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Good morning.

Situational awareness: The Affordable Care Act's open enrollment period has been extended until 3am tomorrow — about 21 hours from now — after issues with enrollment over the weekend.

Today's word count is 843, or a 3-minute read.

1 big thing: Profits dip, but stocks soar
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Data: FactSet; Chart: Axios Visuals

Health care industry earnings fell 18% in the third quarter of this year, compared with the same period in 2018, due in part to the costs associated with opioids litigation, according to the Axios tracker of almost 170 health care companies.

Yes, but: The industry still churned out a 6.1% profit margin, and health care stocks are at the highest they've been all year because Wall Street foresees a very profitable election year, Axios' Bob Herman reports.

The big picture: Earlier this year, when health care profits were at record highs, Wall Street was bearish because algorithms and traders were triggered at the thought of "Medicare for All" and drug pricing reforms.

  • Now, even as profits slump a bit, Wall Street is buying into an industry that has helped kill legislation that would've tackled egregious billing practices and secretive contracting, scored potential repeals of the Affordable Care Act's taxes, and neutered most drug pricing proposals.

By the numbers: Executives and shareholders of pharmaceutical companies continue to reap enormous rewards.

  • Approximately two-thirds of all third-quarter profits flowed to drug companies, even though they generated less than 20% of global revenue, according to our analysis, which does not include early-stage biotechs.
  • All of our other analyses of industry finances have showed this same theme.

The intrigue: Cardinal Health, a major drug and device distributor, dragged down the industry's profit margin by almost a full percentage point after it booked a $5.6 billion pre-tax charge for any future opioid settlement.

Hospitals also recorded lower bottom lines, as their cumulative net margin dropped from about 7% in the third quarter of 2018 to 3% this year, according to the financial results of 48 not-for-profit systems analyzed by Axios.

  • Hospitals' investment returns have shrunk, and their labor costs have soared.
2. Surprise bills inflate costs by billions
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Data: Health Affairs; Chart: Axios Visuals

Four specialties that are often out-of-network — anesthesiologists, pathologists, radiologists and assistant surgeons — raise employer insurance spending by 3.4%, according to a new study in Health Affairs.

Why it matters: Surprise medical bills are not only unaffordable for the patients who receive them, but also inflate everyone else's premiums.

Between the lines: Providers are more likely to be out-of-network at for-profit hospitals and those located in concentrated markets, the study found.

  • These four specialties are providers that patients don't choose. They ultimately get paid several times more than they'd make from treating a Medicare patient.
  • In contrast, orthopedists performing knee surgeries — which patients do have the ability to choose — were paid 164% of Medicare rates, on average.
  • The study's authors argue that these four specialties can use the threat of billing patients directly to gain leverage in negotiations with insurers.

By the numbers: If the payment rates for these four specialties were reduced to 164% of Medicare, total physician spending among privately insured patients would be reduced by 13.4%, or $40 billion a year for people with employer coverage, the study found.

  • That's exactly why providers are fighting so hard against Congress' efforts to include a benchmark payment rate for out-of-network care as part of a surprise billing solution.
  • Whatever they spend in lobbying is, comparatively, chump change.

Go deeper: TeamHealth sent thousands of surprise medical bills in 2017

3. Sacklers pulled billions from Purdue

The Sackler family, owners of Purdue Pharma, withdrew $10.7 billion from the company over the last dozen years, placing the money in trusts and overseas holding companies, according to an audit commissioned by Purdue and filed in bankruptcy court yesterday.

Why it matters: The revelation may reignite the debate over how much the Sacklers should be required to pay to resolve the thousands of lawsuits pending against Purdue for its role in the opioid epidemic, NYT reports.

  • The family has offered to pay at least $3 billion in cash as part of a settlement, but some states have argued that the Sacklers should have to pay more.

Go deeper.

4. The cost of repealing ACA taxes

Illustration: Sarah Grillo/Axios

Congress announced yesterday that it will repeal three major Affordable Care Act taxes in its year-end spending bill, which will come with a price tag of nearly $400 billion.

The taxes' projected revenue over 10 years, per the Congressional Budget Office:

My thought bubble: Remember all of those Democratic presidential candidates who are promising to pay for expanded government health coverage by making industry pay up?

  • I'd like to introduce them to Congress, which has proven itself very unlikely to be up for that.
5. Medicaid expansion and infant mortality rates

Medicaid expansion and other social services help improve infant mortality rates, according to a new report from the liberal Center for American Progress.

Why it matters: The U.S. is ranked 55th in the world on infant mortality — alongside Serbia, Axios' Marisa Fernandez reports.

Yes, but: Medicaid expansion is not a cure-all. For example, Washington, D.C., which implemented Medicaid expansion in 2014, saw more than double the overall national infant mortality rate.

Lawmakers in several states are undertaking new programs to help reduce infant mortality.

  • Virginia Gov. Ralph Northam announced in December the state will undergo a $22 million budget proposal to help new mothers by 2025.
  • New Jersey Gov. Phil Murphy signed four bills this year aimed at helping the state's maternal and infant health.
  • A bipartisan bill in Congress would offer states an incentive to extend their Medicaid coverage to a full year after delivery.

The bottom line: "At this point, the data is really hard to argue with," Cristina Novoa, senior policy analyst for early childhood policy at the Center for American Progress, told Marisa.