David Nather
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What Kasich really wants on Medicaid

Pablo Martinez Monsivais/AP

Ohio Gov. John Kasich got some attention this morning when he said it would be a "very, very bad idea" for congressional Republicans to phase out Medicaid expansion. "We cannot turn our back on the most vulnerable," Kasich said on CNN's State of the Union. "We can give them the coverage, reform the program, save some money, and make sure that we live in a country where people are going to say, at least somebody is looking out for me."

What it really means: Yes, Kasich wants to make sure the 700,000 Ohio residents who gained coverage don't lose it. But that doesn't mean he wants to leave the Medicaid expansion the way it is. Here are two important things Kasich has asked for in the past — reforms where he could pretty easily reach common ground with the Trump administration and Congress:

  • Charge a fee for Medicaid coverage. Kasich has proposed that in the past, and although the Obama administration turned him down, he could have more luck this time with a modified version of the plan. That's because Seema Verma, Trump's nominee to head the Centers for Medicare and Medicaid Services, was the consultant who helped Kasich write his original plan, Cleveland.com reports.
  • As a presidential candidate last year, Kasich proposed rewriting Medicaid to limit the amount of funding for each person in the program — the same idea congressional Republicans are looking at now. Kasich's point is that he doesn't want people to lose coverage during the transition to the new system.
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See? Trump is working on Obamacare repeal

Andrew Harnik / AP

President Trump is holding an Obamacare strategy meeting tomorrow with Health and Human Services secretary Tom Price and Office of Management and Budget director Mick Mulvaney, per a White House pool report.

Between the lines: The presence of Mulvaney, just confirmed as OMB director, suggests this is going to be a meeting about how to repeal Obamacare — and probably include some pieces of a replacement -- through the budget "reconciliation" bill.

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Chelsea Clinton, global health wonk

Mark Lennihan/AP

Hillary Clinton resurfaced on Twitter this morning to plug Chelsea Clinton's new book: an academic look at global health. The book, Governing Global Health: Who Runs the World and Why?, shows that the fascination with health care runs through the Clinton family — except that Chelsea is more interested in the public health side, especially the international effort to wipe out diseases.

What it says: Judging from the online excerpt, it reads like exactly what it is: an academic book published by Oxford University Press. It's cowritten by a professor at the University of Edinburgh's medical school, and it's not easy to get through. That said, it's a good look at how Chelsea Clinton has been carving out her own health care identity in her career. She takes more of an international perspective, and she's interested in how other countries can strengthen their public health systems.

How you know she's a Clinton: It's right there in the title of the chapter that's posted online: "Financing universal healthcare coverage."

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One big hangup with Obamacare replacement: tax credits

Zach Gibson/AP

Bloomberg's Sahil Kapur and Billy House have a smart piece about one reason conservative House Republicans think the emerging Obamacare replacement plan is "Obamacare Lite": They don't like the tax credits. The House GOP plan would create "refundable" tax credits to help people buy health insurance, meaning low-income people could get the money even if they didn't owe taxes. That's what the conservatives don't like — they say it could just become another entitlement. "I don't want people getting money back," Rep. Ted Yoho told Bloomberg.

Why it matters: This is all part of Republicans' reckoning with the reality of health care reform: There are different ways to replace Obamacare and still cover uninsured people, but not an infinite number of ways. If the conservative members reject all of them, the GOP could end up with no replacement at all — and then they can't guarantee a smooth transition away from Obamacare.

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Backlash builds over Verma comments on maternity health benefits

AP file photo

Seema Verma, President Trump's nominee to head the Centers for Medicare and Medicaid Services, has triggered a big lobbying backlash with her suggestion in her Senate testimony yesterday that maternity health coverage should be optional. The March of Dimes is circulating an online petition denouncing the comments, saying: "ALL families should be able to have a healthy baby without planning a year or more in advance."

Why it's an issue: Maternity coverage is one of the required categories of health benefits under Obamacare, and Republicans are looking for ways to relax those rules to bring down the cost of health insurance. Verma told the Senate Finance Committee that while some women want maternity coverage, "some women might not choose that."

Why it matters: It's a sign of how much lobbying will take place to keep Obamacare's required benefits in place, pushing back against customers who have complained that they don't want all of the coverage the law requires.

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Surprise! It was "A Better Way" all along

J. Scott Applewhite/AP

We've all been in suspense, chasing the details of what House Republicans will do to replace Obamacare — and now it's clear we could have been reading House Speaker Paul Ryan's "A Better Way" plan the whole time. The briefing document from yesterday's House Republican meeting sticks closely to the Ryan plan from last year, at least in the parts it includes.

The big things that are being picked up from "A Better Way": Tax credits (fixed amounts, based on age, not income), health savings accounts, Medicaid reform (choice between per-capita caps and block grants) and "State Innovation Grants" (which can be used for high-risk pools).

The big pieces that are left out: Limiting the tax breaks for employer health coverage (Republicans are still talking about it) and Medicare "premium support" plan (President Trump's not interested).

The backstory: None of this should be a surprise. Ryan has been the driving force in the House on health care reform all along, and he noted yesterday that his former colleague, Health and Human Services secretary Tom Price, was "one of the primary architects" of the Better Way plan. The Senate still has to buy off on it, but the thinking among House GOP aides is that the House has more leverage because Ryan has been working on these ideas for years.
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Vitals

Happy actual Friday! We're getting a better picture of the Obamacare replacement plans the House committees will start working on after the recess. But they're still figuring out critical details, like any numbers at all, and they're nowhere close to getting all Republicans on board.

Surprise! It was "A Better Way" all along

Giphy

We've all been in suspense, chasing the details of what House Republicans will do to replace Obamacare — and now it's clear we could have been reading House Speaker Paul Ryan's "A Better Way" plan the whole time. The briefing document from yesterday's House Republican meeting sticks closely to the Ryan plan from last year, at least in the parts it includes.

The big things that are being picked up from "A Better Way":

  • Tax credits (fixed amounts, based on age, not income)
  • Health savings accounts
  • Medicaid reform (choice between per-capita caps and block grants)
  • "State Innovation Grants" (can be used for high-risk pools)

The big pieces that are left out:

  • Limiting the tax breaks for employer health coverage (Republicans are still talking about it)
  • Medicare "premium support" plan (President Trump's not interested)
The backstory: None of this should be a surprise. Ryan has been the driving force in the House on health care reform all along, and he noted yesterday that his former colleague, Health and Human Services secretary Tom Price, was "one of the primary architects" of the Better Way plan. The Senate still has to buy off on it, but the thinking among House GOP aides is that the House has more leverage because Ryan has been working on these ideas for years.

They haven't solved the Obamacare Lite problem

The big signal that House Republican leaders are sending with the Obamacare replacement plan: The Freedom Caucus doesn't get to run the show.

  • The conservatives have insisted that the law needs to be repealed before they worry about a replacement. And earlier this week, Rep. Raul Labrador said they don't want to pass anything that looks like "Obamacare Lite" — another huge overhaul of the health care system that just happens to be more conservative.
  • But House Republicans are clearly headed for an ambitious overhaul, and they even brought in Price to tell the rank and file that President Trump wants the repeal and replacement to happen at the same time.
  • Labrador made it clear the new plan didn't avoid the "Obamacare Lite" trap. "No," he said when I asked him. "So far it just sounds like Obamacare Lite."
  • He said he wanted to find out more about it, but "there were only two minutes of time for members to ask questions." Rep. Jim Jordan had the same complaint.

Why it matters: The House leadership is calling the bluff of the Freedom Caucus — but they do need their votes to pass the plan. And then they'll have to keep the conservatives on board if the Senate tries to moderate the plan.

FWIW: Caitlin Owens reports that none of the Senate Republicans she asked had read the House plan. They didn't know it was out.

Ryan on the big problem: Medicaid

Here's what Ryan said at his weekly press conference yesterday: "I think it's 32 states, if I am not mistaken, have Medicaid expansion. Mine did not. We're going to have to find a solution that accommodates each of these two concerns."

What's in the plan: States that expanded Medicaid could keep getting their extra federal funds "for a limited period of time," but they'd go back to the regular federal matching rate "at a date certain." Republicans are still figuring out what those dates will be, but the goal is to stop the states that expanded Medicaid from enrolling new people.

What's missing is what matters the most

The briefing document lays out all of the ideas but includes almost none of the specifics that really matter, like the size of the tax credit, the amount of the "state innovation grants," or the ways to pay for all of it. That's partly because Republicans are still getting official cost estimates, but those are the details that will really make a difference, according to outside analysts:

  • Harvard's John McDonough, former Senate Democratic aide and member of the Axios board of experts: "What is the size of the credit? Why so shy about this? Why the veil over the most important single item in a plan? Maybe because revealing the number will allow experts to figure out quickly how many will lose coverage."
  • Chris Condeluci, former Senate Republican aide and member of the Axios board of experts: Key questions are whether it really repeals all Obamacare taxes right away or phases some out gradually, and how to be fair to states that expanded Medicaid and the ones that didn't.
  • Zeke Emanuel of the Center for American Progress: "How much is the subsidy? We don't know their value so we cannot say what it will cover ... There is not enough information but what appears is that people will pay more and many people will find insurance impossible to buy."

How the FTC’s new competition chief could affect health care

President Trump's acting Federal Trade Commission chairwoman, Maureen Ohlhausen, is wasting no time shaking up the agency. Bob Herman reports that she named Tad Lipsky the new acting director of the FTC's Bureau of Competition yesterday — the office charged with policing mergers and acquisitions for most of the health care industry.

What this means: Potentially less oversight, but not for all health care players. Lipsky replaces Deborah Feinstein, who went after some large hospital and health system mergers. However, her group has been lax on many transactions involving drug companies, pharmacy benefit managers and retail pharmacies.

  • Former FTC staffers say Lipsky is a pro-business conservative who is less aggressive in challenging M&A, but he also is knowledgable about health care and likely won't slow down reviews on hospital mergers.
  • Former FTC antitrust attorney John Kirkwood: "This is not choosing a Steve Bannon ... This is like choosing another establishment figure to the right of Debbie Feinstein."

Key quote: Here's what Lipsky said to U.S. News & World Report in December after Trump won: "The purpose of antitrust is not necessarily to prevent firms from succeeding, even when they become very dominant in their industry."

A few big moments at the Seema Verma hearing

The Centers for Medicare and Medicaid Services nominee didn't answer all of the questions at the Senate Finance Committee hearing yesterday — especially on the new Obamacare rule, which came from the agency she'll be running. But there were a few standout moments:

  • She defended the Indiana approach to Medicaid, which requires low-income people to contribute to their health care: "It gives dignity to individuals ... We don't assume that just because someone is poor, they don't want choices about their health care."
  • She said she doesn't support what Sen. Bill Nelson called a "voucher" system for Medicare, meaning the premium support model that Ryan wants — a sign that the Trump team has given her full permission to brush it away.
  • She might actually be a fan of pharmaceutical benefit managers, which are taking a lot of grief lately for their possible role in contributing to rising drug prices.
  • She said the MACRA bill, which reformed how Medicare pays doctors, was an "important step forward" for outcomes and providers.
For more highlights, read Caitlin Owens' roundup here.

For more Obamacare replacement light reading ...

Republicans went on a tear yesterday with the bill introductions, as they unloaded more details of other pieces of Obamacare replacements. Bookmark these and make someone read them for you:

Between the lines: The pre-existing conditions bill reads a lot like Obamacare — it looks like Republicans suddenly decided to just cover all sick people. But it's supposed to be paired with a "continuous coverage" bill, which would allow people to be charged more if they didn't keep themselves insured. It's also possible that the Trump administration will take some of their own steps to promote continuous coverage, as we noted yesterday.

What we're watching next week: National Governors Association winter meeting, Washington, Feb. 24-27. Also: what's the reaction to the House GOP plan? And what will be the next Obamacare town hall video to go viral?

Have a great weekend, and tell us what you're hearing and what else we need to know: david@axios.com.

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Big questions on House Republican Obamacare plan still unresolved

J. Scott Applewhite/AP

The House Republican briefing on their most likely Obamacare replacement plans was a bit of an anticlimax. Republicans who emerged from the briefing said there were major elements still under discussion, like what kind of Medicaid reform it would include and how they'd pay for the package.

House Ways and Means Committee chairman Kevin Brady said he and Energy and Commerce Committee chairman Greg Walden gave their colleague "a very in-depth view of what the replacement will be," including health savings accounts, high-risk pools to cover sick people, and "greater state control of health care."

But he said a basic question — whether Medicaid would be restructured as a block grant or as per-person funding limits — was "still under discussion," as were the possible ways to pay for the package. (A briefing document says the Medicaid package will include both per-capita caps and block grants.)

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Vitals

Good morning — have you read all 71 pages of the new Obamacare rule yet? Did you catch that surprise on page 49? No? Better go read it, then. Meantime, we're all fired up for Seema Verma's confirmation hearing today, and Steve Brill has a new winner in the highly-paid hospital CEO awards.

The leading candidates for Obamacare replacement

House Republicans are supposed to get an update this morning from Energy and Commerce Committee chairman Greg Walden and Ways and Means Committee chairman Kevin Brady on where their Obamacare replacement work stands. It's going to be hard for the rank-and-file Republicans keep the ideas straight, so Caitlin Owens has a rundown this morning that does it for them.

Yeah, we know, it's still a work in progress, but we have a pretty good idea of what the most likely pieces will be. So Caitlin walks you through the pros and cons of Medicaid per-capita caps, limits on the tax break for employer coverage, tax credits, and health savings accounts — the things they're most likely to be able to do in a budget "reconciliation" bill that only needs 51 votes. Read her story here.

What's next after the big Obamacare rule

It's pretty clear that the "market stabilization rule" the Department of Health and Human Services released yesterday was just a warmup act. (It was even signed by Norris Cochran, the guy who was temporarily running HHS before Tom Price got confirmed.) But the rule already hinted at the next steps: more regulations to encourage "continuous coverage."

  • HHS is thinking of proposing that people who sign up outside of the regular enrollment period should have to prove they had prior coverage for at least six to 12 months.
  • More significant: It's also asking whether the individual market should require people to keep themselves insured if they want their pre-existing conditions to be covered — mirroring the rule the Health Insurance Portability and Accountability Act of 1996 had for group coverage.

The biggest bombshell: It's a super-wonky change, but liberals are up in arms about a part of the rule that gives insurers more flexibility in calculating the "actuarial value" of their coverage. The result, according to the Center for American Progress: higher deductibles and out-of-pocket costs for the customers, and Obamacare's tax credits will be worth less. Expect to hear a lot from Democrats about shifting costs to sick people.

The big picture: The rule dodged some of the biggest issues insurers want resolved, but it sends important signals about the direction the Trump administration wants to take — tighter rules for consumers and separate treatment for people with health problems. Read my story with Bob Herman here.

It's Seema Verma's turn to answer lots of questions

AP file photo

The Centers for Medicare and Medicaid Services nominee is up for her confirmation hearing this morning, just in time for Democrats to unload on her about the Obamacare rule. Verma will get a lot more questions than that, of course — CMS is the main agency that implements the law, and she'll have a big hand in the Trump administration's efforts to start phasing it out. Republicans will also ask her about Medicare and Medicaid, as well as her views on Medicare payment reform and delivery system reform.

And in case you didn't get enough mind-numbing ethics questions with Tom Price, you'll hear some about Verma's own issue. Her Indiana consulting firm worked on the design of the state's Medicaid reform plan under then-Gov. Mike Pence, but she also worked for one of Indiana's biggest Medicaid vendor, as the Indianapolis Star reported in 2014 and the Associated Press investigated this week. (The AP notes that she's promised to sell her consulting firm within 90 days of her confirmation.)

Brill finds a higher-paid hospital CEO

Steve Brill's article last week on hospital CEO salaries got a lot of attention, some blowback from the industry — and a tip from a reader that maybe another CEO should have been at the top of the list. So Brill looked into it, and sure enough, Mercy Health System's Javon Bea earns the equivalent of $72.02 for every day a patient stays in his hospital — even more than the $56.40 a day earned by Greenwich Hospital's Norman Roth, the CEO featured in Brill's first story. Read Brill's latest here.

What it means: It means it's hard to be 100 percent sure who's earning the most per patient day without searching every hospital CEO in the country. Roth's earnings were the highest Brill had seen, and Bea now tops that — but if you know of CEO who might be earning more than that, please let us know.

And yes, we know there's been a lot of debate over the patient-day measure, so if you missed it earlier this week, read the American Hospital Association's critique of the original article and Brill's response.

Even Molina suffers losses from Obamacare

Molina Healthcare was one of the insurers that was doing well — until it wasn't. Yesterday, the health insurer reported a fourth quarter loss because of the law, but not because it had too many sick customers. Instead, it had lots of healthy ones, so it had to pay $325 million into Obamacare's "risk adjustment" program, which redistributes money to insurers that had higher-cost enrollees.

It's also owed lots of money from Obamacare's "risk corridor" program, a separate initiative to prevent insurer losses that was undermined by congressional Republicans. Read Bob Herman's story here.

PhRMA to Marathon: Sorry, we don't know you

Giphy

The main drug industry trade group, Pharmaceutical Research and Manufacturers of America, has ditched other drug companies that have embarrassed the industry with huge price hikes — and yesterday it did that to Marathon Pharmaceuticals, the company that brought us the $89,000 drug for Duchenne muscular dystrophy.

"Their recent actions are not consistent with the mission of our organization," PhRMA said in a statement. Moreover, the group said, the PhRMA leadership "has begun a comprehensive review of our membership criteria to ensure we are focused on representing research-based biopharmaceutical companies who take significant risks to bring new treatments and cures to patients."

The power, and costs, of a nursing strike

When the unionized nurses at Allina Health, a hospital system based in Minneapolis, went on strike last fall for more than five weeks, it was a big hit to the organization's balance sheet, Bob Herman reports. The nursing strike cost more than $149 million, Allina executives told bondholders this week, mostly stemming from the lofty costs of bringing in temporary nurses to fill in the shifts. The strike was the main reason Allina lost $30 million in 2016.

The biggest reason for the strike: Like other large employers, Allina wanted to move its workers into plans with higher deductibles and copayments. That will still happen with the nurses, but the two sides agreed to have them phased in over time. Those types of plans are cheaper for employers to offer and have become increasingly common for people with job-based coverage. Republicans have called for capping the tax exemption on employer-based plans, which would add fuel to the trend.

What we're watching today: House Republican briefing on Obamacare replacement, 9 am Eastern. Senate Finance Committee confirmation hearing for Seema Verma, 10 am Eastern. Livestream here. House Speaker Paul Ryan holds weekly press conference at 11:30 am Eastern — livestream here.

What we're watching next week: What will be the next Obamacare town hall video to go viral?

Thanks, and feedback and news tips are always welcome: david@axios.com.

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Obamacare rule is mostly tinkering, but suggests bigger plans

Andrew Harnik/AP

The Obamacare "market stabilization" rule released this morning dodges a lot of the biggest issues health insurers are worried about. It's mostly meant to send signals about where the Trump administration is headed — and analysts say the signals suggest a more insurer-friendly environment, with tighter rules for consumers and separate treatment for sick people.

Insurers are mostly happy with the changes in the proposed rule, though they're noncommittal about whether it will bring them back to the Obamacare marketplaces next year. But liberals and consumer groups are up in arms about it, saying it will shift costs to patients. Health and Human Services Secretary Tom Price said in a statement that it's the first stage of an effort to "reverse the harmful effects of Obamacare."

Read on for highlights of the early reactions.