Axios Vitals

A briefcase with a red cross on the front.

November 29, 2017

Good morning ... The next few weeks will be critical in determining how big an imprint President Trump leaves on the health care system. With his nominee to lead HHS advancing and the individual mandate back on the chopping block, that imprint is looking bigger every day.

Individual mandate at death's door, again

It's not over yet, but Republicans' tax plan had a good day yesterday — and that means the Affordable Care Act's individual mandate is, yet again, in serious jeopardy.

The latest:

  • All 12 Republicans on the Senate Budget Committee voted for the tax overhaul, including once-wavering budget hawks Bob Corker and Ron Johnson.
  • Senators coming out of their lunch meeting with Trump yesterday said he endorsed the ACA stabilization bill from Sens. Lamar Alexander and Patty Murray, as well as a new reinsurance program championed by Sen. Susan Collins. Passing those two measures would go a long way toward getting Collins on board.
  • Ways and Means chairman Kevin Brady said repealing the individual mandate wouldn't be a problem for the House.

Yes, but: Trump endorsing a new reinsurance program — which would cost roughly $5 billion over two years — does not necessarily mean House Republicans would be on board.

Be smart: The two measures Republicans are eyeing as ways to soften the blow from the individual mandate are probably inadequate.

  • Alexander-Murray would, primarily, restore cost-sharing payments to insurance companies. That has little bearing on the premium increases that would stem from repealing the individual mandate.
  • Reinsurance — directly paying insurers for their most expensive enrollees — can make a big difference. It's one of the most efficient options the federal government has, Avalere's Caroline Pearson says. For every dollar the government spends on reinsurance, it gets about 60 cents back through lower premiums and thus lower premium subsidies.
  • But Congress would probably need to provide about $10 billion per year to offset the costs of losing the individual mandate, Pearson says — a far cry from the roughly $2.5 billion per year in Collins' proposal.
  • Reinsurance isn't structural; it's truly just giving insurance companies money so that they won't go collect that money through premiums. When the program ends, premiums go back up. (This happened last year, when the ACA's temporary reinsurance program ended.)
  • So, even under Collins' proposal, premiums would spike again in two years — shortly before the 2020 election, as a matter of fact.

​Azar on the hot seat

Alex Azar heads to the Senate HELP Committee today for the first hearing on his way to confirmation as the next secretary of the Health and Human Services Department. HELP won't formally report his nomination to the full Senate, but he's sure to face aggressive questioning today from Democrats.

What we're hearing: Republicans will likely tread pretty easily on Azar, but a Democratic aide outlined three areas Democrats' questioning will likely focus on:

  • ACA "sabotage": Azar has plenty of bad things to say about the ACA, most of them pretty well in line with standard Republican talking points. But if he's confirmed, he'd be charged with overseeing it. Democrats will want to extract some sort of commitment to restore some of the outreach and promotion efforts Trump slashed this year.
  • Drug prices: Let's be real, it's not like the Trump administration was steaming toward tough action on drug prices until Azar came along. That has never been a real priority. Still, look for Democrats to use the nomination of a former pharma CEO as a way to highlight Trump's inaction on a popular campaign promise.
  • Women's health/abortion: Azar has given speeches where he discussed "protecting the unborn," and Democrats will also examine his role in socially conservative policymaking in the George W. Bush administration.

The other side: HELP chairman Alexander plans to say in his opening statement:"You have been confirmed by the Senate twice. ... You have served in the judicial branch as a law clerk for Justice Antonin Scalia and you know the executive branch, having been HHS General Counsel and Deputy Secretary. And you know the private sector."

Go deeper: The hearing starts at 9:30am. You can watch the livestream here.

An early glance at Medicare Advantage rates

The Centers for Medicare & Medicaid Services has rolled out a preliminary look at a crucial payment rate for Medicare Advantage plans, and it looks like insurers are in line for a sizable pay increase, Bob Herman reports.

The details: The federal government pays Medicare Advantage companies lump sums of money through a complicated formula. A main component of that formula, called the fee-for-service growth rate, is expected to be 4.29% for 2019.

How it compares: That's up from the 2.31% CMS projected for the 2018 rates. The growth rate could go up even more by the time final rates are released in April, but the numbers are still very preliminary.

Why it matters: This market is massive, and only getting bigger. Medicare Advantage insurers are estimated to receive about $248 billion in 2019, according to the Congressional Budget Office.

​Are we cost conscious yet?

Remember when high-deductible health plans were supposed to make people pay more attention to the cost of their medical care? It's not happening yet, according to a new study in the Journal of the American Medical Association.

Among people who had high-deductible plans, surveyed from August 26, 2016, through September 19, 2016:

  • 25% talked with a doctor about the price of a service.
  • 14% compared prices.
  • 14% compared the quality of services.
  • 6% tried to negotiate prices.

The bottom line: If people don't become more cost-conscious and avoid unnecessarily expensive medical procedures even when they have more "skin in the game," that undermines a big argument for shifting more people into high-deductible plans. The trend toward higher out-of-pocket costs isn't likely to change, though, because it does help employers control how much they spend on health benefits.

​Why health care is so spendy

As long as we're talking about cost consciousness, it's worth remembering that patients don't always have total control over what medical procedures are thrown at them. That's the lesson of an alarming story ProPublica posted yesterday, featuring a hospital that charged $1,877 to pierce a 5-year-old's ears.

The back story: No, the hospital didn't say, "Hey, would you like a $1,877 ear piercing for your daughter?" The girl was there for an unrelated, minor outpatient procedure, and the surgeon offered to do the ear piercing as long as she was there. The mother assumed it would be free — and then found out it wasn't when the insurer refused to pay for it.

The big picture: It's an extreme case, but ProPublica cites other examples of patients who got procedures because they were presented with little to no choice. It's hard to see that changing until there's a broader public awareness of wasteful spending — and patients learn to push back.

What we're watching today: Azar's confirmation hearing.

What we're watching this week: HELP hearing Thursday on the opioid crisis. House Energy and Commerce subcommittee hearing Thursday on implementation of the 21st Century Cures Act.

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