December 01, 2017
Good morning … If you're in D.C., join Axios' Mike Allen and Evan Ryan Tuesday morning for a discussion on the future of health care with the president & CEOs of NewYork-Presbyterian and PhRMA.
Mike will also explore innovations in the field with the first U.S. chief technology officer, Aneesh Chopra. Bonus: Arianna Huffington will join Mike to discuss her work championing health and wellness through her latest venture, Thrive Global. RSVP here.
GOP may have no choice but to try health care again after taxes
Republicans have been asking themselves what they'll turn to next, after their tax overhaul wraps up. If they repeal the Affordable Care Act's individual mandate, there's a good chance the answer will be health care — whether they like it or not.
What they're saying: President Trump has said several times that he wants to take another crack at repeal-and-replace after the tax bill, but, notably, GOP leaders in the House and Senate have not echoed that plan. And that makes sense — their health care adventures did not succeed and did not poll well, either. It's a hard issue.
Yes, but: If Republicans do end up repealing the individual mandate, insurance markets will begin to feel the effects quickly, leading to almost immediate nationwide upheaval that will be impossible to ignore — especially in an election year.
The timing: The disruption caused by repealing the individual mandate would start early next year and intensify at the 2018 midterm elections.
The bottom line: All this fallout would put more pressure on Congress to return to health policy whether it wants to or not — and reopening all the same internal divisions that have stymied every other health care bill.
Go deeper: Read my full story in the health care stream.
We're on the brink of a health care M&A binge
CVS Health is extremely close to cementing its $66 billion takeover of Aetna, the Wall Street Journal reported yesterday. It'd be the biggest deal of the year, and Axios' Bob Herman notes that more health care deals could also be in the offing:
- Humana recently altered its executive compensation and severance policies in case the health insurer is bought out or merges with another company. Wall Street views Humana as a ripe acquisition target for Cigna because of Humana's huge Medicare business.
- Express Scripts is about to lose its large, lucrative pharmacy benefits contract with Anthem. Express Scripts' CEO said at a Forbes health care conference yesterday he "would be open" to striking a merger deal with a health insurer or partnering with Amazon.
- Catholic Health Initiatives and Dignity Health, two large hospital systems, likely will provide more details into their merger discussions when they chat with bondholders next week.
Get smart: Health care mergers and acquisitions have been in vogue for years, and big deals would be almost certain to happen if Congress also passes its tax cut bill — which would give companies more money to play with through vastly lower corporate tax rates.
ACA plans: fewer doctors and higher deductibles
Plans sold through the ACA exchanges for 2018 come with higher deductibles and tighter access to services, according to a new analysis from the consulting firm Avalere.
- 73% of exchange plans offer "restrictive" networks, Avalere said — such as HMOs or similar plan types that maintain relatively small networks of doctors, hospitals and other providers, and often don't cover out-of-network care at all.
- "Narrow network" plans are gaining ground in the exchanges. They made up 68% of the market last year and 54% in 2015.
- At the same time, deductibles have been rising steadily for "silver" plans — the most popular category, which falls roughly in the middle of the road in terms of costs and benefits.
- Silver plans carry an average deductible of $3,937 this year, up from $3,703 in 2015.
Why it matters: Both of these tools — narrow networks and high out-of-pocket costs — help keep premiums in check. They also make health insurance harder to use for the people who have it. Nobody likes paying a lot out of pocket, and nobody likes having few doctors to choose from — but nobody likes paying higher premiums or being denied coverage, either.
Scaling back bundled payments also scales back savings
It's official: Bob reports the Centers for Medicare & Medicaid Services axed and scaled back some bundled payment programs, in which hospitals and doctors are paid lump sums for orthopedic surgeries and heart procedures. CMS teed the decision up in August.
Why it matters: There's debate about how effective bundled payments are, but it appears clear that the Trump administration's moves will mean diminished cost savings for Medicare. CMS said requiring fewer hospitals to accept bundled payments for hip and knee replacements would cost Medicare $108 million in savings over three years.
Well, this is awkward: Bloomberg notes that CMS finalized these moves the day after Alex Azar, Trump's nominee for Health and Human Services secretary, told the Senate HELP Committee that "one of the great legacies of Secretary Burwell's tenure was launching so many of the alternative payment models that we have out there."
What we're watching today: CMS administrator Seema Verma discusses health information technology (10am; details).
Get in touch: I'd love to hear your thoughts, questions, feedback and tips: [email protected]