performance relative to the past two fiscal years combined with Fitch’s expectation for continued improvement in 2024 and beyond.
The Centers for Medicare & Medicaid Services offered the first look at the potential savings generated by the first crop of Medicare drug price negotiations.
On Thursday morning, the agency released data that show if the negotiated prices for the first 10 drugs in the program had been available last year, it would have generated an estimated $6 billion in savings for Medicare. That’s savings of about 22% on those 10 products.
CMS will offer additional details on negotiations down the line, officials said on a call with reporters on Thursday, but they said the program led to price reductions of between 38% and 79% on the initial list of drugs.
On the highest end, negotiations led to a price decrease for Merck’s Januvia, a diabetes drug, from $527 for a 30-day supply to $113, down 79%. CMS said 843,000 Medicare beneficiaries took Januvia in 2023, with the drug accounting for nearly $4.1 billion in spending.
“Americans pay too much for their prescription drugs. That makes today’s announcement historic. For the first time ever, Medicare negotiated directly with drug companies and the American people are better off for it,” said U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra.
Here’s a look at savings for other drugs included in the program:
Fiasp and NovoLog insulins (Novo Nordisk): Reduced the cost of a 30-day supply from $495 to $119, a decrease of 76%.
Farxiga (AstraZeneca): List price for a 30-day supply decreased from $556 to $178.50, or 68%.
Enbrel (Immunex Corporation): Cut the list price for a 30-day supply by 67% from $7,106 to $2,355.
Jardiance (Boehringer Ingelheim): Reduced the cost of a 30-day supply by 66%, or from $573 to $197.
Stelara (Janssen): The list price for a 30-day supply dropped from $13,836 to $4,695 or by 66%.
Xarelto (Janssen): Lowered the cost for a 30-day supply by 62%, or from $517 to $197.
Eliquis (Bristol Myers Squibb): The cost for a 30-day supply decreased from $521 to $231, or by 56%.
Entresto (Novartis): Reduced the list price for a 30-day supply by 53%, or from $628 to $295.
Imbruvica (Pharmacyclics): Decreased the cost for a 30-day supply from $14,934 to $9,319, or by 28%.
CMS sent the initial offers for the 10 drugs to the manufacturers on Feb. 1, and the companies had until March 2 to respond with a counteroffer. Then throughout the summer, the agency held meetings with the drugmakers to continue negotiations, before sending final offers on July 15.
The negotiation period ended on Aug. 1 with a deal in place for all 10 drugs, CMS said.
The new prices will go into effect on Jan. 1, 2026. CMS estimates that Medicare beneficiaries will see aggregate savings of $1.5 billion in their personal out-of-pocket costs in 2026.
Final cost savings can vary based on the enrollee’s specific plan, the agency said.
CMS said it will select up to 15 additional drugs for negotiation in 2027, and the list will be announced by Feb. 1, 2025.
Reaction rolls in
Multiple lawmakers praised CMS and the efforts to reduce drug prices in statements Thursday.
Sen. Ron Wyden, D-Ore., who chairs the Finance Committee, said that Medicare used “the bargaining power of tens of millions of American seniors to fight Big Pharma for lower drug prices.”
“These new, lower prices for prescription drugs in Medicare means seniors save money at the pharmacy counter and marks the first step in a seismic shift in the relationship between Big Pharma, taxpayers, and seniors who need affordable prescription drugs,” Wyden said.
Rep. Frank Pallone, D-N.J., who is the ranking Democrat on the House Energy & Commerce Committee, said that the negotiations will lead to $101 million in savings for seniors living in the Garden State.
Pallone also helped to co-write the Inflation Reduction Act, which gave Medicare the power to negotiate with drug companies.
“This is a historic day for New Jersey and the nation. After more than two decades of fighting, we have finally empowered Medicare to negotiate lower prescription drug prices for our seniors,” said Pallone. “This milestone is especially meaningful for New Jersey, where many seniors rely on Medicare for their life-saving medications.”
Reactions, however, were not universally positive. Pharmaceutical Research and Manufacturers of America (PhRMA) CEO Steve Ubl said in a statement Wednesday that regulators won’t be able to achieve their ultimate goal as the negotiation program does not take aim at pharmacy benefit managers.
Ubl also said that the IRA “fundamentally alters” the incentives drugmakers have in researching and developing new products and therapies. He said companies are already making changes to their R&D programs in response.
“The administration is using the IRA’s price-setting scheme to drive political headlines, but patients will be disappointed when they find out what it means for them,” Ubl said. “There are no assurances patients will see lower out-of-pocket costs because the law did nothing to rein in abuses by insurance companies and PBMs who ultimately decide what medicines are covered and what patients pay at the pharmacy.”
“As a result of the IRA, there are fewer Part D plans to choose from and premiums are going up,” he continued.” Meanwhile, insurers and PBMs are covering fewer medicines and say they intend to impose further coverage restrictions as the price-setting scheme is implemented.”
The Pharmaceutical Care Management Association, which represents PBMs, meanwhile, said that its analyses show that PBM negotiations have driven more significant discounts on six of the 10 drugs included in the program.
“While we share the Administration’s goal to reduce prescription drug costs for America’s seniors and to push back against the high prices set by drug manufacturers, the Administration has missed the mark by choosing several prescription drugs for which PBMs are already actively negotiating steep discounts that significantly lower costs for beneficiaries and taxpayers,” PCMA said.
“The key to reducing drug costs is to increase competition among manufacturers,” the organization said. “We encourage the Administration to focus on those drugs where a lack of competition is driving higher prices and higher costs, and to allow PBM negotiations to continue to deliver value and savings for Medicare.”
While the negotiation program takes more direct aim at drugmakers, PBMs are also under the microscope on the Hill. Lawmakers are mulling a slew of potential reforms to the industry, which critics argue is too concentrated, too opaque and too profit-driven at the expense of patients.
A surge in COVID-19 infections has swept the country this summer, upending travel plans and bringing fevers, coughs and general malaise. It shows no immediate sign of slowing.
While most of the country and the federal government has put the pandemic in the rearview mirror, the virus is mutating and new variants emerging.
Even though the Centers for Disease Control and Prevention (CDC) no longer tracks individual infection numbers, experts think it could be the biggest summer wave yet.
So far, the variants haven’t been proven to cause a more serious illness, and vaccines remain effective, but there’s no certainty about how the virus may yet change and what happens next.
The highest viral activity right now is in the West, according to wastewater data from the CDC, but a “high” or “very high” level of COVID-19 virus is being detected in wastewater in almost every state. And viral levels are much higher nationwide than they were this time last year and started increasing earlier in the summer.
Wastewater data is the most reliable method of tracking levels of viral activity because so few people test, but it can’t identify specific case numbers.
Part of the testing decline can be attributed to pandemic fatigue, but experts said it’s also an issue of access.Free at-home tests are increasingly hard to find. The government isn’t distributing them, and private insurance plans have not been required to cover them since the public health emergency ended in 2023.
COVID has spiked every summer since the start of the pandemic. Experts have said the surge is being driven by predictable trends like increased travel and extreme hot weather driving more people indoors, as well as by a trio of variants that account for nearly 70 percent of all infections.
Vaccines and antivirals can blunt the worst of the virus, and hospital are no longer being overwhelmed like in the earliest days of the pandemic.
But there remains a sizeable number of people who are not up-to-date on vaccinations. There are concerns that diminished testing and low vaccination rates could make it easier for more dangerous variants to take hold.
“One of the things that’s distinctive about this summer is that the variants out there are extraordinarily contagious, so they’re spreading very, very widely, and lots of people are getting mild infections, many more than know it, because testing is way down,” said William Schaffner, a professor of preventive medicine and infectious diseases at Vanderbilt University.
That contagiousness means the virus is more likely to find the people most vulnerable — people over 65, people with certain preexisting conditions, or those who are immunocompromised.
In a July interview with the editor-in-chief of MedPage Today, the country’s former top infectious diseases doctor, Anthony Fauci, said people in high-risk categories need to take the virus seriously, even if the rest of the public does not.
“You don’t have to immobilize what you do and just cut yourself off from society,” Fauci said. “But regardless of what the current recommendations are, when you are in a crowded, closed space and you are an 85-year-old person with chronic lung disease or a 55-year-old person who’s morbidly obese with diabetes and hypertension, then you should be wearing a mask when you’re in closed indoor spaces.”
Schaffner said hospitalizations have been increasing in his region for at least the past five weeks, which surprised him.
“I thought probably they had peaked last week. Wrong. They went up again this week. So at least locally, we haven’t seen the peak yet. I would have expected this summer increase … to have plateaued and perhaps start to ease down. But we haven’t seen that yet,” he said.
Still, much of the country has moved on from the pandemic and is reacting to the surge with a collective shrug. COVID-19 is being treated like any other respiratory virus, including by the White House.
President Biden was infected in July. After isolating at home for several days and taking a course of the antiviral Paxlovid, he returned to campaign trial.
Biden is 81, meaning he’s considered high risk for severe infection. He received an updated coronavirus vaccine in September, but it’s not clear if he got a second one, which the CDC recommends for older Americans.
Updated vaccines that target the current variants are expected to be rolled out later this fall, and the CDC recommends everyone ages 6 months and older should receive one.
As of May, only 22.5 percent of adults in the United States reported having received the updated 2023-2024 vaccine that was released last fall and tailored to the XBB variant dominant at that time.
The immunity from older vaccines wanes over time, and while it doesn’t mean people are totally unprotected, Schaffner said, the most vulnerable should be cautious. Many people being infected now have significantly reduced immunity to the current mutated virus, but reduced immunity is better than no immunity.
People with healthy immune systems and who have previously been vaccinated or infected are still less likely to experience the more severe infections that result in hospitalization or death.
Almost “none of us are naive to COVID, but the people where the protection wanes the most are the most frail, the immunodeficient, the people with chronic underlying illnesses,” Schaffner said.
The fate of billions of dollars of Affordable Care Act subsidies is riding on the election, which will also determine how much the next Congress will be consumed with relitigating the law.
Why it matters:
Enhanced ACA subsidies expire at the end of 2025 without congressional action. They’ve substantially lowered consumers’ premiums and driven more enrollment in marketplace plans, though at a hefty cost to the government.
Driving the news:
Although the fight over repealing the ACA itself has faded, the partisan battle is shifting to the fate of the enhanced subsidies, passed as part of the American Rescue Plan Act and then extended via the Inflation Reduction Act.
If Republicans win both chambers of Congress and the presidency, they’re strongly expected to let the subsidies expire.
But if Democrats win the presidency or even partial control of Congress, there’s a good chance for a prolonged debate and, possibly, a grand bargain to extend them.
Sen. Bill Cassidy, the top Republican on the HELP Committee, tied the fate of the subsidies to the election results when asked what’s ahead.
“Tell me, do Republicans have everything, do Democrats have everything, or is it divided government?” he told Axios.
By the numbers:
The enhanced subsidies have cut premium costs an average of 44%, or $705 per year, for qualified ACA enrollees, according to a KFF analysis.
“If they expire, the uninsured rate would jump and people would see huge premium increases,” said Larry Levitt, KFF’s executive vice president for health policy.
The CBO finds that extending them would raise the deficit by $335 billion over 10 years and increase the number of people with health coverage by 3.4 million.
Some Republicans are portraying the continuation of subsidies as a sop to health insurers.
“At a time when we are experiencing a record $35 trillion national debt … it is unconscionable that Democrats would continue to push for massive taxpayer-funded handouts to the wealthy and large health insurance companies,” House Budget Chair Jodey Arrington and Ways and Means Chair Jason Smith said in a joint statement responding to the CBO estimate.
What they’re saying:
“I think just not doing the enhanced subsidies, I would take that as a win for 2025,” said Brian Blase, a former Trump administration health adviser now president of Paragon Health Institute.
He pointed to the cost, also arguing that enhanced subsidies incentivize fraud, with ineligible people enrolling in zero-premium plans. “They’re associated with an unprecedented level of fraud,” he said.
“It’s entirely possible that some people are fraudulently misestimating their income,” Levitt said. But, he noted, many low-income people simply lead “volatile lives” and don’t always know what their income will be in a coming year.
What’s next:
Senate Finance Chair Ron Wyden told Axios he wants to combine an extension of the enhanced subsidies with a bill he’s sponsored that would crack down on unscrupulous insurance brokers, to help counter GOP arguments about fraud.
“I think it would be a real good package to crack down on these insurance scams and these brokers ripping off the ACA and focus on something that actually helps people, which is the premium [tax credits],” Wyden said.
The expiration of some of the 2017 Trump tax cuts next year also could provide an opening for a deal with Republicans to extend the ACA subsidies in divided government.
The bottom line:
Levitt said that although some of the repeal fervor has faded, “the future of the program, the future success of the program, very much depends on these enhanced subsidies.”
Unless you were under a rock, you saw yesterday’s news that Medicare negotiated a better deal than the private market for some of the program’s top-selling drugs.
Why it matters:
So what? How meaningful is that difference, and what will the longer-term effects be?
Some seniors will likely pay less out of pocket for drugs (that’s a whole topic that we’re not going to get into right now), and that obviously matters to patients. But how pharma interprets the negotiated prices and reacts to them will have a huge impact on future drug development.
Our thought bubble:
Democrats are thrilled, Republicans are appalled. The drug industry is complaining publicly but telling investors everything is fine.
For all of the uproar this law caused when it was passed, the financial world’s reaction to today’s rollout made everything seem pretty good — for now (more on that below).
Between the lines:
The announced prices — an overall 22% reduction in net spending but no details on individual drugs’ net price reductions — are less drastic than some feared.
“There are strong price reductions, but it also shows there is plenty of room for the industry to continue to make some profits on these drugs,” Vanderbilt’s Stacie Dusetzina said.
Analysts arereacting much more neutrally than the politicians.
In a note titled “CMS Spins, Pharma Wins (Relatively),” Raymond James analyst Chris Meekins wrote that “the impact is far less than politicians proclaimed and the industry as a whole seems to be managing this fine so far.”
And in a note titled “Sigh of Relief,” Leerink analysts concluded that “22% is not as bad as anticipated earlier this year,” though recent earnings calls had assuaged fears somewhat.
Where it stands:
No one knows for sure the net prices of Part D drugs, much less what they would have otherwise been in 2026. But there are some estimates, and Medicare’s negotiated rate is generally lower than those estimates.
If there’s anything everyone agrees on, it’s that America’s high drug prices make up a grossly disproportionate bulk of pharma’s revenue compared with the rest of the world’s.
Critics — which include many politicians from both parties! — say all that means is that America is getting ripped off.
Pharmaceutical companies and some experts say that this subsidization allows drug companies to keep searching for and investing in new therapies despite too-low prices in other countries.
Regardless, that tasked the administration with figuring out how much of a revenue haircut — or a subsidy reduction — drug companies could take without sacrificing the new drugs we want them to continue bringing to market.
So far, that haircut seems to be pretty manageable.
“We’ve shown that it can be done successfully and the sky doesn’t fall,” said Harvard’s Aaron Kesselheim. “It’s not surprising to me that the markets haven’t come crashing down, because I think this process was not set up to bankrupt the pharmaceutical industry.”
There are several reasons why the outcome of negotiations over this particular group of drugs may not say much about future outcomes.
Many of them were already about to get generic competition, which may not be the case for drugs selected down the road. Most of them are already highly rebated.
And the number of drugs any given company is receiving a negotiated price for will likely go up over time, as more drugs enter the program each year.
“The financial impact will be a lot worse when companies have many drugs negotiated rather than just one or two in ’26 that are going off patent anyway,” said Leerink’s David Risinger.
“Over time, will they adjust and make money? Big pharma — of course. It’s small pharma … that’s getting severely impacted,” said Joe Grogan, the former director of the United States Domestic Policy Council in the Trump administration.
“They’re figuring out how to continue to make money, but it doesn’t alter the fact that it upset their R&D expenditures and their R&D plans, and it’s going to leave fewer therapies and fewer treatments down the road,” he added.
“Medicine development is a long and complex process, and the negative implications of these changes will not be fully realized for decades to come,” said PhRMA CEO Steve Ubl in a statement before the rates were released.
And perhaps the biggest wild card of all: Different administrations could take different approaches — and nothing requires any given administration to be consistent.
“They have flexibility to negotiate harder in coming years, and maybe they didn’t want to poke pharma in the eye too hard in the first year,” Risinger said.
“The problem is it’s unpredictable so it’s hard to forecast,” former FDA commissioner Scott Gottlieb told me. “These will ultimately be political decisions, and as much as CMS says there’s a process and a formula, there isn’t.”
The bottom line:
For now, it looks like the Biden administration found a way to save the government some money — it helped me to consider how I’d think about a 22% sale in my personal life — without really upsetting the drug market.
HENRY KOTULA 