Axios Vitals

A briefcase with a red cross on the front.
February 28, 2017

Good morning — all set for President Trump's speech to Congress tonight? We know he's going to talk about Obamacare repeal, but now he has to satisfy two very different Republican audiences: governors who don't want anyone to lose coverage, and conservatives who don't want to create a "new entitlement."

Meantime, Cory Booker is going to have a chance to work with Bernie Sanders on drug prices — and get back in the good graces of progressive Democrats again.

Who will win the Obamacare repeal stare-off?

It didn't take long for the Republican governors to lose the spotlight. Now everyone is back to worrying about the conservative hardliners in the House. Within a few hours of each other:

  • Rep. Mark Meadows, the chairman of the Freedom Caucus, told CNN he wouldn't vote for the draft House Obamacare replacement bill — because its refundable tax credits, which are supposed to be used to help people buy health insurance, would amount to "a new entitlement."
  • Rep. Mark Walker, the chairman of the Republican Study Committee, came out against the bill too — also because of the tax credits.

Why it may be a crisis: If the two are serious about voting against the bill, and they bring most of the members of their groups with them, that pretty much ends any chance that the House could pass an Obamacare repeal bill. Even if they succeeded in knocking the tax credits out of the bill, the Senate would never pass a repeal bill that didn't give customers another way to buy health insurance.

Why it may not be a crisis: Would they really vote against repeal when the time comes, or are they just trying to negotiate changes? Meadows and Walker want to repeal Obamacare as much as anyone else — which is why Republican leaders have been betting they wouldn't really tank the repeal effort.

What to watch: Jonathan Swan reports that Trump was still working on his speech to Congress last night — so watch to see if he tries to stare down the conservatives.

What did the governors want again? They told Trump yesterday that they don't want any of their constituents to lose health insurance — and they haven't seen any details yet that would back up his assurances, Caitlin Owens reports. "There's no specificity, and that's one of the things I want to see," Nevada Gov. Brian Sandoval told reporters after the meeting.

Here's what happens under the GOP tax credits

Speaking of the GOP tax credits, Caitlin Owens took a look at how they'd compare with the premium tax credits in Obamacare. (The big difference: the GOP version would be flat credits, based on age, rather than the income-based ones in Obamacare.) The bottom line: younger, wealthier people would do better under the GOP version, but older, poorer people would do worse. Read the story here.

Before you get too stressed about coverage losses ...

The Republicans have been getting some very bad news lately about how many people would actually have insurance under their Obamacare replacement plans. But it's important to remember a couple of things:

  • The leaked draft of the House GOP bill is more than two weeks old at this point — so there's time for a back-and-forth with the Congressional Budget Office that could result in policy changes, and perhaps better coverage estimates.
  • Other, credible estimates of similar plans have gotten very different results. A centrist think tank called the Center for Health and Economy analyzed House Speaker Paul Ryan's "A Better Way" plan last year, and found that it could actually cover 1 million more people in its first year. "There's a coverage gain" for market-oriented reforms, "and it's a good one," Holtz-Eakin told me yesterday.

Yes, but: The same estimate showed a long-term loss of coverage of 4 million people, mainly because the Medicaid expansion would be repealed. (Holtz-Eakin says "I do not for the life of me believe that that's what they're going to do" with the actual GOP bill.)

And: Any policy changes, especially with the tax credits, would probably have to be pretty major to make a difference. Avik Roy, a conservative health care expert, writes in Forbes that the flat tax credits in the draft plan are a "fatal flaw," because "millions of highly vulnerable people—those near the poverty line and those with poor health status—will not receive enough in tax credits to afford the coverage they need."

Booker makes peace with Sanders on drug prices

Cory Booker had a big political problem on his hands earlier this year after he voted against Bernie Sanders measure allowing Americans to buy cheaper prescription drugs from Canada. It was only a symbolic vote, a non-binding budget amendment that wouldn't have done anything by itself. But by voting against it, Booker — who pretty much everyone expects to run for president in 2020 — put himself on the wrong side of a big issue for progressive Democratic voters.

Now, he's about to get back on the right side. Booker and Sanders, along with a group of other Democrats, will introduce a fully developed bill today to allow the drug imports. It will include the language Booker thought was missing last time — provisions to make sure the imported drugs are safe. Problem solved!

Get ready for more Medicare Advantage audits

A spokesperson with the Centers for Medicare and Medicaid Services told Bob Herman that the agency "anticipates awarding a contract" this year for a private company to audit Medicare Advantage insurers. A little-known Obamacare provision required the expansion of recovery audit contractors, or RACs, to Medicare Advantage and Part D plans, and it looks like it will finally happen.

Why this matters: The agency is currently conducting what are called "risk-adjustment data validation audits," which are reviews of Medicare Advantage insurers to see if they are overcharging Medicare. Aetna, Humana, UnitedHealth Group, multiple Blue Cross Blue Shield plans and other companies are facing the audits right now, but the results haven't been released yet.

Why insurers are nervous: Health insurers fear the reviews because they know an adverse outcome could force them to pay back a lot of money. The industry won't be thrilled the feds are adding a private auditor to the mix. It's worth noting that hospitals and doctors hate Medicare RACs, which are paid a percentage of every overpayment they find.

Cybersecurity spending is up — but on the right things?

A new report says health care organizations in the United States are going to spend a lot more on cybersecurity — but it sounds skeptical that the money will go to the right places, especially when there's so much more use of electronic health records and other digitized personal health data.

The main points from the report by Thales and 451 Research:

  • More than eight out of 10 U.S. health care organizations will increase their cybersecurity spending this year.
  • But "most spending remains stubbornly focused on network and endpoint security," according to the report — which doesn't necessarily help prevent attacks from the outside.
  • The key quote: "Much of this spending will still be driven by compliance, which doesn't necessarily translate into assurance. This raises critical questions as to whether U.S. Healthcare is well-defended against today's current threat environment, let alone the new threats that will emerge as more healthcare data is generated and held on mobile and [Internet of Things] devices."

What we're watching today: Trump's speech to Congress, 9:10 pm Eastern.

What we're watching this week: Senate Finance Committee confirmation vote on Centers for Medicare and Medicaid Services nominee Seema Verma, Wednesday; House Energy and Commerce health subcommittee hearing on reauthorizing the Food and Drug Administration's generic drug and biosimilar user fee programs, Thursday; MedPAC discusses Medicare premium support, Friday.

Peace out. (Haven't used that one yet.) [email protected]