The healthcare agenda for the Biden administration will be set by six events in the next 51 days before the inauguration January 20:
1. DECEMBER 11 GOVERNMENT SHUTDOWN
The federal government is set to shut down in 12 days unless Congress approves funding to keep it operating. As of last week, a compromise between the leaders of the House and Senate Appropriations committees for the federal government’s FY 2021 $1.4 trillion in discretionary spending appeared close–an omnibus bill of 12 different spending measures. But there are sticking points: Democrats want emergency COVID-19-relief ($233 billion) money as part of the deal; Republicans want a separate bill for relief funding and a few billion for the border wall. Other sticking points are funding for the Veteran’s Choice, which enables veterans to see private physicians if unable to get timely access in the VA system, ($12.5 billion) and extension of temporary Medicare sequestration cuts for hospitals. And this omnibus package requires the President Trump’s signature: President Trump vowed not to sign another omnibus bill after signing that $1.3 trillion omnibus package in 2018.
Consequence to healthcare: Much is at stake for healthcare–funding for Veterans Health and community health centers, relaxation of Medicare loan repayments by hospitals, relief from mandated Medicare sequestration cuts that expire 12/31/20 and administrative functions in the Medicare program that keep enrollees served and providers paid. Odds are a compromise will be reached by the 116th Congress. A government shutdown in the pandemic would be political malpractice even for the staunchest partisans.
2. TRUMP ADMINISTRATION LOOSE ENDS AND COURT PROTECTIONS
The administration is rushing to enact or protect legislation, executive orders, and administrative actions it initiated in advance of the change of power January 20. In the next 51 days, it will seek to hardwire its executive orders into regulations requiring its hospital, insurance and drug price transparency, changes to the Medicare outpatient payment rules for physicians, modernization of the Stark rule and others. Notably, the Trump administration had considerable success in its federal court appointments gaining confirmation for more than 220 conservative federal judges, including three Supreme Court justices and 53 appeals court judges. Thus, the Trump administration’s legacy in healthcare will be impacted by court decisions for years to come.
Consequence for healthcare: The 116th Congress was unable to resolve major partisan contention around surprise medical bills, drug prices and other issues where bipartisan support was lip-service only. For healthcare, the loose ends will be revisited one at a time in Congressional sausage-making. But arguably, the most significant Trump legacy as it relates to current and future healthcare legislation will be its presence in the Court system where it successfully moved the bar to conservative tastes.
3. NEW COVID-19 RELIEF PACKAGE
Most Economists concur with Fed Chairman Jay Powell that a new round of relief funding is needed for individuals, small businesses, hospitals, and others ravaged by the third wave of the pandemic. At the end of the year, several programs in the CARES Act ($2.2 trillion March 2020) aimed at protecting consumers and small businesses expire i.e. protections against eviction, suspension of student loan payments, penalty-free forbearance for federally backed mortgage payments. By inauguration day, infections are projected to increase from 12.4 million today to more than 20 million per the University of Washington. Economists think the economy will not recover to pre-pandemic levels before the third quarter, 2021, with unemployment reaching 6-7% as employers adapt to a gig economy and survivors in the hospitality, restaurant, entertainment, and retail industries pivot back to normalcy. The Conference Board’s assessment is measured: its upside scenario is 3.8% (annualized rate) in 4Q20 yielding an annual contraction of 3.5% for 2020 and an expansion of 6% in 2021 if COVID-19 cases level off and lockdowns don’t happen. But its downside is sobering: the possibility of a double dip reflecting possible problems with the vaccine rollout, failure by Congress to pass a Relief Package for individuals and businesses and “a very bumpy political transition that disrupts business and consumer confidence. Under this scenario US monthly economic output does not recover to pre-pandemic levels until sometime in 2022.”
Consequence for healthcare: The House proposed a $3 trillion package; the Senate countered with its $1.2 trillion proposal. Both say they’re close and optimistic, but neither is convincing. A Relief Package will pass before the end of the year simply because 13 million voters stand to lose their unemployment benefits and anxiety among voters is high. But it will fall short of funds needed by hospitals to manage the surge.
4. POLITICAL APPOINTMENTS TO KEY HEALTHCARE LEADERSHIP ROLES
A new administration has makes 4000 political appointees of which 1200 require Senate confirmation. In healthcare, the leaders of Health and Human Services, Veterans Administration, Food and Drug Administration, National Institutes of Health, Center for Medicaid and Medicare Services, and the Center for Disease Prevention and Control will be first followed by Deputy Secretaries, Chiefs of Staff and Directors in important programs like the Center for Medicare and Medicaid Innovation, Indian Health Service, Agency for Healthcare Research and Quality and others. Thus far, the Biden administration has relied on experienced Obama-era government officials for its picks in Treasury, National Security, Homeland Security, and others. For key healthcare posts, the likely slate will include experienced state health officials since pressures on Medicaid programs will be intense in addition to seasoned wonks in DC.
Consequence for healthcare: The Biden administration’s pledge to ‘build on the affordable care act’ imply its policies will seek to expand affordable health insurance coverage cost effectively via both private sector innovation (aka value-based models). For it to be successful, the Biden team would be well-served to add seasoned private sector expertise to inject pragmatism and operational sensitivities in its policies and directives. Leadership slots for the Center for Medicare and Medicaid Innovation (CMMI), Agency for Healthcare Research and Quality (AHRQ), the Patient Centered Research and Outcomes Institute (PCORI) and others would benefit from the tandem of private sector expertise and health policy savvy.
5. GEORGIA SENATE RUN-OFF JANUARY 5
In Georgia over the next three weeks, $250 million will be spent to convince Peach State voters. The Democratic challengers Ossoff and Warnock will argue that the incumbents are against access to healthcare for the poor and rubber stamps for drug manufacturer’ price gauging. The incumbents Perdue and Loeffler will remind Georgia voters that they oppose Medicare for All and a government takeover of the health system. What’s at stake is control of the Senate: a sweep by the Democratic challenger to produce a 50-50 tie broken by Vice President Harris. It would, in effect, buoy major policy efforts like the public option and increased subsidies for the under-insured. If either/both Republicans win, the big change policies of Biden healthcare agenda will be moot: support for the public option, lowering the age of Medicare eligibility to 60 and others will not get a nod in a divided 117th Congress.
Consequence for healthcare: A sweep by the Democratic challengers will mean a 50-50 Dem-GOP split in the Senate allowing Vice President Harris to resolve tie votes. Presumably, that would enable the Biden health policy agenda to be more aggressive in its pursuit of a public option and expansion of subsidies for those uninsured or under-insured. The Biden healthcare policy agenda is profoundly impacted by this election in Georgia and its effectiveness in managing the pandemic. It’s that simple.
6. WAVE ONE CORONAVIRUS VACCINE DISTRIBUTION
Before early January, more than 20 million vaccine doses from Pfizer, Moderna and Astra Zeneca will be administered to frontline healthcare workers, and shortly after states will begin vaccinations for their most at-risk patient populations. The logistics for storing and administering the vaccines and booster shots weeks later for each drug vary, so the first wave will be instructive for subsequent waves to follow. Before the inauguration, the nation’s frontline healthcare workers will have been vaccinated along with essential workers at high risk of infection (i.e. police officers, teachers, bus drivers et al). The success of the Wave One vaccination will be critical to the Biden administration’s prosecution of the war against the pandemic.
Consequence for healthcare: The administration of the vaccine programs by state and local government governments in tandem with local hospitals and public health agencies, retail pharmacy and drug distribution partners (CVS, McKesson et al) will test logistics support in every organization. For the healthcare industry, especially its frontline caregivers in hospitals and nursing homes, it’s the most urgent need facing its leaders.
MY TAKE
For at least the next seven months, the coronavirus and economic recovery will dominate the political landscape. Political pundits will speculate about the mid-term elections November 8, 2022 when control of the U.S. House of Representatives will be in play. If history is a judge, first term Democratic Presidents take a beating in their first mid-term contest: in 1994, Bill Clinton lost 54 seats to Republicans. In 2010, Barack Obama lost 63 seats to Republicans. But the war against the pandemic and how it’s prosecuted by the Biden administration will be THE FOCUS.
The next 51 days will set the stage for healthcare’s post pandemic future and the role its health system plays. Drug prices, healthcare affordability and price transparency, consolidation of hospitals that result in higher costs, physician independence, the role of private equity ownership and the national deficit will once again dominate the healthcare industry’s attention. But how they are approached will be defined by what happens between now and January 20.
Stay safe. Be well.
Paul
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RESOURCES
“The Conference Board Economic Forecast for the U.S. Economy”; November 13, 2020; The Conference Board
“The CARES Act” U.S. Department of the Treasury
“CARES Act Provider Relief Fund” U.S. Department of Health and Human Services
“Covid-19 Deaths Top 100,000 in U.S. Long-Term Care Facilities”; November 25, 2020; Wall Street Journal
“America will be the first country to roll out a covid-19 vaccine”; Nov 28th 2020; The Economist
CORONAVIRUS NEWS
Exit Poll: COVID-19 Denial a Major Challenge in U.S.
According to the Kaiser Family Foundation survey conducted by NORC Oct. 27-Nov. 3:
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For every voter group – whites, Blacks, urban, suburban and rural voters, voters with and without college degrees – about 60% of Biden voters said COVID-19 was a top issue driving their vote in the exit poll but barely 20% of Trump voters named COVID-19 a top issue influencing their vote.
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It was just the reverse for the economy.8% of white Biden voters named the economy their top issue in exit polls, while 48% of white Trump voters did. An identical 8% of small town and rural Biden voters picked the economy while 48% of Trump voters did.
“The Exit Polls Show The Need To Confront COVID-19 Denial in Red America” Kaiser Family Foundation November 17, 2020; Kaiser Family Foundation
50 Million Food Insecure in U.S.
According to the USDA, more than 35 million people, including nearly 11 million children, lived in food insecure households before the COVID-19 pandemic. However, a recent Feeding America analysis found that number could rise to more than 50 million people, including 17 million children, in 2020. With 11.1 million people in America still unemployed, many are turning to the food banks for the first time. Previous food bank surveys revealed that an estimated 40% of people seeking assistance from food banks had never needed help before. Food banks have seen a 60% increase in demand compared to this time last year.
“Feeding America Network Stays Resilient As COVID-19 Crisis Endures” Feeding America November 20, 2020; Feeding America
INDUSTRY NEWS
Pew: News Sources Reinforce Predispositions
According to Pew Research’ News Pathways Project:
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18% of American adults rely primarily on social media for news: they know less about the 2020 election, less about the coronavirus pandemic, and less about political news in general than people who rely on news websites, cable or network TV, radio, and print. Those who depend on social media are also more likely than other news consumers to be exposed to disinformation.
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The percentage of American adults who use social media for news, sometimes or often, is now at 55%, Mitchell says—up from the presidential election of 2016, when 42% of adults got at least some news from social media
“Americans Who Get News Mainly on Social Media Are Less Knowledgeable and Less Engaged”; November 16, 2020; Pew Research
Study: Bundled Payment Programs Reduce Spending
Background: Under the Patient Protection and Affordable Care Act (ACA), US hospitals were exposed to a number of reforms intended to reduce spending including bundled payment programs for targeted acute episodes (eg, acute myocardial infarction, heart failure, and pneumonia) starting in 2012. Researchers analyzed 7,634,242 episodes from Medicare beneficiaries between January 1, 2008, and August 31, 2015, from a national random 20% sample of Medicare beneficiaries. Key finding: The bundles were associated with a significant reduction in episode spending: between $431 and $1232 per discharge amounting to a total annual savings of $5.68 billion.
Ibrahim et al “Evaluation of US Hospital Episode Spending for Acute Inpatient Conditions After the Patient Protection and Affordable Care Act”; November 25, 2020; JAMA Network
Study: Drug Company Inducements to Physicians Influence their Prescribing
MEDLINE (Ovid), Embase, the Cochrane Library, Web of Science, and EconLit were searched for citations through September 2020 focused on the association between receipt of industry payments (exposure) and prescribing (outcome). Key finding: of 101 analyses reviewed, most studies identified a positive association between payments and prescribing in all analyses and no study had only null findings.
Mitchell et al “Are Financial Payments From the Pharmaceutical Industry Associated With Physician Prescribing? A Systematic Review”; November 24, 2020; Annals of Internal Medicine
USPTF Recommendation: Behavioral Counseling Encouraged for Heart Disease
The United States Preventive Services Task Force (USPSTF) has released new recommendations for adults with known cardiovascular disease (CVD) risk factors1 and an associated systematic literature review. The recommendations encourage medical practitioners to offer or refer adults with CVD risk factors to behavioral counseling interventions to promote healthy diet and physical activity (B recommendation). Notably, changes from the 2014 recommendations are that recommendations are extended to patients who are not overweight or obese (individuals who are overweight or obese are covered in other recommendations), CVD risk factors are expanded to include patients with elevated blood pressure and a 10-year CVD risk of 7.5% or greater, research pertaining to patients with impaired fasting glucose or diabetes is no longer included in the review but discussed in separate recommendation statements, and it is no longer specified that behavioral interventions should be intensive.
Kharmats et al “USPSTF Recommendations for Behavioral Counseling in Adults With Cardiovascular Disease Risk Factors Are We Ready?”; November 24, 2020; JAMA Network
Kaiser Family Foundation: States Face Bigger Medicaid Funding Shortfalls
Medicaid enrollment for the fiscal year 2021 is expected to increase 8.2%, with state spending accelerating by 8.4%, compared with 6.3% growth in the previous fiscal year, based on data from 42 state Medicaid directors surveyed by the Kaiser Family Foundation.
The federal government picks up 90% of the cost for people covered under the Affordable Care Act’s Medicaid expansion, but it matches state expenditures for other beneficiaries in the program. Under pandemic legislation, states have received a 6.2% increase in federal funds that match state expenditures on the program, but this additional funding expires at the end of March 2021. Nationwide, the U.S. state budget shortfall from 2020 through 2022 could amount to about $434 billion, according to data from Moody’s Analytics.
“States Expect Medicaid Enrollment and Spending to Increase by Over 8 Percent Each in FY 2021, Primarily Driven By a Slumping Economy and Federal Conditions to Maintain Eligibility to Access Enhanced Federal Medicaid Funds”; October 14, 2020; Kaiser Family Foundation
U.S. Department of Treasury: October Deficit $284 Billion
Last week, the federal government announced its October shortfall was $284 billion– budget deficit in more than double the monthly shortfall a year ago. The U.S. budget gap rose 111% due to higher federal spending last month on healthcare and safety-net programs, and lower federal tax collection. Government outlays rose 37% to $522 billion, while revenue declined 3.2% to $238 billion.
The 12-month budget gap totaled $3.3 trillion last month, about 15.5% of gross domestic product.
Kate Davidson “Monthly U.S. Budget Gap More Than Doubled in October”; November 12, 2020; Wall Street Journal
