House Subcommittee Takes Dim View of Healthcare Consolidation

https://www.healthleadersmedia.com/strategy/house-subcommittee-takes-dim-view-healthcare-consolidation

Lawmakers and witnesses alike cited the ill-effects of hospital mergers and acquisitions in a long list of industry behavior they find troubling.


KEY TAKEAWAYS

An economics and health policy professor from Carnegie Mellon suggested lawmakers should give the FTC more power to review nonprofit mergers.

Lawmakers from both sides of the aisle expressed dissatisfaction with the healthcare industry’s consolidation trend and voiced support for legislative action.

A hearing of the House Judiciary Committee’s antitrust subcommittee would not have been a comfortable place Thursday for any healthcare executive touting the benefits of a planned merger or acquisition.

Lawmakers and witnesses took turns criticizing rampant consolidation among hospitals and other healthcare companies. While the public is often told these deals will lead to improved efficiency and higher quality care, those purported benefits frequently fail to materialize, they said.

Since the hearing grouped payer and provider consolidation with anticompetitive concerns about the pharmaceutical industry—an area that both major parties have expressed interest in addressing through congressional action—the discussion could signal how lawmakers will approach any legislation to address the problems they perceive.

Rep. Doug Collins, a Republican from Georgia and the committee’s ranking member, said hospital consolidation has had an especially detrimental impact on rural communities in his state.


“These communities often already have few options for quality care, so as hospital consolidation has increased over the past 10 years, rural communities like my own have been hurt the most,” Collins said.

“At times, these mergers and acquisitions can help rural communities by keeping facilities open, but often they result in full or partial closures and shifting patients from nearby facilities to those hours away,” he added.

Some problems caused by consolidation, such as increased travel times for emergency services, can “literally mean the difference in life and death,” Collins said.

Jerry Nadler, a Democrat from New York and the committee’s chairman, said there’s no question that the recent spate of mergers has contributed to the industry’s problems.

“It is well documented that hospital mergers can lead to higher prices and lower quality of care,” Nadler said.

Martin Gaynor, PhD, an economics and health policy professor at Carnegie Mellon University and a founder of the Health Care Cost Institute, said in his testimony that there have been nearly 1,600 hospital mergers in the past 20 years, leading most regions to be dominated by one large health system apiece.

“This massive consolidation in healthcare has not delivered for Americans. It has not given us better care or enhanced efficiency,” Gaynor said. “On the contrary, extensive research evidence shows us that consolidation between close competitors results in higher prices, and patient quality of care suffers for lack of competition.”

Since hospitals that have fewer competitors can better negotiate favorable payment terms, this consolidated landscape “poses a serious challenge for payment reform,” he added.

“Our healthcare system is based on markets. That system is only going to work as well as the markets that underpin it,” Gaynor said. “Unfortunately, these markets do not function as well as they could or should.”

Gaynor recommended several possible policy changes, including an end to policies that make it harder for new competitors to enter a market and compete and an expanded authority for the Federal Trade Commission to review potentially anticompetitive conduct by nonprofit entities. He also said lawmakers should consider imposing FTC reporting requirements for even small transactions to enhance the tracking capabilities of enforcement agencies.

To support his claims, in his written testimony, Gaynor pointed to research he completed with Farzad Mostashari of Aledade Inc. and Paul B. Ginsburg of The Brookings Institution.

 

 

 

 

How to save $80 billion a year on prescription drugs

https://www.axios.com/newsletters/axios-vitals-2b22d854-43a4-481f-aa30-d1b14d859e29.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Illustration of a bill with money print on it.

Medicare could have saved almost $80 billion, just in 2018, by matching the U.K.’s prices for prescription drugs that don’t have any competition, according to a new study released in Health Affairs yesterday.

Why it matters: Medicare’s drug benefit was designed to keep prices in check through competition. But competition doesn’t always exist, and the U.S. doesn’t have many options to keep prices down in those cases.

  • Unlike the other three countries examined in the study, the U.S. doesn’t regulate drug prices.

Details: This study focuses on a group of single-source brand-name drugs in Medicare Part D that have been on the market for at least 3 years. Researchers compared U.S. prices for those drugs to prices in the U.K., Japan and Ontario.

  • On average, after accounting for rebates, Medicare paid 3.6 times more than the U.K., 3.2 times more than Japan, and 4.1 times more than Ontario.
  • The longer a drug was on the U.S. market, the larger that gap grew.
  • If Medicare Part D had adopted the average price from those countries, it would have saved an estimated $72.9 billion on sole-source drugs in 2018 alone.

Between the lines: The Trump administration wants to rely on international prices for Medicare Part B, which covers drugs administered in a doctor’s office. But this study shows that there are also a lot of savings to be had in Medicare Part D, which covers drugs you pick up at a pharmacy.

The other side: “An international reference pricing system could result in American seniors losing access to their choice of medicine, and waiting years longer for new breakthrough treatments,” the trade group PhRMA said in a statement.

The bottom line: The political interest in cutting drug prices is real, but we’re still a very long way from President Trump’s stated goal of matching other countries’ prices.

 

GOP tax law boosts health care profits

https://www.axios.com/newsletters/axios-vitals-1102fe1c-124e-4bbf-9647-ad0efd6392a3.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

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The GOP tax law is padding health care companies’ bottom lines, according to my colleague Bob Herman’s analysis of newly released financial information from the last quarter of 2018. Overall, the industry’s profits were up significantly from the same period a year earlier.

The big picture: The law made it easier to bring home money that was parked abroad. It also eliminated tax provisions that have specifically helped large companies like Blue Cross Blue Shield insurers. But the lower corporate tax rate is the main event.

  • Drug giant Pfizer received a $563 million tax benefit in the fourth quarter, and its corporate income tax rate in all of 2018 was just 6%.
  • Johnson & Johnson’s effective tax rate in the last quarter of 2018 was 2.6%.
  • Almost half of the $551 million tax break recorded by hospital chain HCA Healthcare in 2018 came in the fourth quarter.

Between the lines: The tax law aside, the companies that handle the most revenue — like health insurers collecting premiums or drug distributors shipping products — are not the most profitable.

  • The highest margins still usually belong to pharmaceutical companies and medical-devices.

 

 

 

‘Outrageous giveaway to Big Pharma’: A political ‘bomb’ over drug prices may threaten NAFTA 2.0

https://www.japantimes.co.jp/news/2019/02/13/business/outrageous-giveaway-big-pharma-political-bomb-drug-prices-may-threaten-nafta-2-0/#.XGR6YlVKi1s

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The clash over free trade in North America has long been fought over familiar issues: low-paid Mexican workers. U.S. factories that move jobs south of the border. Canada’s high taxes on imported milk and cheese.

But as Democrats in Congress consider whether to back a revamped regional trade pact being pushed by President Donald Trump, they’re zeroing in on a new point of conflict: drug prices. They contend that the new pact would force Americans to pay more for prescription drugs, and their argument has dimmed the outlook for one of Trump’s signature causes.

The president’s proposed replacement for the 25-year-old North American Free Trade Agreement is meant to win over Democrats by incentivizing factories to hire and expand in the United States. Yet the pact would also give pharmaceutical companies 10 years’ protection from cheaper competition in a category of ultra-expensive drugs called biologics, which are made from living cells.

Shielded from competition, critics warn, the drug companies could charge exorbitant prices for biologics.

“This is an outrageous giveaway to Big Pharma,” Rep. Rosa DeLauro, a Connecticut Democrat, said in an interview. “The government guarantees at least 10 years of market exclusivity for biologic medicine. It’s a monopoly. It’s bad policy.”

The objections of DeLauro and other Democrats suddenly carry greater potency. The need to curb high drug prices has become a rallying cry for voters of all political stripes. Trump himself has joined the outcry. The revamped North America trade deal must be approved by both chambers of Congress, and Democrats have just regained control of the House.

Rep. Earl Blumenauer of Oregon, the new chairman of the House Ways and Means subcommittee on trade, told The Associated Press that “I don’t think candidly that it passes out of my trade subcommittee” with the biologics provision intact.

“The biologics are some of the most expensive drugs on the planet,” Blumenauer said.

Still, the politics of NAFTA 2.0 are tricky for Democrats and not necessarily a sure-fire winner for them.

The original NAFTA, which took effect in 1994, tore down most trade barriers separating the United States, Canada and Mexico. Like Trump, many Democrats blamed NAFTA for encouraging American factories to abandon the United States to capitalize on lower-wage Mexican labor and then to ship goods back into the U.S., duty-free.

Having long vilified NAFTA, Trump demanded a new deal — one far more favorable to the United States and its workers. For more than a year, his top negotiator, Robert Lighthizer, held talks with Canada and Mexico. Lighthizer managed to insert into the new pact provisions designed to appeal to Democrats and their allies in organized labor. For example, 40 percent of cars would eventually have to be made in countries that pay autoworkers at least $16 an hour — that is, in the United States and Canada and not in Mexico — to qualify for duty-free treatment.

The new deal also requires Mexico to encourage independent unions that will bargain for higher wages and better working conditions.

Late last year, the three countries signed their revamped deal, the U.S.-Mexico-Canada Agreement. But it wouldn’t take effect until their three legislatures all approved it. In the meantime, the old NAFTA remains in place.

The question now is: Are Democrats prepared to support a deal that addresses some of their key objections to NAFTA and thereby hand Trump a political victory? Some Democrats have praised the new provisions that address auto wages, though many say they must be strengthened before they’d vote for the USMCA.

Protection for drug companies is another matter. Many Democrats had protested even when the Obama administration negotiated eight years of protection for biologics— from cheap-copycat competitors called “biosimilars” — in a 12-country Pacific Rim trade pact called the Trans-Pacific Partnership, or TPP.

Trump abandoned the TPP in his first week in office. But the pharmaceutical industry is a potent lobby in Washington, and Trump’s negotiators pressed for protection for U.S. biologics in the new North American free trade deal. They ended up granting the drug companies two additional years of protection in the pact.

Top biologics include the anti-inflammatory drug Humira, the cancer fighter Rituxan and Enbrel, which is used to treat rheumatoid arthritis.

The administration and drug companies argue that makers of biologics need time to profit from their creations before biosimilars sweep in, unburdened by the cost of researching and developing the drugs. Otherwise, they contend, the brand-name drug companies would have little incentive to invest in developing new medicines.

They note that a 2015 law authorizing presidents to negotiate trade deals requires American officials to push other countries toward U.S.-level protections for intellectual property such as biologic drugs. (The same law, somewhat contradictorily, directs U.S. negotiators to “promote access to medicines.”)

Supporters also note that existing U.S. law gives makers of biologics 12 years’ protection. So the new pact wouldn’t change the status quo in the United States, though it would force Mexico to expand biologics’ monopoly from five years and Canada from eight years. In fact, supporters of the biologics monopoly argue that the pact might cut prices in the United States because drug companies would no longer face pressure to charge Americans more to compensate for lower prices in Canada and Mexico.

But critics say that expanding biologics’ monopoly in a trade treaty would prevent the United States from ever scaling back the duration to, say, the seven years the Obama administration once proposed.

“By including 10 years in a treaty, we are locking ourselves in to a higher level of monopoly protection for drugs that are already taking in billions of dollars a year,” said Jeffrey Francer, general counsel for the Association for Accessible Medicines, which represents generic drug companies. “The only way for Congress to change it is to back out of the treaty. … Does the United States want to be in violation of its own treaty?”

For Democrats, higher drug prices are shaping up as a powerful political argument against approving the president’s new North American trade deal. In December, Stanley Greenberg, a leading Democratic pollster and strategist, conducted focus groups in Michigan and Wisconsin with Trump voters who weren’t affiliated with the Republican Party. Some had previously voted for Barack Obama. Others called themselves political independents. They’re the kinds of voters Democrats hope to attract in 2020.

Greenberg said he was “shocked” by the intensity of their hostility to drug companies — and to the idea that a trade pact would shield those companies from competition.

“It was like throwing a bomb into the focus group,” said Greenberg, who is married to DeLauro. He said the voters’ consensus view was essentially: “The president was supposed to go and renegotiate (NAFTA) so that it worked for American workers. But it must be that these lobbyists are working behind the scenes” to sneak in special-interest provisions.

That perception gives Democrats reason to reject the new pact as the 2020 election approaches.

“Democrats have no incentive to do this,” said Philip Levy, a senior fellow at the Chicago Council on Global Affairs and a White House economist under President George W. Bush. “Before you know it, the presidential election season is going to be upon us.”

U.S. trade rules are designed to force Congress to give trade agreements an up-or-down vote — no nitpicking allowed. Still, there are ways to bypass those restrictions. Congressional Democrats could, for example, push the administration to negotiate so-called side letters with Canada and Mexico to address their concerns. President Bill Clinton did this with the original NAFTA.

“Lighthizer and his team are very creative,” said Blumenauer, chair of the House trade subcommittee. “This is something that can be handled.”

 

 

 

Big Pharma Lobby Group Spent Record Amount as Reform Push Grows

https://www.bloomberg.com/news/articles/2019-01-22/big-pharma-lobby-group-spent-record-amount-as-reform-push-grows

The pharmaceutical industry’s 2 leading trade groups both set records for lobbying spending in 2018 — a sign of just how much the industry believes is on the line in the political battle over drug prices.

By the numbers:

  • PhRMA, the industry’s largest trade organization, spent $27.5 million on lobbying last year, per Bloomberg. That’s the most it has ever spent in 1 year.
  • A full $10 million of that came in the first quarter — the most PhRMA has ever spent in a single quarter.
  • The Biotechnology Innovation Organization, meanwhile, spent just shy of $10 million, according to STAT — also a record.
  • Those totals don’t include the millions individual drug companies spent on their own lobbyists. They also don’t include the industry’s campaign contributions, which topped $17 million in the 2018 cycle, according to the Center for Responsive Politics.

Between the lines: PhRMA set its previous lobbying record during the debate over the Affordable Care Act, trying to stop a fully Democratic government from taking a bite out of its bottom line.

  • It’s remarkable that PhRMA would break that record in a year where Republicans — the industry’s allies — controlled the House, Senate and White House.

 

 

 

 

Drug Prices Due to Rise in 2019

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28 pharmaceutical companies will raise their drug prices next year going back on the price freezes that they instituted this summer after public shaming from Administration officials, according to press reports. 

Allergan, Bayer, Novartis, Amgen, AstraZeneca, Biogen, and GlaxoSmithKline are among the companies who filed disclosures with California earlier this year that they planned to raise prices within at least 60 days, in accordance with the state’s 2017 notification law.

Payers have reported that they anticipate drug price increases about 20 percent higher than previous years with the average price increase for a pharmacy-dispensed drug to be in the high single digits and the increase for physician-administered drugs to be around 3 percent.

Click here for the Reuters report.

 

The Health 202: Here’s how Trump and Bernie Sanders agree on lowering drug prices

https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2018/11/21/the-health-202-here-s-how-trump-and-bernie-sanders-agree-on-lowering-drug-prices/5bf42bd91b326b3929054956/?utm_term=.143e3b258cb2

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Have you heard about the trendy new approach to lowering prescription drug spending? Copy other countries.

The Trump administration and Sen. Bernie Sanders (I-Vt.) are strange bedfellows on drug prices. But they’re both eyeing similar approaches to lowering the country’s astronomically high spending on prescription medicines: pegging U.S. drug prices to lower international levels.

Sanders proposed a bill Tuesday incentivizing companies to develop cheaper generic versions of brand-name medications that the government determines to be “excessively priced” in comparison to the median price in Canada, the United Kingdom, Germany, France and Japan.

This is similar to an idea advanced in October by Health and Human Services Secretary Alex Azar, whose agency is experimenting with pegging some Medicare payments to an index based on sales prices in those five countries plus 11 more: Austria, Belgium, the Czech Republic, Finland, Greece, Ireland, Italy, Portugal, Slovakia, Spain and Sweden.

Both proposals stem from the reality that drug prices are much higher in the United States because the government doesn’t engage in price-setting, unlike in many other countries with similar economies. That means pharmaceutical companies pocket a lot more money in this country — and rely more heavily on their U.S. profits to pay for developing new medications.

Trump and Sanders have adopted similar rhetoric when they talk about the issue, even though the Republican president and the self-described democratic socialist senator couldn’t be further apart on other topics such as taxes and immigration. The United States pays unfairly high prices for prescription drugs, they argue, even as other countries demand — and obtain – steep discounts.

It’s not the first time Trump and Sanders have shared common ground. During their 2016 campaigns, both candidates advocated allowing Medicare’s prescription drug program to directly negotiate lower prices with drugmakers and private companies. Trump has since backed away from that idea, but HHS surprised many with its bold suggestion of  creating an international price index (which I explained in this Health 202).

Granted, HHS’s experiment is quite limited in scope. It applies only to drugs administered to Medicare patients by doctors themselves and will last just five years. The experiment — called a “demonstration” in administration-speak — won’t start until sometime after the Centers for Medicare and Medicaid Services propose a rule early next year.

Sanders’s proposal, also sponsored by Rep. Ro Khanna (D-Calif.), would go much further by affecting all drugs, including those purchased by Americans with private health insurance. If HHS determined a drug price to be excessive, the secretary would be directed to strip its maker of exclusivity rights and open the door for competitors to develop a generic version.

Sanders gave a nod to Trump’s Part B proposal but emphasized that his approach would help the more than 150 million Americans who get private health coverage from their employer. The monthly cost for the popular insulin Lantus (used for diabetes) could fall from $387 to $220 and the medication Humira (used for arthritis) could fall from $2,770 to $1,576, according to some examples provided by Sanders’s office.

There’s little to no chance Sanders’s bill will advance in Congress. Many Republicans aren’t enthused even about Trump’s limited Part B demonstration, because it smacks of government price-setting.

There is something else Sanders shares with the president: strong resistance from the pharmaceutical industry. A spokeswoman for the Pharmaceutical Research and Manufacturers of America said both proposals would be “devastating” if implemented.

“This legislation would have the same devastating impact on patients as the administration’s proposed International Pricing Index model,” PhRMA spokeswoman Nicole Longo said in a statement provided to The Health 202.

“Patients in countries whose governments set prices wait years for new medicines and have far fewer treatment options,” she added. “These policies reduce investment in research and development, slow progress in creating tomorrow’s cures and will result in Americans having access to fewer new medicines.”

 

 

 

On Health Care, Dems Go From Running to Baby Steps

https://www.rollcall.com/news/policy/health-care-democrats-congress-baby-steps?utm_source=rollcallheadlines&utm_medium=email&utm_campaign=newsletters&utm_content=102918&bt_ee=laxMKcbLquOQ38r3vgGpAMJX0zq6rDqxygOXbPDfSwKSHMjaEgq8JGZkmOJJy/1x&bt_ts=1542196035790&utm_source=rollcallheadlines&utm_medium=email&utm_campaign=newsletters&utm_content=102918&bt_ee=tH6eZI6YXwNy2ZGbobMIrH2ZCUu8d3EvTOK0U9Cxlbepc1ICeXiBfznzGL6Gj8mS&bt_ts=1542196035723

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Incremental measures will dominate action on the health law in a largely gridlocked Congress.

The midterm elections all but ended the Republican push to repeal the 2010 law known as Obamacare, but as a defining issue for Democrats in their takeover of the House, health care will likely remain near the top of lawmakers’ policy and political agenda.

Newly emboldened Democrats are expected to not only push legislation through the House, but use their majority control of key committees to press Trump administration officials on the implementation of the health law, Medicaid work requirements, and insurance that does not have to comply with Obamacare rules.

Both parties are looking to address issues that voters prioritized, such as lowering prescription drug prices, though different approaches by Republicans and Democrats could mean incremental changes stand a better chance of enactment than any major bill.

Early on, lawmakers may find themselves dealing with the fallout of a court ruling that could overturn the law’s mandate that health insurance cover pre-existing conditions, putting Congress on the spot in the face of widespread voter support for those protections.

All of these issues, which dominated this year’s elections, will play out against the backdrop of the next congressional and presidential contests.

“In a lot of ways, the purpose of legislation in this Congress for the Democrats is going to be to set the agenda for the 2020 election,” said Dan Mendelson, the founder of the consulting firm Avalere.

Drug prices

Lowering drug prices is a top priority for House Democrats and President Donald Trump. Leaders of both parties identified this issue last week as a possible area for bipartisanship.

But Democrats’ more ambitious plans, like allowing Medicare to negotiate drug prices, aren’t expected to advance in the Republican Senate. Instead, issues like increasing transparency or speeding up approvals for new treatments could be ones where both parties can find agreement.

Texas Democratic Rep. Lloyd Doggett, a contender to lead the Ways and Means Health Subcommittee, is pushing a measure that would require HHS to negotiate prices for drugs covered by the Medicare Part D program. While most Democrats say they back price negotiations, there will likely be debate within the party about the details, particularly if they seem to be close to the government setting prices.

“When you start getting into anything that looks like price controls, you might get some bipartisan support for, but you also might get bipartisan support against,” said Ben Isgur, the leader of PwC’s Health Research Institute.

Democrats’ other focal points center on price-gouging for pharmaceuticals, which gained significant attention in recent years. The House Democrats’ “Better Deal” legislative agenda envisions a “price-gouging” enforcer, which would be a Senate-confirmed position to lead a new agency focused on stopping significant price increases for prescription drugs. Democrats also hope to require drug manufacturers to provide data to justify significant price increases.

Their plan would require drugmakers to justify price increases of certain amounts at least 30 days before they take effect.

Leaders in both parties have said since the election that drug pricing will be on the agenda, but have appeared skeptical of whether their efforts would yield a successful outcome.

“The jury’s out in my mind,” Democratic Rep. Pramila Jayapal said in a call with reporters last week. “If he is serious about taking on those pharmaceutical drug companies and ensuring that we can really get prescriptions filled for our seniors and negotiate prices for our pharmaceutical drugs the way we do for our VA, then we might have something we can work on.”

Mendelson predicted that even if a major bipartisan agreement to lower prices doesn’t advance in the next Congress, the Trump administration will keep taking steps that could eventually lower prices. Food and Drug Commissioner Scott Gottlieb has earned bipartisan praise for speeding new drug approvals, for instance.

The Trump administration could try to stay in command of drug pricing politics ahead of the 2020 election, he added, although Democrats will also seek to control the issue.

“There could well be significant progress over the next year or two because the administration has a lot of authority and they will use it to neutralize the issue before the 2020 election,” said Mendelson, a former Clinton administration official.

Health care law

The electrifying election-year issue of pre-existing condition protections is likely to win a House vote as Democrats seek to prove their commitment to that popular part of the law.

Both parties are bracing for a ruling from U.S. District Court Judge Reed O’Connor of Texas in a lawsuit filed by 20 state officials seeking to overturn the 2010 law. O’Connor heard oral arguments in September, although the Trump administration asked to delay a ruling until after the open enrollment period ends on Dec. 15.

If O’Connor strikes down all or part of the health care law, Democrats expect a group of state attorneys general defending the law to seek an immediate injunction and appeal the decision. Legal scholars on both sides of the aisle question the arguments of those attempting to kill the law, but the case could reach the Supreme Court.

House Democrats plan to consider a bill by Rep. Jacky Rosen of Nevada who won a Senate bid last week, that would allow the House to intervene in the case and defend the health law, aides say.

Across the Capitol, 10 Senate Republicans introduced a bill this summer to guarantee coverage of pre-existing conditions, which GOP aides say could be part of a response to the lawsuit.

Democrats have criticized the Senate GOP bill because it doesn’t require insurers to cover certain services for patients with pre-existing conditions. Republicans like North Carolina Sen. Thom Tillis, who sponsored the measure, defend it.

“If they do strike down large parts of the legislation, Sen. Tillis’ bill could be one important part of a larger health care legislative effort,” said Adam Webb, a spokesman for Tillis.

Senate Majority Leader Mitch McConnell of Kentucky declined to reveal after the election how the chamber would respond to a ruling striking down parts of the law, but called for bipartisan fixes to the health law.

A draft bipartisan stabilization bill, which has been at an impasse for nearly a year, could re-emerge in the next Congress, but it’s not clear if lawmakers can resolve a fight over abortion restrictions that blocked an agreement or how that measure could change a year later.

“The first thing we need to do is stop Republican attacks on coverage of pre-existing conditions, stop any movement toward extending these short-term plans,” Iowa Rep.-elect Cindy Axne, who defeated Rep. David Young, said in a call with reporters last week.

Top Democrats — Frank Pallone Jr.Richard E. Neal of Massachusetts, and Robert C. Scott of Virginia, who are expected to chair the Energy and Commerce, Ways and Means, and Education and Workforce committees, respectively — introduced legislation this year to shore up the health law. It would increase the size of the tax credits that help people pay their premiums and expand eligibility. It would also block Trump administration rules to expand health plans that don’t meet the 2010 law’s requirements.

Aides caution the bill could see minor changes next year based on developments since it was introduced in March and say it could be tied into a stabilization debate.

Since falling short in their efforts to overhaul the law last year, Senate Republicans pivoted to rising health care costs, a focus that will likely extend into next year. Several senators showed interest in legislation to prevent surprise medical bills, but it’s not clear what other topics could lead to bipartisan agreement, which will still be needed in the Senate even with a larger Republican majority.

Oversight

Oversight of the health care law will dominate House action on the health law in a largely gridlocked Congress. House Democrats plan to bring administration officials to Capitol Hill to explain what critics call “sabotage” of the law’s insurance exchanges.

“We’ll be looking at what they’re doing administratively to undermine the operations of the Affordable Care Act and what consequences they may have caused to literally millions of people,” Minority Whip Steny H. Hoyer told reporters in September.

Oversight could touch on issues such as Trump’s funding cuts to outreach and advertising for the exchanges, reductions in enrollment help and the effects of repealing the law’s mandate to get coverage.

Maryland Rep. Elijah E. Cummings, who is expected to lead the House Oversight Committee, will likely rev up an investigation into drug companies high prices that he has been conducting as ranking member and could bring executives in to testify before the panel.

In a post-election press conference, the presumed incoming House speaker, Nancy Pelosi of California, highlighted the Energy and Commerce Committee as another “big oversight committee” that will be active.

“We do not intend to abandon or relinquish our responsibility … for accountability, for oversight and the rest,” said Pelosi. “This doesn’t mean we go looking for a fight, but it means that if we see a need to go forward, we will.”

 

Pharma’s grip on the health care economy

https://www.axios.com/pharma-health-care-economy-q3-profits-53b950b2-5515-4d79-b1f5-7067bf3652d1.html

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Ten companies controlled half of the health care industry’s $50 billion of global profit in the third quarter of this year, according to an analysis of financial documents for 112 publicly traded health care corporations. Nine of those 10 companies at the top are pharmaceutical firms.

The bottom line: Americans spend a lot more money on hospital and physician care than prescription drugs, but pharmaceutical companies pocket a lot more than other parts of the industry.

By the numbers: The health care industry’s $50 billion of profit came from $636 billion of revenue, equating to a cumulative profit margin of almost 8%. Those are the highest figures of the past four quarters.

  • Approximately 63% of the profit total went to drug companies, even though they collected 23% of the revenue — numbers that mirror our past analyses.
  • Pfizer had the highest profit total ($4.1 billion) of any publicly traded health care company in the third quarter. Pfizer also said it will go back to its “normal” routine of raising drug prices after a public skirmish with President Trump.
  • Of the 19 companies that tallied at least $1 billion of third-quarter profit, 14 were drug companies. The others were either health insurers (UnitedHealth Group and Aetna) or involved in the drug supply chain (Walgreens, CVS Health, Express Scripts).
  • The analysis does not include not-for-profit hospital systems, but early returns still show the biggest systems have a lot of money.

Between the lines: The Republican tax law, which slashed the corporate tax rate, also continues to bolster the industry.

  • Drug firm AbbVie paid $14 million of income taxes on $2.76 billion of pre-tax earnings in the third quarter — an effective tax rate of just 0.5%. Pfizer’s effective tax rate in Q3 was 1.6%.

The big picture: The health care industry arguably has more financial power now than at any point in its history, and a split Congress likely won’t change that in the short term — even though patients are fed up with the system.

 

 

Short-term health plans: A junk solution to a real problem

https://theconversation.com/short-term-health-plans-a-junk-solution-to-a-real-problem-101447

Serious illnesses like cancer often are not covered by short-term health insurance policies.

 

After failing to overturn most of the Affordable Care Act in a very public fight, President Donald Trump has been steadily working behind the scenes to further destabilize former President Barack Obama’s signature achievement. A major component in this effort has been an activity called rule-making, the administrative implementation of statutes by federal agencies like the Department of Health and Human Services.

Most recently, citing excessive consumer costs, the Trump administration issued regulations to vastly expand the availability of short-term, limited duration insurance plans.

While the cost of health care is one of the overwhelming problems in the American health care system, short-term health plans do nothing to alter the underlying causes. Indeed, these plans may cause great harm to individual consumers while simultaneously threatening the viability of many states’ insurance markets. Having studied the U.S. health care market for years, here is why I think states can and should take quick action to protect consumers.

Comparing crab apples and oranges

Short-term, limited duration insurance plans, by definition, provide insurance coverage for a short, limited period. Since being regulated by the Health Insurance Portability Act of 1996 (HIPAA), this has meant for less than one year. Sold at least since the 1970s, they were offered as an alternative to major medical insurance intended for individuals with temporary and transitional insurance needs such as recent college graduates or those in between jobs.

However, after passage of the Affordable Care Act further concerns emerged over the misuse and mismarketing of these kinds of plans. As a result, the Obama administration restricted their duration to three months.

In addition to being shorter in duration, these policies’ benefits tend to also be much skimpier than for those plans sold on the Affordable Care Act’s marketplaces. For example, plans often do not cover crucial services such as prescription drugs, maternity care, or major emergencies like cancer. Equally problematic, even those benefits covered come with high deductibles, strict limitations, and annual and lifetime coverage limits.

It is important to note that short-term health plans are also not subject to any of the consumer protections established by the Affordable Care Act. This means, for example, that insurers can set premiums, or even refuse to sell to an individual, based on a person’s medical history. Moreover, consumers must update their health status every time they seek to purchase coverage.

Crucially, short-term health plans have shown to be particularly discriminatory against women. For one, women are charged higher premiums. Moreover, they are likely to be disproportionately affected by medical underwriting for pre-existing conditions like domestic and sexual abuse and pre- and postnatal treatment.

Because plans are so limited in benefits, and because insurers are able to deny coverage to sicker individuals, short-term health plans come with much lower premiums than standard insurance plans with their more expansive benefits and vastly superior consumer protections. Indeed on average, premiums amount to only one-fourth of ACA-compliant plans.

Too good to be true

While short-term insurance plans are more affordable in terms of premiums, they come with a slew of problems for consumers.

For one, consumers have a tremendously hard time understanding the American health care system and health insurance. Predatory insurance companies have been known to take advantage of this shortcoming by camouflaging covered benefits, something the Affordable Care Act sought to ameliorate. Mis- and underinformed consumers often find themselves surprised when they actually try to use their insurance.

Even for those who are aware of the limitations, problems may arise. Unable to predict major medical emergencies, consumers may be confronted with tens of thousands of dollars of medical bills if they fall sick or face injury.

Moreover, insurers are also able to rescind policies after major medical expenses have been incurred if consumers failed to fully disclose any underlying health conditions. This even applies to health conditions that consumers had not been aware of prior to getting sick.

While some may argue that this is the fault of the those who purchase short-term insurance, it causes problems for all of us.

For one, these individuals may refuse to seek care. This could result in severe consequence for their and their family’s well-being and ability to earn a living.

At the same time, medical providers will shift the costs of the resulting bad debts to other individuals with insurance or the general taxpayer.

Bad for the individual, worse for all of us

Short-term insurance plans are perhaps even more problematic for the health of the overall insurance market than they are for individual consumers.

With a very short implementation time frame, insurance regulators in the states only have until October to prepare for the potentially significant disruptions to their markets. This leaves little time for analysis and regulatory preparation.

Yet long-term consequences are even more concerning. Healthier and younger consumers are naturally drawn to the low premiums offered by these plans. At the same time, older and sicker individuals will value the comprehensive benefits and protections offered by the Affordable Care Act. The result is the continuing segregation of insurance markets and risk pools into a cheaper, healthier one and a sicker, more expensive one. As premiums rise in the latter, its healthiest individuals will begin to drop their coverage, leading to ever more premium increases and larger coverage losses. If left unchecked, eventually the entire insurance market may collapse in this process.

This could be particularly problematic in states with relatively small insurance markets like Wyoming or West Virginia where even one truly sick individual can drive up premiums tremendously.

States have options

The expansion of short-term health plans is one action by the Trump administration that states can counteract relatively simply. Currently, states serve as the primary regulator of their insurance markets. As such, they have the power to make decisions about what insurance products can be sold within their boundaries.

Action can be taken by insurance regulators and legislature to create relatively simple solutions. While the vast majority of states have failed to create consumer and market protections, a small number of states have done just that.

New York, for example, has banned the sale of these plans.

Others, like Maryland, have strictly limited their sale and renewability.

Treating the symptoms, not the cause

Many Americans struggle to access insurance and services despite the Affordable Care Act. While the Affordable Care Act has unquestionably improved access to insurance for Americans, cost control and affordability are truly its Achilles heels. Indeed, some Americans lost their limited benefits, lower cost plans when the Affordable Care Act did not recognize them as viable coverage.

The Trump administration has rightfully highlighted to high costs of the American health care system. However, offering consumers the opportunity to purchase bare-bones insurance at lower costs does nothing to solve America’s health care cost problems.

If access to insurance is truly a concern for the Trump administration, I believe it should seek to convince the remaining hold-outs to expand their Medicaid programs. Also, I think discontinuing its actions to destabilize insurance markets would also go a long way to reducing premiums.

Yet when it comes to altering the underlying cost calculus, there are no simple solutionsAdministrative costs are too highMedical quality is too lowResources constantly get wasted. Consumers could do more to be healthier.

Ultimately, I see it coming down to one crucial problem: Providers, pharmaceutical companies, device makers and insurers are making too much money. And it is these vested interests that make structural reform of the U.S. health care system a truly herculean endeavor.

But unless Americans and policymakers of both parties are willing to address this root cause, any reform effort amounts to nothing more than rearranging the deck chairs on the Titanic.