Axios Vitals

A briefcase with a red cross on the front.

Good morning ... We're wishing a speedy recovery to Senate Budget Committee chairman Mike Enzi, who had emergency gallbladder surgery this weekend and just got released on Wednesday. He was supposed to oversee the drafting of the Senate health care bill, but don't worry — an aide tells us he's been in contact with the staff the whole time.

And don't miss the premiere of Axios Future of Work, where Steve LeVine reports on the biggest ricochet story in our lives: robots, artificial intelligence, jobs, and global economics. The news stream goes live today, and the newsletter launches on Sunday. Sign up here.

Trump is paying out cost-sharing subsidies. Isn't that unconstitutional?

The White House and congressional Republicans are on the same page when it comes to the Affordable Care Act's cost-sharing subsidies: keep the money flowing for a while. But there's a problem: A federal judge has said that page is unconstitutional. And while everyone's agreeing to just not worry about that right now, it's still the law of the land — and it can't be ignored forever.

What's happening: The Trump administration is providing the ACA subsidies without an appropriation from Congress. That's exactly the same arrangement the Obama administration employed, which the House Republicans challenged in court and a federal judge ruled unconstitutional. "The administration is pretty overtly acting contrary to law," says Nicholas Bagley, a University of Michigan law professor and an expert on ACA litigation.

Even if House Republicans would prefer to give President Trump a pass, that's not so easy now that the courts are involved. They can't ask the judge to just forget about that whole unconstitutional-implementation thing. So, where does this go next? The options are not great, as Sam explains here.

Republicans are thinking about taxing employer benefits

The senators trying to come up with a health care plan are thinking about taxing employer health benefits, according to the Wall Street Journal. Many of the changes the Senate wants to make to the House's health care bill — like bumping up its subsidies and softening some of its Medicaid cuts — would make the proposal more expensive, so it's no surprise senators are looking to scrounge up some money elsewhere in the system. And removing the tax exclusion for employer benefits would raise hundreds of billions of dollars per year.

Reality check: Passing a health care bill is an awfully heavy lift as it is, without taxing the health plans that cover more than 170 million Americans. Employers hate this idea. They've killed it before, and would surely try to kill it again if the Senate proceeds down this path.

The state budget fights won't be just about Medicaid

The Kaiser Family Foundation's Drew Altman makes an important point in today's column: Medicaid funding fights stop being just about Medicaid if the program is cut deeply enough. You'd see fights over budget priorities across the board in every state — because trying to maintain same level of Medicaid coverage would have to compete with school funding, higher education, prisons, environmental protection, and other programs.

States might be able to absorb some of the cutbacks by running their programs more efficiently, Altman writes, but only at the margins — because all of the low-hanging fruit has already been picked.

Where the public stands: A new KFF poll released last night found that large majorities of Democrats and independents oppose changing the funding structure for Medicaid. Republicans are split down the middle.

Conservatives to Price: It's time for Phase 2

Remember when there was going to be a Phase 2 for repealing and replacing the ACA? It was going to be all the stuff they thought Health and Human Services secretary Tom Price could unwind without Congress. Freedom Partners and Americans for Prosperity, two groups affiliated with the Koch brothers, are out with a letter today outlining the steps they think Price can take on his own:

  • Relax the benefit requirements.
  • Let states get waivers from more regulations.
  • Loosen the rules for how much of the costs insurers have to cover.

Reality check: HHS may have different priorities. As Vox reported this week, the next regulation in the pipeline is the one to broaden the exemptions to the contraception coverage mandate.

Health care world doesn't like the Paris withdrawal

Hospital system leaders had been urging Trump not to abandon the Paris climate deal — so when he announced the withdrawal yesterday, they grumbled that the decision was a mistake, Bob Herman reports. Hospitals are on the front lines of climate change, as studies have shown climate change increases the incidence of infectious diseases, respiratory illnesses, and other health problems.

They're not the only ones: Key quote from Jack Ende, president of the American College of Physicians: "Today's decision therefore greatly increases the chances that the global effort to reduce carbon emissions will be insufficient to avert catastrophic consequences for human health."

But Price is good with it: "The Paris agreement is a bad deal for the American people. I applaud President Trump's leadership and the actions he is taking."

Why the Iowa patient's care is so expensive

We've written before about a unique problem in Iowa's individual health insurance market: one patient whose care reportedly costs $1 million a month. It seemed hard to believe, but yesterday, the Des Moines Register gave more details that help explain why the patient's care is so expensive. The paper reported the patient has hemophilia — a disorder that keeps the blood from clotting, and can require expensive infusions of proteins.

The lesson: Insurers are sure to push Congress for changes to help them absorb the costs of expensive patients more easily, like reinsurance or a return to high-risk pools. But Iowa's insurance commissioner, Doug Ommen, told the Register that the state's insurance market problems go beyond just one patient — there's just a bad overall mix of customers, with too many sick ones and not enough healthy ones.

A privacy issue? The story also set off a lot of discussion yesterday about whether the patient's privacy under the HIPAA law was violated. It didn't name the patient, but the details — which came from a presentation from a Wellmark official — included the gender and a general idea of the age. (We've left out those details here.) We never got a definitive answer from privacy and legal experts, but safe to say they're worried about it.

What we're watching this week: Senate Republican leaders and staff are still working on the first draft of that health care bill. How quickly can the business lobby kill this idea of taxing employer benefits?

What we're watching next week: The Senate comes back, looks at the draft bill, and leaks stuff they don't like. And Thursday is Tom Price day — the Health and Human Services secretary testifies on the HHS budget proposal before the Senate Finance Committee in the morning and the House Ways and Means Committee in the afternoon. (Same day James Comey is testifying on some other stuff, FWIW.)

Also, the investment bank Jefferies holds its global health care conference in New York City, June 6-9. Facebook holds a health summit on June 6 for pharmaceutical marketers, per CNBC.

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