David Nather
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Who’s in the line of fire in the ACA subsidy wars

Data: Kaiser Family Foundation; Daily Kos Elections; Census Bureau; Chart: Chris Canipe / Axios

The Trump administration's decision to stop paying the Affordable Care Act's cost-sharing reduction subsidies will affect ACA customers in Republican-leaning congressional districts as well as Democratic ones. Here's a look at how many people could feel the impact in districts that voted for President Trump, compared to those in districts that voted for Hillary Clinton.

The details: This year, 11.1 million people were enrolled in ACA marketplace plans or in a Basic Health Plan created by the law. Of those, 5.9 million live in Republican-held congressional districts and 5.2 million live in districts held by Democrats, per the Kaiser Family Foundation.

The impact: The cost-sharing reduction subsidies are going to 58 percent of the people who are enrolled in ACA marketplace plans. In all, about 7 million people don't receive any financial assistance with their premiums, so they'd pay the full cost when health insurance companies raise their rates. But others could be affected if health insurers decided to pull out of the markets rather than deal with the instability.

Go deeper: Trump states are hit hardest by the subsidy cutoff, per the Associated Press.

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Can Trump and Schumer really make a health care deal?

Trump in the Rose Garden after the House passed a health care plan in May. Photo: Evan Vucci / AP

So what to make of Trump's next turn on health care? Axios scooped on Friday night that Trump had called Democratic Senate Leader Chuck Schumer to see whether they could cut a deal. Now Trump and Schumer are giving their versions of the call.

Here's our best forecast of where this conversation is headed and why it's likely to explode politically:

  • If there's another Trump-Schumer conversation — and this isn't just a one-off — the president has to figure out if he really wants to take repeal off the table. If he does, the GOP base blows up. But if he doesn't, it's not surprising that Schumer calls it a nonstarter.
  • Even if Trump did decide to take repeal off the table, and just stabilize the Affordable Care Act, there's nothing remotely easy about reaching a health care deal with the Democrats. Republicans would have to get something out of it.
  • At a minimum, Republicans want states to be able to cut back the ACA's rules on what has to be covered. They think that's the key to making health insurance less expensive. But for Democrats, that's just a backdoor way of undermining coverage of pre-existing conditions.
  • Example: If they let states cover fewer benefits — like, say, not making them cover prescription drugs — then those are benefits that sick people won't get. So even if you say people with pre-existing conditions are still covered, they wouldn't have as much coverage as they do now. Democrats will be under a lot of pressure to oppose that.
  • This is where senators Lamar Alexander and Patty Murray are stuck in trying to negotiate their deal. Murray has offered smaller concessions, but nothing that would interest most Republicans.

Bottom line: If Alexander and Murray can't get past that roadblock — two people who really know the details of the health care law — how is Trump going to cut his own deal with Schumer, since policy details aren't really his thing?

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The children who got health coverage under CHIP

We've spent so much time watching the Affordable Care Act fights that it's easy to forget the success of an earlier health coverage expansion. The Children's Health Insurance Program was created in 1997 as a bipartisan compromise after the failure of more sweeping health care plans.

Why it matters: CHIP's authorization expires on Saturday — because Congress was too busy fighting over the ACA. (They're working on renewing it — later.)

Data: Kaiser Family Foundation; Map: Andrew Witherspoon / Axios

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Alexander coming back to the health care table

Alexander is willing to restart the bipartisan talks. Photo: J. Scott Applewhite / AP

Senate HELP Committee chairman Lamar Alexander says he's willing to restart the bipartisan talks with Democratic Sen. Patty Murray over how to stabilize the Affordable Care Act. "I will consult with Senator Murray and with other senators, both Republicans and Democrats, to see if senators can find consensus on a limited bipartisan plan" to lower premiums and make sure everyone has health insurance options, he said in a statement.

Reality check: There's still no guarantee that they can get a deal — Alexander wants to give states more freedom from ACA rules than Murray does. But the fact that Alexander is willing to restart the talks, after walking away from them last week during the Graham-Cassidy effort, could be a sign that the repeal bill's failure is reviving the prospects for “fixing" the ACA.

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Trump’s health care talking points just changed

Trump talks with Reps. Josh Gottheimer and Tom Reed at a meeting with House Republicans and Democrats this afternoon. Photo: Evan Vucci / AP

One quote you need to read from President Trump's meeting with a group of House Republicans and Democrats this afternoon:

"But we do want to do something very, very powerfully with respect to Obamacare. It has not worked; the rates are going through the roof. The numbers that you looked at -- no matter where you go, no matter where you look, health care is failing in our country. And we're going to get it changed, and we're going to get it changed fast."

What he didn't say: “Repealed." Or “replaced."

Featured

The partisan chasm on immigration

So President Trump wants Congress to solve the “Dreamers" issue in six months? Here's a reality check on why any immigration legislation falls apart once Congress gets ahold of it. This poll, from Quinnipiac University last month, shows that Republicans and Democrats aren't just divided on what to do about undocumented immigrants. They live in different universes, with independents somewhere in the middle of the huge chasm.

Data: Quinnipiac University Poll, August 16, 2017; Note: Don't know responses not shown; Chart: Andrew Witherspoon / Axios

The bottom line: The issue before Congress — what to do about undocumented immigrants who were brought to the United States as children — is just a subset of the broader immigration debate. But these kind of numbers show why immigration legislation has always been a graveyard in Congress, and why the odds have been against a deal to give legal protections to the Dreamers.

Yes, but: President Trump's deal with Democratic leaders on the debt limit may have changed that.

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Vitals

Happy Friday, and this is it — my last issue of Vitals! But not to worry. I'm passing the torch to Sam Baker next week (after the holiday weekend on Tuesday), and you will be lucky to have him in your inbox every morning because he will make Vitals better, smarter, and faster.

Thanks to all of your for your time and attention, and please encourage all of your friends to sign up as Sam reboots the franchise. I'll start a broader role at Axios next week, so keep in touch and let me know what we can do better: david@axios.com.

Lessons for the next act on health care

Rebecca Zisser / Axios

When Congress comes back next week, it's going to start the next chapter on the Affordable Care Act — and it probably will set its sights a lot lower for changing the law, now that the repeal effort has collapsed. There are a lot of lessons Republicans can learn from the failure of that effort — and a few that Democrats can learn too, if they're honest about their own experiences since the ACA became law.

Here are the main lessons for the next round:

Do it step by step. That's how Senate HELP Committee chairman Lamar Alexander says he wants to handle it, starting with a limited bill to stabilize the ACA markets.

Republicans have to decide what they want. Stanford's Lanhee Chen said it became clear during the repeal debate just how deeply divided conservatives are on health care policy — and that will continue to be an issue during the next steps.

The details matter. It wasn't just John McCain who said a big health care bill should go through hearings. Lisa Murkowski said her "no" vote was meant as a warning that "We're not ready to go to the floor to wrap this up," as the Alaska Dispatch News reported at the time.

If one party owns it, it doesn't last. This is a lesson for both parties. When Democrats passed the ACA on their own, it was only safe as long as a Democrat was in the White House. If Republicans rewrote the health care system by themselves, they would have been taking the same risk. (So, Democrats — single payer? Really?)

Ditch the talking points. Former Senate GOP aide Rodney Whitlock said the Alexander-Murray hearings could help by forcing Republicans to face the need for the risk sharing protections. They could also force Democrats to figure out what they're actually willing to do to improve the ACA.

Don't overpromise. Funny thing about both the repeal debate and the original ACA debate — they both promised lots of winners and no losers. That doesn't happen in health care. As Whitlock put it: "In health care, there's no such thing as a free lunch."

You can change the ACA, but you're not going to get rid of it. Unless Senate Republicans find that 50th vote — and there's no sign that they're anywhere close — the next chapter is going to be about putting a more conservative stamp on it. Turns out John Boehner was right.

How Alexander and Murray will get senators on board

We all thought Caitlin Owens was on vacation this week, but her sources didn’t know that! Per Caitlin, Alexander and Murray are planning to invite senators who aren’t on the HELP Committee to meet with the witnesses before each hearing. There’s one round of hearings on their stabilization effort next week, and another round the following week.

Between the lines: It could be a good way to increase the buy-in from Republicans and Democrats before Alexander and Murray introduce their bill — if it helps convince them what needs to be done to end the turmoil.

About those HHS advertising cuts...

The Department of Health and Human Services blew up a quiet health care week yesterday with its announcement that it's going to cut the ACA advertising budget by 90% for next year.

Why the cuts? HHS officials say they're trying to be cost-conscious — because ACA enrollment this year actually fell despite $100 million in advertising.

Normally, with this kind of debate about cost effectiveness, you get a healthy debate from both sides. But it was pretty one-sided yesterday.

  • There were plenty of Democrats and other ACA supporters blasting the Trump administration for “sabotage."
  • But if you were looking for the “Thanks for being fiscally responsible, HHS" messages, you wouldn't have found much — other than House Energy and Commerce Republicans cheering a separate set of cuts to “navigators" who help sign people up.

Why it matters: The consensus from pro-ACA health care experts is that cutting the advertising budget will only drive up premiums — because healthy people won't sign up.

  • “Not smart," tweeted Venrock's Bob Kocher, a former Obama administration health care adviser.
  • Andy Slavitt, who ran the Centers for Medicare and Medicaid Services under former President Obama, says a 90% cut in ad spending means a "dramatic cut" to ACA enrollment next year — “which means a worsening risk pool, higher government outlays, less competition, and higher premiums paid by American families."

The bottom line: The Trump administration insists its actions are about cost-effectiveness. "Judging effectiveness by the amount of money spent and not the results achieved is irresponsible and unhelpful to the American people," said HHS spokeswoman Caitlin Oakley. If so, the silence from budget hawks is deafening.

The looming Tar Heel health care giant

ICYMI yesterday, Bob Herman reported that UNC Health Care and Carolinas HealthCare System — two rather profitable not-for-profit health systems based in North Carolina — want to merge. The combined public system would be bigger from a revenue standpoint than other major medical system giants like Partners HealthCare in Boston or Dignity Health along the West Coast.

Here's what Bob advises us to watch next:

  • The impact: If the systems are able to merge, layoffs appear inevitable. (“Restructuring would be required," according to an internal memo from UNC CEO William Roper). But more broadly, it would become a lot more difficult for a health insurance company to exclude the UNC-Carolinas system from networks, given its size and affiliation with a cutting-edge medical school.
  • The rationale: Roper and Carolinas CEO Gene Woods spoke with reporters yesterday. They naturally said the deal wasn't about reducing competition and trotted out the line of "advancing care." In particular, they want to find ways to improve care in rural areas, which North Carolina has struggled with.
  • The big question: How will antitrust wonks at the Federal Trade Commission respond? Carolinas and UNC mostly operate in different parts of North Carolina, but they command a lot of inpatient market power in their respective areas. (The Justice Department is already suing Carolinas for allegedly stiffing competitors.)
  • The bottom line: Despite what Roper and Woods say, they are indeed reducing competition. The systems did not immediately respond to whether they did any antitrust planning.

Looking ahead: Mergers beget mergers. Other health systems in North Carolina like Novant Health and Duke University Health System are looking smaller right now.

Don't forget: Catholic Health Initiatives and Dignity Health are still evaluating their own megamerger.

The Kasich-Hickenlooper tradeoff

If you look at the health care plan Ohio Gov. John Kasich and Colorado Gov. John Hickenlooper released yesterday, you might have trouble finding a lot for Republicans to like — other than a few state flexibility options, like letting states combine waivers and adapt ones that have been approved in other states.

Yes, but: Greg Moody, director of Ohio's Office of Health Transformation, tells me the other steps the plan would take to stabilize the markets — like funding the ACA's cost-sharing reduction payments and reinsurance programs to help limit insurers' losses — would make it easier for states to pursue the waivers. That's because it's easier for them to try some of the obvious reforms, like alternatives to the individual mandate if the markets are stable.

Key quote: “The federal government's responsibility is to create stability in the markets in the short term. That then clears the path for states to take action."

Medigap changes are coming

Turns out that HHS was doing other things yesterday too, and Bob was paying attention. It put out a notice reminding everyone big changes are in store for Medicare supplemental insurance policies, known as Medigap plans. Roughly 12.6 million people have a Medigap plan to help fill in the coverage holes in the traditional Medicare program.

What's changing: Any Medigap policy that covers the annual Medicare Part B deductible ($183 this year) will be eliminated starting Jan. 1, 2020, and will not be available for new Medicare enrollees. Those plans are the most popular.

Why: It's required by the payment law MACRA. Although nearly all of that law is about changing how Medicare pays physicians, one tiny section forbids the sale of any Medigap plan that covers that Part B deductible. The goal is to give seniors more "skin in the game."

Ripple effect: Eliminating these types of Medigap policies could push seniors to choose Medicare Advantage plans instead, perhaps without understanding the tradeoffs.

Thanks for reading!

Giphy

What we're watching next week: Senate HELP Committee hearings on bipartisan ACA stabilization bill, Sept. 6 (insurance commissioners) and Sept. 7 (governors). 2017 Wells Fargo Healthcare Conference in Boston, Sept. 6-7; Senate Finance Committee hearing on CHIP reauthorization, Sept. 7; markup of Senate funding bill for HHS, dates TBD.

Also, Kasich and Hickenlooper discuss their ACA proposal at a joint American Enterprise Institute-Center for American Progress event, Sept. 8. RSVP here.

What we're watching in two weeks: Senate HELP Committee hearings on bipartisan ACA stabilization bill, Sept. 12 and 14. Also, Healthcare Security Forum, sponsored by the Healthcare Information and Management Systems Society, Sept. 11-13.

Featured

Lessons for the next act on health care

Rebecca Zisser / Axios

When Congress comes back next week, it's going to start the next chapter on the Affordable Care Act — and it probably will set its sights a lot lower for changing the law, now that the repeal effort has collapsed. There are a lot of lessons Republicans can learn from the failure that effort — and a few that Democrats can learn too, if they're honest about their own experiences since the ACA became law.

Here are the main lessons for the next round.

Do it step by step. That's how Senate HELP Committee chairman Lamar Alexander says he wants to handle it, starting with a limited bill to stabilize the ACA markets.

Republicans have to decide what they want. Stanford's Lanhee Chen said it became clear during the repeal debate just how deeply divided conservatives are on health care policy, to the point where they couldn't rally around any alternative to the ACA. “Those differences will outlive the debate we just went through and go on to impact discussions about health reform going forward," he said.

The details matter. It wasn't just John McCain who said a big health care bill should go through hearings. Lisa Murkowski said her “no" vote was meant as a warning that "We're not ready to go to the floor to wrap this up." Now Alexander and Democratic Sen. Patty Murray will have hearings on their bill — a chance to grapple with the details even if the bill is smaller.

If one party owns it, it doesn't last. This is a lesson for both parties. When Democrats passed the ACA on their own, it was only safe as long as a Democrat was in the White House. Under a Republican president, there's no guarantee it will get the minimum support to survive. If Republicans rewrote the health care system by themselves, they would have been taking the same risk. (So, Democrats — single payer? Really?)

Ditch the talking points. Rodney Whitlock, a former Senate Republican aide when the ACA was passed, said the Alexander-Murray hearings could help by forcing Republicans to face the need for the risk sharing protections — and by forcing Democrats to figure out what they're actually willing to do to improve the ACA, not just talk in single-payer applause lines.

Don't overpromise. Funny thing about both the repeal debate and the original ACA debate — they both promised lots of winners and no losers. That doesn't happen in health care. Greater benefits force healthy people to pay more than they want to pay, skimpier benefits are cheaper but hurt vulnerable people. As Whitlock put it: “In health care, there's no such thing as a free lunch."

You can change the ACA, but you're not going to get rid of it. Unless Senate Republicans find that 50th vote — and there's no sign that they're anywhere close — the next chapter is going to be about putting a more conservative stamp on it. Turns out John Boehner was right.

Featured

HHS cuts ACA advertising budget by 90%

AP file photo

The Department of Health and Human Services announced today it's slashing the advertising and promotional budget for the Affordable Care Act for next year. It's planning to spend $10 million to promote the law in the open enrollment period that starts in November — compared to the $100 million the Obama administration spent last year.

Why they're doing it: On a conference call with reporters, HHS officials argued that last year's promotional spending — which was doubled from the year before — was ineffective because signups for new customers actually went down. They also said the $10 million budget is more in line with what Medicare Advantage and Medicare Part D spend to promote their open enrollments.

Why it matters: The Trump administration is making cost-effectiveness a major theme this year, but it's sure to be accused of undermining ACA enrollment, given all of the Trump administration's battles to repeal the law — and given that it also cancelled advertising for the final days of last year's open enrollment.

One more thing: HHS is also planning to cut spending on “navigators," who are supposed to help people enroll, by tying their funding to their effectiveness in reaching their enrollment goals last year.

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Kasich, Hickenlooper call for quick ACA fixes, modest reforms

Ohio Gov. John Kasich and Colorado Gov. John Hickenlooper are out with their bipartisan health care plan, and it sticks pretty close to the Affordable Care Act fixes Republican Sen. Lamar Alexander and Democratic Sen. Patty Murray will start considering next week — but with a broader range of practical changes to be considered after the markets are stabilized.

Why it matters: Kasich and Hickenlooper have gotten a lot of attention for their bipartisan work on health care and other issues, though more so before Kasich ruled out running together for the White House in 2020. Their work may boost Alexander and Murray’s efforts to fund ACA insurer payments and increase state flexibility, but it also includes a menu of other ideas they could consider after the basic bill passes.

The highlights of the plan:

Quick fixes:

  • Fund the ACA’s cost-sharing reduction subsidies to insurers (likely to be in Alexander-Murray bill)
  • Create a temporary “stability fund” for reinsurance or other programs to limit insurer losses
  • Exempt insurers from the ACA’s health insurance tax to encourage them to cover underserved counties
  • Let people in those counties buy into the Federal Employees Health Benefits Program to give them more choices
  • Keep the individual mandate “for now"

Broader changes:

  • Keep funding outreach to encourage young adults to enroll
  • Crack down on customers only signing up when they need insurance
  • Strengthen the ACA’s risk-sharing protections for insurers
  • Let states choose different ways of covering the ACA’s “essential health benefits”
  • Make it easier to fast-track states’ “Section 1332” waivers (letting them achieve the ACA’s goals in different ways)
  • Encourage more creative ways to pay for health care, like "value-based health care purchasing"