Jul 29, 2019

Axios Vitals

Good morning. Am I late to it? Yes. Is it obviously fake? Yes. Am I still laughing so hard it hurts at the Turtle That Cries Like a Man? Yes, yes, yes. (via @whatatimepod)

Today's Vitals is 923 words, or a <4-minute read. It does not cry like a man.

1 big thing: No partial Medicaid expansions

President Trump and CMS administrator Seema Verma. Photo: Mark Wilson/Getty Images

The Trump administration made a very big decision over the weekend: It won't approve full federal funding for a partial Medicaid expansion.

Why it matters: The partial expansion had looked like a key weapon in red states' continued resistance to the ACA. Without it, Medicaid enrollment likely will keep growing.

Between the lines: Although the reasoning is different, the Trump administration is now adopting the same policy as the Obama administration — a decision many experts believe the law compels.

Details: Utah voters approved the full ACA expansion last year, but the state legislature overruled them to pass a more limited version.

  • Utah believed that the federal Centers for Medicare & Medicaid Services would approve full federal funding even for the partial expansion, which prompted other red states to explore the same idea.

The intrigue: While the Obama administration rejected these requests on the grounds that federal law dictates the terms of a Medicaid expansion, the Trump administration went a different route, per the Washington Post.

  • "White House advisers argued that it did not make sense to approve generous federal funding under the ACA while the administration is arguing that the entire law should be overturned," the Post reports.

The bottom line: Utah has a backup plan in place — the full Medicaid expansion that Utah residents voted for in the first place.

  • Partial expansion was mainly attractive to red states facing pressure to expand but had leaders who didn't want to. With that option off the table, don't be surprised if more states end up just going along with the expansion.

Go deeper: Red states' Medicaid gamble: Paying more to cover fewer people

2. Hospital billing is big business


Health care's administrative back end — services like verifying patients' insurance, putting patients on payment plans and collecting patient debt — is bigger than ever, Axios' Bob Herman reports.

The big picture: The U.S.' fractured insurance system leads hospitals and doctors to spend tens of billions of dollars annually on billing software and services — none of which are tied to actual health care.

Driving the news: For-profit hospital system Tenet Healthcare decided to spin off its billing services unit, Conifer, into its own publicly traded entity in 2021.

Between the lines: Many hospital systems that send out bills have ownership stakes in these companies.

  • Tenet controls 76% of Conifer, which registered $1.5 billion of revenue last year. Catholic Health Initiatives owns the remaining 24%. They both use Conifer.
  • Catholic health system Ascension and private equity firm TowerBrook hold a majority stake in R1 RCM, which used to be named Accretive Health and was prohibited from doing business in Minnesota due to its aggressive collections practices. Two Ascension executives sit on R1's board.
  • Bon Secours Mercy Health recently sold off a majority stake in its billing firm, Ensemble Health Partners, for $1.2 billion, the Wall Street Journal reported.

Researchers have cited administrative costs as a sizable source of health care waste. Some startups are trying to address this issue, but traditional billing and service firms are only getting larger and have providers as investors.

3. Kamala Harris' take on "Medicare for All"

Photo: Justin Sullivan/Getty Images

After changing course a couple of times on Sen. Bernie Sanders' "Medicare for All" plan, Sen. Kamala Harris is out with a version of her own this morning.

How it works: Harris' proposal differs from Sanders' in a couple of key ways.

  • It would preserve private insurance. Harris would allow for a privately managed version of a single-payer program, similar to Medicare Advantage. Sanders would not.
  • Slower phase-in: Sanders' plan would phase in over 4 years. Harris' would be 10 years.
  • Different taxes: Sanders has acknowledged that his proposal would require raising taxes on some middle-class families, though he has argued that those families wouldn't pay more overall — rather, their premiums and deductibles would become taxes.
    • Harris, though, says her version wouldn't raise taxes on anyone making less than $100,000. She's proposing a new tax on stock trades instead.

My thought bubble: Harris has gone back and forth on the elimination of private insurance, a centerpiece of Sanders' plan. Today's proposal gives her a firm answer to point to.

  • It won't make Sanders fans happy, but winning over Sanders fans was never Harris' path to the nomination.
4. 1.3% of patients, 20% of spending

Illustration: Rebecca Zisser/Axios

A very small group of patients with major illnesses is responsible for an outsized share of health care spending. And in his latest Axios column, Kaiser Family Foundation president Drew Altman breaks down new data showing that prescription drugs are a big part of the reason their bills are so high.

“Persistently high spenders” are people who have accumulated big health care bills for at least 3 consecutive years.

  • Among people who get their coverage from a large employer, this group makes up just 1.3% of the population yet accounts for almost 20% of overall health spending, averaging a whopping $88,000 per year.
  • Prescription drugs account for about 40% of this group’s costs, not counting rebates — compared with just 10% for the country as a whole. 
  • Their bills just for prescription drugs average out to about $34,000 per year. That’s much more than the average premium for family coverage.

Why it matters: These are exactly the people our insurance system is failing. They have insurance and a major illness, but still struggle with their medical bills as deductibles, and other out-of-pocket costs keep rising faster than wages.

Go deeper: Read the column

5. While you were weekending ...
  • Business Insider has a good story about parents who want access to Zolgensma, the $2 million drug for children's spinal muscular atrophy, versus the insurance companies trying to fight $2 million drugs.
  • Pfizer plans to divest itself of its off-patent drugs and roll them into a joint venture with Mylan, CNBC reports.
  • Also from CNBC: One Medical is now valued at almost $2 billion and is more focused on expanding its offerings than on near-term profits.
  • Even in the world's most centralized health care system, health IT is still "a Balkanized mess," Politico reports.