Axios Vitals

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October 02, 2018

Good morning ... I missed this last week, but here's one way to get a jump on your Halloween costume: T-shirts ($22.95) emblazoned with the average cost of common health care procedures, including a knee replacement ($30,067) and a hysterectomy ($16,138).

1 big thing: Pharma gets a win in Trump's trade deal

President Trump announces a new trade deal at the White House

President Trump announces a new trade deal at the White House. Photo: Jim Watson/AFP/Getty Images

The Trump administration's new trade deal with Canada and Mexico includes a big win for pharmaceutical companies and Republicans, my colleague Caitlin Owens reports — a provision to protect biologic drugs from competition for 10 years.

Why it matters: Republicans say this will spread the cost of developing new drugs beyond the U.S. market, lowering American drug prices.

  • By shielding the drugs from generic competition in Canada and Mexico, the measure will also help pharmaceutical companies reap more profits abroad.

The big picture: Biologics get 12 years of market exclusivity in the U.S. market, but 10 years is longer than they currently receive in Canada or Mexico. It's also much longer than the Obama administration had negotiated in its trade deals.

  • "It will add cost to their national health care systems ... especially in Canada," but will lead to the creation of new cures “without the United States being the piggy bank for all those research and development dollars," a former senior GOP official closely involved in trade negotiations for both former President Obama and President Trump tells Caitlin.

The other side: “We feel this is bad news for patients who are seeking more affordable biologics. It would delay biosimilar competition," Jeff Francer, general counsel for the Association for Accessible Medicines, told Axios in August when the administration announced a similar policy with Mexico.

2. ACA competition dwindles under Trump

Data: Kaiser Family Foundation; Map: Lazaro Gamio/Axios

Data: Kaiser Family Foundation; Map: Lazaro Gamio/Axios

The Trump administration has been touting the fact that Affordable Care Act coverage is on track for relatively modest premium increases next year in much of the country. But a new paper published in Health Affairs offers a reminder that Trump has not been a friend to the ACA’s exchanges.

By the numbers: In 2016, 93% of the country lived in a county where they'd have at least three insurers to choose from, if they wanted to buy coverage through the exchanges.

  • This year, that's down to 60% of the population.

Unsurprisingly, the places where insurers backed out tended to be rural, impoverished and unhealthy.

"It is unclear" whether this trend "represented a long-run equilibrium or more transient factors such as the fluid policy environment and insurer 'panic' over early losses," the paper says.

The bottom line: Premiums also skyrocketed in this period — the average premium for a middle-of-the-road policy rose by about 37% from 2017 to 2018. And insurers have said plainly that policy changes from the administration and congressional Republicans made them skittish.

3. The next hospital megamerger

Two hospital behemoths — Memorial Hermann Health System and Baylor Scott & White Health — are looking to merge. That would create an organization with almost $15 billion of annual revenue and hefty market power across Texas, Axios' Bob Herman reports.

Why it matters: Hospitals continue to combine into larger regional and multi-state corporations as they anticipate seeing more and more patients covered by Medicare and Medicaid, which don't pay as much as private insurance. Mergers give hospitals the upper hand in negotiations with commercial health insurers.

What they’re saying: Oil magnate Ross McKnight, board chair of Baylor Scott & White, declared in a buzzword-laden press conference that “patients … all over Texas are the winners from this merger.” 

Reality check: There's essentially no evidence that hospital mergers benefit patients through lower costs or better care. 

By the numbers: Almost $900 million — that’s the combined total “surplus” (financial jargon for “profit” at a not-for-profit organization) of Baylor Scott & White and Memorial Hermann in fiscal 2017.

  • Like other not-for-profit hospitals that don’t pay federal or state taxes, these Texas systems more closely resemble Fortune 500 companies than charities.

4. FDA's cybersecurity plan for medical devices

The FDA yesterday announced new steps it's taking to counter cyberattacks on medical devices, Caitlin reports. 

  • The agency isn't aware of any cyberattacks against devices being used by patients, but cybersecurity researchers have identified vulnerabilities.

The details: The FDA's plan includes ...

  • A cybersecurity "playbook" for health care delivery organizations, as well as an internal FDA playbook for addressing threats.
  • An update to premarket guidance that addresses cyber risks.
  • Two memoranda of understanding to create information-sharing and analysis networks.

The big picture: Some of these steps are "quite substantial," says Beau Woods, a cybersecurity expert with I Am The Cavalry.

  • The FDA's action "gives people something to actually look at, to hold in their hands, to read over, and to show some of the progress," he says.

5. When you shouldn’t call an ambulance

Photo: RJ Sangosti/The Denver Post via Getty Images

If it’s not an emergency, maybe you shouldn’t call an ambulance to take you to the hospital, economist Austin Frakt writes in the New York Times.

Ambulances can be very expensive, and often aren’t covered (or are only partially covered) by insurance.

  • The easy availability of services like Uber and Lyft — especially now that they’re offering dedicated partnerships with providers — makes them a better option in non-emergency situations, Frakt writes.
  • Having insurance seems to make people more likely to call. In New York, studies suggested that more people used ambulances for minor injuries after the ACA’s Medicaid expansion took effect, while the number of ambulance rides for true emergencies was unchanged.
  • All of those extra rides, in addition to being expensive for patients, slow the response times for actual emergencies.

Yes, but: Although this is sound advice, remember the woman whose leg got caught in the Boston subway tracks a few months ago, who was begging the people helping her not to call an ambulance because she couldn’t afford it?

  • Sometimes people do need an ambulance, and it’s probably not a great reflection on our health care system that the cost of emergency treatment is anyone’s first thought in the middle of the emergency.

6. Medicare tweaks its 2019 handbook

Medicare’s next open enrollment period begins in less than two weeks, and the Centers for Medicare & Medicaid Services has released its final handbook that serves as a central guide for seniors and disabled people signing up for coverage.

Medicare eliminated controversial portions from its draft 2019 handbook, including a sentence that supported the “flexibility” of private contracts and language that some consumer advocates thought was overly supportive of Medicare Advantage plans.

Go deeper: Read the entire Medicare handbook