Axios Vitals

A briefcase with a red cross on the front.

October 16, 2017

Good morning ... Last week gave us an executive order and an end to cost-sharing payments. Can't wait to find out what the health policy universe has in store for us this week.

Who will pay more without CSR subsidies

The Trump administration's decision to stop paying the Affordable Care Act's cost-sharing reduction subsidies will affect ACA customers in Republican-leaning congressional districts as well as Democratic ones. Here's a look at how many people could feel the impact in districts that voted for President Trump, compared with those in districts that voted for Hillary Clinton.

The details: This year, 11.1 million people were enrolled in ACA marketplace plans or in a Basic Health Plan created by the law. Of those, 5.9 million live in Republican-held congressional districts and 5.2 million live in districts held by Democrats, per the Kaiser Family Foundation.

The impact: The CSR subsidies are going to 58% of the people who are enrolled in ACA marketplace plans. In all, about 7 million people don't receive any financial assistance with their premiums, so they'd pay the full cost when health insurance companies raise their rates. But others could be affected if health insurers decided to pull out of the markets rather than deal with the instability.

The flaws in Trump's legal rationale

There are broader implications of the Trump administration's decision to lean so heavily on a legal rationale for cutting off the CSR subsidies: institutional divisions between the executive and legislative branches.

Between the lines: The White House said it was ending the payments in part because of a ruling last spring that said it was unconstitutional to make the payments without an explicit appropriation from Congress. As part of that process, Attorney General Jeff Sessions wrote a memo saying, in effect, there was no point appealing that ruling.

  • "Opening the door to lawsuits initiated by Congress over the specifics of how the executive branch spends tax dollars would be a marked change and a potential threat to the White House," the New York Times' Carl Hulse noted over the weekend.
  • Trump might particularly wish he hadn't conceded that point if Democrats retake control of the House and/or Senate while he's still president. Divided government is how this lawsuit started, after all.

Real talk: Former White House strategist Steve Bannon, speaking at the Values Voters Summit over the weekend, cut to the heart of Trump's decision: "Not going to make the CSR payments, going to blow that thing up; going to blow those exchanges up, right?"

The value of hospitals’ tax exemptions

The American Hospital Association released a report last week that said the benefits that not-for-profit hospitals provide to their local communities far outweigh foregone federal tax revenue. But Axios' Bob Herman talked to some experts who said the AHA's report has flaws and omissions that exaggerate hospitals' community roles and understate the power of their tax exemptions.

  • The AHA did not account for the giant tax break hospitals get on their property, "which is just a joke," said Craig Garthwaite, a health economist at Northwestern University.
  • "Exclusion of property taxes would be a very major problem," added Gary Young, a health policy professor at Northeastern University who has studied tax exemptions for not-for-profit hospitals.
  • Calculating shortfalls from Medicare as a community benefit also raises a red flag. For-profit hospitals that pay taxes treat Medicare patients. The IRS doesn't acknowledge Medicare shortfalls as a community benefit.
  • Plus, research shows hospitals often lose money from Medicare because of their high fixed costs and inefficiency, not because payments are too low. "That's really just trying to get that (community benefits) number as high as possible," Garthwaite said.

AHA's response: Mindy Hatton, the AHA's top lawyer, responded with a statement to Axios. The report did not include property tax values, she said, because the analysis only covered federal exemptions, which "Congress has jurisdiction over."

​How opioid enforcement got harder

The Washington Post and "60 Minutes" teamed up for a lengthy investigation into changes in the laws governing the Drug Enforcement Agency that, some experts claim, made it harder to crack down on the flow of opioids.

  • Congress passed — and President Obama signed — a law in 2016 that changed the standards for drug shipments the DEA could seize, requiring them to meet a higher bar.
  • "The law was the crowning achievement of a multifaceted campaign by the drug industry to weaken aggressive DEA enforcement efforts against drug distribution companies," the Post reports.
  • 'The chief advocate of the law…was Rep. Tom Marino Pennsylvania Republican who is now President Trump's nominee to become the nation's next drug czar."

Read the whole thing



While you were weekending…

  • "I just don't think there is any policy here," Ohio Gov. John Kasich said amid a lengthy diatribe over the end of CSR payments, on NBC's "Meet the Press."
  • On "Fox News Sunday," Republican Sen. Bill Cassidy reaffirmed his support for an extension of the payments.
  • "These certainly are very disruptive moves that will result in smaller numbers of people being insured that will make it more difficult for low income people to afford their out-of-pocket costs and that will destabilize the insurance markets," Sen. Susan Collins said on CNN's "State of the Union."
  • "The president is not going to continue to throw good money after bad, give $7 billion to insurance companies, unless something changes about Obamacare that would justify it," Sen. Lindsey Graham said on CBS' "Face the Nation" yesterday. "But he did talk to Senator Alexander yesterday. He's encouraging him to get a bipartisan deal ... But it's got to be a good deal."

What we're watching this week: With health care back on the front burner, all eyes are on Sens. Lamar Alexander and Patty Murray.

  • Speaking of Alexander and Murray, the Senate HELP Committee is holding hearings Tuesday on the cost of prescription drugs, and Thursday on "how healthy choices can improve health outcomes."
  • The U.S. Chamber of Commerce holds a health care event Wednesday.
  • The House is out, but work will continue on a bill to reauthorize the Children's Health Insurance Program.

Get in touch: I welcome your thoughts, questions and tips: [email protected]