Tag Archives: Health Policy

Doctor Shortage Under Obamacare? It Didn’t Happen

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When you have a health problem, your first stop is probably to your primary care doctor. If you’ve found it harder to see your doctor in recent years, you could be tempted to blame the Affordable Care Act. As the health law sought to solve one problem, access to affordable health insurance, it risked creating another: too few primary care doctors to meet the surge in appointment requests from the newly insured.

Studies published just before the 2014 coverage expansion predicted a demand for millions more annual primary care appointments, requiring thousands of new primary care providers just to keep up. But a more recent study suggests primary care appointment availability may not have suffered as much as expected.

The study, published in April in JAMA Internal Medicine, found that across 10 states, primary care appointment availability for Medicaid enrollees increased since the Affordable Care Act’s coverage expansions went into effect. For privately insured patients, appointment availability held steady. All of the gains in access to care for Medicaid enrollees were concentrated in states that expanded Medicaid coverage. For instance, in Illinois 20 percent more primary care physicians accepted Medicaid after expansion than before it. Gains in Iowa and Pennsylvania were lower, but still substantial: 8 percent and 7 percent.

Though these findings are consistent with other research, including a study of Medicaid expansion in Michigan, they are contrary to intuition. In places where coverage gains were larger — in Medicaid expansion states — primary care appointment availability grew more.

“Given the duration of medical education, it’s not likely that thousands of new primary care practitioners entered the field in a few years to meet surging demand,” said the Penn health economist Daniel Polsky, the lead author on the study. There are other ways doctor’s offices can accommodate more patients, he added.

One way is by booking appointment requests further out, extending waiting times. The study findings bear this out. Waiting times increased for both Medicaid and privately insured patients. For example, the proportion of privately insured patients having to wait at least 30 days for an appointment grew to 10.5 percent from 7.1 percent.

The study assessed appointment availability and wait times, both before the 2014 coverage expansion and in 2016, using so-called secret shoppers. In this approach, people pretending to be patients with different characteristics — in this case with either Medicaid or private coverage — call doctor’s offices seeking appointments.

Improvement in Medicaid enrollees’ ability to obtain appointments may come as a surprise. Of all insurance types, Medicaid is the least likely to be accepted by physicians because it tends to pay the lowest rates. But some provisions of the Affordable Care Act may have enhanced Medicaid enrollees’ ability to obtain primary care.

The law increased Medicaid payments to primary care providers to Medicare levels in 2013 and 2014 with federal funding. Some states extended that enhanced payment level with state funding for subsequent years, but the study found higher rates of doctors’ acceptance of Medicaid even in states that didn’t do so.

The Affordable Care Act also included funding that fueled expansion of federally qualified health centers, which provide health care to patients regardless of ability to pay. Because these centers operate in low-income areas that are more likely to have greater concentrations of Medicaid enrollees, this expansion may have improved their access to care.

Other trends in medical practice might have aided in meeting growing appointment demand. “The practice and organization of medical care has been dynamic in recent years, and that could partly explain our results,” Mr. Polsky said. “For example, if patient panels are better managed by larger organizations, the trend towards consolidation could absorb some of the increased demand.”

Although the exact explanation is uncertain, what is clear is that the primary care system has not been overwhelmed by coverage expansion. Waiting times have gone up, but the ability of Medicaid patients to get appointments has improved, with no degradation in that aspect for privately insured patients.

Trump administration, HHS stepping away from Affordable Care Act promotion, bundled payments

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New bundled payment models for cardiac care may be on chopping block, along with changes to joint replacement.

Lacking a repeal and replacement bill for the Affordable Care Act, President Trump appears to be following through on his Twitter promise to “let Obamacare implode.”

The Trump administration and the Department of Health and Human Services is distancing itself from several groups which in the past have helped market open enrollment, according to talkingpointsmemo.

HHS has not reached out to the Latino Affordable Care Act Coalition, the United Methodist Church, the American Congress of Obstetricians and Gynecologists, the American Medical Student Association, the National Urban League, the National Latina Institute for Reproductive Health, the National Hispanic Medical Association, and the National Partnership for Women and Families, according to the report.

Open enrollment in the ACA marketplace starts November 1.

The new bundled payment model for cardiac care coordination and cardiac rehabilitation may also be on the chopping block, along with unspecified changes to the joint replacement model, according to a proposed rule published August 10 in the Office of Management and Budget.

The models were introducted by the Centers for Medicare and Medicaid Services’ Innovatoin Center, or CMMI, run by Patrick Conway, MD, who last week announced he was leaving CMS to head Blue Cross Blue Shield North Carolina.

HHS Secretary Tom Price, an orthopedic surgeon appointed by the president, has consistently voiced his opposition to mandatory bundled payment programs.

What’s the Near-Term Outlook for the Affordable Care Act?

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If Congress abandons efforts to repeal and replace the Affordable Care Act (ACA), President Trump has said he would “let Obamacare fail.” This Q&A examines what could happen if the Affordable Care Act, also called “Obamacare,” remains the law and what it might mean to let Obamacare fail.

Is Obamacare failing?

The Affordable Care Act was a major piece of legislation that affects virtually all payers in the U.S. health system, including Medicaid, Medicare, employer-sponsored insurance, and coverage people buy on their own. One of the biggest changes under the health reform law was the expansion of the Medicaid program, which now covers nearly 75 million people, about 14 million of whom are signed up under the expansion. Most Americans, including most Republicans, believe the Medicaid program is working well.

When people talk about the idea of the ACA failing, they are usually referring to the exchange markets, also called Marketplaces. These markets, which first opened in 2014, are part of the broader individual insurance market where just 5-7% of the U.S. population gets their insurance. People who get insurance from other sources like their work or Medicaid are not directly affected by what happens in the individual insurance market.

The exchange markets have not been without problems: There have been some notable exits by insurance companies and premium increases going into 2017, and in the early years of the exchanges, insurers were losing money. The structure of the ACA’s premium subsidies – which rise along with premiums and cap what consumers have to pay for a benchmark plans a percentage of their income – prevents the market from deteriorating into a “death spiral.” However, premiums could become unaffordable in some parts of the country for people with incomes in excess of 400% of the poverty level, who are ineligible for premium assistance.

Insurer participation in this market has received a great deal of attention, as about 1 in 3 counties – primarily rural areas – have only one insurer on exchange. Rural counties have historically had limited competition even before the ACA, but data now available because of the Affordable Care Act brings the urban/rural divide into sharper focus. On average at the state level, competition in the individual market has been relatively stable – neither improving nor worsening.

Premiums in the reformed individual market started out relatively low and remained low in the first few years – about 12% lower than the Congressional Budget Office had projected as of 2016 –before increasing more rapidly in 2017. Most (83%) of the 12 million people buying their own coverage on the exchange receive subsidies and therefore are not as affected by the premium increases, but many of the approximately 9 million people buying off-exchange may have difficulty affording coverage, despite having higher incomes. As might be expected, after taking into account financial assistance and protections for people with pre-existing conditions, some people ended up paying more and others paying less than they did before the ACA. Our early polling in this market found that people in this market were nearly evenly split between paying more and paying less. About 3 millionpeople who remain uninsured are not eligible for assistance or employer coverage and many of them may be going without coverage due to costs.

Our recent analysis of first quarter 2017 insurer financial results finds that the market is not showing signs of collapse. Rather, insurers are on track to be profitable and the market appears to be stabilizing in the country overall. In other words, those premium increases going into 2017 may have been enough to make the market stable without discouraging too many healthy people from signing up. However, there are still markets – particularly rural ones – that are fragile.

How would administrative actions affect market stability?

Despite signs that the individual insurance market is generally stabilizing on its own, certain administrative actions could cause the market to destabilize again. Actions the Administration might take that would weaken the market include:

STOP ENFORCING OR WEAKEN THE INDIVIDUAL MANDATE

The individual mandate is the Obamacare requirement that most people either have insurance or pay a penalty. The purpose of it is to get young and healthy people into the market to bring down average costs. If there are not enough young and healthy people signing up, insurers have to raise premiums. If the administration signals it will either stop enforcement of the individual mandate or give broad exemptions, insurers will respond by raising premiums or exiting the market. The Congressional Budget Office (CBO) estimates that without the individual mandate, premiums in the individual insurance market could rise by 20%.

SCALE BACK OUTREACH AND CONSUMER ASSISTANCE

The individual market is often a transitional source of insurance when life circumstances change. People who are temporality unemployed, in school, or early retirees make up a substantial share of the individual market. Additionally, people in this market often experience income volatility and may cycle between Medicaid and subsidized exchange coverage. Those who are sick will be most likely to seek insurance coverage on their own when they go through a change in life circumstances, but outreach and consumer assistance programs – particularly those targeted at young and healthy individuals – can help balance out the risk pool and bring down average costs.

This coming open enrollment period (November 1 – December 15, 2017) is shorter than previous periods and may require more outreach to get people signed up before the deadline. This will also be the first enrollment period run from start to finish by the Trump administration and it is not yet clear how much outreach the administration will take on. Toward the end of the last open enrollment period, the Trump administration cut marketing and more recently has used outreach funds for messages critical of the health care law.

STOP MAKING COST-SHARING SUBSIDY PAYMENTS

Under the Affordable Care Act, insurers are required to offer low-deductible plans to low-income people (58% of marketplace enrollees benefit from these cost-sharing subsidies). For the lowest-income enrollees, these subsidies can bring down the deductible from a few thousand dollars to a couple hundred dollars (Figure 2 below). Providing these higher-value plans to low-income enrollees costs insurers more money (an estimated $10 billion dollars in 2018), so under the ACA the federal government reimburses insurers in the form of a cost-sharing subsidy payment. However, these payments are the subject of a lawsuit and the Administration has signaled they might stop making payments.

If these payments stop, we estimate that insurers would need to raise rates on silver-level plans – which are the only plans where consumers can access cost-sharing reductions – by 19 percent, with states that did not expand Medicaid (primarily red states) facing higher premium increases (Figure 3 below). Lower-income marketplace enrollees receiving premium subsidies would be protected from premium increases because subsidies would rise as well. However, higher-income enrollees not receiving premium subsidies would face higher premiums if insurers expect cost-sharing subsidy payments to end.

The combined effect of these policy changes (not enforcing the individual mandate and defunding cost-sharing subsidies) could cause some insurers to raise premiums on some plans by as much as 40 percentage points higher than they otherwise would. Because premium subsidies increase as premiums rise, administrative actions that cause premiums to rise can also cause taxpayer costs to increase. For example, we estimate that ending cost-sharing subsidy payments could increase net federal costs by about $2.3 billion per year.

Insurers have already submitted their preliminary premiums for the upcoming calendar year to state regulators. Since there has not been clarity on these issues, some insurers are already assuming that the Trump Administration or Congress may take an action that would destabilize the market. Some companies have either significantly raised premiums for next year, scaled back their footprints, or made plans to exit the exchange or individual market all together. Insurers are still negotiating rates for 2018, so if they do not get clarity soon, premiums could go up even more or more insurers could leave.

Again, these premium increases would only affect people who buy their own insurance (particularly middle-income or upper-middle-income people who buy their own insurance without a subsidy to offset the costs), and this group does not make up a large share of the American public. Nonetheless, more insurer exits or large premium increases on the exchange markets could be seen as Obamacare failing. It is worth noting, though, that a majority (64 percent) of the public – including 53 percent of Republicans – say that because President Trump and Republicans in Congress are now in control of the government, they are responsible for any problems with the ACA moving forward.

What happens if the market fails?

Following some announcements of 2018 exits by major insurers, there are some counties at risk of having no insurer on the exchange next year. This would be a first; thus far, all counties have had at least one insurer on the exchange. As negotiations between insurers and state regulators are still underway, there is still time for other insurers to come in and fill these gaps. Thus far, in most cases, a new or expanding insurer has already moved in to cover counties once thought to be “bare.” However, administrative actions that destabilize the market could encourage more insurers to exit.

If no exchange insurer ultimately moves in to some of these counties, people buying their own insurance will not be able to get subsidies and would have to pay full price for insurance. Paying for unsubsidized insurance would be particularly difficult for low-income and older adults living in high-cost areas like many rural parts of the country. Our subsidy calculator can show the difference in cost. For example, in Knox County Ohio, a low-income 60-year-old could get a silver plan for $83 per month but would have to pay $775 per month if he bought that plan without a subsidy, plus he would have a higher deductible because he would no longer benefit from cost sharing subsidies that are only available on the exchange. That same person would also qualify for a free ($0 premium) bronze plan if he buys on exchange, but off-exchange without a subsidy he would have to pay more than $600 per month for a similar plan. People shopping for coverage off-exchange in a county left without an exchange insurer – particularly lower income or older exchange shoppers – may not be able to afford any option and may drop their coverage.

If the market becomes destabilized, and particularly if the individual mandate is not enforced, insurers may decide to exit the off-exchange market as well. This would mean that people in these counties who would otherwise buy their own insurance may not have any option even if they could afford to pay full price.

What might be done to strengthen the Marketplaces?

Although the individual health insurance market is stabilizing on average, insurer financial performance varies and some companies in some states are still struggling. Additionally, some insurers have already decided to increase premiums significantly or exit the market in 2018 on the assumption that the Trump Administration or Congress will take actions that destabilize the market. Although there are many ideas on both the left and the right for how to improve these markets, there are not many options that have bipartisan support.

One possible policy response that could receive bipartisan support would be to reestablish a reinsuranceprogram. Reinsurance programs provide funds to insurers that enroll high-cost (sicker) individuals and can work to lower premiums. The Affordable Care Act included a reinsurance program but it was temporary and phased out in 2016. Republicans in Congress and the Administration have also signaled a willingness to establish reinsurance programs: Both the House and Senate repeal bills included stability funds for reinsurance and Health and Human Services Secretary Price has supported Alaska’s request for a waiver to support its reinsurance program. Though such a program could receive bipartisan support, it would require additional funds (for example, taxing insurers in other markets).

Additional state flexibility to address local challenges in implementing the health care law may also receive some bipartisan support. The challenge of attracting insurers to rural areas or certain states, for example, may warrant state-specific solutions – either as part of the ACA’s waiver program or by Congress giving states additional flexibility.

CBO: ObamaCare premiums could rise 20 percent if Trump ends payments

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CBO: ObamaCare premiums could rise 20 percent if Trump ends payments

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Insurance companies would raise premium prices about 20 percent for ObamaCare plans if President Trump ends key payments to insurers, according to the Congressional Budget Office (CBO).

At the request of House Democratic leadership, CBO estimated what would happen if the payments to insurers ended after December. It found that halting payments would increase the federal deficit by $194 billion through 2026.

Many people would be cushioned from the impact of the increases because federal tax credits rise automatically when premiums do.

If the payments ended, some carriers would withdraw from ObamaCare and about 5 percent of people would live in an area without any options on the exchanges in 2018, according to CBO. But by 2020, CBO estimates more insurers would participate again, so that most areas would be covered.

The number of people without insurance would be slightly higher next year but a little lower in 2020, according to the analysis.

Cost-sharing reduction payments are made to insurers, compensating them for discounting out-of-pocket costs for certain enrollees.

Insurers have been pleading for certainty from the administration on whether they’ll continue to receive the payments, which total about $7 billion for fiscal 2017.

The administration has been making these payments on a monthly basis. But Trump has threatened to halt the funds, calling the money “bailouts” for insurance companies.

The issue has also been caught up in court, and if Trump decides to stop appealing a court ruling against the administration, CSR payments could stop. The deadline for another update is coming up quick — Aug. 20. The case has been on hold for months and could be delayed again.

Additionally, the Senate Health Committee will hold hearings on a bipartisan, short-term stabilization measure the first week of September. The goal, according to Chairman Lamar Alexander (R-Tenn.), is to craft a bill by mid-September that includes funding the payments to insurers.

But insurers are bumping up against major deadlines.

Last week, the administration extended the deadline for carriers to finalize how much their premiums will cost on HealthCare.gov. That date is now Sept. 5, and insurers sign contracts locking them into selling plans Sept. 27.

If insurers don’t know if CSRs will be funded, they could exit the marketplaces, health experts warn. That could possibly lead to some areas have no insurers selling plans on their exchanges.

 

Why ACA market upheaval still looms large despite failure to repeal the law

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http://www.healthcaredive.com/news/why-aca-market-upheaval-still-looms-large-despite-failure-to-repeal-the-law/449117/

Whether lawmakers are done with efforts to repeal the ACA or not, some important changes for healthcare could be on the horizon.

At least one part of the healthcare industry is still looking to Washington D.C. after the flurry of activity last month, if only for one action. In addition to the highly public failure to pass major healthcare legislation before leaving town for a month, Congress and President Donald Trump also left the Affordable Care Act (ACA) exchange markets in a dangerous flux by not taking action on the cost-sharing reduction (CSR) payments for insurers.

It’s not clear whether Congress will continue to take up Republican healthcare legislation to repeal the ACA when it returns. Even within the party, senators are singing different tunes, while President Donald Trump continues to pressure lawmakers to get an ACA repeal bill on his desk. A bipartisan group with members from both chambers has a few ideas, but the majority of lawmakers appear ready to move on. Regardless, they will still have to take up reauthorization of the Children’s Health Insurance Program (CHIP) in September, potential reigniting some debates around the ACA.

If GOP leaders do declare ACA repeal off the table for this year, its opponents will look to the executive branch for efforts to weaken the law and its effects. Here’s what to look out for.

Cost-sharing reduction payments

Payers have been begging for assurance that CSRs will continue to be paid, but the White House and Congress have so far refused. The result has been many payers pulling out of the exchange markets or reducing their footprints, as well as premium hikes of 30% or more. Just last week, Anthem announced it is pulling out of the Nevada and Virginia exchange markets and reducing its participation in Georgia.

Not paying the CSRs would increase federal spending, because the higher premiums will require higher premium subsidies for the 84% in the exchanges who qualify for help. That’s not to mention the 30,000 or more who would have no insurance options.

Trump hasn’t been shy about his plan to halt any efforts that stabilize the exchange markets (like CSRs) in an effort to sabotage the ACA and force unwilling Democrats to cooperate on a repeal bill. Others in the GOP, however, have been reluctant to hurt constituents with such an overtly political play.

America’s Health Insurance Plans has said it is imperative the CSRs are funded. “These benefits are essential to making coverage and care affordable for American families who receive them,” the organization said. “Clarity and commitment to this funding is needed to eliminate confusion and anxiety for consumers.”

It may soon be too late for CSR payments to matter for next year. Payers must sign their contracts with HealthCare.gov by Sept. 21. The CMS and some states have tried to give insurers more flexibility because of the uncertainty by pushing back rate filing deadlines. Connecticut said it will allow payers to refile their rates if the CSR payments are eliminated, and California allowed them to file two sets of rates, one of which assumes no CSRs.

Weakening the ACA

Trump’s threat to “let Obamacare implode” may go beyond refusing to shore up the exchange markets. His administration has already pulled advertising and promotion of the exchanges, and is being investigated by the Government Accountability Office for pushing the GOP healthcare bills in official HHS communication channels. Immediately after his inauguration, Trump signed a wide-ranging executive order instructing federal agencies to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay any provision or requirement” of the ACA that imposes a fiscal or regulatory burden.

No major changes have resulted from the order so far, but it could be used to roll back benefit requirements for preventive care, contraception and mental health services.

HHS Secretary Tom Price could also make changes that weaken the ACA’s individual mandate. Repealing the mandate would mean 15 million fewer Americans would have coverage by 2026 and result in premium increases of about 20%, according to the Congressional Budget Office. Watering down the requirement instead of ditching it completely would have less drastic results, but there would still be an impact.

Price could create more exemptions for the mandate or attempt to force the Internal Revenue Service to stop enforcing it. Either of these actions would add turmoil to the exchanges markets and undermine the efforts of the ACA.

Reauthorizing CHIP

Those watching health legislation in Congress are eyeing CHIP reauthorization as a possible vehicle for changes to the ACA. Lawmakers will be hesitant, though, as CHIP is a successful program with bipartisan support.

The program, which turned 20 years old this past weekend, covered nearly 9 million children in fiscal 2016. CHIP coverage is more affordable than employer-sponsored or marketplace coverage, while children covered under CHIP are more likely to have a usual source of care and regularly attend well-child visits, according to the Medicaid and CHIP Payment and Access Commission, which recommends Congress extend CHIP funding through 2022.

The commission estimates more than a million children would lose coverage if CHIP loses funding.

Bipartisan legislation and state waivers

A bipartisan group of about 40 members of the House is proposing some relatively small changes to the ACA that have received support from both sides of the aisle in the past. The plan is to put them in a bill that would also immediately fund the CSRs.

Their suggestions include exempting smaller businesses from the employer mandate, a fund states can go to for help covering people with high care costs and more flexibility and guidance for states looking to apply for ACA waivers. Another possible measure is repeal of the medical device tax.

Their proposal is to change the employer mandate by having it apply only to businesses with 500 or more employees, instead of the current requirement for businesses with 50 or more workers. Analysis from the Urban Instituteand Rand Corporation has shown the employer mandate has little effect on the number of people who have coverage, partly because nearly all businesses with at least 50 employees offered coverage even before the mandate went into effect.

The ACA has always given states the option of applying for a waiver that allows them to eschew essential health benefits and other requirements — as long as they can prove their plans will cover the same number of people with coverage that is just as comprehensive and affordable. HHS under President Barack Obama was careful in ensuring that state proposals met those guidelines, but current HHS Secretary Tom Price has said he wants to encourage more waivers and will be less strict with approvals of those waivers and Medicaid demonstration waivers.

With this in mind, some recent proposals have included aspects that would have previously been rejected. Last week, Maine applied for a Medicaid demonstration waiver that includes work requirements and asset testing. Those measures are likely to restrict access to coverage for people with low incomes.

Many of the options available for Congress and the executive branch could roil the industry, but some bipartisan options could provide much needed clarity. Summer is usually pretty quiet in Washington D.C., but this year has not been business as usual. Healthcare leaders would be wise to be ready for new developments with the ACA and beyond.

Climbing Cost Of Decades-Old Drugs Threatens To Break Medicaid Bank

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http://khn.org/news/climbing-cost-of-decades-old-drugs-threatens-to-break-medicaid-bank/

Skyrocketing price tags for new drugs to treat rare diseases have stoked outrage nationwide. But hundreds of old, commonly used drugs cost the Medicaid program billions of extra dollars in 2016 vs. 2015, a Kaiser Health News data analysis shows. Eighty of the drugs — some generic and some still carrying brand names — proved more than two decades old.

Rising costs for 313 brand-name drugs lifted Medicaid’s spending by as much as $3.2 billion in 2016, the analysis shows. Nine of these brand-name drugs have been on the market since before 1970. In addition, the data reveal that Medicaid outlays for 67 generics and other non-branded drugs cost taxpayers an extra $258 million last year.

Even after a medicine has gone generic, the branded version often remains on the market. Medicaid recipients might choose to purchase it because they’re brand loyalists or because state laws prevent pharmacists from automatically substituting generics. Drugs driving Medicaid spending increases ranged from common asthma medicines like Ventolin to over-the-counter painkillers like the generic form of Aleve to generic antidepressants and heartburn medicines.

Among the stark examples:

  • Ventolin, originally approved in 1981, treats and prevents spasms that constrict patients’ airways and make it difficult to breathe. When a gram of it went from $2.58 to $2.90 on average, Medicaid paid out an extra $54.5 million for the drug.
  • Naproxen sodium, a painkiller originally approved in 1994 as brand-name Aleve, went from costing Medicaid an average of $0.72 to $1.70 a pill, an increase of 136 percent. Overall, the change cost the program an extra $10 million in 2016.
  • Generic metformin hydrochloride, an oral Type 2 diabetes drug that’s been around since the 1990s, went from an average 10 cents to 13 cents a pill from 2015 to 2016. Those extra three pennies per pill cost Medicaid a combined $8.3 million in 2016. And cost increases for the extended-release, authorized generic version cost the program another $6.5 million.

“People always thought, ‘They’re generics. They’re cheap,’” said Matt Salo, who runs the National Association of Medicaid Directors. But with drug prices going up “across the board,” generics are far from immune.

Historically, generics tend to drive costs lower over time, and Medicaid’s overall spending on generics dropped $1.6 billion last year because many generics did get cheaper. But the per-unit cost of dozens of generics doubled or even tripled from 2015 to 2016. Manufacturers of branded drugs tend to lower prices once several comparable generics enter a market.

Medicaid tracks drug sales by “units” and a unit can be a milliliter or a gram, or refer to a tablet, vial or kit.

Old drugs that became far more expensive included those used to treat ear infections, psychosis, cancer and other ailments:

  • Fluphenazine hydrochloride, an antipsychotic drug approved in 1988 to treat schizophrenia, cost Medicaid an extra $8.5 million in 2016. Medicaid spent an average $1.39 per unit in 2016, an increase of 347 percent vs. the year before.
  • Depo-Provera was first approved in 1960 as a cancer drug and is often used now as birth control. It cost Medicaid an extra $4.5 million after its cost more than doubled to $37 per unit in 2016.
  • Potassium phosphates — on the market since the 1980s and used for renal failure patients, preemies and patients undergoing chemotherapy — cost Medicaid an extra $1.8 million in 2016. Its average cost to Medicaid jumped 290 percent, to $6.70 per unit.

A shortage of potassium phosphates began in 2015 after manufacturer American Regent closed its facility to address quality concerns, according to Erin Fox, who directs the Drug Information Center at the University of Utah and tracks shortages for the American Society of Health-System Pharmacists.

When generics enter a market, competition can drive prices lower initially. But when prices sink, some companies inevitably stop making their drugs.

“One manufacturer is left standing … [so] guess who now has a monopoly?” Salo said. “Guess who can bring prices as far up as they want?”

According to a Food and Drug Administration analysis, drug prices decline to about half of their original price with two generic competitors on the market and to about a third of the original price with five generics available. But if there’s only one generic, a drug’s price drops just 6 percentage points.

The increases paid by Medicaid ultimately fall on taxpayers, who pay for the drugs taken by its 68.9 million beneficiaries. And those costs eat “into states’ ability to pay for other stuff that matters to [every] resident,” said economist Rena Conti, a professor at the University of Chicago who co-authored a National Bureau of Economics paper about generic price hikes in July. The manufacturers’ list prices for the drugs named here also rose in 2016, according to Truven Health Analytics, which means customers outside Medicaid also paid more.

Conti said that about 30 percent of generic drugs had price increases of 100 percent or more the past five years.

Medicaid spending per unit doesn’t include rebates, which drug manufacturers return to states after they pay for the drugs upfront. Such rebates are extremely complicated, but generally start at the federally required 23.1 percent for brand-name drugs, plus supplemental rebates that vary by state, Salo said. Final rebate amounts are considered proprietary, he noted. “All rebates are completely opaque … [it’s] “black-box stuff.”

Fox said drug prices could also jump when a pharmaceutical product changes ownership, gets new packaging or just hasn’t had a price increase in a long time.

Recently named FDA Commissioner Scott Gottlieb has made increasing generic competition a core mission. Plans include publishing lists of off-patent drugs made by one manufacturer and preventing brand-name drugmakers from using anti-competitive tactics to stave off competition.

Doctors, pharmacists and patients don’t always receive warning when a price hike is about to occur, Fox said.

“Sometimes, we will get notices. Other times, it’s like a bad surprise,” she said, adding that the amount of wiggle room for alternatives depends on the drug and the patient.

Following some price hikes, doctors can use fewer units of a drug or switch it out entirely, she said.

Ofloxacin otic, long used to treat swimmer’s ear, became so expensive when generic manufacturers exited the market that doctors started using eye drops in patients’ ears, Fox said.

When old drugs get more expensive, hospitals try to eliminate waste by making smaller infusion bags and keeping really expensive drugs in the pharmacy instead of stocked in readily available shelves and drawers. But that’s not always possible.

“These drugs do have a place in daily therapy. Sometimes they’re life-sustaining and sometimes they’re lifesaving,” said Michael O’Neal, a pharmacist at Vanderbilt University Medical Center. “In this case, you just need to take it on the chin, and you hope one day for competition.”

CBO to release analysis of ending key ObamaCare insurer payments

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CBO to release analysis of ending key ObamaCare insurer payments

CBO to release analysis of ending key ObamaCare insurer payments

The nonpartisan Congressional Budget Office (CBO) will release an analysis next week detailing the effects of ending key ObamaCare insurer payments.

The CBO announced Friday the score would be released next week.

President Trump has threatened to cancel the payments, known as cost-sharing reductions, which reimburse insurers for giving discounted deductibles and copays to low-income people.

The administration has made the payments on a month-to-month basis but insurers have pleaded for long-term certainty.

The reimbursements total $7 billion for fiscal 2017, and regardless of whether the administration pays them, insurers would still be on the hook to offer these discounts to enrollees — they just wouldn’t be reimbursed for doing so.

Uncertainty over the future of the payments has contributed to insurers exiting the healthcare exchanges and proposed premium increases for 2018. More insurers might leave or increase premiums if the payments aren’t continued.

The Senate Health Committee will hold bipartisan hearings in September on ways to stabilize and strengthen the individual market.

The goal is to craft a bipartisan, short-term proposal by mid-September, which could include funding the payments.

Facing Trump Subsidy Cuts, Health Insurance Officials Seek a Backup Plan

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Congress is on vacation, but state insurance commissioners have no time off. They have spent the past three days debating what to do if President Trump stops subsidies paid to insurance companies on behalf of millions of low-income people.

For administration officials and many in Congress, the subsidies are a political and legal issue in a fight over the future of the Affordable Care Act. But for state officials, gathered here at the summer meeting of the National Association of Insurance Commissioners, the subsidies are a more immediate, practical concern.

The insurance commissioners are frustrated with the gridlock in Washington, which they say threatens coverage for consumers and the solvency of some insurers. Without the payments, they say, consumers will face higher premiums in 2018, and more insurers will pull back from the individual insurance market.

Mr. Trump has repeatedly threatened to cut off the payments, which reimburse insurers for reducing the deductibles, co-payments and other out-of-pocket costs for low-income people.

If the government continues providing funds for the subsidies, insurers will have “a small profit,” said Craig Wright, the chief actuary at the Florida Office of Insurance Regulation. “If the subsidies are not funded, carriers would face the prospect of large financial losses, which could increase the risk to their solvency.”

“It could be very damaging,” Mr. Wright said. “Our market wouldn’t recover.”

With no guidance or clarity from the Trump administration, state officials are agonizing over what to do. Many expressed a sense of urgency, saying they needed to make decisions soon on rates to be charged in 2018.

Trump administration officials were invited to speak to state insurance regulators and were listed in the program for at least one public session, but they did not show up at that event to provide the promised update on federal policy.

“Most of us are hoping and praying that this gets resolved,” said David Shea, a health actuary at the Virginia Bureau of Insurance. “But that’s not the case right now.”

Without the federal subsidies, insurers would need to get the money — estimated at $7 billion to $10 billion next year — from another source. And that means higher premiums, state officials said.

The officials here are wrestling with several questions: How much should premiums be increased? Who should pay the higher premiums? Is there any way to minimize the effect on low-income people? Is it better to assume that the cost-sharing subsidy payments will or will not be made in 2018? What happens if state officials guess wrong?

State officials said they would allow insurers to impose a surcharge on premiums if the federal government cuts off funds for the cost-sharing subsidies.

Paul Lombardo, a health actuary at the Connecticut Insurance Department, said officials there might direct insurers to spread the cost across all of their health plans, both on and off the insurance exchange created under the Affordable Care Act.

By contrast, Florida has asked insurers to load all of the extra cost into the prices charged for midlevel “silver plans” sold on the exchange. The federal government would then absorb almost all of the cost through another subsidy program, which provides tax credits to help low-income people pay premiums, Mr. Wright said. The tax credits generally increase when premiums rise.

J. P. Wieske, the deputy insurance commissioner in Wisconsin, said that two companies, Anthem and Molina Healthcare, were leaving the state’s marketplace in 2018 and that two others, Humana and UnitedHealth, exited in previous years. As a result, he said, more people will be enrolled in smaller local health plans that could be more affected by a termination of federal subsidy payments.

“Carriers left in the Wisconsin market are smaller, local plans,” Mr. Wieske said. “Particular carriers could have huge surges in population, going from 7 or 8 percent of their business in the individual market to 30 or 40 percent. If that’s the case, if it’s 30 or 40 percent of their business in the individual market, that’s obviously a gargantuan risk.”

The risks for consumers are also high, Mr. Wieske said. “Consumers,” he said, “could be stuck in a zombie plan, an insurer that is essentially no longer able to do business in the worst-case scenario, or consumers may have to move to another insurer with different health care providers.”

Officials in many states must decide this month on insurance rates for next year.

“We are holding off making those decisions until the very last possible minute,” said Julie Mix McPeak, the Tennessee insurance commissioner. “In doing so, we are really making it difficult for consumers who need information about open enrollment — who’s participating in the market and what the rates might be. We don’t know the answers to any of those questions.”

The uncertainty stems not only from the White House and Congress, but also from federal courts.

House Republicans challenged the cost-sharing payments in a lawsuit in 2014. A federal judge ruled last year that the Obama administration had been illegally making the payments, in the absence of a law explicitly providing money for the purpose. The case is pending before the United States Court of Appeals for the District of Columbia Circuit, which has held it “in abeyance” at the request of House Republicans and the Trump administration.

The administration has been providing funds for cost-sharing subsidies month to month, with no commitment to pay for the remainder of this year, much less for 2018.

“I am very fearful that we’ll have insurers make a decision to leave markets as a result of the uncertainty,” said Ms. McPeak, who is the president-elect of the National Association of Insurance Commissioners. “It’s somewhat inequitable to ask insurers to sign a contract that binds them but may not bind the federal government.”

The Affordable Care Act requires an annual review of health insurance rate increases, and states are taking different approaches.

Nebraska initially told insurers to file 2018 rates on the assumption that the cost-sharing subsidies would continue. But “because of the confusion in Washington,” said Martin W. Swanson of the Nebraska Insurance Department, the state later told insurers to assume that they would not receive the subsidy payments.

Mike Chaney, the Mississippi insurance commissioner, and Allen W. Kerr, the Arkansas insurance commissioner, said they had instructed companies to assume that they would receive the cost-sharing subsidies next year. Michigan has told insurers to submit two sets of rates, one with the subsidies and one without.

Michael F. Consedine, the chief executive of the National Association of Insurance Commissioners, said that without a firm commitment of federal funds for the cost-sharing subsidies, “we have grave concerns about the long-term viability of the individual health insurance market in a number of states.”

“We need some step right away,” Mr. Consedine said, “either by action of Congress or by direction of the administration, to ensure that Americans continue to have access to coverage.”

The Hidden Subsidy That Helps Pay for Health Insurance

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As Republican senators work to fix their troubled health care bill, there is one giant health insurance subsidy no one is talking about.

It is bigger than any offered under the Affordable Care Act — subsidies some Republicans loathe as handouts — and costs the federal government $250 billion in lost tax revenue every year.

The beneficiaries: everyone who gets health insurance through a job, including members of Congress.

Much of the bitter debate over how to repeal and replace the law known as Obamacare has focused on cutting Medicaid and subsidies that help low-income people buy insurance.

But economists on the left and the right argue that to really rein in health costs, Congress should scale back or eliminate the tax exclusion on what employers pay toward employees’ health insurance premiums. Under current law, those premiums are not subject to the payroll or income taxes that are taken out of employees’ wages, an arrangement that vastly benefits middle- and upper-income people.

That one policy tweak could reduce health care spending, stabilize the health insurance market and, according to Congressional Budget Office estimates, shrink the federal budget deficit by between $174 billion and $429 billion over a six-year period

Lawmakers briefly pondered the idea this year but quickly abandoned it, recognizing how politically explosive it would be. Still, as Congress seeks to push ahead with major changes to the health system and the tax code, there has been a growing awareness of how long-established tax subsidies — like the mortgage deduction for homeowners — have contributed to economic inequality in the United States.

Republicans who have been fighting for seven years to repeal the Affordable Care Act argue that the Medicaid expansion has cost too much, that the subsidies for lower-income insurance customers are in some cases handouts. Senator Orrin G. Hatch of Utah, the chairman of the Finance Committee, likened the expenditures recently to “the dole.”

“The public wants every dime they can be given,” he told reporters in May as he left a health care meeting to explain the difficulty in cutting those programs. “Let’s face it, once you get them on the dole, they’ll take every dime they can.”

The tax exclusion, though, is also a subsidy, one that disproportionately helps the affluent, who are more likely to receive generous health benefits from an employer and who fall into higher tax brackets, making the tax break worth more.

A 2008 study by the Joint Committee on Taxation found that not paying taxes on these benefits saved people with incomes less than $30,000 about $1,650. For people with incomes above $200,000, the average tax savings was $4,580.

The Affordable Care Act required companies to start reporting the value of employer-sponsored health benefits on W-2 forms (Box 12; Code DD). But most people don’t even realize they get a subsidy typically worth thousands of dollars a year.

For the federal government, the health benefits exclusion is the single largest tax expenditure, accumulating over the next decade to about 1.5 percent of the nation’s gross domestic product. (Economists say it is effectively the federal government’s third-largest health care expenditure, after Medicare, which cost about $581 billion last year, and Medicaid, at $349 billion.)

It costs five times as much as the subsidies the Affordable Care Act set up to help people buy health insurance, which are estimated to total $49 billion this year. And it is far more than the $70 billion the federal government is spending to expand Medicaid under Obamacare this year.

But few lawmakers, Republican or Democrat, have ever argued to change the exclusion. The closest Congress came to making the system more progressive — that is, to make it scale up according to income — was the so-called Cadillac tax included in the Affordable Care Act.

That was supposed to tax the most generous employer benefits to help pay the subsidies in the law, but its effective date got pushed back to 2020. Both the Republican House and Senate health bills shove it back further, so long — a decade in the Senate bill — that many analysts say it is unlikely to ever take effect.

What Different Health Policies Cost

“This seems like a natural place to look for revenue to expand coverage,” said Stephen Zuckerman, a senior fellow and co-director of the health policy center at the left-leaning Urban Institute. But, he said, “It becomes a political problem.”

Business groups, which tend to back Republicans, argue that a cut in the tax exclusion is a tax increase; labor unions, which tend to support Democrats, say it will lead them to lose benefits at the same time their wages have stagnated.

“We don’t think it does the things economists say it’s going to do,” said James Gelfand, senior vice president for health policy for the Erisa Industry Committee, which lobbies for large employers. “Ultimately these proposals are designed to end the employer-sponsored system,” he said. “They’re not indexed to reality.”

The benefit began with the wage controls of World War II. Employers got around those limits by offering more generous health benefits, and the Internal Revenue Service and later Congress said those benefits did not have to be taxed.

Employer-based health insurance now covers more than half the non-elderly population in the United States. The average premium in 2016, according to the Kaiser Family Foundation, was $6,435 for an individual and $18,142 for a family, and the tax exclusion reduced the cost of insurance by about 30 percent.

Even economists who dislike the exclusion recognize its benefit: It pools risk, the way some countries have done with national health insurance, and reduces adverse selection by encouraging the healthy to buy insurance.

But economists also argue that the exclusion creates perverse incentives that drive up the cost of coverage. Studies have found it encourages workers to buy more expensive insurance and to use more medical services than they need.

“Because we have invented a system where most people have extremely generous coverage, no one asks about the price, and no one tells them what the price is,” said Joseph Antos, an economist and scholar in health care policy at the American Enterprise Institute, a conservative think tank.

Every year the Congressional Budget Office analyzes options for reducing the deficit, including reductions in the tax exclusions for employer-provided health insurance.

In its 2016 analysis, the C.B.O. found that imposing income and payroll taxes on premiums higher than the 50th percentile beginning in 2020 — this would be contributions above $7,700 a year for individuals and $19,080 for families — would cut the federal deficit by $429 billion by 2026, more than either the House or Senate health bills would achieve, according to C.B.O. analyses.

It would also cause four million fewer people to have employer-based health insurance, the analysis found. Half of those people would go to health insurance exchanges set up by the Affordable Care Act, fewer than 500,000 would enroll in Medicaid, and one million would remain uninsured.

Subjecting premiums at the 75th percentile or higher to payroll and income taxes beginning in 2020 — premiums higher than $9,520 for an individual and $23,860 for a family — would reduce the deficit by $174 billion by 2026, the C.B.O. found.

Economists bet that employers would pay less for health insurance and pass on that savings in the form of higher wages. But business groups and business owners say that is unlikely.

Particularly in high-cost states, employers say offering a less attractive package of health benefits hurts their ability to hire.

“Good employees are the most important resource companies have, and this is part of the landscape that folks expect,” said William McDevitt, a shareholder with Wilkin & Guttenplan, an accounting and consulting firm in New York and New Jersey. “Messing with that matrix to generate revenue, I just see it as anarchy, politically.”

Even if companies did increase wages, employees would have to pay higher taxes, leaving them with less money to buy health insurance.

“You’re going to tell every employee they’re going to pay 20 percent more in federal taxes? Is that going to change what they need and their behavior?” asked Bill Grant, the chief financial officer of Cummings Properties in Massachusetts, a real estate firm that spends about $2 million a year to pay about 70 percent of the health insurance premiums for its 350 full-time employees. “And if part of that premise is that they are using more than they need, is paying more to Uncle Sam going to change that lifestyle? I don’t think so.”

One in eight American adults is an alcoholic, study says

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A new study published in JAMA Psychiatry this month finds that the rate of alcohol use disorder, or what’s colloquially known as “alcoholism,” rose by a shocking 49 percent in the first decade of the 2000s. One in eight American adults, or 12.7 percent of the U.S. population, now meets diagnostic criteria for alcohol use disorder, according to the study.

The study’s authors characterize the findings as a serious and overlooked public health crisis, noting that alcoholism is a significant driver of mortality from a cornucopia of ailments: “fetal alcohol spectrum disorders, hypertension, cardiovascular diseases, stroke, liver cirrhosis, several types of cancer and infections, pancreatitis, type 2 diabetes, and various injuries.”

Indeed, the study’s findings are bolstered by the fact that deaths from a number of these conditions, particularly alcohol-related cirrhosis and hypertension, have risen concurrently over the study period. The Centers for Disease Control and Prevention estimates that 88,000 people a year die of alcohol-related causes, more than twice the annual death toll of opiate overdose.

How did the study’s authors judge who counts as “an alcoholic”?

The study’s data comes from the National Epidemiologic Survey on Alcohol and Related Conditions (NESARC), a nationally representative survey administered by the National Institutes of Health. Survey respondents were considered to have alcohol use disorder if they met widely used diagnostic criteria for either alcohol abuse or dependence.

For a diagnosis of alcohol abuse, an individual must have exhibited at least one of the following characteristics in the past year (bulleted text is quoted directly from the National Institutes of Health):

  • Recurrent use of alcohol resulting in a failure to fulfill major role obligations at work, school, or home (e.g., repeated absences or poor work performance related to alcohol use; alcohol-related absences, suspensions, or expulsions from school; neglect of children or household).

  • Recurrent alcohol use in situations in which it is physically hazardous (e.g., driving an automobile or operating a machine when impaired by alcohol use).

  • Recurrent alcohol-related legal problems (e.g., arrests for alcohol-related disorderly conduct).

  • Continued alcohol use despite having persistent or recurrent social or interpersonal problems caused or exacerbated by the effects of alcohol (e.g., arguments with spouse about consequences of intoxication).
“Facing Addiction,” a report, pulls together the latest information on the health impacts of drug and alcohol misuse, as well as on the issues surrounding treatment and prevention. (Department of Health and Human Services)

For a diagnosis of alcohol dependence, an individual must experience at least three of the following seven symptoms (again, bulleted text is quoted directly from the National Institutes of Health):

  • Need for markedly increased amounts of alcohol to achieve intoxication or desired effect; or markedly diminished effect with continued use of the same amount of alcohol.

  • The characteristic withdrawal syndrome for alcohol; or drinking (or using a closely related substance) to relieve or avoid withdrawal symptoms.

  • Drinking in larger amounts or over a longer period than intended.

  • Persistent desire or one or more unsuccessful efforts to cut down or control drinking.

  • Important social, occupational, or recreational activities given up or reduced because of drinking.

  • A great deal of time spent in activities necessary to obtain, to use, or to recover from the effects of drinking.

  • Continued drinking despite knowledge of having a persistent or recurrent physical or psychological problem that is likely to be caused or exacerbated by drinking.

Meeting either of those criteria — abuse or dependence — would lead to an individual being characterized as having an alcohol use disorder (alcoholism).

The study found that rates of alcoholism were higher among men (16.7 percent), Native Americans (16.6 percent), people below the poverty threshold (14.3 percent), and people living in the Midwest (14.8 percent). Stunningly, nearly 1 in 4 adults under age 30 (23.4 percent) met the diagnostic criteria for alcoholism.

Some caveats

While the study’s findings are alarming, a different federal survey, the National Survey on Drug Use and Health (NSDUH), has shown that alcohol use disorder rates are lower and falling, rather than rising, since 2002. Grant says she’s not sure what’s behind the discrepancies between the two federal surveys, but it’s difficult to square the declining NSDUH numbers with the rising mortality rates seen in alcohol-driven conditions like cirrhosis and hypertension.

A separate study looking at differences between the two federal surveys found that the disparities are probably caused by how each survey asks about alcohol disorders: It found that the NESARC questionnaire used in the current study is a “more sensitive instrument” that leads to a “more thorough probing” of the criteria for alcohol use disorder.

If the more sensitive data used in the current study is indeed more accurate, there’s one final caveat to note: The study’s data go only through 2013. If the observed trend continues, the true rate of alcoholism today would be even higher.

What do the researchers think is driving the increase?

“I think the increases are due to stress and despair and the use of alcohol as a coping mechanism,” said the study’s lead author, Bridget Grant, a researcher at the National Institutes of Health. The study notes that the increases in alcohol use disorder were “much greater among minorities than among white individuals,” likely reflecting widening social inequalities after the 2008 recession.

“If we ignore these problems, they will come back to us at much higher costs through emergency department visits, impaired children who are likely to need care for many years for preventable problems, and higher costs for jails and prisons that are the last resort for help for many,” University of California at San Diego psychiatrist Marc Schuckit said in an editorial accompanying the study.