Dec 20, 2019

The health care industry's happy holidays

Illustration: Eniola Odetunde/Axios

The year-end spending bill in Congress epitomizes the power of health care interests.

The big picture: There are lots of goodies for the industry, while patients will get the worst kind of holiday surprise — more medical bills.

The bill includes some of the usual health care "extenders" — keeping money flowing to rural hospitals and community health centers, and again delaying cuts to hospitals that treat the poorest patients.

  • But in the weeds of the negotiations, industry came out even better than you may have realized. The health care industry's lobbying clout isn't new, but it's striking to see how this end-of-2019 package turned around.
  • This was the bill that, once upon a time, might have been the vehicle for deals to reduce drug prices and crack down on unscrupulous billing practices. Instead, it became an industry giveaway.

A fix for surprise medical bills didn't make the cut, and drug pricing fell apart months ago.

  • Congress was close to a fix for surprise bills, but dropped it at the last minute, punting the issue to next spring at the earliest, which means patients will still be on the hook for bills they never saw coming.
  • The bill also doesn't include changes to secretive contracting terms in the pharmaceutical supply chain and in hospitals.

Congress did find time, however, to repeal several Affordable Care Act taxes — a particularly big win for health insurers that sell Medicare Advantage plans.

  • The bill also gives more drugs — for example, some that treat diabetes or osteoporosis — 12 years of market exclusivity instead of the five years they would have gotten. "That's a big win for pharma," said Peter Maybarduk, a policy expert at Public Citizen. Industry lobbied in favor of this earlier this year.
  • Hospitals that perform certain stem cell transplants will now get paid by Medicare for the costs associated with acquiring those stem cells. Hospitals and industry-backed groups have long lobbied for this policy, which will add an average of $50,000 to $65,000 in extra pay for each procedure.
  • Companies that make some radioactive substances for PET scans will get an extra nine months of higher pay from Medicare.
  • Clinical labs won a one-year delay on price-reporting requirements. This will give them more time to collect data from higher-priced labs, which will be used to drive up their pay in the face of recent Medicare cuts.

The big picture: All of these policies will materially benefit pretty much every sector within an industry that already wields more financial power than ever.

  • Aside from a provision that stops brand drugmakers from blocking generic drugmakers from getting their medicines, patients aren't getting a whole lot — other than an inevitably higher spending tab.

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Photo Illustration: Sarah Grillo/Axios. Photos: Scott Eisen/Getty Images and Erik McGregor/LightRocket via Getty Images

Americans worry a lot about how to get and pay for good health care, but the 2020 presidential candidates are barely talking about what's at the root of these problems: Almost every incentive in the U.S. health care system is broken.

Why it matters: President Trump and most of the Democratic field are minimizing the hard conversations with voters about why health care eats up so much of each paycheck and what it would really take to change things.

Hospital charges surge over last 2 decades, especially in the ER

Reproduced from Thomas M. Selden, 2019, "Differences Between Public and Private Hospital Payment Rates Narrowed"; Chart: Axios Visuals

The rates charged by hospitals — especially for emergency department care — have skyrocketed over the last two decades, according to a new study in Health Affairs.

Why it matters: While most patients with insurance don't pay these prices for their care — insurers typically negotiate lower rates — those who are uninsured or out-of-network often do.

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Private insurance is health care's pot of gold

Illustration: Aïda Amer/Axios

Private health insurance is a conduit for exploding health care spending, and there's no end in sight.

The big picture: Most politicians defend this status quo, even though prices are soaring. And as the industry's top executives and lobbyists gathered this week in San Francisco, some nodded to concerns over affordability — but then went on to tell investors how they plan to keep the money flowing.

Go deeperArrowJan 17, 2020