Feb 21, 2019

Axios Vitals

Good morning ... D.C. readers: Join Axios' Mike Allen and Evan Ryan tomorrow at 8:30 am for our next News Shapers event.

  • They'll sit down with Oregon Gov. Kate Brown and New Hampshire Gov. Chris Sununu, along with actress Jennifer Garner and Save the Children CEO Mark Shriver, to talk about how we improve and expand education in America.
  • RSVP here
1 big thing: U.S. health care spending tops $3.6 trillion
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Data: Sisko et. al., 2019, "National Health Expenditure Projections" and CIA World FactBook; Note: All values adjusted for inflation as of 2018; Chart: Harry Stevens/Axios

Americans spent $3.65 trillion on health care in 2018, according to new preliminary estimates from independent federal actuaries. That total is about the same size as Spain and Canada's entire economies — combined.

By the numbers: U.S. health spending last year was 4.4% higher than in 2017, a rate that is still growing faster than the broader economy, Axios' Bob Herman reports.

  • That $3.65 trillion health care tab last year translates to $11,121 per person.
  • Spending on hospitals, doctors and other clinic services was $2.16 billion, holding steady at 59% of total health care spending.
  • The spending category that experienced the largest year-over-year increase was the general cost of administering health insurance, which rose 7.7% in 2018.
  • Spending on prescription drugs purchased in retail pharmacies went up 3.3% in 2018, higher than the 0.4% rate in 2017.

Between the lines: A majority of the bigger spending totals were due to higher overall prices, while the "use and intensity" of health care services played a smaller role.

  • Private health insurance continues to fare the worst on controlling costs. Per-person spending among the privately insured rose 4.5% in 2018 despite the fact that enrollment in private plans stayed flat.
  • Per-person spending in Medicaid and Medicare increased 1.1% and 3.1%, respectively, last year.
2. Drug ads may end up downplaying risks

Federal regulations require drug companies to include both major and minor side effects in their direct-to-consumer advertising — the risk of heart attacks as well as, say, dry mouth.

Details: Researchers asked a group of people to read 2 print ads for Lunesta, the sleep aid. One was the actual ad, featuring 2 major side effects and 2 minor ones; the other only included the major side effects.

  • People who read the ad with more side effects rated the drug as safer, and thus more appealing, than people who only saw the major ones.
  • Researchers got the same results when they played the full radio ad for Cymbalta vs. an edited version that eliminated minor side effects.

What they found: Presenting people with a lot of information can dilute each piece of information, the researchers said — if you want people to really hear 1 thing, you shouldn't also tell them 20 other things at the same time. (That also happens to be a guiding principle of this newsletter.)

  • In mock-up print ads, putting the major side effects in a bold font seemed to help people remember them better, even with minor side effects still listed in regular type.
3. Brokers' incentives to keep premiums high

Employers often turn to brokers to help them find the right health care plan for their workers. But there's a catch: Brokers have several layers of incentives to steer companies toward plans with higher premiums.

How it works: For starters, brokers' commission is a percentage of the plan's total annual premium. Higher premium, higher commission.

But there's more, as ProPublica reports.

  • Insurers offer brokers big bonuses to the agents and brokers who rake in the most business, including cash (up to $100,000 per employer) and trips to the Bahamas.
  • Those bonuses are built into the insurance plans' premiums, but the costs aren't disclosed to employers unless they ask.
  • "It's a classic conflict of interest," Eric Campbell, a University of Colorado bioethicist, told ProPublica.

Some brokers are trying to do better, switching to flat fees instead of commissions, hoping to draw a sharper contrast with agents who may not have the employer's bottom line in mind.

  • But even efforts to work around this incentive structure can go awry.
  • Morris County, New Jersey paid its broker directly, in an effort to make the broker unbiased about which plans it recommended. The broker collected that fee and also a $235,000 commission from Cigna, according to the lawsuit.
  • It also accuses the broker of hiding the costs of switching to a Cigna plan, including $800,000 in administrative fees.

Go deeper: The unclear benefits of drug price coalitions

4. How to crack down on surprise medical bills
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Data: Brookings; Chart: Harry Stevens/Axios

My colleague Caitlin Owens breaks down a new Brookings Institution paper that outlines ways to prevent patients from receiving surprise medical bills — particularly the patients who are unlikely to know their doctor is out-of-network.

The big picture: The paper argues that any solution must take into account that health care settings often are not normal markets.

  • Patients either aren't in a position to make choices (like in an emergency room), or don't have a choice of doctor (like anesthesiologists or radiologists in a hospital).

Details: The paper recommends 2 fixes:

  1. States could cap out-of-network provider rates in these situations, limiting patients' cost-sharing to what they'd normally pay for in-network services.
  2. Separate billing would be banned for out-of-network doctors at in-network facilities. Insurers would instead pay the hospital a certain amount and then that facility would pay providers for their services.
5. Pinterest cracks down on anti-vaccine messages

Photo: Rich Polk/Getty Images for Pinterest

Pinterest is no longer returning any search results about vaccines, as a blunt way to weed out anti-vaccine messages, CNBC reports.

  • Pinterest decided to remove vaccine-related results "after noticing that the majority of shared images on Pinterest cautioned people against vaccinations, despite medical guidelines demonstrating that most vaccines are safe for most people," per CNBC.

Why it matters: Inaccurate anti-vaccine information spreads quickly on social media, and Facebook in particular is under pressure to curtail that content amid multiple measles outbreaks. Pinterest's move could amplify that pressure.