Axios - Health Care

The shift in Medicare spending

Medicare is the largest purchaser of health care services in the country, and over the past decade, there's been a gradual change in how those taxpayer dollars are spent, according to data from the independent Medicare Payment Advisory Commission.

Since 2006, Medicare is shifting money from physician practices and inpatient hospitals (where a person needs an overnight stay), and toward private health insurers and other companies that run the Medicare Advantage and Part D prescription drug programs. Spending also has increased in outpatient settings.

Data: Medicare Payment Advisory Commission; Chart: Chris Canipe / Axios

Why it matters: The Affordable Care Act contributed to some of this shift by cutting Medicare payments to hospitals. But what's happening in Medicare is representative of the health care system at large: the shift to defined benefits and narrow networks of hospitals and doctors, and avoiding hospitalizations whenever possible.

Where more Medicare funds are flowing:

  • Medicare Advantage: Roughly 20 million seniors and disabled people are now enrolled in the politically popular program, which represents 27% of all Medicare dollars. Seniors give those plans high marks, and it's a profitable business for insurers. But there are concerns that Medicare Advantage isn't saving money and that insurers are gaming the program.
  • Part D: The growth of drug prices has blown away the growth of pretty much every other economic good, and Medicare is barred from negotiating discounts with manufacturers. That inevitably has resulted in more money going into the Part D program (14% of all Medicare spending), and the benefits managers that run it.
  • Outpatient hospital departments and clinics: Technology has made it possible for Medicare enrollees to get some procedures and go home the same day, and it's cheaper than treating someone in the hospital. But hospitals also have been buying physician offices and controversially converting them into hospital outpatient departments, resulting in higher fees for the same services.
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Ascension acquires Illinois' largest Catholic health system

Gerald Herbert / AP

Ascension, the largest Catholic not-for-profit health system in the country, will become even larger after agreeing to acquire Presence Health, the largest Catholic hospital system in Illinois.

The numbers: Ascension — with 141 hospitals and more than $22 billion in annual revenue — has had decent profit margins while Presence Health has been losing a lot of money on its 12 hospitals and $2.7 billion in annual revenue. Financial terms of the deal were not disclosed, but based on Presence Health's financial statements and recent going rates for hospital transactions, the deal could be worth at least $1 billion — and possibly a lot more.

Why it matters: Hospital and health system consolidation is a continuing trend and almost always results in higher prices for patients.


Alexander, Murray announce hearings on individual market

Senators Patty Murray (left) and Lamar Alexander on Capitol Hill (Alex Brandon / AP)

HELP Committee Chairman Lamar Alexander and Ranking Member Patty Murray today announced the first two of four September hearings on the individual market. The first hearing on Sept. 6 will focus on testimony from state insurance commissioners, and the second hearing on Sept. 7 will focus on governors' testimony.

Why it matters: This is a step in their effort to craft a short-term stabilization package after the GOP's partisan health care effort failed.

What's likely to be in the package:

  • Funding for the Affordable Care Act's insurer subsidies, which are currently being paid by the Trump administration but which the president has threatened to cut off.
  • A more flexible state innovation waiver, although the details on this are unclear, as is the number of years insurer subsidies would be funded.

Number of U.S. counties set to be without ACA coverage drops to 1

Cliff Owen / AP

Wisconsin's insurance department announced all of its counties will be covered in the Affordable Care Act marketplace next year, per the Kaiser Family Foundation. That indicates the only Wisconsin county that previously didn't have coverage plans in the ACA marketplace for next year, Menominee County, now has an Obamacare insurer.

That leaves just one county, Paulding in Ohio, not covered next year in the marketplace.

On the marketplaces:

  • Wisconsin: Earlier this month Molina Healthcare announced it would drop out of the Wisconsin marketplace. In June Anthem Blue Cross and Blue Shield said it would stop selling insurance plans in Wisconsin marketplaces next year for the most part.
  • Ohio found Obamacare insurers to fill out 19 of 20 so-called "bare" counties in the state in July.

The battle over the federal 340B drug program

Patrick Sison / AP

A federal advisory panel on Monday recommended Medicare scrap a proposal that would slash drug payments to hospitals under the 340B drug pricing program by almost 30 percentage points next year. But it's worth noting that panel is made up of doctors and hospital executives who would be affected most.

Why it matters: The 340B program allows hospitals with a lot of poorer patients to buy drugs at cheaper prices and keep the savings, but it has come under fire in recent years by independent bodies and pharmaceutical groups who say hospitals are profiting excessively off the program. Medicare's proposal has ruffled a lot of feathers (hospitals say it does nothing to lower the high prices set by drug manufacturers), and it's becoming one of the bigger industry battles.

Looking ahead: Public comments on the proposal are due Sept. 11, and Medicare will issue its final rule in the fall.


Health care effort hurt McConnell, poll shows

(J. Scott Applewhite / AP)

A new poll by left-leaning Public Policy Polling shows Senate Majority Leader Mitch McConnell is deeply unpopular in Kentucky, and the failed health care effort only made things worse.

Here's what the poll found:

  • 74 percent of Kentuckians disapprove of McConnell's job performance, while only 18 percent approve.
  • 44 percent said they'd vote for a generic Democrat over McConnell, with only 37 percent saying they'd re-elect him. 50 percent said they'd vote for Rand Paul, the other senator from Kentucky, over a generic Democrat.
  • Only 27 percent of Kentuckians approved of the GOP health care bill. 49 percent said McConnell's support of the health care bill made them less likely to vote for him again. Only 38 percent said the same of Paul.
Trend: PPP has previously found that their health care vote hurt GOP Sens. Dean Heller, Jeff Flake, Cory Gardner and Bob Corker.

Investor demands Community Health Systems fire CEO

Investment firm ASL Strategic Value Fund has written a letter to the Community Health Systems board of directors that demands the immediate ouster of CEO Wayne Smith. ASL also urged the board to "claw back significant portions" of compensation from existing and retired executives as the for-profit hospital company continues to bleed losses and flirts with bankruptcy.

Key quote: "Management's previous missteps have resulted in billions of dollars of shareholder losses, all the while reaping tens of millions of dollars in compensation."

Why it matters: ASL's letter was dated Aug. 8 but was just publicized Monday — a week after our report on the collapse of CHS. The company did not respond, and now there's immense pressure on the board to do something. But one hospital industry observer told Axios that Smith has kept his job for so long because CHS' board is "populated with friends of Wayne."


Here’s how long Congress has to renew CHIP

Technically, Congress is supposed to reauthorize the Children's Health Insurance Program by the end of September, and it hasn't gotten very far on that. But here's why some top Republicans think they have a bit more time. This graphic is based on projections from the Medicaid and CHIP Payment and Access Commission (MACPAC), and it shows when states are expected to exhaust their federal CHIP funds.

Yes, but: As we've written, states have to go through a lot of preparations to shut down their programs before then if there's no sign that Congress is getting its act together. It's better for all of them if Congress can renew the program quickly, without a lot of unnecessary drama.

Data: MACPAC 2017 analysis; Cartogram: Andrew Witherspoon / Axios


Trump signs FDA funding bill into law


President Trump has signed into law a bill reauthorizing the user fees that help fund the Food and Drug Administration.

  • It was one of the last bills the Senate passed before leaving for the August recess, and it could have easily turned into a battle, since the Trump administration wanted to restructure the medical product user fees to make the industry pay the full cost of product reviews.
  • But congressional Republicans and Democrats ignored the request, and the administration didn't push the issue.
  • Notable: It's one of the rare health care bills that's significant and yet passed easily, with bipartisan support and without a fight — and it could be one of the last for a while.

The Menendez scenario for reviving ACA repeal

Julio Cortez / AP

No, Sen. Joe Manchin isn't going to become Energy secretary — the dream scenario some White House officials had for replacing a Democratic senator with a Republican, thereby gaining the 50th vote for Affordable Care Act repeal. But the New York Times reports that there's another, not totally implausible scenario — because Democratic Sen. Robert Menendez is going on trial soon on federal corruption charges.

  • If the New Jersey senator is convicted, he could resign, or the Senate could vote to expel him (it would take two thirds of the Senate to throw him out).
  • Either way, New Jersey Gov. Chris Christie would appoint his replacement — who would almost certainly be a Republican.
  • The odds: It's really not knowable until the trial begins and we get a better sense of the case against Menendez. For now, it's just another “what if" scenario. But it's not impossible.