Dec 18, 2018

Axios Vitals

Caitlin Owens

1 big reminder: Our daily Axios Markets newsletter launches Jan. 7 and will cover all the important stories in markets, business and finance.

  • Dion Rabouin will be our markets editor, joining reporter Courtenay Brown and the writers of our other two business newsletters: Felix Salmon with the weekly Axios Edge and Dan Primack with his daily deals newsletter Axios Pro Rata.
  • The plan: Mike Allen will send 2 more editions of Axios Markets on Dec. 19 and Jan. 2 before Dion takes over. To get Axios Markets sign up here.
1 big thing: Congress could make ACA lawsuit go away, but won't

Illustration: Sarah Grillo/Axios

Congress could kill the lawsuit that threatens to wipe out the Affordable Care Act, legal experts say, but the politics of the issue will almost certainly keep it from doing so.

Three different legal experts offer ideas as to how Congress could make the entire lawsuit moot, if it wanted to:

  • Law professor Nicholas Bagley says that Congress could pass a law, signed by the president, stating that it believes the individual mandate is separable from the ACA.
  • Legal expert and ACA supporter Tim Jost suggests that Congress could pass a $1 penalty for not having health insurance, essentially recreating its status as a (constitutional) tax.
  • Conservative legal expert Jonathan Adler tells me that Congress could just repeal the health insurance requirement entirely.

Yes, but: Doing any of these would require Republicans to act to save the ACA and Democrats to recognize the validity of the lawsuit.

  • For now, members are much more content to stick to their talking points and wait for last week's decision to get overturned on appeal.

What won't do anything, at least in a practical sense, is if the House votes to intervene in the case, as incoming Speaker Nancy Pelosi has said she wants to.

  • "Courts care what Congress does, not what Congress says," Adler says. "And intervening to defend the law in court is really more Congress talking than Congress doing.”

P.S. HHS issued a statement on the ruling yesterday, confirming that nothing is changing for now: "HHS will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision."

P.P.S. California Attorney General Xavier Becerra made his opening moves to begin challenging the decision last night, focusing first on making sure the status quo remains in place while the legal proceedings play out.

Go deeper

2. Hospitals smallest part of out-of-pocket costs
Expand chart
Data: Peterson-Kaiser Health System Tracker; Chart: Chris Canipe/Axios

We spend more on hospital care than any other type of health care service, but hospitals make up the smallest amount of out-of-pocket spending.

  • That means insurers are passing on a smaller percentage of hospital costs to enrollees, although they indirectly pay for hospital care through premiums.

Between the lines:

  • "A big role of patient cost-sharing is to discourage use of inappropriate or unnecessary services. So much of hospital care is non-discretionary from the perspective of patients," Kaiser Family Foundation's Larry Levitt says.
  • Levitt adds that insurance tends to pay a bigger part of hospital bills versus other services because hospital bills tend to be large, causing patients to blow through their deductible or hit their out-of-pocket maximum.
3. Lamar's legacy: health care costs?

Sen. Lamar Alexander — chairman of the Senate Health, Education, Labor and Pensions Committee — announced his retirement yesterday morning, and so is officially in legacy-making mode.

  • Earlier this month, he said that a priority for next Congress would be addressing health care costs, a point he reiterated at an Axios event last week.
  • This includes getting rid of wasteful spending, making prices more transparent and addressing surprise medical bills.

"Lowering health care costs is an obvious path towards getting lasting results to help the American people, and Alexander views it as a possible legacy item where he can drag both parties to a consensus before he retires," a person familiar with Alexander's thinking told me yesterday.

Our thought bubble: Alexander is retiring, and Sen. Chuck Grassley has only two years to chair the Finance Committee before he's term-limited out of the position. That makes two chairmen of health care committees who are incentivized to do something big before they leave their position.

  • "Two chairmen who are lame ducks free to do anything they want and the Leader in cycle," one former GOP aide-turned-lobbyist emailed. "What could go wrong?"
4. GOP's problem: They'd miss chunks of the ACA

A 2017 pro-ACA protest in New York. Photo: Albin Lohr-Jones/Pacific Press/LightRocket via Getty Images

Republicans may be publicly applauding the judge’s ruling now, but they might wish it had gone the other way if it’s upheld, Kaiser Family Foundation’s Drew Altman writes in today’s column.


  • There’s not much hope of a deal with Democrats to replace the law if it’s wiped out.
  • Democrats are sure to use the ruling against Republicans in the 2020 campaign.
  • There are lots of ACA provisions — including young adult coverage, low-income subsidies, the closing of the “donut hole” in Medicare prescription drug coverage, and Medicaid expansion — that are even more popular than the pre-existing conditions protections, the part everyone knows about.

The bottom line: Republicans may have been better off settling for the repeal of the mandate penalty, Altman writes. Now, they may have bought more than they bargained for.

Read the column

5. Acadia Healthcare drama

The stock price of Acadia Healthcare, one of the largest providers of mental health and substance abuse treatment, dived almost 5% yesterday after the company made a surprising executive overhaul, my colleague Bob Herman reports.

Driving the news: Acadia’s board fired CEO Joey Jacobs, a move that comes less than a month after we and others reported on the major red flags at Acadia — such as high amounts of debt and questionable timing of executives, like Jacobs, selling their stock.

  • Jacobs is entitled to roughly $10.4 million in severance pay and stock cash-outs, based on the company’s latest proxy filing.

What we’re hearing: The firing likely indicates “internal turmoil at the board level” and makes it less likely that any rumored private equity buyout will happen, Ryan Daniels, a stock analyst at William Blair, wrote in a note to investors yesterday.

Caitlin Owens