Trump Threatens Health Subsidies to Force Democrats to Bargain

In the weeks since President Trump’s attempts to replace the Affordable Care Act collapsed, the administration has debated what to do: Try again? Shore up the insurance marketplaces? Or let the whole system collapse?

Mr. Trump has failed to get enough support from his own party, but he hopes to get the Democrats’ help by forcing them to the negotiating table with hints about the chaos he could cause.

His bargaining chip is the government subsidies paid to insurance companies so they can reduce deductibles and other out-of-pocket costs for low-income consumers — seven million people this year.

In an interview with The Wall Street Journal this week, Mr. Trump threatened to withhold the subsidy payments as a way to induce the Democrats to bargain with him.

For now, Democrats are resisting and using his maneuver against him to energize their own party. And they warn that Mr. Trump will be blamed if the insurance markets collapse and people lose coverage next year.

“Republicans are in control of government,” Senator Claire McCaskill, Democrat of Missouri, said Thursday after a town-hall-style meeting in her home state. “If they blow up what access to health care there is right now, they’re going to own it.”

The president’s tone differs from that of Republicans in Congress, who have repeatedly promised a smooth transition away from the law they call Obamacare. “We don’t want to pull the rug out from under people,” the House speaker, Paul D. Ryan, has said.

If the subsidies are interrupted, insurers say, some health plans will increase premiums and others will withdraw from the individual insurance market. That will, in turn, affect millions of other people who do not receive the subsidies.

The issue could come to a head within weeks. When the House reconvenes on April 25, the first order of business will be a spending bill to replace the current stopgap law, which expires three days later. Democrats are determined to put money for the health insurance subsidies into that bill, and some Republicans on the House and Senate Appropriations Committees are open to the idea. But ultimately, the decision will be made by Republican leaders in the two chambers.

If the spending is allowed to continue, the Congressional Budget Office estimates that the federal government will pay $135 billion in cost-sharing subsidies to insurers from 2018 to 2027.

The cloud of uncertainty swirling around the subsidies stems from a court ruling in a lawsuit that House Republicans filed against the Obama administration in 2014. Judge Rosemary M. Collyer of the Federal District Court in Washington ruled last year that spending on the subsidies “violates the Constitution” because Congress never appropriated money for them. She ordered a halt to the payments, but suspended her order to allow the government to appeal.

The Trump administration has not made clear whether it will press the appeal filed by the Obama administration. In a letter to Mr. Trump this week, the U.S. Chamber of Commerce joined the American Medical Association, the American Hospital Association and insurers in seeking “quick action” to guarantee continuation of the subsidies. Without the subsidies, they said, more people will be uninsured and unable to pay medical bills.

Democrats say they will not negotiate with Mr. Trump until he stops his drive to repeal the Affordable Care Act. “President Trump is threatening to hold hostage health care for millions of Americans, many of whom voted for him, to achieve a political goal of repeal that would take health care away from millions more,” said the Senate Democratic leader, Chuck Schumer of New York.

 

 

ACA Cost-Sharing Subsidies: How One Decision Could Disrupt Obamacare Marketplaces

Web Briefing for Journalists – ACA Cost-Sharing Subsidies: How One Decision Could Disrupt Obamacare Marketplaces

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Premiums, insurer choice, and overall stability of 2018 Affordable Care Act (ACA) marketplaces could be affected by decisions from Congress and the Trump Administration on the health law’s cost-sharing reduction provision. With a legal appeal pending on a lawsuit from the U.S. House, the federal government and Congress are in a position to choose whether to continue reimbursing insurers for the subsidies, which were established as part of the ACA to reduce out-of-pocket costs for lower-income people buying plans through the marketplaces. Failure to continue the payments would not only disrupt the marketplaces, but it also might signal a more obstructionist approach to the ACA, following House Republicans’ failed attempt at repeal. Continuing the payments could help to avoid further exits and premium increases by insurers.

On Thursday, April 6, the Kaiser Family Foundation hosted a web briefing for the media to explain how the cost-sharing reduction program works, where it stands now, and how consumers could be affected by either choice from the federal government. Panelists presented new analysis on the magnitude of the cost-sharing payments and how much premiums would have to rise in different states to compensate for insurers’ loss of federal funding.

Panelists included Gary Claxton and Larry Levitt, co-executive directors of the Foundation’s Study of Health Reform and Private Insurance. Rakesh Singh, the Foundation’s vice president of communications, moderated the discussion.

 

High Drug Prices Remain a Conundrum, Analysts Say

http://www.medpagetoday.com/PublicHealthPolicy/HealthPolicy/64347?xid=nl_mpt_DHE_2017-04-07&eun=g1061559d0r&pos=11

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The problem of high prescription drug costs has no easy solution, analysts said Tuesday at an event here sponsored by Johns Hopkins University.

“It’s a major problem … and there’s no light at end of tunnel,” said Joshua Sharfstein, MD, associate dean for practice and training at Johns Hopkins University’s Bloomberg School of Public Health in Baltimore.

Overall drug costs are growing 10%-12% a year, “far quicker than wages or medical cost growth,” he added. “And it inhibits our ability to address public health problems. When we have a challenge like hepatitis C, when people can’t get treatment because of the [high cost], we’re all at risk.”

Although many ideas for solving the problem are being discussed, none are moving forward, Sharfstein said. He noted that things could get worse if, for example, Congress were to pass something like the House Republicans’ American Health Care Act, which would have resulted in the loss of health insurance for an estimated 24 million people.

“If you take 24 million people off of insurance, that generates pressure to get as much out of every insured person for pharmaceuticals as possible,” meaning that drug prices could rise even higher, he said. “It’s entirely possible you’d see that shift continue, and it could really worsen all the different challenges we have.”

How Pharma Companies Game the System to Keep Drugs Expensive

https://hbr.org/2017/04/how-pharma-companies-game-the-system-to-keep-drugs-expensive?utm_campaign=hbr&utm_source=facebook&utm_medium=social

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I help the University of Utah hospital system manage its drug budgets and medication use policies, and in 2015 I got sticker shock. Our annual inpatient pharmacy cost for a single drug skyrocketed from $300,000 to $1.9 million. That’s because the drug maker Valeant suddenly increased the price of isoproterenol from $440 to roughly $2,700 a dose.

Isoproterenol is a heart drug. It helps with heart attacks and shock and works to keep up a patient’s blood pressure. With the sudden price increase, we were forced to remove isoproterenol from our 100 emergency crash carts. Instead, we stocked our pharmacy backup boxes, located on each floor of our hospitals, to have the vital drug on hand if needed. We had to minimize costs without impacting patient care.

This type of arbitrary and unpredictable inflation is not sustainable. And it’s not the way things are supposed to work in the United States. Isoproterenol is a drug that is no longer protected by a patent. Theoretically, any drug company should be able to make a generic version and sell it at a competitive cost. We should have had other options to buy a competitors’ copy for $440 or less. But that’s not happening like it should. The promise of generic medications is getting further from reality each day. As the U.S. Senate considers President Donald Trump’s choice to head the Food and Drug Administration, now is the time refocus efforts on generic drugs.

 

Block grant funding of public health insurance: the Canadian example

Block grant funding of public health insurance: the Canadian example

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Speaker Paul Ryan wants to reform Medicaid by “block granting” the program, that is,

by capping federal funding and turning control of the program over to states. The aim of such reforms is to reduce federal funding over the long term, while preserving a safety net for needy, low-income Americans. An additional valuable aim of this effort has been to advance federalism by reducing the federal government’s role and giving states and governors more freedom and flexibility in managing their Medicaid programs and helping people in their states.

What are the likely consequences of block granting? Benjamin Sommers and David Naylor write in JAMA about how Canada’s joint federal/provincial funding of health care provides lessons about the likely consequences of block granting.

Canada is a single payer health care system. However, there isn’t a Canadian single payer. Rather, there is a single payer for each province: I am covered by the Ontario Health Insurance Plan (OHIP). These plans are primarily funded by provincial taxes. However, provinces also receive a health transfer from the Canadian federal government, i. e., a block grant. The provincial health insurance plans are run by provincial health ministers, not the federal minister in Ottawa.

So, does provincial autonomy facilitate experimentation and tailoring by the provinces? Sommers and Naylor think not.

there is little evidence that the alleged advantages of block grants have materialized in Canada. Advocates argue that with greater flexibility and proper incentives, states can reduce costs by improving the efficiency of care. In Canada, however, the provinces’ primary means of coping with budget pressures under block grants has been to reduce funding to hospitals and bargain harder with provincial medical associations. Ironically, then, if this scenario plays out in the United States, it would exacerbate one of the chief Republican criticisms of Medicaid — that it pays clinicians such low rates that they have reduced incentives to care for low-income patients.

Indeed, physician refusal to take Medicaid patients is one of Speaker Ryan’s central criticisms of Medicaid.

What about the effects of a block grant system on federal funding of health care?

Once block funding was initiated in 1977, health care funding became a line item in the federal budget that could be arbitrarily cut or capped for fiscal or political reasons, as opposed to a level of spending pegged to the needs and health care use of the population. Importantly, these cuts occurred under both conservative and liberal federal governments.

When the Canadian health transfer began, the federal government paid 50% of provincial costs. However, the transfer has steadily declined, until it is now about 20%. Sommers and Naylor predict that US federal block grants would also decline, and this is clearly one of Speaker Ryan’s goals.

However, Canadian health care spending per capita has not declined.

As the cost of providing care has risen, but the federal health transfer has stayed fixed or declined, the provinces have taxed more and the federal government has taxed less. The provincial governments hate this, because they would rather have the federal government make the unpopular choice to raise taxes. But it’s not clear whether block granting has made a big difference in the health care received by Canadians.

American states could similarly increase taxes in response to a declining federal Medicaid block grant, but would they? The key difference between Canadian public health insurance and Medicaid is that the former is universal, while the latter is means-tested. Ontarians prefer lower taxes, but if Ontario decreases funding for OHIP, every Ontarian will experience longer waits for care. But American states can cut Medicaid — and reduce taxes — without affecting the health care of better off and able-bodied citizens.

The affluent and able-bodied are also the citizens most likely to vote. American states determine their own voting procedures. Block granting gives states an incentive to manage voting so as to reduce the participation of the marginalized communities who are most in need of public health insurance. Block granting is likely to undermine the health care for the poor and disabled, and it could reinforce the post-Shelby County v. Holder efforts to restrict voting.

 

Blame Game Over High Drug Prices Escalates With New Ad

https://www.bloomberg.com/news/articles/2017-04-06/blame-game-over-high-drug-prices-gets-worse-with-lobby-s-new-ad

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New punches were thrown in the blame game over U.S. drug prices Thursday.

Broadening its efforts to defuse outrage over skyrocketing prices, Pharmaceutical Research and Manufacturers of America, the industry’s lobbying association, started an advertising campaign urging insurers to share with customers more of the benefits of rebates they’ve negotiated. In response, the main health-insurance lobby pushed the blame back on drugmakers: “Enough with the distractions.”

Meanwhile, the head of one of the largest pharmacy benefit managers, who are often criticized by drugmakers for their lack of transparency, said his industry helps save money and manufacturers should stop faulting the middlemen.

Pharmacy benefit managers like Express Scripts Holding Co. — which manage drug benefits for employers and insurers, and privately negotiate prices on their behalf — receive discounts from manufacturers. The rebates lead to lower prices, but it’s up to insurers whether they are ultimately passed down to patients, Express Scripts Chief Executive Officer Tim Wentworth said in an interview on Bloomberg Television on Thursday.

“A hundred percent of the time, payers determine how they pass through,” he said.

Drug companies that raise prices “would blame the middleman,” the CEO said. Yet pharmacy benefit managers, or PBMs, are transparent with how they work within the health-care sector with payers. “For us it’s a real simple challenge: get the net cost as low as possible for our clients.”

Opaque System

The three main groups that are involved in the complex and opaque system of setting drug prices in the U.S. — drugmakers, insurance companies and PBMs — started to strongly fight off criticism months ago. The sector escalated its defense against Washington this year after drug prices became a frequent target for President Donald Trump. He’s threatened to use the government’s buying power to force prices down, which is the industry’s most dreaded option, but so far has not unveiled any specifics about how.

The new ad from PhRMA, which represents more than 50 companies and is one of the most powerful interest groups, is another step in its endeavor to demonstrate that other parts of the health-care industry are responsible for the costs faced by patients. In January, the group started a major initiative, including TV, radio and digital ads. Unlike most developed countries in the world, the U.S. doesn’t directly regulate medicine prices, and drugmakers have strongly resisted it.

The new campaign, “Share the Savings,” will include advertising across various mediums to educate the public about how the rebates for commercially insured patients with high deductibles and coinsurance aren’t passed along to consumers, PhRMA said in a statement. “Robust negotiations” have resulted in major discounts, the group said.

Estimates: Average ACA Marketplace Premiums for Silver Plans Would Need to Increase by 19% to Compensate for Lack of Funding for Cost-Sharing Subsidies

Estimates: Average ACA Marketplace Premiums for Silver Plans Would Need to Increase by 19% to Compensate for Lack of Funding for Cost-Sharing Subsidies

A new Kaiser Family Foundation analysis finds that the average premium for a benchmark silver plan in Affordable Care Act (ACA) marketplaces would need to increase by an estimated 19 percent for insurers to compensate for lost funding if they don’t receive federal payment for ACA cost-sharing subsidies.

Established by the health law to reimburse insurers for the cost of reducing out-of-pocket costs for lower-income people buying marketplace plans (with incomes from 100% to 250% of the poverty level), the subsidies have been challenged in a lawsuit from the U.S. House. With a legal appeal pending, the federal government and Congress are in a position to choose whether to continue reimbursing insurers for their cost.

Among 12.2 million people who selected a 2017 ACA marketplace plan, about 58 percent, or 7.1 million, are receiving cost-sharing reductions. An earlier Foundation analysis of 2017 plans found the subsidies lower combined medical and prescription drug deductibles by as much as $3,354 and reduce annual out-of-pocket maximums by up to $5,587.

The Foundation’s new analysis examines the amount insurers would need to increase premiums to make up for the lack of funding, if federal payments cease for the cost-sharing reduction program.

 

Trump’s New Plan to Penalize the Sick

https://www.americanprogress.org/issues/healthcare/news/2017/04/06/430156/trumps-new-plan-penalize-sick/

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Republicans need to stop making a terrible health care bill even worse. A little over a week ago, President Donald Trump declared that the White House would be moving on from its efforts to repeal the Affordable Care Act, or ACA. However, in an abrupt about-face, the administration is now reportedly considering a new proposal in an attempt to reinvigorate talks: allowing insurers to drastically raise prices on people with pre-existing conditions, even to the point of preventing them from obtaining insurance at all.

First Republicans had a proposal that would lead to skyrocketing uninsurance and out-of-pocket costs while increasing premiums. Then they argued for driving up coverage prices for services like maternity care and substance abuse treatment while simultaneously weakening protections for employer-provided insurance. Now they’re threatening to eliminate protections for the up to 133 million individuals who have pre-existing conditions.

The Perverse Effects of Maryland Drug-Price Bill

http://www.realclearhealth.com/articles/2017/04/04/the_perverse_effects_of_maryland_drug-price_bill_110530.html?utm_source=RealClearHealth+Morning+Scan&utm_campaign=2ee066e433-EMAIL_CAMPAIGN_2017_04_04&utm_medium=email&utm_term=0_b4baf6b587-2ee066e433-84752421

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As President Trump said, health care is “complicated.”

When it comes to health care in America, virtually everyone claims to have the same broad goals: Accessibility to decent care that is affordable and not have it cost businesses and government (read: taxpayers) a fortune.

Good intentions abound, but politically feasible solutions are in short supply, and many bad or simplistic ideas are bandied about by policymakers on both sides of the aisle. A case in point is a Maryland bill that would crack down on “price gouging” by prescription-drug makers. The bill, which passed the House of Delegates on March 20 with an overwhelming, bipartisan margin of 137-4 and will probably be taken up by the Senate in the next few days, seems like a no-brainer. As Maryland Attorney General Brian Frosh said: “We’ve seen in Maryland and all over the country drug prices [are] skyrocketing.

However, the devil is in the details, and devilish it is. The bill, H.B. 631, excludes pricey brand drugs and only targets generic-drug makers, whose medicines save Maryland residents and taxpayers about $3.7 billion a year. If the bill becomes law, the state Attorney General could take generic drug makers to court for price increases that are vaguely described as “unconscionable.” Unconscionable is a legal doctrine used when consumers have no option to purchase an essential product at inflated prices. However, under the proposed Maryland law, it could be invoked when a generic maker increases the price of a pill from 15 cents to 50 cents but not when the manufacturer of a brand drug increases its price from $300 to $500 per pill.

Generics are a proven solution to high drug costs that saved America approximately $227 billion in 2015, including $90 billion for Medicare and Medicaid. Generics account for 89 percent of all prescriptions written, but only 27 percent of U.S. spending on medicines. In short, generics and a new class of off-brand drugs called biosimilars reduce health care costs and get affordable medicines into the hands of patients who need them most.

 

Is U.S. Preeminence in High-Tech Medicine a Myth?

http://www.commonwealthfund.org/publications/blog/2017/apr/us-preeminence-in-high-tech-medicine?omnicid=EALERT1189645&mid=henrykotula@yahoo.com

U.S. health care has many well-documented shortcomings. However, it is often assumed that, because we invest so heavily in technology and specialists, our health care system performs well for patients who have rare or complex diseases.

New research shows that we should be skeptical of that assumption. A recent study in the Annals of Internal Medicine compares the health outcomes of U.S. and Canadian patients with cystic fibrosis, an incurable, genetic disease that affects about one in 10,000 people in both countries. The results are disturbing: on average, Canadian patients live 10 years longer than American patients. And the gap has been widening for the past two decades (see exhibit).

Median Age of Survival for Patients with Cystic Fibrosis over Time

Median age of survival (years)

The researchers suggest the likely culprit is the significant gaps in health insurance coverage among U.S. children and adults under age 65. Uninsured patients with cystic fibrosis, they find, face a much greater risk of early death than their insured peers. Of particular note, given recent events in Washington, D.C., Medicaid patients have significantly better health outcomes than those without insurance, despite the fact that they tend to be poorer and more socially vulnerable.

In Canada, of course, there are no uninsured: the government provides universal health coverage for all residents, without copayments for physician visits or hospital stays. (The study also finds that Canadian patients are much more likely to receive a lung transplant than U.S. patients—shattering another common assumption about the U.S. health system’s technological superiority.)

When one considers the medical needs of people with cystic fibrosis, it is obvious why lacking health insurance could lead to an early death. The disease causes abnormal secretions to impair functioning of the lungs, pancreas, and other organs, which in turn leads to infections and lung damage, and prevents the body from properly digesting food. Inhibiting the build-up of these secretions and ensuring proper nutrition and wellness are crucial to preventing the rapid progression of the disease. In this context, staying well requires constant self-management and frequent contact with the health care system—which comes at a cost. Coverage gaps and financial barriers to care are incredibly dangerous for these patients and can quickly undermine their health.

And while several promising pharmaceuticals that treat cystic fibrosis have hit the market in recent years, these are priced at a quarter of a million dollars . . . per year. High-quality care is simply out-of-reach for patients without insurance.

In medical terms, we might call uninsurance a “comorbidity”—one unique to the United States among all industrialized nations, and just as deadly as pneumonia or diabetes.

The study is a reminder, if one was needed, of the fundamental problem with the U.S. health insurance system: not everyone is covered. The focus of would-be health reformers should be—not solely on whether the 20+ million Americans who gained coverage under the ACA should be allowed to keep it—but rather how to extend those gains to the 28 million remaining uninsured. For some, their lives will depend on it.