Jun 25, 2019

Axios Vitals

By Caitlin Owens
Caitlin Owens

Good morning. Today's word count is 878 words, or ~3 minutes.

1 big thing: Industry doesn't like Trump's transparency push

President Trump signs yesterday's executive order. Photo: Mark Wilson/Getty Images

Industry groups came out with guns blazing yesterday against President Trump's executive order on price transparency for hospitals. And plenty of experts are skeptical that it will bring prices down.

What's next: The industry will have ample opportunity to kill or weaken the new rules while the administration fills in the details through the regulatory process.

Between the lines: Health care economists and hospitals are on the same side — although perhaps for different reasons.

  • "I would expect the health care industry to oppose any government mandate to disclose what it considers to be confidential business information," the Kaiser Family Foundation's Larry Levitt said.
  • "While transparency might not lead directly to lower prices, it could spur political action to deal with them, and that’s something the industry certainly wants to avoid," Levitt added.

What they're saying: If the price-disclosure requirements "take the wrong course ... it may undercut the way insurers pay for hospital services resulting in higher spending," Chip Kahn, president and CEO of the Federation of American Hospitals, said in a statement.

  • "Competition experts ... agree that disclosing privately negotiated rates will reduce incentives to offer lower rates, creating a floor not a ceiling for the prices that hospitals would be willing to accept," said Matt Eyles, president and CEO of America's Health Insurance Plans.

Both groups cited the Federal Trade Commission, which wrote in a 2015 blog post that it's "especially concerned when information disclosures allow competitors to figure out what their rivals are charging, which dampens each competitor’s incentive to offer a low price, or increases the likelihood that they can coordinate on higher prices."

2. The only prices that matter to consumers

Illustration: Aïda Amer/Axios

Speaking of skeptical experts, the Kaiser Family Foundation's Drew Altman writes in today's column that there's really only one price that matters to consumers: what they pay out-of-pocket.

  • The most important detail to watch in the coming regulations carrying out the executive order is whether they require insurers to give consumers information on out of pocket costs in a timely and usable way, Altman writes.

Why it matters: Consumers need that kind of timely information to shop based on the costs they will actually pay.

Some insurance companies have tools consumers can use to figure out what they're going to have to pay out-of-pocket for a particular health care service, but that information is not easily available. As a recent Kaiser Family Foundation/Los Angeles Times survey shows:

  • 67% of the American people say it is somewhat or very difficult for them to figure out what a treatment or procedure will cost them.
  • 44% said they had difficulty determining what they would actually have to pay.
  • 40% had problems figuring out what was even covered.

Yes, but: Even with the right information, larger medical expenditures generally occur when people are in a medical crisis of some kind, in anything but shopping mode.

Read the column.

3. Another ACA case for SCOTUS

Health insurers will get a chance to persuade the Supreme Court that they're entitled to roughly $12 billion in payments under the Affordable Care Act, Axios health care editor Sam Baker reports.

  • A lower court ruled against the insurers last year, but the Supreme Court said Monday that it will hear their appeal.

The big picture: The disputed payments involve the ACA's "risk corridors" program, designed to help stabilize the law's insurance markets through their infancy. Insurers say the government still owes them billions, but the Trump administration says Congress has forbidden those payments.

How they work: Risk corridors were intended to give insurers some peace of mind as they entered a new and unpredictable marketplace.

  • The program collected money from insurers that had a better-than-expected early experience in the ACA's exchanges, and used that money for insurers whose early experience was worse than they expected.
  • But the program ended up owing more than it had taken in.
  • The assumption at the time was that HHS would cover those payments out of its budget. But then Congress passed a rider prohibiting HHS from using its funds for the program.

Why it matters: Some insurers that didn't receive the promised payments have already gone bankrupt. There are also broader legal issue at stake, such as what companies can expect when they enter into contracts with the federal government.

Where it stands: The court won't hear the case until its next term, which begins in October.

4. Specialty drugs' steep price hikes
Expand chart
Adapted from AARP; Chart: Axios Visuals

The cost of specialty drugs has skyrocketed over the last decade, with the cost of 61 widely used drugs almost tripling between 2006 and 2017, according to a new AARP report.

By the numbers: The average annual cost of a specialty drug in 2017 was almost $20,000 more than the median U.S. household income.

  • Specialty drugs are the most expensive class — and their prices are increasing rapidly, with annual increases ranging from 7% to 9.7% between 2012 and 2017.

The bottom line: The market is going to be increasingly driven by the use of specialty drugs, and that's going to be expensive.

5. Cancer costs wallop employers

Cancer is the main source of catastrophically high medical claims for companies and their employees, according to new data from stop-loss insurer Sun Life, Axios' Bob Herman reports.

Why it matters: Self-funded employers, or those that directly pay for their workers’ medical claims, usually buy "stop-loss" coverage to insure themselves from unpredictably costly diagnoses. And cancer has been the highest-cost condition for stop-loss claims every year since 2013.

By the numbers: Cancer represented almost 27% of the $936.3 million in reimbursements that Sun Life paid out to employers between 2015 and 2018.

  • Breast cancer was by far the biggest chunk of that total, representing one-third of costs but only 13% of the total claims.
  • Multiple myeloma and brain cancer were right behind, each costing $111 million.

The next-most expensive condition after cancer? Chronic kidney disease.

Caitlin Owens