Relevant and even prescient commentary on news, politics and the economy.

“Congressional Leaders Signal They Intend to Kick the Can Down the Road on CHIP” Again

A Little History of the legislator who wrote the bill:

Chair of the House Appropriations Committee since 2017, Rodney Frelinghuysen’s campaigns have been funded by the aerospace, defense, pharmaceutical and health care industries. On domestic issues, he opposes legalized abortion, Planned Parenthood, sanctuary cities, and federal regulation of greenhouse gas emissions. He endorsed Donald Trump in the 2016 presidential election. He voted to repeal the Patient Protection and Affordable Care Act (Obamacare) and replace it with the American Health Care Act (AHCA). He was criticized for purportedly failing to have in-person town hall meetings since 2013, as well as writing a letter which had the effect of threatening an opponent’s employment.

It does appear Congressman Rodney Frelinghuysen has some irons in the fire when it comes to woman’s healthcare, healthcare in general, the healthcare industry, and who is a priority in healthcare plus sanctuary cities and green-house gases. Definitely unbiased irons as Congressman Frelinghuysen, like Michigan’s Mike Bishop, refuses to meet with his constituents and learn of their interests. His “Chip Further Continuing Appropriations Bill” passed by the Senate was reported-on by the Georgetown University Health Policy Institute, Center for Children and Families’ Joan Alkers. The bill does not solve the 5 year funding issue for CHIP as proposed in another Republican led bill.

What is coming to pass is a stopgap measure taking unused CHIP funding and giving portions of it to states running out of funding. Some states ware better funded due to timing and other reasons. It is as Chairman Greg Walden of the House Energy and Commerce Committee called the stopgap measure:

“a short-term, fill-the-gap for states – a little rescue, lifeline for them right now.“

Portion of the Bill:

DIVISION B CHILDREN’S HEALTH INSURANCE PROGRAM (CHIP) ALLOCATION REDISTRIBUTION SPECIAL RULE

SEC. 201. CHIP ALLOCATION REDISTRIBUTION SPECIAL RULE FOR CERTAIN SHORTFALL STATES DURING FIRST QUARTER OF FISCAL YEAR 2018.

‘‘(B) DETERMINATION OF REDISTRIBUTED AMOUNTS IF INSUFFICIENT AMOUNTS AVAILABLE.

‘‘(i) PRORATION RULE. Subject to clause (ii), if the amounts available for redistribution under paragraph (1) for a fiscal year are less than the total amounts of the estimated shortfalls determined for the 3 year under subparagraph (A), the amount 1 to be redistributed under such paragraph for each shortfall State shall be reduced 3 proportionally.

‘‘(ii) SPECIAL RULE FOR FIRST QUARTER OF FISCAL YEAR 2018.

‘‘(I) IN GENERAL.—For the period beginning on October 1, 2017, 8 and ending December 31, 2017, with respect to any amounts available for redistribution under paragraph (1) for 11 fiscal year 2018, the Secretary shall redistribute under such paragraph such amounts to each emergency shortfall State (as defined in sub-15 clause (II)) in such amount as is equal to the amount of the shortfall described in subclause (II) for such State and period (as may be adjusted under subparagraph (C)) before the Secretary may redistribute such amounts to any shortfall State that is not an emergency shortfall State. In the case of any amounts redistributed under this subclause to a State that is not an emergency shortfall State, such amounts shall be determined in accordance with clause (i).

What is Stopping CHIP Funding?

The Hill blames it on Congress not reaching an agreement on how to fund the CHIP for children. The issue lies with the Republican Congress which wishes to take funds from other programs, etc. to fund the Children Health Insurance Program.

• Additional Means testing of certain higher income seniors. (if you start with this, it will grow to other things also. This is another Republican scam.)
• Allowing states to kick out Medicaid beneficiaries if they win the lottery (This can be done by asking for a waiver from the Republican run CMS).
• Shortening the grace period for people paying their Obamacare premium payments late. (The point to this is to penalize those who have lower incomes and have trouble paying during certain time periods.)
• Cutting more than $5 billion from the Affordable Care Act’s prevention and public health fund. These funds are used for the ACL, CDC, and SAMHSA programs.

Not satisfied with holding children hostage in the continental United States, Republicans are also holding Puerto Rico Medicaid funding hostage.

Another funding option suggested by Chairman Greg Walden of the House Energy and Commerce Committee is;

“letting states receive more money for CHIP from the Centers for Medicare and Medicaid Services (CMS). This would not be new money, but would come from the agency’s unused funds.”

With Walden’s suggestion there would be no additional funding. This option would pit the needs of CHIP against the needs of Medicaid and Medicare. All of the funding options proposed either grow into something worse down the road for children and the elderly or steal from funding for those needing healthcare, programs again for the elderly and also programs for minorities and low-income constituents.

Its beginning to look a lot like Christmas for Republicans will be stealing healthcare from children and those who can least afford it or lose it.

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CVS Phamacy Chain buys Aetna Healthcare Insurance

Pharmacy chain CVS Health has agreed to buy health insurer Aetna for $69 billion in cash and stock, retaining its current management, the companies announced late Sunday.

The deal brings together one of the largest providers of pharmacy services with the No. 3 U.S. health insurer, which together would establish a healthcare giant with more than $240 billion in annual revenue.

The CVS-Aetna deal would likely give the combined company bargaining power in negotiating with hospitals and pharmaceuticals if they chose to go in that direction. There has not been much to control the rising cost of pharmaceuticals since Congress has blocked Medicare/ACA (Part D) from negotiating pharmaceutical pricing. The possibility of more insurers combining with pharmacy retail businesses. United Healthcare may be looking to do the same.

Interesting Direction . . . .

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ACA without a mandate

It appears almost certain that the ACA (Obamacare) mandate will be eliminated. This actually means that Obamacare will correspond to Obama’s 2008 proposal which didn’t include a mandate. Obama claimed it would work (he was lying or, to be polite, playing 11 dimensional chess).

Can ACA without a mandate work at all ? Can it be modiefied so that it works better ?

People who know a hell of a lot more than I do about health economics have struggled with these questions, so I doubt this post is useful. But I will type it anyway.

This excellent post by the always excellent Sarah Kliff explains.

First the CBO forecasts that removing the mandate will cause roughly 13 million more people to be uninsured. This means that they forecast that some people will still buy insurance on the exchanges — that there won’t be a complete death spiral. I am even more optimistic. The CBO’s forecasts of the number of uninsured Americans have been excellent, so I fear their forecast is better than my guess. The CBO forecasts 5 million fewer people will get Medicaid and 8 million fewer will buy insurance on the exchanges.

The effect on Medicaid enrollment shows the CBOs confidence in behavioral economics. Those 5 million don’t have to pay for Medicaid, but they forecast that without the push from the mandate, they won’t check and find out that they are eligible.

The 8 million would be roughly 40% of the numbe of plans purchased on the individual market (which still includes millions bought directly from insurance companies and not on the exchanges).

How can the individual market survive at all with guaranteed issue, community rating, and no madate ?
One might fear an adverse selection death spiral where only sick people get insurance so premiums are very high so only very sick people get insurance etc.

The spiral will be stopped for people with income under 4 times the poverty line who purchase insurance on the exchanges. They get subsidies so the amount they pay is a fixed function of their income and does not depend on the amount insurance companies charge. There will be only one loop of the spiral — healthy people don’t get insurance so premiums go up, but so do subsidies, so medium healthy people still get insurance.

It is possible that ACA without a mandate will destroy the direct from insurance companies individual market and will cause people with income over 4 times the poverty line to go uninsured. Also many people eligible for subsidies will be scared off by the premiums before they check and find they won’t pay them.

How could these consequences of GOP insanity be prevented or, at least, ameliorated ?

First there will be part of the same surprising effect of Trump’s previous attempt at sabotage — refusing to pay insurance companies for the cost sharing reductions they are required to make to reduce deductibles for people who have income less than 2.5 times the poverty rate who buy silver plans. Trump’s action caused extremely high silver premiums. Subsidies are linked to silver premiums. In many counties people can get bronze quality insurance for free. I’m pretty sure adverse selection must make silver premiums increase more than bronze premiums (with better insurance, the insurance company bears more of the additional cost from a sick policy holder). So the latest sabotage effort might cause the post subsidy cost of bronze insurance to go down. I hope this is an important effect. I think the end of Federal subsidies for cost sharing reductions may have strenthened Obamacare (in the short run, it probably hurt, because many peope don’t know that insurance companies still have to pay the cost sharing reductions, and now there won’t be a long run).

Importantly something probably will be done to undo the damage, because powerful entities will suffer. Obviously insurance companies will lose customers. Of course it is very much in their interest to try to convince healthy people to get insurance (it always has been). Also hospitals will go broke. Importantly, the GOP did not restore the program which paid hospitals which provided a lot of uncompensated care (it costs money). It was cut by the ACA, because it was assumed there would be much less need for it. This is already causing huge problems for rural hospitals in states which didn’t expand Medicaid. Hospitals might step up efforts to get people insured. But most importantly state governments will have a compelling reason to try to deal with the problem.

State governments end up paying for uncompensated care. They can protect themselve from Republicans in congress in many ways. First the remaining 19 states can expand Medicaid. It is insane not to. If Republicans are held responsible for Obmamacare without a mandate, the political incentive to refuse to expand Medicaid to stick it to Obmama is eliminated. I think the dread tax and sabotage ACA bill will cause states to expand Medicaid. Of course I can’t believe so many haven’t and that voters didn’t punish them.

Blue states could impose their own individual mandate. I doubt many will, because it is unpopular, but a bad enough effect of eliminating it might convince voters that it is necessary.

Finally, State and local government try to get the people who seek other services insured. If there are huge premiums and huge federal subsidies, the incentive to do this becomes stronger. I think one place to do this is unemployment offices. Newly unemployed people can buy Obamacare outside of open-enrollment periods. They tend to have low incomes. Similarly the state can contact people in divorce court. Again they are allowed to purchase outside of open enrollment. They will need to rearrange health insurance along with everything else. At least a terminal for bored people waiting at the DMV to check if they can get free insurance makes sense. People spend a lot of time waiting in state offices (after taking a number). A reminder that they might be going without free insurance (and a terminal) might be the nudge they need.

I think a lot can be done to undo the damage Republicans in Congress are doing. I fear it won’t be, but I am sure it can be.

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Medicare and Social Security reductions?

AARP notes a planned reduction in Medicare funding.  I have not hear much from them as in times past.

If you read through the umpteen pages of the Senate tax bill, you won’t find a clause that says it dramatically cuts Medicare spending. But the effect of the legislation being debated this week would be to slash up to $25 billion from the health program in 2018 and possibly more in the future.

That’s because the tax measure would prompt the “pay-as-you-go” law, commonly referred to as PAYGO. The law was designed to keep the deficit in check by requiring the administration to institute spending cuts in many mandatory federal programs if Congress passes any measure that increases the deficit but doesn’t include offsetting revenues.

The Senate tax proposal would add $1.5 trillion to the federal deficit over the next 10 years. Under PAYGO, if this bill were to become law, the government would have to lop off $150 billion in spending every year for 10 years.
Medicaid, Social Security, food stamps and other social safety net programs are exempt from the PAYGO law, which went into effect in 2010. But Medicare and other programs — such as federal student loans, agricultural subsidies and the operations of the Customs and Border Patrol — are not exempt.
The law caps how much the government can trim from Medicare at 4 percent. That’s $25 billion the first year, according to a report by the nonpartisan Congressional Budget Office. The annual amount could increase in subsequent years depending on the size of the deficit and Medicare’s budget.
The $25 billion reduction would affect the payments that doctors, hospitals and other health care providers receive for treating Medicare patients. Individual benefits would not change and neither would premiums, deductibles or copays. But with so much less money going to providers, the cuts could have major impacts on patient access to health care — such as fewer physicians accepting Medicare patients.
“We’re deeply concerned that the tax proposals being made will very directly affect the ability of Medicare to maintain services, and we do not think it is fair that older Americans who have paid into Medicare their entire working lives get stuck with the bill for a tax overhaul,” says Cristina Martin Firvida, AARP director of financial security.

Bruce Bartlett predicts that as soon as the tax bill is passed the deficit hawks will rise again.

Be prepared for an onslaught of reports from Republican “deficit hawks” the second the tax bill passes, demanding immediate action to slash SS & Medicare b/c the deficit suddenly & mysteriously got much, much worse. But no taxes or defense cuts, period.

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Healthcare Costs and Its Drivers Today

I have been doing my typical reading on healthcare in the US and ran across several articles which seemingly come together at various points in the dialogue and are written by different authors. I decided to tie them together into a much wider and telling story.

An interesting point being was made by MedPage Today’s Dr. Milton Packer on his blog, “people suffer and die because Payors (Healthcare Insurance) is cost effective.” He starts his discussion on the opiate epidemic in the US, opiates are being prescribed by doctors for pain relief and . . .

“Patients are becoming addicted to opiates after the initial 10 day prescription with one-fifth of patients still using opiates a year later. There is no need to prescribe opiates as other less addictive pain-relief formulations are available, which are not commonly prescribed.” This raises the question of why?

Payers will not pay for the alternatives. The less-addictive opiates are more expensive and payers have declined to support them. Patients get addicted because prescribing for the lower cost and highly addictive opiates saves the payers money initially (me).

September 17, 2017, the New York Time and ProPublica (independent, nonprofit investigative journalism organization) collaborated on an article concerning the opiod epidemic in the US.

At a time when the United States is in the grip of an opioid epidemic, many insurers are limiting access to pain medications that carry a lower risk of addiction or dependence, even as they provide comparatively easy access to generic opioid medications.

The reason given: Opioid drugs are generally cheap while safer alternatives are often more expensive.

While the pharmaceutical manufacturers, distributors , and doctors have come under scrutiny; insurance companies and the pharmacy benefit managers (CVS Caremark, Express Scripts and OptumRx) make the final decisions as to what is covered. It could be something as simple as a higher tier and deductible to block usage.

A little side trip here and a continuation of the above. A week or so ago, I ran across another MedPage Today article by Dr. Packer; “ Who Actually Is Reviewing All Those Preauthorization Requests and How the System Works.” Dr. Packers was giving a talk on advances in medicine with regard to heart failures to a room of about 20 or so doctors who were retired.

Since many of them were no longer involved in active patient care, he wondered why they might want to hear a presentation on new advances in heart failure. Here was their answer:

Doctors: “We no longer care for patients, but we care about what’s going on. You see, most of us are employed by insurance companies to do preauthorization for drugs and medical procedures.”

Dr. Packer: I just gave a talk about new drugs for heart failure. Are you responsible for preauthorizing their use for individual patients?

The answer; “Yes.”

So did I say anything today that was helpful? I talked about many new treatments. Did I say anything that you might use to inform your preauthorization responsibilities?

“Oh, we’ve heard about those drugs before. We are asked to approve their use for patients all the time; but, we don’t approve most of the requests. Nearly all of them are outside of the guidelines we are given.”

I just showed you evidence that these new drugs and devices make a real positive difference in people’s lives. People who get them feel better and live longer.

“Yes, you were very convincing. But the drugs are too expensive. So we typically reject requests, at least the first time. We figure that, if doctors are really serious, then they should be willing to make the request again and again.”

If the drugs will help people, how can you say no?

“You see, if it weren’t for us, the system would go broke. Every time we say yes, healthcare becomes more expensive, and that isn’t a good thing. So when we say no, we are keeping the system in balance. Our job is to save our system of healthcare.”

But you are not saving our healthcare system. You are simply making money for the company that you work for. And patients aren’t getting the drugs that they need.

“You really don’t understand, do you? If we approve expensive drugs, then the system goes broke. Then no one gets healthcare.”

“Plus, if I approve too many expensive drugs, I won’t get my bonus at the end of the month. So giving out too many approvals wouldn’t be a smart thing for me to do. Would it?”

Now before you start on insurance companies and doctors; understand, this is not as free a market place as many would assume. In all of their political wisdom, Congress favors pharmaceutical companies over doctors, insurance companies, and the welfare of the constituents. Through legislation, Congress has made it impossible for insurance companies to negotiate pharmaceutical pricing in Medicare Part D insurance and also the ACA. Furthermore with the consolidation happening in healthcare, negotiation by insurance companies with a consolidating and growing healthcare industry is becoming more and more difficult as the former does not have as great of leverage. You have read my argument calling out of Single Payor, Medicare-for-All, Public Option, etc. as the cure for today’s healthcare issues and rising cost not being enough as the ACA and Part D were specifically blocked or the cost issue unaddressed in the legislation written by Congress. If these issues are not addressed from the very beginning, we will be fighting the same issues with rising costs a decade later with other programs.

At this point, I begin to disagree with Dr. Packers as he goes on to say:

“So we spend more for healthcare than any other country in the world; but, Americans do not get the care they need. There is a simple reason. Treatment decisions are not being driven based on a physician’s knowledge or judgment. They are being driven by what payers are willing to pay for.”

It is true that patients may not get some of the healthcare they need at the time due to denial, which can be appealed to the ACA, and can be a tiring process. It could be approved, passed on to patients, resulting in higher premiums the following year, and the Part D Risk Corridor program pay for it if excessive for the present year. What Dr. Packers does not mention is the rising prices and cost of drugs being blamed by pharmaceutical company on R&D, tooling up to manufacture, etc. The counter argument is much of the R&D is funded by the US government through tax deductions and write-offs for pharmaceutical R&D and capital Overhead. Pharmaceutical profits are double digit at ~25% beating out hospital supplies and healthcare insurance, which is already limited in what can be charged back to the insured by the MLR. To blame insurance companies totally for the higher costs in healthcare is false. Furthermore, a doctor’s decision do not always lead to less costly cures or practices.

Maggie Mahar of Health Beat Blog would take the subject of costs a step farther and state Medicare will approve anything the FDA approves for usage regardless of the quality of outcome when measured against older proven treatments. Notably the VA does limit its pharmacy and its care is rated higher than that of today’s commercial, for-profit healthcare to which most citizens are exposed.

Dr. Donald Berwick, President Obama’s proposed appointment for Medicare and who was in charge of Medicare and Medicaid for 17 months stated;

“20 to 30 percent of health spending is ‘waste’ that yields no benefit to patients, and that some of the needless spending is a result of onerous, archaic regulations enforced by Medicare and Medicaid.

He listed five reasons for what he described as the ‘extremely high level of waste.’ They are overtreatment of patients, the failure to coordinate care, the administrative complexity of the health care system, burdensome rules and fraud.

Much is done that does not help patients at all and many physicians know it.”

That is the same Medicare/Medicaid being touted by many proponents today as an alternative.

Speaking of costs and pricing for pharmaceuticals, there have been recent incidents of skyrocketing costs on particular drugs. A short while ago, I wrote a post concerning the appointment of Alex Araz as the new HHS Secretary replacing Dr. Tom Price. Formerly, Alex Araz was the CEO of the pharmaceutical giant Eli Lilly & Co.’s U.S. division. He also served under George W. Bush administration as the HHS General Counsel and Deputy Secretary. During that stint, he received praise for his management competence with the HHS; although, he did not have a healthcare background prior to this position.

Here it gets interesting when examining what took place during his tenure with Eli Lilly. One of the leading costs identified in pharmaceuticals increases has been in the rising cost of diabetes medication.

“While the Tweeter-in-Chief, Trump tells us presidential campaign contributor Alex Azar will be a ‘star’ who will lower prescription prices,”

Public Citizen’s Peter Maybarduk (Director) had this to say: “Eli Lilly is notorious for spiking prices of a century-old isolated hormone during Azar’s tenure as president and vice president. Eli Lilly raised the price of Humalog by 345%, from $2,657.88 per year to $9,172.80 per year.

Maybe President Trump in appointing Alex Azar to be HHS Secretary should have asked the 6 million diabetic Americans whose insulin prices have more than tripled under Azar’s watch at Eli Lilly.”

This has nothing to do with R&D and has more to do with pharmaceutical companies controlling the market regardless of supply and throughput restricted manufacturing (capacity).

What I have tried to do is tie these articles together into one cohesive story of how the pharmaceutical industry, insurance, and healthcare can have an impact on healthcare costs. For those who are interested, my background does include working in the manufacture of hospital supplies and pharmaceuticals. Using various citations from these articles, I have tried to touch upon the impact of insurance companies, the healthcare industry, government intervention under the HHS, one particular Med in the market place, etc. Overall, what is going on in the marketplace.

Another article, I read the other day gets into the foundation of what is happening based upon a recently completed study by JAMA. Using this study, the Methods Man, Dr. Perry Wilson (MedPage Today) examines what is driving healthcare costs in his article Here’s What’s Really Driving Healthcare Costs using data from Factors Associated With Increases in US Health Care Spending, 1996-2013 and the US Disease Expenditure Project. Dr. Wilson breaks it down using three simple charts which I have consolidated to one.

Dr. Perry Wilson starts off making an overall point about the rising cost of healthcare from 1996 to 2013 and stating; “after accounting for inflation, healthcare expenditures increased $933.5 billion from 1996 to 2013.”

Going on: “Healthcare expenditures in the US being high and rising rapidly is nothing new, but the study appearing in the Journal of the American Medical Association identifies the exact components of healthcare that are driving those soaring costs. The data from this study suggests traditional economic forces break down in the US healthcare market.

Different chronic diseases have different patterns of price increases. The biggest increase was seen in diabetes care, as you can see here, driven largely by the rising costs of pharmaceuticals.”

The Chart breakdowns reveal the various impacts of healthcare costs moving from left to right and then downward:

• 50% of the increase in healthcare costs was simply due to higher prices.

• Inpatient care or Service Utilization (purple) went down from 1996 – 2013 as outpatient treatment increased; however, the price of the remaining inpatient care went up much more – increasing overall inpatient care spending by around $250 billion.

• Different Chronic Diseases have different patterns of price increases. The biggest increase was seen in diabetes care and driven largely by the rising prices of pharmaceuticals.

The takeaway drawn by Dr Perry Wilson: “Regardless of the disease, it is clear, the price of what we’re buying – whether a drug, an ED visit, or a hospital stay – not the amount of what we’re buying is the major driver of cost increases. Efforts to reduce the consumption of healthcare may not bend the cost curve as much as efforts to reduce its price.”

You can not make an argument about the regulation of costs “not” being one of the dynamic components of a healthcare plan given the continuous unhindered industry driven rising cost of healthcare. Yet, every healthcare plan I have read fails to mention cost regulation specifically, provide remedy for it, and many assume a natural occurrence of control.

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Why are Republicans About to cut $25 Billion from Medicare ?

The PayGo law forbids bills which increase the national debt. Unless it is repealed or waived, the Republican tax cuts would cause automatic sequestration of, among other funds $ 25 billion from Medicare.

This is an excellent as usual Vox Explainer by Tara Golshan

It all comes down to the “pay-as-you-go,” or PAYGO, rule — a 2010 law that says all passed legislation cannot collectively increase the estimated national debt. In other words, if Republicans want to pass a tax cut, they have to pay for it with mandatory spending cuts — or, inversely, if Congress boosts funding for entitlement programs, it has to increase taxes.

If Congress violates this law, the Office of Management and Budget, which keeps the deficit scorecard, “would be required to issue a sequestration order within 15 days of the end of the session of Congress to reduce spending in fiscal year 2018 by the resultant total of $136 billion,” the CBO said in a letter to Minority Whip Rep. Steny Hoyer (D-MD).

Democrats can filibuster a bill which waives PayGo. But can they block a bill which defends Medicare ? If they do, will they be blamed for the sequestration ? Back to Golshan

“for Democrats, the pressure of impending Medicare and federal program cuts would likely be enough to get them on board — even though it is a budgetary gimmick to make up for a Republican tax bill they don’t want passed.”

I have a proposed strategy. Democrats demand that the bill waive PayGo and also restricts the budget resolution/reconciliation process with a claus saying budget resolutions and reconciliation bills may not be used to change Medicare. Basically, Republicans (especially Paul Ryan) have pretty much said they will try to reform (that is cut) Medicare and Social Security to close the huge deficits created by their tax cuts. Democrats can demand that they be given a veto on such reform (by requiring any such bills to be filibusterable). I think this is a line they can hold. It may be key to blocking the tax cut/ destroy the ACA bill.

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Trump’s HHS Secretary Nomination and Healthcare Economist Uwe Reinhardt

News Editor Joyce Frieden at Medpage Today offers up an excellent review of President Trump’s head of HHS selection Alex Azar. If you do not read MedPage Today, it is a good site to get information on healthcare and healthcare policy.

Orrin Hatch of Utah: “The leader of HHS will be at the tip of the spear, working to not only right the wrongs of [the Affordable Care Act] but also ensure the long-term sustainability of both Medicare and Medicaid,”

Wow, that is great. Perhaps Hatch will fix things like the skin-in-the-game co-pays and deductibles Congress put in place and reduce them to a reasonable level taking the pressure off the individuals’ market place.

“This candidate has the experience, knowledge and fortitude to take on these daunting challenges. I look forward to learning about his plan to restore our faith in our nation’s healthcare system and get it back on track doing what it does best – saving lives and improving the health and well-being of all Americans. I hope my colleagues on the Finance Committee will work with me in the advancement of a fair and transparent vetting process for this nominee.”

That will be a miracle in itself. Including the president, Republicans have not put anything up legislatively substantial to replace the ACA in Congress. Their only effort has been to repeal, return healthcare back to what it was pre-2010 and disenfranchise 22 -30 million citizens who have healthcare under the ACA. The Republicans are offering up the same old BS which has been on the plate since 2008 only this time it is being offered up by a different waiter.

Arguably this HHS Director candidate is more qualified to lead the HHS than his predecessor. However, Democrats and advocacy groups are not so pleased with Trump’s selection. Here is Public Citizen’s President Robert Weisman’s comment:

“If Alex Azar’s nomination is confirmed, then Big Pharma’s coup d’etat in the healthcare sphere will be virtually complete.”

Public Citizen’s Peter Maybarduk adds;

“As Tweeter-in-Chief, Trump tells us Azar will be a ‘star’ who will lower prescription prices. Maybe he should have asked the 6 million diabetic Americans whose insulin prices have more than tripled under Azar’s watch at Eli Lilly.”

Mr. Alex Azar does have the qualifications. Alex Azar is the former head of pharma giant Eli Lilly’s U.S. division. He was also the HHS general counsel and deputy secretary during the George W. Bush administration. He has received praise for his competence and knowledge about health policy. He is a strong critic of the Affordable Care Act and he has opposed ideas for reducing prescription drug prices such as purchasing drugs from other countries where prices are lower.

Again Peter Maybarduk;

“Eli Lilly is notorious for spiking prices of this century-old isolated hormone. During Azar’s tenure as president and vice president, Eli Lilly raised the price of Humalog by 345%, from $2,657.88 per year to $9,172.80 per year.”

This does not bode well for consumers of healthcare and pharmaceuticals. Of course then, what has been favorable for citizens when taking into consideration Republican’s attitude towards the ACA and erasing what a previous president accomplished in spite of their blockage. Others such as the Bipartisan Policy Center view Azar’s overall healthcare and pharmaceutical experience as a positive as he would bring industry perspective to the healthcare environment today as the head of the HHS. Azar’s overall objectivity remains to be seen and experienced when considering the ACA, pharmaceutical costs, handing over ACA policy to states, and changes to Medicaid and Medicare. Former head Tom Price failed as the head due to a lack of objectivity, his planned sabotage of the ACA, and in taking advantage of supposed HHS perks.

Today, effective healthcare for all advocate Uwe Reinhardt died. His research focused on hospital pricing, healthcare systems around the world, Medicare and healthcare spending. His work appeared in the New England Journal of Medicine, JAMA, Health Affairs, the British Medical Journal, the New York Times and other leading publications. Uwe;

Politically, you cannot legislate what rationally makes perfect sense.”

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Similar to “Alexander – Murray,” CMS Proposal Gives States Authority to Redefine ACA Minimum Benefits

I have been getting quite a few alerts on proposed changes happening behind the scenes with the ACA. I also found a couple of new places with some intelligent writers who have explained things in greater depth than what I knew. The CMS is proposing a rule allowing states greater authority in defining the ACA. This comes in addition to Trump’s EO. The new rule would give states greater flexibility in:

– Defining the ACA’s minimum essential benefits to increase affordability of coverage,

– a larger role in the certification of qualified health plans offered on the federal insurance exchange,

– and more leeway in setting medical loss ratios for individual-market plans.

If a state redefines the minimum benefits in the ACA, what we can expect to see is emerging trash plans or mini-plans, which were sold by McDonalds and other companies and are useless in many cases. Granting states a larger role in qualifying healthcare plans on the healthcare exchanges gets back to what I have pointed out before; states failed miserably in defining healthcare requirements and in providing healthcare to citizenry in many cases. Before the ACA, healthcare was the ER due to a lack of insured coverage. Patients were paying Chargemaster rates and often times paid little of the bill due to extremely high bills or low income.

Does the CMS proposal force states to adequately protect the vulnerable as called out in Section 1332 of the ACA? The same as the Senate Bill Alexander-Murray; without a change in Section 1332 of the ACA, underfunded states will have to provide similar coverage. Under Section 1332 States can:

“propose a change or eliminate almost all core ACA features, the individual and employer mandates, plan design including the Essential Health Benefits, and the subsidy basis and schedule. For a waiver to be allowed; however, the state must demonstrate that it will cover as many people, with coverage as affordable and comprehensive as the default structure and must not increase the deficit.”

In other words, the state can get a waiver to the ACA requirements as long as the state can show it covers the same numbers of people with just as affordable and comprehensive state coverage as the ACA while not increasing the deficit (to be redundant in stating such in all three cases). I do not see the CMS getting past this part of the ACA law and Alexander-Murray Republican-Democrat alliance proposes to change Section 1332 and the subsequent 2015 guidance.

In 2015, HHS had issued guidance on Section 1332 of the ACA stating a wavier:

Shall not disadvantage “vulnerable (low income, elderly, disabled), etc. residents.”

“Assessment of whether the proposal covers a comparable number of individuals also takes into account the effects across different groups of state residents, and, in particular, vulnerable residents, including low-income individuals, elderly individuals, and those with serious health issues or who have a greater risk of developing serious health issues. Reducing coverage for these types of vulnerable groups would cause a waiver application to fail this requirement, even if the waiver would provide coverage to a comparable number of residents overall.”

Shall not disadvantage residents by affordability.

(The CSR subsidies President Trump stopped with his Executive order will cause increased 2018 healthcare insurance premiums which will be picked up by premium subsidies for anyone who was eligible for a CSR subsidy. What makes it interesting is how the states apply this increase and their application of it could favorably impact all people who are on the healthcare exchanges [more on this later] ).

“Waivers are evaluated not only based on how they affect affordability on average, but also on how they affect the number of individuals with large health care spending burdens relative to their incomes. Increasing the number of state residents with large health care spending burdens would cause a waiver to fail the affordability requirement, even if the waiver would increase affordability for many other state residents. Assessment of whether the proposal meets the affordability requirement also takes into account the effects across different groups of state residents, and, in particular, vulnerable residents, including low-income individuals, elderly individuals, and those with serious health issues or who have a greater risk of developing serious health issues. Reducing affordability for these types of vulnerable groups would cause a waiver to fail this requirement, even if the waiver maintained affordability in the aggregate.”

The Alexander-Murray bill removes both guiding regulations and substitutes a much weaker one for affordability. Both the Alexander-Murray bill and the CMS proposals surrender control of providing healthcare to states with less federal funding and the same attitude of providing healthcare as experienced in the past. It leaves those who are uninsured or under insured vulnerable to state politics and includes the low-income individuals, elderly individuals, those with serious health issues, and those who have a greater risk of developing serious health issues now protected by the ACA.

While not Medicare-for-all, single payer, or something mimicking European healthcare; the ACA was still a huge step forward in comparison to what existed before it. It eliminated an attitude as expressed by Michigan State Senator Joseph Hune’s upon the passage of the Medicaid expansion; “I am sick to my stomach with the expansion of Medicaid.” An embarrassment of the same magnitude as Trump’s in his public comments and ignorance.

Alexander-Murray also calls for the HHS to issue guidance by providing examples of model state plans that meet the requirements for approval or what has been called cookie-cutter waivers. When asked by one blogger whether Alexander-Murray whether the amendment to Section 1332 effectively protects the vulnerable now protected in the ACA Timothy Jost had this to say:

“If administered by the Obama administration probably yes; if administered by the Trump administration, who knows? (sounds like a “no” to me) I think the intent of the provision is clear, that affordability not be decreased for vulnerable populations; but, the repeal of the guidance and of the procedural rule are to me, the most troubling parts of the bill.”

Given the attitude displayed by this administration now and in many state legislatures pre-ACA, it is hard to believe either would take an approach to protect the vulnerable over providing tax incentives to the 1% of the population making >$500,000 annually and their own re-election in 2018. It is pretty clear what the political priorities are today.

Both Michigan Senators Peters and Stabenow have come out in support of the Alexander-Murray bill repealing the 2015 HHS guidance including the detailed regulations governing waiver submission and assessment issued in 2012. An exception is being made for affordability if approved. I believe it is critical the ACA not be tampered with beyond taking it to the next level of healthcare which might be a form of European and a two tiered system. At this point in time with a lunatic as the president, I have no reason to support a legislature bent on cutting taxes for the 1% of the housholds making >$500,000 annually. That revenue to support such a tax cut will partially come from healthcare cuts.

I have emailed both Senators asking them to withdraw their support of the Alexander-Murray bill with no reply. It is time to go to pen and paper.

Does the Alexander-Murray bill adequately protect vulnerable groups?” Andrew Sprung, xpostfactoid blog

CMS to allow states to define essential health benefits” Harris Meyer , Shelby Livingston and Virgil Dickson; Modern Healthcare

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House Passes Senate Tax Reform Budget Resolution and Creates 2018 Budget

Everyone is reporting a 2018 Budget has been passed. Tucked away inside the 2018 Budget is a Tax Reform Resolution which allows the House to write the bill.

The House has passed the Senate Tax Reform Budget Resolution creating a $1.5 trillion deficit with a 216-212 vote. What this means in the Senate is a majority vote is only necessary to pass the Tax Reform bill which Trump has been campaigning and tweeting silly comments. Unless the House and Senate can provide the necessary revenue generation in the Tax Reform bill at 10 years out, it will be subject to a sunset the same as the Bush’s 2001-2003 tax breaks were. The key to this budget is the resolution for tax reform which will be looking at state income and property tax deductions on federal income tax returns, 401k tax exemptions, capping 401k contributions, Medicare and Medicaid cuts, and the old standby cuts to the ACA.

Tax reductions for the 1% of tax paying households making >$500,000 annually as funded by everyone else.

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What is the Matter With the Iowa ACA?

The story as it is told is “Iowa’s Healthcare Market has imploded.” Companies have gone out of business, lost money, premiums increased, policies canceled, etc. “ With Obamacare’s fifth open-enrollment season kicking off on Nov. 1, the consequences are playing out across one of America’s most politically influential states as residents struggle to maintain coverage.” It has been difficult to implement the ACA with the issues in the healthcare exchanges, Republicans badmouthing the ACA, and its first attempt at a US healthcare policy. Just one insurer is willing to sell policies in 2018 in Iowa. Why did it end up this way and what caused it?

Gov. Kim Reynolds: “Obamacare is unaffordable, unsustainable and unworkable and Obamacare has driven out consumer choice and competition.”

Trump: “Obamacare is finished. It’s dead. It’s gone. There is no such thing as Obamacare anymore.”

Vanessa Beauregard a resident of Iowa: “I cannot believe our politicians and government have put us in this situation. It’s just not right when you’re not a deadbeat.”

Dave Anderson, a health insurance expert at Duke University. “It’s hard to build inexpensive networks when the only hospital within 30 miles has you over a barrel.”

Aaron Todd, chief strategy officer for the Iowa Primary Care Association.: “There wasn’t a political will to make hard decisions or move people. They basically saw [keeping the noncompliant plans] the ACA as a relief valve.”

Nick Gerhart, who authorized the noncompliant plans to remain in the market as the state’s insurance commissioner. : “Why would I stand in the way of people keeping their insurance? It was a viable option. What does it look like if they’re in? The [premium] increases still would have been significant.” Disagreeing with these being a destabilizing factor.

Here is the story as I know it, a half commitment to the ACA with a lot of resistance from Republicans, and negativism from pundits.

CoOportunity turned out to be the canary in the co-op coal mine.” In the three years previous, 19 of the 23 nonprofit coop startups across the country, seeded with $2 billion in loans, had collapsed after piling up huge financial losses. One Republican appointee, Gerhart blames the disastrous performance in part to a lack of effective oversight from federal officials at the Center for Medicare & Medicaid Services. However, this is not the complete story as told.

“Effectively you’re running a venture capital firm out of CMS with nobody who understands insurance.”

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After three years of procrastinating, Wellmark entered Iowa’s exchange. It too did not go well for reasons I will explain. Its troubles were attributed to a single patient who was costing the company $1 million a month in claims, a 17-year-old boy with hemophilia.

One would think the designers and legislators of the ACA would have put in place some protections for experienced insurance companies just entering the new market and the new startup Coops which were sponsored to compete with for-profit insurance companies. Install something akin to the Risk Corridor and the Reissuance programs which exist in the Medicare Part D drug program to protect insurers for exactly these reasons. Ahhhh, but they did do so.

If one could look to one or two things which plagued the ACA in Iowa, one would look to the Risk Corridor Program and Reissuance Program. Both were put in place to:

– Compensate insurance companies for startup losses whether nonprofit or for-profit.

– Cover those instances when an insurance company would end up with one, two, or a few of the $1 million dollar or the high insured a company had to cover, could not deny because of pre-existing conditions, or cancel a policy or change a item coverage due to illness or disorder (which by-the-way exists in Advantage programs).

So what happened?

The Risk Corridor program in the PPACA protects insurance companies from losses during the first three years if they did not estimate premiums properly which can happen in new markets with new different characteristics. With the mandate to insure all with pre-existing conditions, keeping children on parents plans, the exchanges, etc.; the Risk Corridor program was put in place (besides two other safe guards) giving insurance companies and Co-ops a three year window to get it right. Besides looking at losses, the Risk Corridor also looked at the profits of companies who had estimated accurately, had excess profits as a result, and required them to pay a ratio of excess profits into the Risk Corridor fund to help underwrite the losses of other companies. Outside of a plus or minus 3% was the basis for whether you gave up a ratio of profits or received a ratio of funding from the Risk Corridor program. The Risk Corridor program is nothing new and was used successfully with Medicare Part D forcing the evil and low profit insurance companies to share profits with the government. It still is in place for Part D and “still” generates additional revenue for the government. I do not recall any Republicans complaining about funding for drug insurance companies then; but then too, Part D was Bush’s legislature while the PPACA legislation was Obama’s. Strictly politics and constituents have paid the price of it.

Depicting the Risk Corridor particulars rather than attempting to explain it in writing will give a better explanation. Click on the image to better read the chart. Please note the plus or minus 3% and then the different ratios of revenue sharing or funding from and to healthcare companies and Co-ops. Besides being extra cash for the government, this fund was used to cover losses experienced by the drug insurance companies for the same reasons depicted above which occurred in the ACA.

invisible hand Again, what happened? The Risk Corridor program worked well for Part D, brings in revenue for the government, and is still in place. February 2014 found Rubio testifying to the House Committee on Oversight and Government Reform on behalf of his bill. At the same time the CBO released their evaluation of the ACA Risk Corridor program. Instead of being detrimental to the economy and a fiscal drag, the CBO projected the federal government would collect $8 to 16 billion from ACA healthcare insurers. Premiums would outpace claims, $8 billion would be distributed to the plans losing money, and $8 billion in additional revenue would be left for the federal government. Another and a House probe suggested initially there would be a shortfall with claims exceeding premiums.

The Republicans were not sitting idle and were investigating ways to derail the PPACA. As the ranking member of the Senate Budget Committee, Senator Jeff Sessions and the chairman of the House Energy and Commerce Committee, Michigan Representative Fred Upton came up with a plan to attack the legality of the Risk Corridor payments. They joined forces with the Appropriations Panel Chairman Colorado Representative Jack Kingston whose panel funds the Department of Health and Human Services and the Labor Department. Kind of get the picture of where this is going so far?

Senator Jeff Sessions wrote a letter to the GAO questioning whether the Risk Corridor payments were being appropriated correctly. Eventually the Appropriations Panel forced the HHS to make changes in how they appropriated funds allowing Congress to stop all appropriations. The PPACA could no longer appropriate the funds as they were subject to the discretion of Congress. The GAO issued an opinion on the legality of what the HHS was doing with funds.

GAO Letter to Senator Jeff Sessions. September 30, 2014:

Discussion; “At issue here is whether appropriations are available to the Secretary of HHS to make the payments specified in section 1342(b)(1). Agencies may incur obligations and make expenditures only as permitted by an appropriation. U.S. Const., art. I, § 9, cl. 7; 31 U.S.C. § 1341(a)(1); B-300192, Nov. 13, 2002, at 5. Appropriations may be provided through annual appropriations acts as well as through permanent legislation. See, e.g., 63 Comp. Gen. 331 (1984). The making of an appropriation must be expressly stated in law. 31 U.S.C. § 1301(d). It is not enough for a statute to simply require an agency to make a payment. B-114808, Aug. 7, 1979. Section 1342, by its terms, did not enact an appropriation to make the payments specified in section 1342(b)(1). In such cases, we next determine whether there are other appropriations available to an agency for this purpose.”

Further down in the GAO letter, the GAO did leave the HHS an out of using other already available appropriations for the Risk Corridor payments to insurance companies. Classifying the payments as “user fees” was another way to retain the authority to spend other appropriations already made by Congress. Otherwise if revenue from the Risk Corridor program fell short, the administration would need approval for addition appropriations from Congress. As it was, the HHS could no longer appropriate funds to make Risk Corridor payments unless the funds were already appropriated by Congress or Congress approved new funds which was not going to happen with a Republican controlled House.

Appropriations Panel Chairman Rep. Jack Kingston put the final nail in the coffin by inserting one legislative sentence in Section 227 of the 2015 Appropriations Act (dated December 16, 2014) which escaped notice. In the 2015 Appropriations Act, the sentence inserted said no “other” funds in this bill could be used for Risk Corridor payments.

Sec. 227.

None of the funds made available by this Act from the Federal Hospital Insurance Trust Fund or the Federal Supplemental Medical Insurance Trust Fund, or transferred from other accounts funded by this Act to the “Centers for Medicare and Medicaid Services–Program Management” account, may be used for payments under section 1342(b)(1) of Public Law 111-148 (relating to risk corridors).

This action blocked the HHS from obtaining any of the necessary Risk Corridor funds from other Congressional appropriated program funds identified in the 2015 Appropriations Act.

Nothing was said by Senator Sessions, Representatives Upton or Kingston before passage on what they had managed to do. It was Senator Rubio who issued a news release saying the provision was appropriate even though he had little to do with it. In the end, Colorado Rep. Jack Kingston’s one sentence purposely created a $2.5 billion shortfall in the Risk-Corridor program in 2015 as the HHS had collected $362 million in fees. Insurers who had misjudged the market sought nearly $2.9 billion in payments. Gerhart’ canary in a coal mine played out with many nonprofit insurance Co-ops failing due to a lack of reimbursements for losses, for-profit healthcare insurance companies lost money, healthcare insurance companies began to raise premiums to compensate, and some healthcare insurance companies recognizing an untenable environment created by Republicans took their losses and left the healthcare exchange market.

If you wish to know why there are few insurance companies and no Coops issuing healthcare policies on the healthcare exchanges, why the policies are arbitrarily expensive by default, and why companies are leaving or going bankrupt, etc. Ask your Republican Senators and Representatives why they sabotaged the Risk Corridor and Reissuance Programs. It is all politics with little regard for constituents.

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