Good morning ... Situational awareness: Before you head outside to water your plants this morning, do a quick check for any 23-foot pythons that might swallow you whole.
Trump signs an executive order on health care. Photo: Jabin Botsford/The Washington Post via Getty Images
There are few surprises in the Labor Department's final rules expanding access to association health plans — the undercard in President Trump's effort to pull people out of Affordable Care Act coverage.
The big picture: Association health plans allow small businesses and similarly situated individuals to band together and buy coverage as if they worked for the same large employer.
“This is a fairly well regulated space," Avalere's Sean Creighton told me.
The rule may not live up to Trump's expectations. For example, association plans can be sold across state lines — a priority Trump has mentioned frequently — but they still have to establish provider networks, which tend to be confined to specific metro areas.
The biggest concern I heard from insurance experts yesterday is fraud. The last time association health plans expanded, they were magnets for hucksters who would collect premiums and then vanish.
Again, this is the undercard. The main event from Trump's regulatory agenda — an expansion of short-term health plans — is still in the works. Those policies are far more bare-bones than association plans, and are more likely to pull healthy people out of the ACA's individual market.
Go deeper: How AHPs could benefit those in the gig economy.
PwC makes a provocative statement about health care cost-cutting in its latest report on medical cost trends: that the cost trend has “plateaued” for employers, largely because their efforts to cut the use of medical care “have mostly run their course.” (h/t Becker’s Hospital CFO Report)
Why it matters: If they’re right, it means employers can’t expect to cut their health care costs below the 6% increase PwC predicts for 2019 — a trend it calls unsustainable.
Yes, but: That’s still lower than the growth rates of recent years — including 11.9% in 2007, and 8.5% as recently as 2012. It has stabilized at around 6% since 2014.
What’s next, per PwC: “To drive it down even more, employers and health plans likely will have to tackle prices—and not just drug prices, which have been a focal point in the last few years.” So, good luck with that.
The American Medical Association, the country's biggest doctors' lobby, formally opposes CVS Health's acquisition of Aetna. Its reasoning boils down to an argument against consolidation.
What they're saying: Patients would likely pay higher premiums and possibly higher out-of-pocket costs as "Aetna and CVS fortify their dominant positions in the health insurance, pharmaceutical benefit management, retail and specialty pharmacy markets that already lack competition," according to an AMA statement.
Between the lines: A more consolidated insurance and pharmacy market would also give doctors less negotiating power.
A group of conservative policy advocates has released another proposal to repeal and replace the Affordable Care Act, which has been in the works now for a few months.
The details: Policy-wise, it’s basically the same as the Graham-Cassidy repeal bill, but without dramatic cuts to traditional Medicaid. It would eliminate most of the ACA’s consumer protections/benefit mandates and convert federal subsidy funding, as well as the law’s Medicaid expansion, into block grants to the states.
Why it doesn’t matter: Republicans couldn’t repeal the ACA with 52 Senate seats; they’re unlikely to get it done now with 51.
Why it does matter: This is the manifestation of an ongoing rift within the conservative movement ahead of this year’s midterms. Most of the party seems to have moved on from health care, but some conservatives still see it as a political imperative.
What’s next: Republicans on the House Budget Committee released a proposal yesterday that calls for steep cuts to Medicare and Medicaid, including the premium support system pushed into the mainstream by outgoing Speaker Paul Ryan.
ICYMI, Verscend Technologies is buying Cotiviti in a deal worth $4.9 billion, including debt. Verscend analyzes health care data, and Cotiviti audits providers to make sure payments are correct.
Why it matters, per Axios' Bob Herman: Private equity firms back both companies (Veritas Capital for Verscend and Advent International for Cotiviti), showing their desire for Cotiviti's very profitable niche industry. And that industry only exists because of the immense waste within the U.S. health care system.
Go deeper: Private equity and surprise bills.
The AMA doesn't like insurer consolidation, and insurers don't like provider consolidation. Matt Eyles, the new president of America's Health Insurance Plans, will make that point later today in a speech shared with Axios:
"In many local markets, health systems are not only consolidating but also buying up smaller physician practices, until there are no other systems or providers to compete with, and charging more for the same service with just a new logo on the entrance. And that makes it much harder to negotiate for lower prices for patients."
On drug prices, Eyles will be hard on pharma, as you'd expect, while also coming to the defense of insurers' negotiating practices. Some recent investigations, including the continued focus on pharmacy benefit managers, have called into question whether insurers benefit from high prices.