Oct 18, 2018

Axios Vitals

Sam Baker

Good morning ... I can barely park my Volkswagen in a spot that’s any smaller than about three car lengths. Imagine being skilled enough to easily, seamlessly slide right into a “parking” spot in a warship.

1 big thing: Health stocks soar under the ACA
Expand chart
Data: S&P, Yahoo Finance; Chart: Andrew Witherspoon/Axios

Hey, remember back around 2010, when critics warned that the Affordable Care Act would spell the end of private insurance? The reality has been very much the opposite: Health care stocks have been on a tear since the ACA’s passage, my colleague Bob Herman reports.

The big picture: The S&P 500 health care index, which tracks the stocks of 63 major companies, has soared by 192% since the ACA became law. By comparison, the S&P 500 and Dow Jones increased by 141% and 138%, respectively, according to FactSet.

Winners: Health insurers. The stock price of Centene, a major Medicaid and ACA marketplace insurer, has multiplied by 12 times or 1,100%. Shares of UnitedHealth Group have jumped by more than 700%.

  • More winners: Hospitals have faced sizable Medicare payment cuts from the ACA, but those reductions were largely offset by the law's Medicaid expansion and other forms of new coverage.
  • Also winners: The ACA did not meaningfully touch the pharmaceutical industry's business or patent practices, and those companies have reaped record profits.
  • So many winners! Medical device companies hate the ACA's device tax, but Congress has already deferred that fee a few times. The device tax hasn't hampered earnings and hasn't led to widespread job losses.

Go deeper.

2. Illness is unaffordable, even with insurance

A serious illness will often wipe out your life savings even if you have health insurance. That's the sobering conclusion from a new national survey of people who have had to rely on the health care system intensively.

By the numbers, via the New York Times, which helped analyze the survey:

  • 36% of seriously ill patients with insurance said they had used up all or most of their savings to pay for their care; 29% had a bill referred to a collection agency; and 21% said they had been unable to pay for basic necessities.
  • Among seriously ill patients without insurance, 57% said they had spent through their savings, and 51% reported being unable to afford things like food and housing.

“You’re kind of at a disadvantage as a consumer going against these big complicated systems that don’t always have your best interest at heart,” University of Michigan professor Sarah Miller told NYT. “And I think that’s why there’s so much financial burden, even among people with private insurance.”

Making matters worse, 53% said their illness had kept them from working, at least temporarily. That may not be a direct health care cost — it's not money that goes into the health care system — but it's a big part of the toll that the system takes on the people who need it.

3. ACA suit threatens pre-ACA protections

Texas' lawsuit over the ACA could roll back protections for pre-existing conditions even among people who don't get their coverage through those marketplaces, my colleague Caitlin Owens notes this morning.

How it works: Before the ACA, the federal privacy law known as HIPAA prevented employer-based insurance plans from denying employees coverage because of a pre-existing conditions or from charging those employees a higher premium.

  • The ACA extended similar protections to people who buy insurance on their own.

But there's a chance some of the HIPAA protections could go away if Texas' lawsuit succeeds, because of the way the ACA incorporated them, Kaiser Health News reported.

  • "The ACA certainly changed up the HIPAA provisions and it is not clear they would just reemerge," said Gary Claxton of the Kaiser Family Foundation.
4. An autumn regulatory jamboree

Get ready for a busy fall season of regulations from the federal government. The White House yesterday released its fall regulatory agenda, teasing several significant health care rules.

Bob flags some highlights:

  • A potentially major rule on Medicaid managed care that will “relieve regulatory burdens” and “promote transparency, flexibility, and innovation in the delivery of care,” according to an abstract of the regulation.
  • Policies that could open the door for state Medicaid programs to tinker more with charging premiums and copays to low-income enrollees.
  • A long-awaited rule targeting dialysis chains and charities that help patients get private insurance over lower-paying Medicare or Medicaid. The Obama administration originally issued a regulation on this issue in 2016, but a court struck it down because it didn’t go through a more formal process.
  • A proposal that appears to allow more flexibility for grandfathered health plans under the ACA, and to expand the use of health reimbursement accounts (which we previewed back in February).
  • More “policy and technical changes” to Medicare Advantage and Medicare prescription drug plans, building on last year’s efforts.
  • A vague plan to “require drug pricing transparency” in Medicare and Medicaid, according to an outline of the rule.

The big picture: The Trump administration is stepping on the gas to implement conservative health care policies from the executive branch.

5. McCaskill: How Insys pushed opioid sales

A new report released by Sen. Claire McCaskill reveals how Insys, a pharmaceutical company, aggressively pushed its fentanyl product, Subsys, to increase the number and strength of prescriptions written for it.

Details, via Caitlin:

  • The model Insys used following the drug's approval in 2012 is strikingly similar to the one Purdue Pharma used, beginning in the 1990s, to market OxyContin.
  • It featured speaker programs in which doctors, paid by Insys, spoke with colleagues about the drug.
  • Sales representatives had large financial incentives to sell as much of the drug as possible via prescriptions, and higher dosages of the drug led to higher bonuses.

Between the lines: One illuminating email included in the report summarizes what appears to have been the mindset: “What drives us all? COMPENSATION," the national director of sales wrote to district sales managers in 2013.

  • The strategy was effective: Subsys prescribers tended to write more scripts and generate more revenue than other fentanyl prescribers.

Why it matters: While the new Insys CEO has called the company's previous actions "unacceptable," there's clearly been a pattern when it comes to marketing opioids.

  • "Just as Insys adopted and expanded methods Purdue pioneered, the next pharmaceutical company moving rapidly to establish market share in a crowded field may look to Insys as a model," the report says.
Sam Baker