Sep 5, 2018

Axios Vitals

By Caitlin Owens
Caitlin Owens

Good morning ... Many thanks to Bob Herman and Caitlin Owens for minding the store last week while I took a much-needed break to explore northern Iceland with the Twitter app deleted from my phone. I can't say I'm necessarily happy to be here instead of there, but at least I get to slide right back into my favorite subject — ACA lawsuits.

1 big thing: The ACA is back in court

Brett Kavanaugh is sworn in before the Senate Judiciary Committee. Photo: Chip Somodevilla/Getty Images

Today is all about the courts, the threats they might pose to the Affordable Care Act, and Democrats’ goal of using those threats to drive turnout in the midterm elections.

Driving the news: A federal district judge in Texas will hear oral arguments this morning on red states’ latest legal challenge to the ACA. At the same time, Brett Kavanaugh will be answering senators’ questions about his nomination to the Supreme Court.

Democrats’ strategy is to tie the two together — to frame the Texas lawsuit as an existential threat to the ACA’s most significant provisions and raise the prospect that a Justice Kavanaugh would cast the decisive vote to strike down the heart of President Obama’s signature achievement.

Reality check: The Texas lawsuit would indeed be devastating to the ACA if it succeeds — Texas wants the courts to invalidate the entire law, while the Justice Department is hoping to ax its protections for pre-existing conditions. But a lot of pieces would have to fall into place to get there.

  • Most of the legal experts I’ve talked to see this case as a long shot on the merits.
  • Even if Kavanaugh were to vote to strike down the ACA — which we can’t know for sure, based on his track record with the law — Chief Justice John Roberts would also have to do an about-face and vote to kill the ACA, after upholding it twice before, in order for this suit to ultimately succeed.

The big picture: If there are any tea leaves to read today about the ACA’s future, they’ll come from Judge Reed O’Connor in El Paso, not Judge Brett Kavanaugh in Washington.

  • Don’t expect Kavanaugh to say anything revealing about health care, much less to comment on this specific case.

Situational awareness: The Kavanaugh questioning starts at 9:30am Eastern. The district court arguments start an hour later. Stay tuned to axios.com for updates on both.

2. Report: Hospitals mark up drugs by 500%

Photo: BSIP/UIG Via Getty Images

PhRMA, the drug industry’s main lobbying group, is out with a new report today that says hospitals mark up prescription drugs by an average of almost 500%. One in six hospitals set prices that are at least seven times more than what the hospital paid.

The details: Consultants at the Moran Company analyzed 2016 federal cost reports for roughly 3,800 hospitals, comparing hospitals’ purchase price for certain drugs to the maximum amounts they would charge for those drugs.

Yes, but: The report is focusing on the sticker prices hospitals charge. The prices insurers actually pay are lower — a point pharma is quick to emphasize in debates about its own sticker prices.

  • “We intend to continue to broaden the debate to demonstrate that these markups extend beyond charges into the amount commercial insurers pay for medicines in the hospital outpatient setting,” a PhRMA spokesperson told Bob.

The other side: “This is typical finger-pointing by drug companies to try to divert attention away from their own skyrocketing prices,” the American Hospital Association said in a statement.

3. Public blames everyone for high health costs
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Data: Kaiser Family Foundation Health Tracking Poll of 1,201 U.S. adults, Aug. 23-28, 2018. Margin of error ±3 percentage points; Chart: Chris Canipe/Axios

Health care costs remain a leading issue ahead of this year’s midterms, and voters have plenty of blame to go around, according to the Kaiser Family Foundation’s latest tracking poll.

  • Kaiser asked its respondents whether certain factors are a “major reason” health care costs are rising. (There could be multiple “major reasons.”)
  • Blame for the potential political culprits — the ACA and the Trump administration — was split about evenly.
  • But there’s a broader bipartisan agreement that industry is to blame: At least 70% faulted drug companies, hospitals and insurers. Doctors caught a break, at 49%.

Partisanship reigns, though, on the question of whether President Trump will help.

  • A mere 13% of Democrats are at least somewhat confident that Americans will pay less for prescription drugs under the Trump administration, compared with a whopping 83% of Republicans. Independents generally share Democrats’ skepticism.
  • Roughly a quarter of Democrats and two-thirds of Republicans, think Trump’s public criticism of drug companies will help bring down prices.

Surprise hospital bills haven’t attracted the same political uproar as prescription drug costs, but the Kaiser poll provides more reason to believe they could be the next big controversy.

  • 67% said they’re “very worried” or “somewhat worried” about being unable to pay a surprise medical bill, while 53% fear they won’t be able to pay their deductible and 45% are afraid of the tab for their prescription drugs.
  • 39% experienced a surprise bill in the past year.
4. Theranos will soon dissolve

Theranos founder Elizabeth Holmes. Photo: Gilbert Carrasquillo/Getty Images

The formal, official end is apparently near for Theranos: The company will dissolve and use its remaining cash to pay its creditors, the Wall Street Journal's John Carreyrou reported last night.

What's next: Founder Elizabeth Holmes and former COO Sunny Balwani are awaiting trial on federal fraud charges.

Go deeper: If you haven't yet read "Bad Blood," Carreyrou's how-is-this-real accounting of the entire Theranos saga, you really should.

5. Health benefits are part of income inequality
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Data: Council for Affordable Health Coverage; Chart: Chris Canipe/Axios

As workers' overall compensation has risen since 1980, health benefits have taken up a big piece of the pie for lower- and middle-income workers. Wealthier workers, meanwhile, have seen bigger gains in their paychecks, according to a report by the Council for Affordable Health Coverage.

How it works: Imagine a minimum-wage janitor and senior executive at the same company, who are both on the same company-sponsored health plan. Because the janitor makes less money, his health benefits are a bigger percentage of his overall compensation.

Why it matters: This is part of the broader problem of income inequality, Caitlin notes. Even as compensation increases overall, higher earners see more of those gains through take-home pay that they can save, invest or spend to keep up with inflation.

  • The study found that the bottom 60% of two-earner households would have seen their net earnings decline between 1999 and 2015 after paying their own share of rising health premiums.
  • The same is true for the bottom 40% of single earners.
Caitlin Owens

What we're watching today: Kavanaugh hearing and Texas oral arguments.

What we're watching this week: Energy and Commerce hearing Wednesday on "opportunities to improve health care." Ways and Means markup of several health care bills Wednesday. MedPAC public meeting Thursday and Friday.

D.C.'s hottest club is my inbox. This place has everything — tips, press releases about Kavanaugh, a very intimidating post-vacation backlog that I still need to wade through ... Join the party: baker@axios.com.