Jan 17, 2020

Axios Vitals

Caitlin Owens

Good morning. It's been a long week, but the good news (for me, at least) is that Vitals will be taking a long weekend and won't appear in your inbox again until Tuesday.

Today's word count is 799, or a 3-minute read.

1 big thing: Private insurance is a pot of gold

Illustration: Aïda Amer/Axios

Politicians love private insurance. The health care industry loves private insurance.

  • And so this very expensive part of the health care system will keep getting more expensive, Axios' Bob Herman writes from at the conclusion of the JPMorgan Health Care Conference in San Francisco.

"Prices are definitely going up," Owen Tripp, CEO of health tech startup Grand Rounds, told Bob this week at the conference.

  • His company's vast amount of commercial health data shows big increases in what companies are spending on hospitals, doctors, specialty drugs, devices and out-of-network services.

What they're saying: Many in the industry admit price inflation has been hammering the commercial markets for years.

  • "Cost per unit is the primary driver," Cigna CEO David Cordani said. He did not mention the exploding costs of administering health insurance.
  • As Bob reported earlier in the week, executives from Intermountain Healthcare acknowledged during the conference that "the No. 1 cause of personal bankruptcy is our industry" — but then plunged into telling investors all about the hospital's strong margins.

The other side: Hospital executives said they charge commercial plans higher prices to make up for the lower rates they get from Medicare and Medicaid.

The bottom line: The private market is the main pot of money that everyone is chasing at the JPMorgan conference, and most in the industry don't see the rising spending within that market as a problem.

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2. Redefining a "moderate" health plan

Photo: Justin Sullivan/Getty Images

The moderate health care plans in the 2020 Democratic primary are well to the left of the moderate ideas before them, my colleagues Sam Baker and Alexi McCammond write this morning.

Democrats' appetite for government-run health insurance has steadily increased as the party has moved left and the health care system has gotten more precarious.

  • President Bill Clinton's failed health care overhaul would have relied on private insurance with tight federal regulations.
  • President Obama's Affordable Care Act is a public-private hybrid. It created a new market for private plans, but relied just as heavily on its Medicaid expansion.

Obama also wanted to create a new public option — which moderate Democrats deemed too liberal and killed.

  • Former Vice President Joe Biden and former South Bend, Indiana Mayor Pete Buttigieg have now proposed public options that would be available to more people, and thus more aggressive, than the one Obama supported.

Between the lines: It's not the part that usually gets debated on TV, but the substantive policy argument for government-run health coverage is mostly about cost control.

  • Americans spent $884 billion on health care in 1993, when Clinton declared a health care crisis. In 2018, we spent $3.6 trillion.
  • As health care costs keep skyrocketing, Democrats’ plans to combat those costs keep growing, too.

Flashback: Insurers — not Republicans — came up with the famous "Harry and Louise" ads that helped doom Clinton's effort.

  • Hospitals led the fight to kill Obama's version of the public option and are already geared up to fight all of the 2020 Democrats' plans. 

Go deeper: This is happening on other issues, too.

3. United's $14 billion year

UnitedHealth Group blew the doors off the opening of earnings season this week, reporting a better-than-expected fourth quarter, Bob writes.

  • Its health insurance unit kept more of the premium dollars, and its pharmacy benefit manager, OptumRx, anchored all of the Optum companies.

By the numbers: United reported a $13.8 billion profit on $242 billion of revenue in the full-year 2019.

  • The only other health care company that posts higher annual profits, in absolute numbers, is Johnson & Johnson. J&J reports next week.

Follow along: Our earnings tracker is updated. Tell Bob (bob@axios.com) what you’re seeing and thinking about.

4. A new multi-million dollar drug

BioMarin Pharmaceutical is eyeing a $2 million–$3 million price tag for its hemophilia gene therapy if it's approved, which could make it the world's most expensive drug, the Wall Street Journal reports.

Why it matters: It's a good reminder that today's pipeline is likely to cause a giant shock to the health care system over the next few years.

  • The company's CEO said insurers have indicated that they're OK with the price range.
  • The most expensive drug in the world right now is Zolgensma, a $2.1 million-dollar gene therapy that initially ran into some coverage problems.

BioMarin argues that the lifetime cost of treating hemophilia is $25 million, making the company's gene therapy a relative bargain.

  • Yes, but: There have been some concerns that the treatment won't last for a lifetime.

Go deeper: Health care industry grapples with staggering gene therapy costs

5. 1 fun thing: TikTok takes on medical bills

TikTok: It's for teens. It's for memes. And sometimes, it's for getting help with a surprise medical bill.

The New York Times spotlights Shaunna Burns, who posts videos on the popular social-media app offering life advice and encouragement — including one on hospital billing that garnered thousands of replies about "how baffling the American health care system can be," Axios' Marisa Fernandez writes.

There are more authoritative resources out there — Burns' admonition to "Don't take an ambulance unless you are legit dying!" is understandable, but maybe not a maxim to live by.

  • But the simple fact that people are venting on TikTok about their billing surprises shows just how omnipresent frustration with the health care system is.
  • "I thought, 'What if people out there don’t know that they have the right to tell those people to screw off?'" Burns told NYT.
Caitlin Owens