Sep 15, 2017

Axios Vitals

By Caitlin Owens
Caitlin Owens

Good morning ... The HELP Committee's hearings are over. Now it's time to put something in writing and find out whether a bipartisan ACA compromise can happen.

Alexander’s (potentially impossible) balancing act

Sen. Lamar Alexander's colleagues agree: If anyone is going to find some kind of bipartisan middle ground on the Affordable Care Act, it's him. "Lamar is the perfect person to be in the position that he's in," Sen. Jerry Moran said.

Even so, Alexander is trying to walk a very fine line. After eight years of partisan entrenchment, it's not clear anyone can find a compromise, however narrow, on the ACA.

Between the lines: My colleague Caitlin Owens runs through all the competing pressures Alexander is facing:

  • The right: Republicans are not inclined to fund the law's cost-sharing subsidies unless they get some major policy concessions — namely, more flexibility for states — in return.
  • The left: Democrats are happy to fund those subsidies, but don't want to give states so much flexibility that they would be able to chip away at the ACA's consumer protections.
  • The real world: Insurance markets in several states (including Alexander's home state of Tennessee) really are weak, facing substantial premium increases and dwindling competition and creating — at least for Alexander — an imperative to help.
  • The clock: Insurers must decide by Sept. 27 whether to participate in the exchanges next year.

The strategy: Alexander and Sen. Patty Murray, the top Democrat on HELP, kept the discussion narrow and brought in senators from outside their committee at the beginning of the process. One of those senators, Sen. Angus King, said Alexander and Murray have handled this difficult task "just the right way."

  • "Lamar's really smart, really smart, he has great people around him, he has a great demeanor about him, and he has a great partner in Patty Murray," Sen. Tom Carper told Caitlin.
NIH puts the brakes on gun research

In the wake of the Sandy Hook tragedy, the National Institutes of Health started funding research into gun violence. But now it has let that program lapse, according to a report in Science.

  • The Obama-era initiative paid out $18 million, across 22 projects.
  • NIH quit accepting new proposals in January.
  • An NIH spokeswoman told Science the program is still under review.

Be smart: Government-funded research into gun violence is extremely difficult to sustain. The Centers for Disease Control and Prevention stopped researching gun violence in the 90s, under pressure from gun-rights groups and congressional Republicans, and still avoided the issue even after former President Obama said gun research could resume.

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​CBO expects lower enrollment and higher premiums

The Congressional Budget Office yesterday rolled back its estimates of how many people the ACA will eventually cover, and also said it expects to see major premium hikes next year. Here's a rundown of the CBO report and why its expectations have changed — some due to President Trump's actions and others due to market pressures.

Trump effects:

  • Higher premiums next year. CBO said it expects premiums to go up by an average of 15% next year, "largely because of uncertainty about whether the federal government will continue to fund" the law's cost-sharing subsidies.
  • Stunted enrollment. CBO said it expects enrollment to tick up slightly next year, but that the increase will be "limited" for two reasons: higher premiums caused by uncertainty about the subsidies, and the administration's plans to slash outreach programs.

Non-Trump effects:

  • Lower long-term enrollment. CBO reduced, by 7 million people, its enrollment projections for 2026, and acknowledged that some of its past projections turned out to be "too high." Why? One factor, according to CBO: "less interest by consumers in enrolling than the agencies expected." It also said it overestimated how many employers would stop offering coverage, sending their workers to the exchanges instead.
  • This year's premium increases. Average ACA premiums went up significantly this year. That was probably a market correction, CBO indicated, as insurers realized that their new customers were more expensive than they had initially expected.

The bottom line: Trump is by no means the only factor affecting premiums, enrollment or insurers' participation in the exchanges. But it's hard to avoid the conclusion that he's successfully undercutting the law.

Now we know how deep the navigator funding cuts are

Some ACA navigators — groups that help with enrollment outreach and walk consumers through the process — are facing budget cuts as high as 92%, the Washington Post reports.

What's happening: The Trump administration previously said it would slash overall funding for the navigator program by 41%, so everyone knew cuts were coming, but not until this week did the administration decide how much to cut each specific organization.

  • The administration and its allies point to navigator groups that enrolled only a few people, at an average of $5,000 per enrollee in federal grant money.
  • However, the Post reports, "some groups that met past enrollment goals are facing major cuts while other organizations emerged largely unscathed."
​How proposed insurance mergers died

Four health economists who were expert witnesses in unsuccessful health insurance mergers conducted a postmortem of the dead deals in Chicago yesterday. Axios' Bob Herman was there and got the skinny:

  • The Aetna-Humana deal failed for several reasons: Most were related to antitrust (as well as a political whopper tied to the ACA exchanges). The main sticking point? The court didn't buy the insurers' argument that Medicare Advantage competed with traditional Medicare, said Aviv Nevo, the Justice Department's expert in the case.
  • A unique wound that helped sink the Anthem-Cigna case: "The parties were openly, publicly and violently fighting," said Mark Israel, a consultant from Compass Lexecon (a consulting firm ProPublica says uses academics to peddle mega-mergers) which was hired by Anthem.
  • Another hole for Anthem and Cigna: They said the combined insurer would save consumers money by extracting bigger price discounts from hospitals and doctors. But they couldn't prove those savings, nor whether they had to merge to do so, said David Dranove, the Justice Department's expert.

Will health insurers try big deals again?

  • "There's a reasonably good chance…we will see another attempt," Nevo said.
  • Who will take the shot? Each economist pointed to Cigna and Humana. (We wrote about the prospects of a Cigna-Humana merger in June, and it seems plausible something could happen next year.)
Caitlin Owens

What we're watching today: Any out-of-left-field moves on the Graham-Cassidy ACA repeal bill. Probably a lot of fruitless sniping on Twitter about single-payer.

What are you watching? Let me know: baker@axios.com