Dec 7, 2019

Axios Deep Dives

By Mike Allen
Mike Allen

This Axios AM Deep Dive — led by health care editor Sam Baker — digs into the rising costs, and declining outcomes, that will shape America's 2020 health care debate.

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Smart Brevity™ count: 1,186 words — a 4½-minute read.

1 big thing: The coming health care collision

Illustration: Sarah Grillo/Axios

Health insurance through an employer — the way most Americans get it — costs an annual average of almost $23,000 to cover a family. That's enough to buy a new Volkswagen every year.

  • And while those costs keep rising, Americans' life expectancy is falling.

By the numbers: The U.S. spent $3.6 trillion last year on health care.

  • We spend far more than any other rich country, but are no healthier for it.

Between the lines: We don't spend so much because we go to the doctor more than people in other countries. It's because we pay much higher prices for the same services — MRIs or a knee replacement or new drugs. And those costs keep going up.

Our actual health isn't great, either.

  • Americans' life expectancy has been declining for three straight years — the first time that's happened in decades.
  • That's largely a product of the opioid crisis, and in part because the U.S. spends its money on treating physical illnesses, rather than on prevention or mental-health treatment.
2. Democrats' divide on Medicare for All

Photo Illustration: Sarah Grillo. Photos: David McNew/Getty Images, Drew Angerer/Getty Images, Ethan Miller/Getty Images, and Zach Gibson/Getty Images

The way Democratic presidential candidates talk about "Medicare for All" has shifted and sharpened over the course of the campaign — and Medicare for All has gotten less popular in the process.

When Sen. Bernie Sanders introduced his Medicare for All bill in 2017, all of his likely 2020 rivals in the Senate signed on as cosponsors, and many Democrats treated Medicare for All as a catch-all or a loosely defined goal.

What they're saying:

  • Sanders hasn't changed at all. He has tweaked the details of what his plan covers, but still makes the same forceful case for a national plan with no copays, deductibles, premiums or coverage limitations — paid for by tax increases.
  • Sen. Elizabeth Warren still backs Sanders' version of the national health plan, but has said she would pursue a public option first, then a full-scale single-payer program later.
  • Pete Buttigieg has long supported a public option, not Medicare for All, though his criticism of single-payer has gotten more aggressive as he (and Warren) have climbed in the polls.
  • Joe Biden also has a clear position on Medicare for All: He's against it. He, too, prefers a public option. "The party's not there. The party's not there at all," he told "Axios on HBO."
Bonus: Workers' health care costs keep rising
Expand chart
Reproduced from Kaiser Family Foundation 2018 Employer Health Benefits Survey (Average general annual deductibles are for single coverage.) Chart: Axios Visuals
3. The drug-pricing deal that got away

Photo Illustration: Sarah Grillo. Photos: Nicholas Kamm/AFP via Getty Images and Mark Wilson/Getty Images

Neither Congress nor the Trump administration is likely to get much done this year on drug prices, despite the clear political upside of doing so.

Between the lines: Polls consistently show that drug prices are a top concern for voters. President Trump and Speaker Pelosi also seem to agree a lot on the policy. But a deal keeps getting further away.

Where it stands: The House is set to vote on Pelosi's bill next week — though if push ever comes to shove, she has a small and diminishing incentive to help Trump claim a big victory right before his reelection campaign.

  • The White House has thrown its weight behind a bipartisan bill in the Senate.
  • But leadership has never been particularly warm to that effort, and rank-and-file Republicans have also backed away from parts of the plan.

The big picture: The pharmaceutical industry's top two trade organizations together spent more than $35 million on lobbying in 2018 — more than they've ever spent before.

  • That doesn't include individual companies' contributions, nor does it include any of the industry's campaign contributions, which are substantial.

Trump's regulatory agenda on drug prices isn't faring much better. The administration has abandoned several of its ideas.

  • It's now working on a proposal to tie Medicare payments to the prices European countries pay. But Trump would probably need a second term in order to see that one through.

And prices keep going up. The most expensive drug in the world — a gene replacement therapy that treats spinal muscular atrophy — came to market earlier this year, with a sticker price of $2.1 million in the U.S.

  • That drug is a groundbreaking new therapy, but prices also continue to rise for old, familiar products that people depend on every day — most notably, insulin.
4. The urban-rural divide is growing

Photo Illustration: Sarah Grillo. Photo: Spencer Platt/Getty Images

All the bad parts of the health care system — poor health, high costs, inadequate access — are worse in rural areas, Axios' Marisa Fernandez reports.

"This rural disadvantage is unprecedented," said James Kirby, a federal health researcher.

  • Mortality rates are higher in rural areas, and many of those disparities are getting bigger.
  • Women in rural areas are more likely to die from pregnancy-related deaths than urban women. Two-thirds of these deaths are preventable.

Between the lines: Operating a health care practice, especially a hospital, in a rural area is tough: There aren't many patients, and a large proportion of them are covered by Medicare or Medicaid.

  • More than 100 rural hospitals have closed since 2010, and those still up and running have slashed some services for patients in order to survive, according to a study published this month by Project HOPE.
  • It can also be hard to recruit doctors to work in rural areas.

Go deeper: When a rural hospital closes

5. Health care profits are soaring

Illustration: Sarah Grillo/Axios

Soaring health care costs are bad news for patients and taxpayers, but great news for the very profitable health care industry, Axios' Bob Herman writes.

The big picture: The health care industry has profited heavily in 2019. Expect more of the same in 2020.

  • Most health care companies are immune from the trade war, and Washington isn't about to impose any cost controls. And the industry will continue to benefit from the GOP tax cuts.

Hospitals' rush to issue new debt signals they will find ways to fill beds

Pharmaceutical companies will keep hiking the prices for popular treatments and fighting off cheaper competitors.

Insurers are benefiting from the rising popularity of private Medicare Advantage plans.

  • UnitedHealth, the largest health insurance company by revenue, just forecasted a very profitable 2020, in line with Wall Street's estimates.

Pharmacy benefit managers have faced challenges to their business models in states, but the biggest ones have insulated themselves by merging with insurance companies.

Speaking of health care mergers, expect more of them, even after the spate of blockbuster deals over the past few years.

Go deeper:

6. 1 looming thing: The return of the ACA wars

Illustration: Sarah Grillo/Axios

The Affordable Care Act is no longer the center of the national political debate, for the first time in nearly a decade. But it could quickly come roaring back.

What we're watching: A federal appeals court is set to rule any day now on whether the ACA's individual mandate is unconstitutional (yes, that again) — and, if so, how much of the rest of the law would have to fall along with it.

Why it matters: During oral arguments over the summer, the three-judge panel seemed likely to strike down at least some of the ACA.

  • That would put popular policies, like guaranteed coverage for pre-existing conditions, back on the chopping block and thus back at the center of the health care debate.
  • A ruling ultimately striking down the entire law — the outcome the Trump administration is arguing for — would have even bigger ramifications, upending more technical parts of the ACA.
  • The FDA would have to stop approving certain kinds of drugs, for example, and changes to Medicare, including new powers the Trump administration has relied on, would go away.

What's next: The 5th Circuit Court of Appeals could rule any time. If it upholds the health care law (which would be a surprise), there's a good chance that could be the end of all this.

  • But if that court strikes down any part of it, get ready for another big battle at the Supreme Court.
Mike Allen