David Nather


Good morning ... We've got a road map for the week ahead in health care, because you're going to need it. And even if you knew the House health care bill will shift Medicaid costs to the states, you may not have known how much — so keep reading.

No more slo-mo health care this week

This is the week when health care world is going to pick up the pace, after a lot of slow-motion health care talks in the Senate that didn't reach a lot of conclusions. Here's how the plot lines are going to start coming together.

The lawsuit: Sometime today, the Trump administration and House Republicans are supposed to file a status update in the lawsuit over the Affordable Care Act cost-sharing subsidies. It will either give us some clarity on what will happen to the insurer payments, or just prolong the agony. More below on what could happen.

The budget: Tomorrow, the Trump administration is supposed to release its first fully detailed budget for fiscal 2018.

  • It assumes the enactment of the House-passed health care bill, which was already looking at more $800 billion in Medicaid savings over 10 years, per the Washington Post.
  • But in reality, budget experts expect the Medicaid cuts to be even deeper than that. Like the House bill, the Trump budget is expected to have per-capita caps — but with a slower growth rate.
  • That's because the administration thinks current Medicaid spending will be lower than the Congressional Budget Office does, so it needs deeper cuts to get the savings it wants.
  • It will call for work requirements in Medicaid and other social programs, my colleague Jonathan Swan reported yesterday.
  • It's worth knowing what President Donald Trump is pushing for, of course, but don't assume that's what Congress is going to do. Republicans tell AP's Andy Taylor they're unenthused, including House Energy and Commerce Committee chairman Greg Walden: "I would think that the health care bill is our best policy statement on Medicaid going forward."

The score: On Wednesday afternoon, we're finally supposed to get the Congressional Budget Office estimates for the final version of the House-passed bill. That should allow the Senate health care working group to start making some decisions about what will be in their bill.

  • Don't be surprised if we don't know right away whether the House has missed its budget targets — the event that could require a re-vote on the House bill. It may not be obvious from a first read, GOP budget aides tell me — and Democrats would have the right to raise their own challenges anyway.

Watch the states' Medicaid costs rise

Data: Government Accountability Office data analyzed by Sen. Bill Cassidy's office; Table: Andrew Witherspoon / Axios

This is what would happen under the House-passed health care bill to states that expanded Medicaid under the Affordable Care Act. It's based on the estimates Sen. Bill Cassidy has been circulating in the Senate, using Government Accountability Office data. What do you think? Does a 400 percent increase seem like a lot?

That's because the higher matching rate for federal Medicaid funds would be dialed back — way back, in some cases. Caitlin Owens has more here.

What could happen with the subsidies lawsuit

Here's what to look for when the Trump administration and the House file their status update with a federal appeals court:

  • It could be another anticlimax. The two parties could just ask for another 90-day extension, like they did in February.
  • Or there could be an actual decision. The Trump administration could drop its appeal of a lower court ruling against the insurer payments — meaning the administration would stop making the payments, which is what Trump wants to do anyway.
  • That would leave it to Congress to decide whether it wants to fund the payments — though that could get wrapped up with the fate of the ACA repeal bill.
  • Legal expert Timothy Jost points out that the two sides could also say that, since they haven't decided what to do, the appeal should proceed.
  • And since a group of Democratic attorneys general wants to intervene in the case, Jost says, the court could set a schedule for submitting briefs on that issue.

Need more? Caitlin Owens explained the lawsuit in March. Check it out here.

One big thing to know about insurer payments


If Trump stops paying insurers for their ACA cost-sharing reduction subsidies — as he wants to do, per Politico — he's going to make the ACA more expensive for the federal government, not less expensive. That's because insurers will raise their premiums by roughly 20 percent to cover their losses — and the law's tax credits, which are supposed to help cover people's premiums, will increase with them.

The math, according to the Kaiser Family Foundation:

  • Savings: $10 billion
  • Increase in tax credit costs: $12.3 billion
  • Net cost to federal government: $2.3 billion

Don't forget: The tax credits could help shield a lot of ACA customers from the higher premiums — but anyone who doesn't get the tax credits will get stuck with bigger bills. And some insurers could drop out completely, rather than just raising premiums.

If this looks familiar: That's because this estimate came out last month, and we wrote about it then. Apparently the president didn't get the message. Someone in his inner circle might want to tell him.

Yes, but: Conservative health care analyst Chris Jacobs points out in The Federalist this morning that insurers could never count on getting the payments after President Barack Obama left office — and says they should have planned ahead.

The pressure from the right

Conservative groups are trying to make sure the Senate working group doesn't drag the health care bill too far to the center. Freedom Partners and Americans for Prosperity, two groups affiliated with the Koch brothers, are sending a letter to the working group today urging them to wipe out as many ACA regulations as possible and shut down the Medicaid expansion quickly.

And no auto-enrollment: They also want to end any talk of enrolling people automatically into a basic health plan, a possible GOP alternative to the individual mandate. "Enrolling people without their consent is a giveaway to insurers that inflates prices, drives up costs for taxpayers, and keeps Washington at the center of health care," the letter says.

The fallout from the Seema Verma story

The top Democrats on the main Senate and House health care committees are questioning Centers for Medicare and Medicaid Administration chief Seema Verma about a Los Angeles Times report that she offered to fund the cost-sharing subsidies if insurers agreed to support ACA repeal. The Democrats call her reported actions "wholly inappropriate" in a letter this morning, and accuse her of "using the operation of the American healthcare system as a tool to gain leverage in political negotiations."

Between the lines: Remember that CMS has denied the account — but its denial was pretty specific, and focused on a single meeting in April. Verma is sure to get more questions about this the next time she testifies at a congressional hearing, if more details don't emerge before then.

While you were weekending ...

  • Insurers to Senate: It's up to you now.
  • The rollout of the Trump budget has been so bad that it could become irrelevant by the end of the week, budget expert Stan Collender writes for Forbes.
  • The Centers for Disease Control and Prevention has nearly 700 vacancies because of an ongoing hiring freeze throughout the Department of Health and Human Services, the Washington Post reports.
  • The G20 health ministers have agreed to put plans in places to fight the spread of antibiotic-resistant bacteria by the end of 2018.

What we're watching today: The House files its status update on the ACA subsidies lawsuit with the U.S. Court of Appeals for the District of Columbia. Health and Human Services secretary Tom Price is in Geneva for a meeting of the World Health Assembly.

What we're watching this week: Trump releases his full budget for fiscal 2018, Tuesday; the CBO releases its final cost estimates for the House-passed health care bill, Wednesday.

Also, House Energy and Commerce oversight subcommittee hearing on the Zika virus, Tuesday; House Budget Committee hearing on Trump budget, Wednesday; Senate Budget Committee hearing on Trump budget, Thursday; House Appropriations agriculture subcommittee hearing on FDA budget, Thursday.

Did we miss anything? Lemme know: david@axios.com.


A global pledge to fight antibiotics resistance

Janice Carr/CDC via AP

The G20 health ministers, including the United States, announced today that they've agreed to come up with plans to fight the spread of antibiotic-resistant bacteria and implement plans by the end of 2018. Health and Human Services secretary Tom Price attended the meeting of the health ministers in Berlin.

Why it matters: As many as 2 million Americans become infected with antibiotic-resistant bacteria each year and 23,000 people die from it, according to the Centers for Disease Control and Prevention.

Key quote from the health ministers: "Since these global challenges cannot be addressed by one country, region or sector alone, they call for a coordinated global response."

Noted: Price's statement didn't mention the commitment, but he did endorse "a sustained, focused commitment to global health security."


Insurers to Senate: It's up to you now

Jacquelyn Martin / AP

The nation's health insurers are turning to Congress to get their Affordable Care Act subsidy payments. In a letter to Senate Republican and Democratic leaders, America's Health Insurance Plans and several health industry and business groups said Congress should take quick action to fund the payments for cost-sharing subsidies, because health insurers "only have a few more weeks" to decide whether they'll stay in the markets.

At this point, only Congressional action can help consumers.

Between the lines: The insurers didn't mention President Trump, but given today's news that Trump reportedly wants to stop the payments, they didn't have to.


CBO estimate of House health care bill coming next week

The cost estimates of the final version of the House health care bill will be released on Wednesday, the Congressional Budget Office announced this morning.

What to watch: That's when we'll find out whether the costs and projected health coverage changed with the bill's last-minute amendments — and whether the final version missed the budget targets enough to require a re-vote.


Ryan doesn't think House will need a health care re-vote

J. Scott Applewhite / AP

House Speaker Paul Ryan is dismissing reports that the House might have to vote on the health care bill again because the Congressional Budget Office may say it missed its budget targets. "We don't think that's the case ... It's just a technical non-issue," Ryan said on Hugh Hewitt's radio show this morning.

He said a CBO estimate of an earlier version of the bill showed it saved $150 billion over 10 years, and that the only change the House made since then was "an $8 billion amendment" — a fund to help cover people with pre-existing conditions.

Reality check: That's not the only change the House made. It also added state waivers from ACA insurance regulations, and private estimates have suggested those could actually increase costs if they encourage more people to buy health coverage, as Vox's Dylan Scott explains.

What's next: Watch for the CBO estimate of the final bill next week. A re-vote is probably still unlikely, but the situation is more complicated than Ryan suggests.



Good morning ... We've got more for you today on how much the National Institutes of Health really spends on overhead costs. And we were all set to ignore the chatter about a budget problem that could force the House to re-vote on the health care bill — but you should probably be semi-prepared, just in case.

Here's how much NIH spends on indirect costs

(Figures for fiscal 2016 are NIH estimates)

Data: NIH; Chart: Andrew Witherspoon / Axios

The Trump administration and congressional Republicans are starting to give more scrutiny to how much the National Institutes of Health spends to cover administration and overhead costs, rather than research expenses. This chart, taken from NIH budget tables, shows how the two kinds of funding compared to each other since fiscal 2005. This is the information Rep. Andy Harris used when he questioned NIH director Francis Collins about it at a Wednesday hearing.

The takeaways:

  • Indirect costs have hovered at roughly 27% of total spending for more than a decade.
  • Direct costs have remained steady at around 72%.
  • For private funders, 10% is more typical for indirect costs, like this example from the Alzheimer's Association Research Fellowship. (Collins says universities can only afford to accept such low overhead funds from private funders because NIH gives them more.)

Because nothing is implausible anymore ...

You're probably going to start hearing more about a scenario in which the House might have to vote on the health care bill again. Why? It's all because the House didn't wait to get a final Congressional Budget Office estimate before they voted on the bill. Because it's being done under budget "reconciliation" rules, it has to save at least $2 billion. The older versions would have saved way more than that — but as Bloomberg's Billy House reported yesterday, it's no longer clear that the bill still does, after all of the last-minute changes.

Threat level: I would have said it's not very high. But then Vox's Dylan Scott posted a story last night that walked through some private groups' estimates of the changes in more detail. His story was more convincing: Yes, there could be a problem, especially if the state waivers from ACA rules encourage more people to buy health insurance. The bill could also spend too much on programs under the jurisdiction of the Senate HELP Committee.

The bottom line: We'll know for sure when CBO releases its final estimates next week. For now, just be aware that it's a possibility. And if it happens — hey, that's why careful lawmakers wait for CBO estimates before they vote.

Senate working group still hasn't decided things

The infamous Senate Republican working group met yet again Thursday, this time to talk about tax credits. It's only been two weeks since the House passed its bill, but as one senior GOP aide put it to Caitlin Owens, "The working group has made lots of progress in sharing their feelings."

They weren't kidding when they said they're starting from scratch and not just rewriting details. Many members have spoken for a long time about beefing up the House tax credits to help lower-income and older people. But when Caitlin asked Sen. Ted Cruz whether the group is even all in agreement about advanceable tax credits — which is what the House bill has — his response was: "That is one of the many aspects of the bill that are the subject of discussion."

Between the lines: The lack of any decisions about very basic structural pieces of the bill highlights the ideological diversity of Senate Republicans. Getting the necessary 50 votes is going to be difficult.

What we're watching: Whether next week's Congressional Budget Office score of the House bill will help the Senate pick up its pace. "We're interested in what CBO has to say about the House bill, but that doesn't keep us from writing our own bill," Sen. Lamar Alexander, chairman of the Health, Education, Labor and Pensions Committee, told reporters.

Republicans to Price on user fees: Sorry, we can't hear you


The reauthorization of the Food and Drug Administration's user fees is moving along, but Democrats have been worried that the Trump administration might trip everything up. They've been complaining because Health and Human Services secretary Tom Price has been writing letters trying to get Congress to add one of the administration's ideas at the last minute: making the industry pay the full cost of medical product reviews.

It's easy to see why that wouldn't go over well, especially after the whole balance between federal funding and user fees has been carefully negotiated between Congress, the FDA, and the health care industry. So at the markup of the user fee bill yesterday in the House Energy and Commerce health subcommittee, Rep. Frank Pallone urged Republicans to just say "No."

The bottom line: Turns out he didn't have to worry about it. Committee chairman Greg Walden and health subcommittee chairman Michael Burgess both took the low-key approach: They just ignored the administration proposal. And Walden sent a signal that he's not interested in reopening the bill: "If we do not have the bill to the president's desk in July … desperately needed treatments will not reach patients."

The latest insurer payments bombshell

The Los Angeles Times set health care Twitter on fire yesterday with this anecdote, buried deep within a story about insurers' frustrations about the Trump administration. During a conversation with insurance industry executives, Centers for Medicare and Medicaid Services administrator Seema Verma allegedly offered to pay them for the Affordable Care Act's cost-sharing reduction subsidies — if they'd agree to support the ACA repeal bill.

The shock waves: Liberals called it everything from coercion to extortion. CMS issued a denial: "The statement about Administrator Verma suggesting that the administration would fund CSR's is absolutely false. What she said at the AHIP meeting in April was that no decisions had been made about CSR's," said CMS spokeswoman Jane Norris, who was at the meeting. But we get the sense this isn't the last time Verma, and others who were in the meeting, will be asked about it.

Don't miss the rest of the story: It has some harsh quotes from insurance company executives about the Trump administration's general management of the ACA, like this one: "There is a sense that there are no hands on the wheel and they are just letting the bus careen down the road."

And don't forget the subsidies lawsuit: The Democratic attorneys general of 15 states and the District of Columbia, led by California Attorney General Xavier Becerra, are trying to intervene in the House Republican lawsuit against the insurer payments. Their goal: make sure the insurers actually get paid.

What’s next for Athenahealth? A sale wouldn’t be surprising

Now that Paul Singer's hedge fund, Elliott Associates, is breathing down the neck of health care technology company Athenahealth, CEO Jonathan Bush is in a tough spot, Bob Herman reports. The outspoken leader likely will have to consider selling his company, or he could get pushed out if he decides to ignore pressure from its new activist investor.

History shows that when Elliott gets involved with what it perceives to be "undervalued" tech companies, private-equity firms or other bigger companies scoop up those targets. Some recent examples, all of which were spurred by Elliott, include:

  • Informatica sold for $5.3 billion in 2015.
  • Mentor Graphics was bought out for $4.5 billion in 2016.
  • LifeLock was acquired for $2.3 billion in 2016.
  • Elliott is also pushing Advisory Board Company, which has a big health care consulting division, to be acquired.
Looking ahead: Athenahealth's stock price has been volatile over the past three years and has missed financial expectations several times, and the company said it "looks forward to talking with [Elliott] to hear their views about the company." But don't be surprised if or when this turns into a multi-billion-dollar buyout, with or without Bush's blessing. Read Bob's Q&A with Bush from March for more about the company.

What we're watching today: President Trump and Vice President Mike Pence meet with Office of Management and Budget director Mick Mulvaney, 11 a.m. Eastern.

What we're watching next week: The House files its status update on the ACA subsidies lawsuit with the U.S. Court of Appeals for the District of Columbia, Monday, May 22. Trump releases his full budget for fiscal 2018, Tuesday, May 23. The Congressional Budget Office says it will release the cost estimate for the House-passed version of the American Health Care Act "early in the week of May 22."

Have a great weekend, and don't be shy if you have news or feedback: david@axios.com.


Here's how much NIH spends on indirect costs

The Trump administration and congressional Republicans are starting to give more scrutiny to how much the National Institutes of Health spends to cover administration and overhead costs, rather than research expenses. This chart, taken from NIH budget tables, shows how the two kinds of funding compared to each other since fiscal 2005. This is the information Rep. Andy Harris used when he questioned NIH director Francis Collins about it at a Wednesday hearing.

Data: NIH; Chart: Andrew Witherspoon / Axios

The takeaways:

  • Indirect costs have hovered at roughly 27 percent of total spending for more than a decade.
  • Direct costs have remained steady at around 72 percent.
  • For private funders, 10 percent is more typical for indirect costs, like this example from the Alzheimer's Association Research Fellowship. (Collins says universities can only afford to accept such low overhead funds from private funders because NIH gives them more.)

House subcommittee approves drug price measure with FDA bill

David Nather / Axios

A House panel quickly approved a bipartisan measure to speed the review of new generic drugs this morning, the first sign of congressional action this year to lower drug prices. The bill would require the FDA to conduct faster reviews of new generic drugs in markets where there's no competition, which would help address situations like the huge price increases for EpiPens. It was added to a larger measure that reauthorizes the user fees that help fund the FDA.

Why it matters: Republicans and Democrats don't agree on most ways to bring down drug prices, and Democrats on the committee have been pushing for a hearing on the issue. But encouraging more competition among generic drugs is fairly non-controversial solution that unites both parties.



Good morning ... We're probably going to hear a lot more about the National Institutes of Health paying too much for overhead costs. And the Trump administration is trying to make it easier for people to sign up directly for Affordable Care Act coverage — but there's always a catch.

Today's the premiere of Axios Science, our brand-new weekly newsletter from science editor Alison Snyder. Happy to have another newsletter in the Axios family! If you didn't sign up yet, now's your chance.

The next round of NIH funding fights is coming

Here's what the next battleground may be: overhead costs. The Atlantic's Ed Yong reported yesterday that President Donald Trump's complete budget for fiscal 2018, due to be released next week, may propose limiting the amount of National Institutes of Health grants that can go to "indirect" costs, like administration, equipment, and IT. (Science Insider ran a similar report in March.)

Why that's not a surprise: The Trump administration has been talking about this for a while — Health and Human Services secretary Tom Price said in March that NIH needs to get "a bigger bang for our buck." And some congressional Republicans want to crack down on those costs too.

  • At a House subcommittee hearing yesterday, Rep. Andy Harris grilled NIH director Francis Collins about the $6 billion the NIH spent on indirect costs in fiscal 2016. "Why is this reasonable?" Harris asked. "If we freed up this $6 billion...we could fund thousands of more grants."
  • Collins' answer: Universities that conduct medical research can accept smaller private foundation grants with less overhead built in because of the NIH support — but if NIH cut back too, "many of them would not be able to continue the effort. They would need to drop out."

Why the cuts may not happen: Rep. Tom Cole, the chairman of the House subcommittee that funds NIH, said at yesterday's hearing that he wants to keep building on the NIH funding increases of the last two years because medical research is "important for American global leadership." But take note, NIH: He said it needs to be done "while achieving efficiencies and being a responsible steward of taxpayer dollars."

Today's Senate update is pretty quick

You only need to know a few things about the Senate Republican health care talks:

  • Yes, they did manage to talk about health care at a Senate GOP luncheon yesterday, even though the only questions they're getting from most reporters are about Trump and ousted FBI director James Comey.
  • The topic was how to lower premiums in the individual market, according to Senate Republican Policy Committee chairman John Barrasso.
  • They're still debating whether they need a short-term package to stabilize the markets or whether they can do it all in one package. Caitlin Owens has more here.
  • Senate Finance Committee chairman Orrin Hatch caused a bit of a stir when he suggested he'd be open to keeping the individual mandate. So far, we haven't heard a lot of other Republicans say that. Barrasso's response when asked about it: "Ask Senator Hatch."

Why not everyone is thrilled about direct ACA enrollment

The Centers for Medicare and Medicaid Services announced yesterday it's going to let people enroll directly in Affordable Care Act coverage for 2018 using third-party websites — to "make it as simple and easy as possible," CMS administrator Seema Verma said. Great news, right? Who would complain about that?

The catch: Some critics are worried about what happens to all of the sensitive information people have to provide to companies like web brokers and insurers. That can include income information, citizenship status, and Social Security numbers, according to Sarah Lueck of the liberal Center on Budget and Policy Priorities — so they're worried that companies could use it for marketing purposes.

The tradeoff: Direct enrollment also means consumers wouldn't get to compare all of the available plans if they're just going straight to one insurer to sign up, according to Larry Levitt of the Kaiser Family Foundation. But it definitely gives people more ways to sign up, Levitt said — and that could increase total enrollment.

Insurers are happy: The trade group America's Health Insurance Plans called the announcement "a positive step for consumers."

The Medicare Advantage power players

Data: Centers for Medicare and Medicaid Services; Chart: Lazaro Gamio / Axios

The Department of Justice is digging in its heels against UnitedHealth Group, alleging in a second lawsuit that the health insurance giant has knowingly scammed the government by inflating the medical codes of its Medicare Advantage members.

But UnitedHealth is not the only Medicare Advantage insurer under the federal microscope — it's just the largest, covering about one-fourth of all people in the program, Bob Herman reports. The DOJ also is investigating Humana, Centene, and other insurers for their coding practices.

Medicare Advantage is the private version of Medicare that has more limited networks of doctors and hospitals but cheaper premiums, and it is heavily consolidated. The four biggest companies — Aetna, Humana, Kaiser Permanente and UnitedHealth Group — control 56% of the market. Any scrutiny or changes in payment policies will affect those insurers most.

Guess who's about to extend an ACA program?

The Senate Finance Committee is set to approve one of those rare creatures today — a bipartisan health care bill. It's focused on chronic care, but there's one piece of the bill that caught my eye. It's where they extend something called the Independence at Home demonstration program — a program created by the very same Affordable Care Act that Congress is trying to kill.

The back story: The idea pre-dates the ACA, so it's not like it owes its entire existence to the law. And in fairness, there are a lot of random things in the law that nobody really hates. In this case, it's a program that lets chronically ill Medicare beneficiaries get primary care services at home. But yes, you will see a bipartisan vote to keep something that was technically created by the ACA.

Yes, but: Relax, Republicans. It does a lot of other things too, like expanding the use of telehealth.

An "operating system for the brain"

Axios technology editor Kim Hart has a fascinating story this morning about a virtual reality platform, newly approved by the Food and Drug Administration, that might be able to help patients recover from strokes. It's a "neurorehabilitation" platform from a Swiss company called MindMaze, and it uses 3D motion tracking cameras to map the movements of a patient's arms or fingers. Then it analyzes that data to help design the patient's therapy.

The bottom line: Virtual reality is getting more widespread use in health care — and now U.S. patients with brain injuries can try out this new tool.

What we're watching today: House Energy and Commerce Committee marks up its bill to reauthorize the FDA's user fees, 10 a.m. Eastern. Livestream here. Senate Finance Committee marks up the CHRONIC Care Act, 10:30 a.m. Eastern. Livestream here. House Ways and Means health subcommittee holds hearing on Medicare payment policies, 2 p.m. Eastern.

What we're watching next week: The House files its status update on the ACA subsidies lawsuit with the U.S. Court of Appeals for the District of Columbia, Monday, May 22. Trump releases his full budget for fiscal 2018, Tuesday, May 23. The Congressional Budget Office says it will release the cost estimate for the House-passed version of the American Health Care Act "early in the week of May 22."

Any questions? Give me a shout: david@axios.com.


Former FDA chief heads to Verily, Duke

Andrew Harnik / AP

It's official: Former Food and Drug Administration commissioner Robert Califf is taking on a new role with Verily, the life sciences arm of Alphabet, as CNBC reported yesterday. Califf announced today he will be an advisor to Verily, and he'll also rejoin Duke University, where he worked before he became the last FDA chief in the Obama administration. He's a friend of Verily CEO Andrew Conrad.

In a blog post, Califf said he wants to help Verily "offer insights that will allow the company to better tailor its technologies to meet the needs of doctors, other providers, health systems and the patients they serve, and to drive evidence-based approaches that will enable continuous learning and improvement."