Tag Archives: Health Policy

Drug Trade Group Quietly Spends ‘Dark Money’ To Sway Policy And Voters

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

https://khn.org/news/drug-trade-group-quietly-spends-dark-money-to-sway-policy-and-voters/

 

In 2010, before the Affordable Care Act was passed by Congress, the pharmaceutical industry’s top lobbying group was a very public supporter of the measure. It even helped fund a multimillion-dollar TV ad campaignbacking passage of the law.

But last year, when Republicans mounted an aggressive effort to repeal and replace the law, the group made a point of staying outside the fray.

“We’ve not taken a position,” said Stephen Ubl, head of the organization, the Pharmaceutical Research and Manufacturers of America, known as PhRMA, in a March 2017 interview.

That stance, however, was at odds with its financial support of another group, the American Action Network, which was heavily involved in that effort to put an end to the ACA, often referred to as Obamacare, spending an estimated $10 million on an ad campaign designed to build voter support for its elimination.

“Urge him to repeal and replace the Affordable Care Act now,” one ad running in early 2017 advised viewers to tell their congressman. That and similar material (including robocalls) paid for by the American Action Network ran numerous times last year in 75 congressional districts.

PhRMA was one of AAN’s biggest donors the previous year, giving it $6.1 million, federal regulatory filings show. And PhRMA had a substantial interest in the outcome of the repeal efforts. Among other actions, the GOP-backed health bill would have eliminated a federal fee paid by pharmaceutical companies, one estimated at $28 billion over a decade.

But there was no way the public could have known at the time about PhRMA’s support of AAN or the identity of other deep-pocketed financiers behind the group.

Unlike groups receiving its funds, PhRMA and similar nonprofits must report the grants in their own filings to the Internal Revenue Service. But the disclosures don’t occur until months or sometimes more than a year after the donation.

The conservative-leaning AAN has become one of the most prominent nonprofits for funneling “dark money” — difficult-to-trace funds behind TV ads, phone calls, grass-roots organizing and other investments used to influence politics. Such groups have thrived since the Supreme Court’s Citizens United decision in 2010, which loosened rules for corporate political spending, and amid what critics say is nonexistent policing of remaining rules by the IRS.

(It’s impossible to know from public records whether PhRMA donated before or after President Donald Trump’s victory, which made repealing the health law a substantial possibility. In any case, most donations to dark-money groups are not earmarked for a particular program.)

Generally speaking, dark-money groups are politically active organizations, often nonprofits, that are not required to disclose identities of their donors. Under IRS regulations, donors may fund a nonprofit group such as AAN, which is allowed to engage in political activities and is not required to reveal its funding sources.

Dark-money groups are often chartered under Section 501(c)(4) of the tax law, which grants tax exemption to “social welfare organizations.” For those seeking to influence politics but stay in the background, 501(c)(4) designations offer two big advantages: tax exemption and no requirement to disclose donors.

Against the backdrop of high drug prices and its heaviest political expenditures in years, the pharmaceutical industry is directing substantial resources through AAN and other such groups that hide the identity of their donors and have few if any limits on fundraising.

“PhRMA has always been very aggressive and very effective in their influence efforts,” said Michael Beckel, research manager at Issue One, a nonprofit devoted to campaign-finance transparency. “That includes using these new, dark-money vehicles to influence policy and elections.”

PhRMA’s $6.1 million, unrestricted donation to AAN was its single-biggest grant in 2016, dwarfing its $130,000 contribution to the same group the year before. Closely associated with House Republicans — AAN has a former Republican senator and two former Republican House members on its board — the group backed the failed GOP health bill intended to replace the Affordable Care Act. It also supported the successful Tax Cuts and Jobs Act of 2017, which reduced corporate taxes by hundreds of billions of dollars over a decade.

So far in this election cycle, AAN has given more than $19 million to the Congressional Leadership Fund, a Republican super PAC with which it shares an address and staff, according to the Center for Responsive Politics. The fund recently ran ads opposing Democratic candidates in high-profile special congressional elections in Georgia and Pennsylvania.

PhRMA disputes the suggestion that it backs particular actions by the recipients of its donations. “PhRMA engages with groups and organizations that have a wide array of health care opinions and policy priorities,” said its spokesman, Robert Zirkelbach. “It is inaccurate and would be inappropriate for you to attribute those grants to a specific campaign.”

AAN declined several requests for comment.

Including AAN, PhRMA gave nearly $10 million in 2016 to politically active groups that don’t have to disclose donors, its most recent filing with the IRS shows. By contrast, PhRMA and its political action committee, or PAC, made only about $1 million in comparatively transparent political donations in 2015 and 2016 that were disclosed to regulators and reported by the Center for Responsive Politics.

PhRMA’s 2016 political activities included support for the Republican National Convention. Rather than directly support the Cleveland convention, which several companies pulled out of after it became clear that Donald Trump was going to be the presidential nominee, PhRMA routed $150,000 through limited liability companies with names like Convention Services 2016 and Friends of the House 2016.

Like 501(c)(4)s, LLCs do not have to disclose their donors. PhRMA’s support was revealed in IRS filings more than a year later. (Donations by PhRMA and other groups to Friends of the House, which financed a luxury lounge for convention dignitaries, were first reported by the Center for Public Integrity last fall.)

PhRMA’s surge in donations to AAN coincides with the arrival of Ubl, who took over as president and CEO in 2015 and has long-standing ties to Norm Coleman, a former U.S. senator from Minnesota who is now AAN’s chairman. Ubl once ran the lobby for makers of knee implants, heart stents and other medical devices, one of whose most powerful members, Medtronic, is based in Minneapolis.

Dues paid by member drug companies rose by 50 percent after he got there. PhRMA’s total revenue increased by nearly a fourth in 2016, according to IRS filings.

PhRMA’s 2016 dark-money contributions included $150,000 to Americans for Prosperity, a conservative group associated with billionaires Charles and David Koch. Their group has already signaled it will be active in November’s elections, running attack ads against Sen. Jon Tester, a vulnerable Montana Democrat, for not supporting ACA repeal.

PhRMA also gave $50,000 to Americans for Tax Reform, run by conservative anti-tax activist Grover Norquist.

PhRMA and other trade associations donate to such groups “to avoid attracting attention” amid the political fray, said Bruce Freed, president of the Center for Political Accountability, which seeks to shed light on corporate political spending. Nevertheless “they’re achieving their goals by giving money to these folks and helping elect members that are going to be in support of them.”

Mostly smaller amounts went to centrist and liberal groups. Center Forward, which claims to seek bipartisan, common ground on drug policy and other issues, got $300,000 directly from PhRMA and another $179,000 from a PhRMA-backed group called the Campaign for Medical Discovery, according to tax filings.

Zirkelbach disputed the notion that PhRMA donations to AAN and other groups were intended to achieve specific goals, saying, “We seek to work with organizations we agree with as well as those where we have disagreements on public policy issues.”

Much of the work by PhRMA-linked, dark-money groups touches health policy and harmonizes with PhRMA’s positions.

During debates over the tax overhaul, Center Forward worked to preserve a tax credit for researching rare-disease medicines known as orphan drugs. PhRMA took a similar stance, encouraging Congress “to maintain incentives” for rare-disease drugs.

AAN, which collected total contributions and grants of $14.6 million for fiscal 2016, launched a $2.6 million mass-mailing and ad campaign against letting Medicare lower drug prices through negotiations. PhRMA supported that stance, telling Healthline that such a measure could jeopardize seniors’ access to medicine and discourage companies from developing drugs.

Americans for Tax Reform ran similar ads in local markets opposing “price controls” on prescription drugs.

PhRMA’s dark-money allies push its agenda without disclosing its role, critics say.

PhRMA is “spending millions of dollars on politics every cycle, and they’re splitting it up between the state and federal level,” said Robert Maguire, political nonprofits investigator for the Center for Responsive Politics, which tracks political donations. “They’re just not running the political ads themselves,” which keeps their name off the product, he said.

A group called Caregiver Voices United, which got $720,000 from PhRMA in 2016, backed a secret effort to generate letters opposing a drug-transparency bill in Oregon. The campaign surfaced when an employee leaked phone-script documents to a lawmaker, as reported in February by The Register-Guard newspaper in Eugene.

Caregiver Voices United is “not influenced” by PhRMA or any other outside group, said John Schall, its president.

Dark-money groups received pharmaceutical industry money from individual companies as well, not just the PhRMA trade organization.

In 2016, Amgen gave $7,500 to Third Way, a center-left group that supports reimbursement for drugs and medical devices based on their results, according to the Center for Political Accountability. Johnson & Johnson gave $35,000 that year to the Republican Main Street Partnership, a 501(c)(4) that describes itself as a coalition of lawmakers committed to “conservative, pragmatic government,” the CPA data show.

But CPA’s research also reveals that many pharmaceutical companies don’t disclose donations made to 501(c)(4) organizations, nor are they legally required to.

Corporations “could dump millions into one of these (c)(4)s and nobody would ever know where it came from,” said Steven Billet, a former AT&T lobbyist who teaches PAC management at George Washington University.

 

Increase in uncompensated hospital care could be one effect of short-term coverage rule

Posted on by • Posted in Uncategorized • Tagged , , , , , , , • Leave a comment

https://www.healthcarefinancenews.com/news/increase-uncompensated-hospital-care-could-be-one-effect-short-term-coverage-rule?mkt_tok=eyJpIjoiWVdZNE1URmxNREk1T1RsbCIsInQiOiIrbiszc25vVXhkU1NvMkJadnRGTEJhQnNYRDNBcmwyTmFHdnhVem5aS1lZT1wvSkhXYUZqOHNTQTlzZU5iaWtWYjZpN3FydGtadm5Ic1MzMFJwMnFsQWpWWFRZVEdJYkxNM3F4S0QzbHJqSDNSM09iK09tZFZaWTEyWkY0YVIyZGoifQ%3D%3D

Short-term limited duration plans finalized by the Trump Administration on Wednesday could subject patients to catastrophic medical bills and medical bankruptcy, stakeholders told the Departments of Health and Human Services, Labor and Treasury in commenting on the final rule.

Enrollees suffering acute health emergencies, debilitating injuries that lead to permanent disabilities, or the onset of chronic conditions could end up facing financial hardship until they can enroll in an individual or group market plan that provides the coverage they need, according to the final rule.

The rule extends short-term, limited duration coverage from three months to a year, with extensions available for up to three years.

Devastating for hospital ERs

America’s Health Insurance Plans said it was concerned the new plans could catch some consumers unaware and facing high medical expenses when the care they need isn’t covered or exceeds their coverage limits.

Hospitals could be affected by an increase in uncompensated care because the plans are not qualifying health plans mandated to cover the essential benefits of the Affordable Care Act, those commenting on the final rule said.

Stakeholders said the proposed changes could have a devastating impact on hospital emergency rooms, since ERs are required to provide care regardless of coverage status or one’s ability to pay.

“In addition, the lack of coverage of essential health benefits may also lead to an increased reliance on emergency departments as consumers delay or do not seek primary care, exacerbating existing acute and chronic conditions,” the final rule said.

One commenter said this may also lead to increased boarding of mental health patients in emergency departments, where some have an average stay of 18 hours.

If a short-term, limited-duration insurance policy excludes treatment in hospital emergency rooms, there is the possibility that there could be increases in uncompensated care provided by hospitals, according to the departments which issued the rule.

However, there is no reason to believe that all short-term, limited-duration insurance policies will exclude such coverage, the rule said.

In addition, short-term limited duration plans could result in a decrease in uncompensated care if people who otherwise had no insurance become insured.

Many commenters expressed concern that extending the maximum duration of short-term, limited-duration coverage would weaken the single risk pools and destabilize the individual market by syphoning young, healthy individuals from ACA plans. This would leave on the exchanges only those with higher expected health costs and those receiving subsidies in the individual market.

An estimated 70 percent of ACA enrollees receive a subsidy of a premium tax credit.

The departments acknowledge that relatively young, healthy individuals in the middle-class and upper middle-class whose income disqualifies them from obtaining premium tax credits  are more likely to purchase short-term, limited-duration insurance.

“As people choose these plans rather than individual market coverage, this could lead to adverse selection and the worsening of the individual market risk pool,” the rule said.

It could also result in higher premiums for some consumers remaining in the Affordable Care Act market as healthier consumers choose short-term plans and their lower premiums, the rule said.

Individuals who choose to purchase short-term, limited-duration insurance are expected to pay a premium that is approximately half of the average unsubsidized premium in the exchange.

Mixed results

Individual market premiums increased 105 percent from 2013 to 2017, in the 39 states using Healthcare.gov in 2017, while the average monthly premium for the second-lowest cost silver plan for a 27-year-old increased by 37 percent from 2017 to 2018.

Premiums for unsubsidized enrollees in the exchanges are expected to increase by 1 percent in 2019 and by 5 percent in 2028.

In 2019, when the short-term plans go into effect, enrollment in these plans will increase by 600,000. About 100,000 of these consumers will have been previously uninsured.

Enrollment in the ACA exchange in 2019 is expected to decrease by 200,000.

By 2028, enrollment in individual market plans is projected to decrease by 1.3 million, while enrollment in short-term, limited-duration insurance will increase by 1.4 million, according to the final rule.

The net result will be an increase in the total number of people with some type of coverage by 0.1 million in 2020 and by 0.2 million by 2028.

Benefits of short-term plans include increased profits for insurers of these plans and potentially broader access to providers compared to ACA market plans.

Short-term plan shortcomings include high deductibles and cost-sharing requirements.

For example, in Phoenix, Arizona, the out-of-pocket cost-sharing limit for a 40-year-old male can be as high as $30,000 for a 3-month period. Another commenter pointed out that in Georgia, a plan had a 3-month out-of-pocket limit of $10,000, but did not include the deductible of $10,000, resulting in an effective 3-month out-of-pocket maximum of $20,000.

ACA plans also have high premiums and out-of-pocket costs, the rule said. In 2018, deductibles average nearly $6,000 a year for bronze single coverage and more than $12,000 a year for bronze family coverage.

Matt Eyles, president and CEO of America’s Health Insurance Plans said, “Consumers deserve more choices, particularly those who do not qualify for federal subsidies and must pay the full premium.  Consumers should clearly understand what their plan does and does not cover. The new requirement for short term plans to make clearer disclosures to consumers is an important improvement. We also appreciate that the rule affirms the role of states to regulate these plans, including the option to reduce the duration period for short-term coverage.”

 

 

Healthcare Triage News: ACA Risk Adjustment is out of Danger. For Now.

Posted on by • Posted in Uncategorized • Tagged , , , , , • Leave a comment

Healthcare Triage News: ACA Risk Adjustment is out of Danger. For Now.

Image result for Healthcare Triage News: ACA Risk Adjustment is out of Danger. For Now.

A few weeks ago, we were critical of the Trump administration’s handling of ACA risk adjustment payments. We’re fair-minded types around here, so we though you should know that they’ve taken steps to fix it.

 

 

 

Welcome to the New Health-Care Debate

Posted on by • Posted in Uncategorized • Tagged , , , , , , , • Leave a comment

https://www.bloomberg.com/view/articles/2018-08-03/health-care-debate-helps-republicans-hurts-conservatives

America’s health-care debate is entering a new phase. Liberals, inspired by self-described socialists such as Senator Bernie Sanders and Representative-to-be Alexandria Ocasio-Cortez, are excited about the possibility of “Medicare for All.” Republicans have at the same time largely abandoned efforts to enact major reforms of health care.

This new phase of the debate is full of opportunity for Republicans, and peril for conservatives.

But perhaps it would be better to say that the debate is reverting to an older pattern. For roughly four decades, liberals have highlighted the flaws of the existing health-care system, chiefly high costs and unequal access, and proposed increased governmental involvement as the solution. Conservatives talked up the dangers of bigger government, chiefly even higher costs and the disruption of existing arrangements, and reminded voters of the virtues of the status quo.

Most of the time, health care has been a back-burner issue, and discontent with the system has been a modest source of political strength for liberals. When health care has become a dominant issue, however, public fear of disruption has helped conservatives. From 2009 through 2016, Republicans were able to exploit public unhappiness with the changes that Obamacare first threatened to make and then did make.

There have been two brief exceptions to this pattern. In 1995-96 and 2017-18, Republicans advanced their own sweeping changes to health policy. Led by Newt Gingrich 20 years ago, they tried to reform Medicare and Medicaid. Over the last two years, they tried to replace Obamacare and reform Medicaid. 1

Both times the public’s fear of change was turned against Republican politicians, who did not like the pressure one bit. Most of them are relieved to have dropped their party’s Obamacare and Medicaid proposals. They are eager to settle into the familiar role of criticizing liberal health-care proposals.

There’s plenty to criticize. In polls, most people say they like their existing insurance policies — which may be a way for them to signal to politicians that they fear their meddling with those policies. The single-payer plans that are ascending among Democrats would by definition threaten most existing coverage.

These plans pose much bigger political risks than Obamacare did. Obamacare was carefully designed to insulate Democrats from charges that they were turning people’s coverage upside down.

In selling the legislation, President Barack Obama spent much of his time reassuring people that they could keep their doctors and their insurance plans if they liked them. The law mostly avoided changes to the employer-provided coverage through which most Americans get health care.

Yet Obamacare still provoked a backlash. That backlash was especially intense when, in the fall of 2013, it resulted in a significant number of plan cancellations. But many voters have also resented the narrower networks and higher premiums and deductibles that Obamacare has foisted on them.

As even more sweeping left-wing proposals move to the center of the debate, Republicans can reclaim the advantage of opposing disruption. But they may also again be saddled with the disadvantage of being associated with an unsatisfactory status quo.

They are in charge of Congress and the White House; they have been talking about reworking the health-care system for years; and they have succeeded in making significant changes, albeit much less ambitious ones than they sought. They have, for example, ended the fines on people without health insurance that were a major part of Obamacare. In addition, the Trump administration is in the process of liberalizing the rules for short-term insurance plans that do not have to comply with the regulations Obamacare imposes on most other plans.

The Republicans therefore have some, and growing, political ownership of the health-care system. The more they argue against left-wing proposals to change the system, the more ownership they will have.

For Republican politicians, defending even a flawed status quo is probably preferable to trying to impose disruptive changes to it. But if they adopt that position, it will mean that the only solutions on offer to popular concerns about health care will be left-wing ones.

It will mean, as well, that occasionally liberals will have enough political power to enact some, and maybe a lot, of their preferred changes to the system. We will move, that is, toward a health-care system with a larger and larger degree of governmental control even as Republicans make political gains by resisting that trend.

The new shape of the debate may be good news for Republican politicians, then, but it’s bad news for conservatives who favor limited government and free markets.

  1. Arguably there was a third exception: In 2011 and 2012, Paul Ryan led congressional Republicans to endorse increasing competition within Medicare as part of their budget proposals. They did not, however, attempt to advance legislation that would actually change Medicare.

 

 

 

 

How drug companies are beating Trump at his own game

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

https://www.politico.com/story/2018/08/03/trump-drug-prices-companies-721145

People pass the Pfizer headquarters in New York. |Getty Images

 

Recent price freezes and rollbacks are symbolic measures with little lasting impact.

A July tweet from President Donald Trump sent panic through the C-suites of some of the world’s biggest drug companies, prompting Pfizer and nine other companies to roll back or freeze prices.

But there’s less to those announcements than meets the eye. The gestures turned out to be largely symbolic — efforts to beat Trump at his own game by giving him headlines he wants without making substantive changes in how they do business.

The token concessions are “a calculated risk,” said one drug lobbyist. “Take these nothing-burger steps and give the administration things they can take credit for.”

Of the few companies that actually cut prices, for instance, most targeted old products that no longer produce much revenue — such as Merck’s 60 percent discount to a hepatitis C medicine that had no U.S. revenues in the first quarter.

Others volunteered to halt price increases for six months — in some cases, just weeks after announcing what is normally their last price hike for the year.

“A lot of this shit is meaningless to satisfy Trump,” said another drug lobbyist.

The industry’s deft response to Trump’s tweet shaming has also become a test of whether his administration is serious about following up with an aggressive crackdown on the companies or will simply declare victory based on token measures and move on.

“I think right now it’s a lot of noise, not a lot of substantial impact to the companies,” said Les Funtleyder, a health care portfolio manager at E Squared Asset Management, which owns shares in Pfizer. The prospect for meaningful change “is out there … but that will take motivation on the part of regulators and policymakers.”

Analysts are in broad agreement that the spate of recent concessions won’t hurt bottom lines, or rein in drug prices beyond this six-month period, because many companies already increased prices this year — in some cases, just weeks before publicly pledging to freeze them for the rest of 2018.

“There’s the glass-half-full and glass-half-empty interpretation,” said Walid Gellad, director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh. “Glass half full says we have never before seen pharma promise not to raise prices anymore. So this is a step forward — including for patients. Glass half empty is that these are token measures — either on drugs few people use, or drugs that just had their price raised, and that prices will just go up next year.”

Either way, Gellad said, “this is not the kind of structural change we want in the market so that prices go down.”

Drug prices are a fixation for Trump, who rants about them in conversations with aides and advisers, according to people close to the president. He sees the issue as a political winner, especially among his conservative — and largely older — base, which relies heavily on prescription drugs. And after facing huge hurdles moving his legislative priorities through Congress, he sees this as something he can win on by using his executive authority.

That has put huge pressure on Health and Human Services Secretary Alex Azar, a former top official of Eli Lilly and Co.

“They talk three times a week, and they never have a conversation where drug pricing isn’t a topic,” said one person briefed on the conversations, adding that Trump has also interrupted Cabinet meetings to encourage Azar to brief the group on the latest developments.

But even as Azar implements his 44-page blueprint aimed at lowering prices, Trump has grown impatient with the glacial pace of rulemaking and arcane details of drug policy.

His outlet is Twitter, where he can marshal the rage of his millions of followers in an instant. White House aides say he sees his Pfizer tweet as a warning shot to other drug companies — part of a public “shaming” campaign designed to pressure companies to take voluntary steps to lower prices.

That strategy diverges sharply from what Azar is saying publicly — raising doubts about how serious the administration is about cracking down on drugmakers.

The HHS secretary’s rhetoric often targets pharmacy benefits managers — the obscure middlemen who manage the drug side of patients’ health insurance benefits — not drug companies. And targeting the middlemen is a play directly out of pharma’s strategy book — drug companies have long sought to pin patients’ frustration with rising costs on PBMs. HHS has also signaled it wants to overhaul a drug discount program for hospitals that could put money back in pharma’s pocket.

Pfizer CEO Ian Read himself praised the president’s blueprint on the company’s recent second-quarter earnings call, just a few weeks after Trump’s Pfizer tweet.

“I don’t think the administration is gunning for [pharma],” said Ronny Gal, a financial analyst at Sanford Bernstein. Everything they are doing right now is “scratching around the problem,” he said.

“You can tell by the way the stock has performed that investors aren’t too concerned,” Funtleyder said. “They figure, ‘OK, the pharma companies waved the white flag for now, so they’re out of the cross hairs.‘”

Meanwhile, HHS and drug industry officials have worked closely to show Trump they are getting results, administration and pharmaceutical industry sources tell POLITICO.

In private meetings with drug officials, HHS officials ask what steps they’ve taken that they might relay to Trump to keep the president satisfied, said drug company sources.

“They’re also like, ‘Hey, don’t be stupid. If you’re going to do something you feel like we can mutually take some credit for, let us know. … If you can get a good tweet out of it, don’t be an idiot. Let us know [ahead of time],’” said one person familiar with the conversations.

“They’ve said: ‘What would it take for you to lower prices?’” said another top drug industry official.

“There is a real fear that Trump only understands things very simplistically,” said a lobbyist for several drug companies. “So they want to keep tossing treats for him or he will go after blunt instruments,” like government drug price negotiations — steps neither the conservative leadership at HHS nor the drug industry want.

Observers both inside HHS and outside the administration see Azar’s drug pricing team as a buffer for the drug industry.

“To be candid, the secretary is pro-patient, pro-innovation and pro-competition and, quite frankly, really standing in between the industry and some faster ways to lower prices that some would say are not pro-competition,” said HHS’ John O’Brien, a senior adviser to Azar, at a drug cost event one day after Trump’s tweet attacking Pfizer.

Azar prefers the industry and HHS work to make change together, rather than it being adversarial, according to people familiar with HHS’ strategy.

He publicly touts industry price freezes and reversals “in part to show Trump they’re making progress, but also to show the industry that you get recognized for playing ball,” said a person familiar with the discussions.

The White House, meanwhile, was thrilled about the industry’s recent price freezes, even as officials acknowledged the companies’ announcements are only a first step — and promised what one official characterized as a “deluge” of drug price-related regulatory action in the coming months.

“Nothing about what they do or don’t do is going to really turn the tide in a major, major way on a voluntary basis,” the official said of the drug companies’ actions, promising that the administration will take aggressive action.

In the meantime, the White House isn’t ruling out more Twitter shaming.

“You’ll see continuing of the tweeting and announcing different actors doing good or bad things in the market,” the official said.

That will get particularly tricky for the industry come January, when drugmakers would typically take their biggest price increases of the coming year — and when their public concessions sunset.

“They can live with the changes that were made — but they can’t live with not raising prices forever,” Gal said. “It’s a noose they put their head into. In January, we will see what happens with that noose. Does it tighten or not?”

 

Stabilizing and strengthening the individual health insurance market

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , • Leave a comment

https://www.brookings.edu/research/stabilizing-and-strengthening-the-individual-health-insurance-market/?utm_campaign=Economic%20Studies&utm_source=hs_email&utm_medium=email&utm_content=64960143

Image result for Stabilizing and strengthening the individual health insurance market

Stability has long been an issue for the individual health insurance market, even before the Affordable Care Act. While reforms adopted under the ACA initially succeeded in addressing some of these market issues, market conditions substantially worsened in 2016.

Insurers exited the individual market, both on and off the subsidized exchanges, leaving many areas with only a single insurer, and threatening to leave some areas (mostly rural) with no insurer on the exchange. Most insurers suffered significant losses in the individual market the first three years under the ACA, leading to very substantial increases in premiums a couple of years in a row.

For a time, it appeared that rate increases in 2016 and 2017 would be sufficient to stabilize the market by returning insurers to profitability, which would bring future increases in line with normal medical cost trends. However, Congress’s decision to repeal the individual mandate and the Trump Administration’s decision to halt “cost-sharing reduction” payments to insurers, along with other measures that were seen as destabilizing, created substantial new uncertainty for market conditions in 2018.

This uncertainty continues into 2019, owing both to lack of clarity on the actual effects of last year’s statutory and regulatory changes, and to pending regulatory changes that would expand the availability of “non-compliant” plans sold outside of the ACA-regulated market. These uncertainties further complicate insurers’ decisions about whether to remain in the individual market and how much to increase premiums.

In “Stabilizing and strengthening the individual health insurance market: A view from ten states” (PDF), Mark Hall examines the causes of instability in the individual market and identifies measures to help improve stability based off of interviews with key stakeholders in 10 states.

The condition of the individual market

In the states studied—Alaska, Arizona, Colorado, Florida, Iowa, Maine, Minnesota, Nevada, Ohio, and Texas—opinions about market stability vary widely across states and stakeholders.

While enrollment has remained remarkably strong in the ACA’s subsidized exchanges, enrollment by people not receiving subsidies has dropped sharply.

States that operate their own exchanges have had somewhat stronger enrollment (both on and off the exchanges), and lower premiums, than states using the federal exchange.

A core of insurers remain committed to the individual market because enrollment remains substantial, and most insurers have been able to increase prices enough to become profitable. Some insurers that previously left or stayed out of markets now appear to be (re)entering.

Political uncertainty

Premiums have increased sharply over the past two to three years, initially because insurers had underpriced relative to the actual claims costs that ACA enrollees generated. However, political uncertainty in recent years caused some insurers to leave the market and those who stayed raised their rates.

Insurers were able to cope with the Trump administration’s halt to CSR payments by increasing their rates for 2018 while the dominant view in most states is that the adverse effects of the repeal of the individual mandate will be less than originally thought. Even if the mandate is not essential, many subjects viewed it as helpful to market stability. Thus, there is some interest in replacing the federal mandate with alternative measures.

Because most insurers have become profitable in the individual market, future rate increases are likely to be closer to general medical cost trends (which are in the single digits). But this moderation may not hold if additional adverse regulatory or policy changes are made, and some such changes have been recently announced.

Many subjects viewed reinsurance as potentially helpful to market conditions, but only modestly so because funding levels typically proposed produce just a one-time lessening of rate increases in the range of 10-20 percent. Some subjects thought that a better use of additional funding would be to expand the range of people who are eligible for premium subsidies.Actions to restore stability

Concerns were expressed about coverage options that do not comply with ACA regulations, such as sharing ministries, association health plans, and short-term plans. However, some thought this outweighed harms to the ACA-compliant market; thus, there was some support for allowing separate markets (ACA and non-ACA) to develop, especially in states where unsubsidized prices are already particularly high.

Other federal measures, such as tightening up special enrollment, more flexibility in covered benefits, and lower medical loss ratios, were not seen as having a notable effect on market stability.

Measures that states might consider (in addition to those noted above) include: Medicaid buy-in as a “public option”; assessing non-complying plans to fund expanded ACA subsidies; investing more in marketing and outreach; “auto-enrollment” in “zero premium” Bronze plans; and allowing insurers to make mid-year rate corrections to account for major new regulatory changes.

Conclusion

The ACA’s individual market is in generally the same shape now as it was at the end of 2016. Prices are high and insurer participation is down, but these conditions are not fundamentally worse than they were at the end of the Obama administration. For a variety of reasons, the ACA’s core market has withstood remarkably well the various body blows it absorbed during 2017, including repeal of the individual mandate, and halting payments to insurers for reduced cost sharing by low-income subscribers.

The measures currently available to states are unlikely, however, to improve the individual market to the extent that is needed. Although the ACA market is likely to survive in its basic current form, the future health of the market—especially for unsubsidized people—depends on the willingness and ability of federal lawmakers to muster the political determination to make substantial improvements.

Read the full paper here

 

 

California insurance commissioner urges Department of Justice to block CVS Health, Aetna merger

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , • Leave a comment

https://www.healthcarefinancenews.com/news/california-insurance-commissioner-urges-department-justice-block-cvs-health-aetna-merger?mkt_tok=eyJpIjoiWXpNMVltTm1OVGswTlRGbSIsInQiOiJjXC82T2s4Yms2K2RuSXhJYlpoMTd4OFRWSkVnd0pXXC9PN1wvaVBKT1dEdFI2OStpcVhWVkVzaUlPOU9maklhZG5lYlFSOGNSQ2dvTmtSTm1reE56U0JsbFEzdzJ6dmpOXC95V3RySUtmbExTbmhtUENrRDZ6REw4VisybWhwSExMVVwvIn0%3D

The merger would increase market concentration in the PBM space and put other insurers at a competitive disadvantage, Dave Jones says.

The proposed $69 billion merger between CVS Health and Aetna hit a snag on Wednesday when the California insurance commissioner urged the Department of Justice to block the deal.

California Insurance Commissioner Dave Jones said the proposed merger would have significant anti-competitive impacts on consumers and health insurance markets and would also pose a concern in the Medicare Part D market.

Nationally, Aetna has a 9 percent market share among Part D plans while CVS Health has a 24 percent market share, with even greater overlap in some geographic markets. Economic evidence suggests that increasing the market concentration and reducing competition for Part D plans will likely result in higher premiums, Jones said.

California is the largest insurance market in the U.S., according to Jones. Insurers collect $310 billion annually in premiums from individuals and businesses in the state.

“Mergers which decrease competition are not in the interest of Californians,” Jones said in the August 1 letter to Attorney General Jeff Sessions and Assistant Attorney General Makan Delrahim.

In 2016, Jones also vetoed the proposed Anthem/Cigna and Aetna/ Humana mergers that were both blocked by federal regulators.

Jones did approve of Centene’s plan to acquire Health Net, a deal that also received federal approval.

Those mergers would have combined competitors in the same industry, while CVS has dominant market power as a supplier.

Post merger, CVS would have less incentive to keep down the cost of prescription drugs for insurers competing with Aetna, Jones said. Insurers would have difficulty using CVS’s pharmacy benefit manager, CVS-Caremark.

CVS currently provides PBM services to 94 million plan beneficiaries nationally, of which 22 million are Aetna subscribers.

The merger would increase market concentration in the PBM market, eliminate Aetna as a potential entrant in that market and put other insurers at a competitive disadvantage, he said.

Many of the largest PBM competitors are also owned by health insurers, such as OptumRx, which is part of UnitedHealthcare, and Cigna, which has initiated a merger with Express Scripts.

“The PBM market’s lack of competition and the merger of CVS-Aetna is likely to put other insurers that do not own a PBM at a disadvantage,” Jones said.

The merger would not benefit consumers and it would also harm independent pharmacies, he said.

The California Department of Insurance does not have direct approval authority over the proposed acquisition because the transaction does not involve a California insurance company. It does involve Aetna subsidiary, Aetna Life Insurance Company, which is licensed by the state.

The proposed merger was announced in December. The deal has been going through the regulatory process.

 

 

Do States Know the Status of Their Short-Term Health Plan Markets?

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

https://www.commonwealthfund.org/blog/2018/do-states-know-short-term-health-plan-markets?omnicid=EALERT1447487&mid=henrykotula@yahoo.com

Short term plans

The Trump administration this week issued a final rule reversing federal limits on short-term health coverage, allowing such plans to become a long-term alternative to individual market coverage. Starting in October, insurers will be allowed to sell short-term plans for just under 12 months, up from the current federal limit of three months. And in a sharp break from prior regulations, insurers can renew short-term plans for up to 36 months. The rule does strengthen a consumer notice required in application materials, but the notice does not need to inform consumers of all limitations and “fine print.” Importantly, the rule does not preempt state regulation that includes shorter limits on coverage.

Short-term plans are not required to comply with the Affordable Care Act’s (ACA) consumer protections, meaning insurers that sell these policies can deny coverage to individuals with preexisting conditions and are not required to cover essential health benefits. These plans are typically marketed to healthy consumers, for whom coverage with limited benefits and a low premium may appear attractive.

In the past, many state insurance departments have had to warn residents about deceptive marketing practices sometimes undertaken by short-term plan sellers, which can lead consumers to believe they are buying a comprehensive policy when they are not. During the fall open-enrollment seasons for ACA marketplaces, these plans will be competing for consumers’ premium dollars with comprehensive coverage, introducing the possibility of still greater consumer confusion.

We surveyed the Departments of Insurance (DOIs) in the 17 state-based ACA marketplace states to understand how the market for short-term coverage is working on the eve of this policy shift. We found that most states have little information about the status of their current short-term plan markets. Additionally, inconsistencies in how states have collected and reviewed the premium rates and contracts for short-term plans will make it difficult to assess how the market is responding to the new federal rules.

Most States Do Not Have a Complete Picture of the Current Short-Term Market

With the exception of New York, which doesn’t permit short-term plans, 16 states in our survey require insurers to file for approval in order to sell short-term policies. However, once these policies are approved, few states require annual reapproval unless policies undergo significant rate or benefit design changes. Most DOIs acknowledged that insurers with short-term policies that were approved decades ago could potentially market them to consumers this fall without any additional regulatory approval.

As a first step to prepare for the Trump administration’s rulemaking, some states started to identify their approved short-term sellers and which ones are actively marketing. For example, in Maryland, the legislature directed the DOI to contact every approved short-term plan insurer to determine whether they are actively marketing. Similarly, Oregon is now reviewing advertisements for short-term products, and insurers marketing products that are at least five years old have been asked to refile with the state. However, overall, few states are aware of which short-term insurers are actively marketing. A few DOI officials also explained that with the new rule, more short-term plan insurers are likely to market within their state.

Insurers Marketing Short-Term Plans Are Generally Different Than Those Marketing Individual Plans

We compared the list of 2018 marketplace insurers to those who have been approved to sell short-term policies. Four of the 17 states (Massachusetts, New York, Rhode Island, and Vermont) in our survey have no approved short-term sellers because they require such plans to play by some or all of the same rules as traditional coverage. While the data are limited,1 it appears that 11 of the 17 states have more insurers approved to sell short-term plans than individual plans. There tends to be little overlap among the companies, although there are a few approved to sell in both the individual and short-term markets.

This separation poses a risk to individual market stability, as short-term sellers may target healthy marketplace consumers, undercutting ACA-compliant insurers. In return, ACA-compliant insurers may be incentivized to start selling short-term policies in order to shift and maintain their healthy enrollees in those plans. Indeed, the Trump administration expects that as many as 500,000 individual market enrollees will migrate to short-term plans in 2019. Because they will be relatively healthy, their departure will cause premiums in the individual market to increase by a projected 5 percent. This increase will come on top of other projected increases resulting from the repeal of the ACA’s individual mandate penalty and the expansion of association health plans.

Looking Forward

The final rule allowing short-term policies to be sold for longer durations puts enrollees at financial risk, as they unknowingly enroll in the skimpier policies that do not meet their health needs. In turn, the shift of large numbers of healthy consumers to the short-term market will increase prices for those remaining in the individual market. As a new market of long-term short-term plans emerges, states need to understand their short-term market in order to protect consumers and maintain a stable individual market. This can begin with an assessment of which insurers are actively marketing in the state. States also may want to ensure that any short-term plan sellers seeking to offer coverage that mimics the 12-month duration of ACA-compliant coverage submit plan designs, rates, and marketing materials for review and approval, as Vermont has done recently. Doing so will allow states to have a firmer understanding of the insurance products being sold to their residents, and will better position them to reduce consumer confusion and monitor for potential fraud.

 

California Employer Health Benefits: Workers Shoulder More Costs

Posted on by • Posted in Uncategorized • Tagged , , , , , , , • Leave a comment

https://www.chcf.org/publication/california-employer-health-benefits-workers-shoulder-more-costs/

Image result for California Employer Health Benefits: Workers Shoulder More Costs

From 2000 to 2017, the percentage of employers offering health insurance coverage has declined from 69% to 56%. At the same time, workers are shouldering more of the costs for their health care with increasing premiums and higher deductibles and copays.

California Employer Health Benefits: Workers Shoulder More Costs presents data compiled from the 2017 California Employer Health Benefits Survey.

Key findings include:

  • From 2016 to 2017, health insurance premiums for family coverage increased by 4.6%, slightly higher than the 3.0% inflation rate.
  • Average monthly premiums, including the employer portion, were significantly higher in California than the national average. In 2017, the average premium was $604 for single coverage and $1,643 for family coverage.
  • California workers paid an average of 17% of the total premium for single coverage and 27% for family coverage.
  • One in 4 workers had an annual deductible of at least $1,000 for single coverage. Large deductibles were more common among workers in small firms (3 to 199 workers) than larger firms. Nearly 60% of workers had no deductible.
  • In 2017, 25% of California firms reported increasing cost sharing for workers in the past year, and 37% reported that they are very or somewhat likely to increase their workers’ share of premiums in the next year.

The full report, all of the charts found in the report, and the data files are available under Related Materials. These materials are part of CHCF’s California Health Care Almanac, an online clearinghouse for key data and analyses describing the state’s health care landscape.

The California Employer Health Benefits Survey is a joint product of CHCF and the National Opinion Research Center (NORC) at the University of Chicago. The survey was designed and analyzed by researchers at NORC and administered by National Research.

Behind the Debate Over ‘Medicare for All’

Posted on by • Posted in Uncategorized • Tagged , , , , , , • Leave a comment

https://www.weeklystandard.com/chris-deaton/behind-the-debate-over-medicare-for-all

Image result for Behind the Debate Over ‘Medicare for All’

The federal price tag of Bernie Sanders’s proposal is not surprising. But the implications are kind of insane.

Bernie Sanders’s “Medicare for all” proposal is receiving new scrutiny because of an estimate released this week by economist Chuck Blahous of the right-leaning Mercatus Center. Blahous projects that the plan would cost the government $32.6 trillion over 10 years but also reduce the country’s overall level of health expenditures by $2 trillion. “M4A” advocates say that these numbers are two sides of the same coin: that because the program would redirect spending for health care to the government and lower aggregate expenses in the economy, the exorbitant cost to taxpayers would be, as multiple left-leaning analyses have put it, “a bargain.” But Blahous’s research of the Sanders plan, like that of his contemporaries, is loaded with assumptions and caveats that reduce conclusions about the idea’s cost-saving to speculation. If anything, it’s fair to say that the research shows how M4A is a risk of historic price.

For the average individual, the point of “Medicare for all” is to have federal tax revenue pay for health coverage that is comprehensive and basically free to use. Sanders’s proposal includes wide-ranging benefits applicable in “medically necessary or appropriate” circumstances and eliminates cost-sharing, meaning no copays, deductibles, or similar charges. The expense to households is less take-home pay: a new, de facto “premium” paid to Washington, maybe higher payroll taxes, and, depending on income level and economic behavior, higher income taxes from rate hikes.

Similar trade-offs would appear elsewhere: Businesses would not offer their employees coverage under an M4A scheme, for example. But they, too, would have to foot the cost, through a higher corporate tax rate, potential taxes on their own behavior (like on carbon), and perhaps an employer-specific premium like the one paid by individuals. Some of these ideas are incorporated into Sanders’s thinking; depending on the bill’s projected cost, more of them may be necessary to compensate for the government’s expense.

This is where Blahous’s work comes in. Whereas Sanders’s campaign forecast his M4A plan to cost $1.38 trillion per year, Blahous projected that number to be more than double, at $3.26 trillion, in the paper he published on Monday. “For perspective on these figures, consider that doubling all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan,” he wrote. His assessment met skepticism from some in the press, given Mercatus’s affiliation with the Koch brothers.

Notwithstanding the sloppiness of such a charge—Mercatus is directed by a world-class economist respected across the political spectrum, Tyler Cowen, and Blahous’s paper was peer-reviewed and reflected his own research, regardless—Blahous’s findings were similar to the Urban Institute’s, a well-regarded and left-leaning think tank that examined the Sanders proposal in 2016. Its 10-year federal cost estimate was $3.20 trillion a year.

The Urban Institute economists ran their numbers based on the Vermont senator’s framework for Medicare for all. But Sanders introduced his legislation in the Senate last year, which provided Blahous more specifics to analyze and alternative scenarios to consider. For example: Sanders’s plan caps reimbursements to physicians and hospitals for services at the Medicare reimbursement rate, which is significantly lower than reimbursements under private plans (but higher than those under Medicaid). “In 2014, Medicare hospital payment rates were 62 percent of private insurance payment rates and are currently projected to decline to below 60 percent by the time M4A would be implemented, and to decline further afterward. Medicare physician payment rates were 75 percent of private insurance rates in 2016 and … are projected to decline sharply in relative terms in future years, also falling below 60 percent within the first full decade of M4A,” Blahous writes.

The surprising finding in his study is that Sanders’s Medicare for all bill would decrease national health expenditures (NHEs) over the next decade by $2 trillion. Many M4A advocates celebrated this estimate, given the unlikely source of it. But there are two things to keep in mind. One, national health expenditures are different from government expenditures: They comprise aggregate spending on health care in the United States, in both the private and public sectors. (They have a specific definition, per the Centers for Medicare and Medicaid services, available on Page 6 here.) Two, while keeping reimbursement rates at the relatively low Medicare level would help contain the total dollar figure of NHEs, it also would jar the finances of medical providers.

“Perhaps some facilities and physicians would be able to generate heretofore unachieved cost savings that would enable their continued functioning without significant disruptions,” writes Blahous. “However, at least some undoubtedly would not, thereby reducing the supply of healthcare services at the same time M4A sharply increases healthcare demand.” Difficulty accessing care “almost certainly must arise”—which is not a controversial statement, but mere economic intuition.

“Setting provider payment rates for acute care services at levels consistent with the current law Medicare program may be too restrictive,” the Urban Institute study stated. “Payment rates may in fact have to be higher, at least initially and perhaps indefinitely, to be acceptable to providers.”

Anticipating this scenario, Blahous runs the numbers keeping reimbursements to providers and physicians on pace with current projections. This situation results in an annual cost to government of $3.80 trillion, not $3.26 trillion—and a net increase in NHEs of $3.25 trillion over a decade, instead of a decrease of $2.05 trillion. This represents a range of realistic outcomes, and given political and economic realities, something close to the alternative payment arrangement has to be considered a likelihood.

Of course, all this discussion pertains only to finances, not the pluses and minuses of access and quality of care: low-income individuals getting covered, but consumers demanding more care while suppliers shrink the availability of it, for instance. It also does not consider how the goalposts of whether the public scores a good deal with M4A could move. Jacobin magazine called the Sanders plan “a bargain” based on Blahous’s score, since “[w]e get to insure every single person in the country, virtually eliminate cost-sharing, and save everyone from the hell of constantly changing health insurance all while saving money.” But what if the public doesn’t save money, as in the alternative scenario Blahous evaluates? The same advocates could argue so what?—even if the public is paying more money on net, it’s doing so in the cause of insuring 30 million more people. They could frame those numbers as being worth it.

The thrust of the costs is that M4A is not some unassailable good and an easy system relative to the status quo, even for all the inefficiencies of the current, messy health insurance market. Again, this is not a critique confined to a right-of-center perspective. As the Center for American Progress’s Topher Spiro wrote on Monday (in a since-deleted tweet):

spiro-m4a.jpg

Medicare for all would represent an historically large cost shift between the American economy and federal government. Simply citing the budget impact of such a proposal—$32.6 trillion over a decade—to invalidate the merits of the idea cuts the debate unjustifiably short, as left-of-center critics have stated. But incorporating the other financial aspects of M4A does not cinch their case. It instead complicates it, undermines it, and brings the debate about American health care back to philosophical grounds.

Does the public believe Washington should have total financial control of the market, to the tune of more than $3 trillion in tax revenue a year? Does it trust Washington to allocate those taxes fairly? And given the range of outcomes for reducing health costs—to the point it may not reduce them at all—does it believe that such a transition merits the risk?