Jul 12, 2018

Axios Vitals

By Caitlin Owens
Caitlin Owens

Good morning ... President Trump wants a new paint job for the new pair of presidential aircraft.

1 big thing: What a trade war means for health care
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President Trump’s tariffs on Chinese goods will raise the cost of medical equipment in the U.S. by about $400 million per year, according to an analysis the conservative American Action Forum plans to release later today.

The details: Higher tariffs will affect 50 types of medical products, including MRI machines and a variety of surgical tools. All told, that’s about $1.8 billion worth of imports, AAF says.

  • New tariffs will increase the cost of those products by about $400 million. Doctors and hospitals will see those costs when they buy medical tools, and will most likely pass those costs on to patients and insurance companies.
  • People who are uninsured or who have high deductibles will feel the effects the most, while insurance companies will build the cost into their premiums.
2. The opioid crisis, quantified

Three drug distributors shipped 1.6 billion opioid doses to Missouri between 2012 and 2017, according to a new report from Sen. Claire McCaskill, the top Democrat on the Senate Homeland Security & Governmental Affairs Committee.

Between the lines: That's 260 pills per Missourian, over a five-year period.

  • The report also found that the three companies — McKesson, AmerisourceBergen, and Cardinal Health — had vastly different processes for reporting suspicious orders.
  • At the same time, the Drug Enforcement Agency was relatively lax. It didn't use its most powerful enforcement power even once in that period.

The impact: McCaskill's report doesn't accuse any of the companies of illegal action, but several lawsuits do. If it's found that drugmakers and distributors broke the law, they could be on the hook for hundreds of billions of dollars.

3. Private equity circled the Envision waters

When Envision Healthcare was testing the waters for an acquisition earlier this year, the emergency room and surgery services firm attracted a lot of interest from private equity firms, according to a regulatory filing released this week. Not one, not two, but nine private equity groups submitted full cash offers for Envision in February. 

The bottom line: KKR won the Envision sweepstakes with a $46 per share bid. But the large bidding war for a health care company that has become infamous for its out-of-network billing practices reinforces that private equity isn’t shy about pursuing a profitable health care niche, even when critics contend it soaks some patients in unforeseen bills.

4. The politics of Medicaid

Mike DeWine, the Republican candidate in Ohio's open gubernatorial race, has pledged to leave the state's Medicaid expansion intact while trying to add work requirements to the program, the Columbus Dispatch reports.

Why it matters: The ACA's Medicaid expansion is pretty popular.

  • The Trump administration is eager to approve work requirements, so the scenario DeWine has laid out — rolling back the expansion without threatening to walk away from it altogether — is realistic.
  • Still, it's worth remembering that DeWine's neighbor to the south, Kentucky Gov. Matt Bevin, has threatened to quit the expansion entirely if work requirements are ultimately struck down in court.
  • The fact that DeWine didn't want to go that far is in part a function of the difference between the two states — but also a sign that candidates in purple states may not want to campaign aggressively against Medicaid expansion.

Flashback, per the Dispatch: "What Republican Gov. John Kasich saw as DeWine balking over the Medicaid expansion led the governor, in part, to withhold his immediate endorsement of the attorney general after DeWine’s primary win."

Caitlin Owens

What we're watching this week: A Brookings event Friday on the destabilization of the individual insurance market.

Say hello: Find me at baker@axios.com.