Last Thursday, the U.S. Supreme Court upheld the Affordable Care Act for the third time leaving in place the broad provisions of the law enacted by Congress in 2010. The vote was 7-2 against the 18 GOP-dominated states and 2 individual plaintiffs who brought the suit based on the argument that the elimination of the individual mandate in the 2017 Tax Cuts and Jobs Act essentially decapitated the rest of the law rendering it unconstitutional as a whole.
In the majority opinion, the Justices did not address the question of severability, instead focusing on the standing of the plaintiffs that brought the lawsuit. Writing for the majority, Justice Stephen Breyer wrote:
“We conclude that the plaintiffs in this suit failed to show a concrete, particularized injury fairly traceable to the defendants’ conduct in enforcing the specific statutory provision they attack as unconstitutional. They have failed to show that they have standing to attack as unconstitutional the act’s minimum essential coverage provision. Therefore, we reverse the Fifth Circuit’s judgment in respect to standing, vacate the judgment, and remand the case with instructions to dismiss.”
Justices Alito and Gorsuch voted against the majority arguing the mandate an unconstitutional overreach by the federal government.
That means the Patient Protection and Affordable Care Act aka ACA is law having survived three Supreme Court challenges in 2012, 2015 and 2021. It remains the most sweeping and controversial health policy platform since Lyndon Johnson’s Great Society (1965) that started the Medicare and Medicaid programs. It featured prominently in the Biden Campaign’s ‘Build Back Better’ Presidential Campaign and most recently as its vehicle for a special enrollment period allowing 1.2 million to purchase health insurance through the health marketplaces in administration’s American Rescue Plan.
For the last 11 years, it’s been known as ‘Obamacare’ and the target of hyperbolic campaign rhetoric who labeled it ‘government run healthcare’ and ‘socialized medicine.’ After passage in March 2010, Democrats lost House 63 seats in the November mid-term election and the Republican majority passed 67 “repeal and replace” before the 2016 Presidential election.
In the 11 years since passage, some things haven’t changed:
Partisan bickering about the law is intense: The ACA remains a lightning rod for partisans in Congress, Governors and state legislators. In deep Red states, it’s characterized as an unaffordable federal government overreach; in Blue states, it’s a first step toward universal coverage.
The public’s view of the law is mixed: Today, 53% of U.S. adults favor the law versus 35% who oppose it—a gradual increase across the decade and majorities favor its protections precluding pre-existing conditions (133 million) and expanded access to health insurance coverage through marketplace purchases (31 million) and Medicaid expansion (14.8 million)
But the bigger question: what’s the future for the ACA? Is it an adequate platform on which health policies can be built or a fundamentally flawed starting point?
The post-pandemic U.S. healthcare marketplace is vastly different than what it was in 2010 when the Affordable Care Act passed. There are three noticeable distinctions:
1-The Physical, Emotional and Financial Healthiness of the U.S. Population has Eroded
In 2010, 84% of the population had insurance coverage of some type; 92% have coverage of some sort today. But in the decade since passage, life expectancy has declined (78.7 to 77.8), the numbers experiencing mood/anxiety disorders have spiked (from 30% to 43%) and the incidence and severity of obesity, heart disease and diabetes have grown. Notably, in the past decade, out of pocket payments by households more than doubled to 3.8% of as employers passed health costs to employees and insurance premiums kept rising, household medical debt increased 6.5% in the last year and 60% of households have unpaid medical bills outstanding prompting a spike in debt collection activity by hospitals that’s attracted media attention recently.
2-The U.S. Economy is Vastly Different Today vs. 2010
In 2010, the economy was recovering from the 2008-2009 recession; in 2021, the economy is recovering from the global pandemic. But the healthcare economy was largely unhurt during the 2008-2010: it added jobs and operated normally. In 2020, the healthcare economy took a direct hit—some sectors more than others. That’s the big difference. A perspective:
In 2010, the U.S. population was 308.9 million, national health spending was $$2.6 trillion and the nation’s debt relative to its GDP was 52.3%. In 2019 prior to the pandemic the population had grown to 327.7 million, national health spending hit $3.8 trillion and the debt to GDP had increased to 77.4%. The share of spending attributable to Medicare and Medicaid grew slightly (35.4% of total health spending in 2010 vs. 37.1% in 2019) while private managed care organizations gained solid footholds in both. Hospital spending stayed virtually the same (31.2% of total spending in 2010 vs. 31.4% in 2019) while physicians saw their share of the pie shrink (26.6% in 2010 to 20.3% in 2019). Then, the pandemic hit: in 2020, the federal government took in $3.5 trillion, spent $6.6 trillion (including$1.6 trillion in Covid relief funding) and the debt-to- GDP hit 104.5%.
Looking ahead, the economic recovery from the pandemic is likely to take 18-24 months. Deficit spending will be a wedge issue in Campaign ’22 and healthcare is 22% of the administration’s proposed $6.7 trillion FY22 budget, so healthcare spending and affordability will take center stage.
3-The Structure of the Healthcare Marketplace has Fundamentally Changed since 2010
Consolidation of the U.S. healthcare has been a staple for 30 years in every sector. What’s changed? There are fewer deals but they’re bigger. (like last week’s announcements of the Spectrum-Beaumont merger, Cano’s acquisition of Miami U Health Care, Oschner’s deal with Rush and Tenet’s deal with Steward in FL). Vertical consolidators are rolling up new capabilities via their acquisitions (like Humana’s acquisition of One Home Health announced last week, CVS-Aetna, Optum, Truveta, et al) Private equity is funding alternative models of care (Oak, Privia, One Med Premise et al) and insurance (Oscar, Bright Health, Clover et al). And large-cap retailers are building healthcare industry verticals to take advantage of the attractive economics of U.S. healthcare spending (Amazon, Walmart, Best Buy et al).
In 2010, horizontal consolidation was the primary focus; in 2021, vertical consolidation is the focus as regional systems of health offering whole-person care in value-based models displace the status quo.
My view is this: the ACA has laudable elements upon which policies can be built especially around the healthcare workforce, comparative effectiveness research, preventive health, equitable access and its National Quality Strategy, but it is inadequate to address the fundamental changes in the healthcare market that now define post-pandemic healthcare in the U.S.
It successfully increased access to health insurance among underinsured and uninsured Americans. It successfully slowed per capita health costs but failed to lower total spending in the aggregate. And it has institutionalized myths about the system that lack factual evidence rather than building national health literacy.
At best, the ACA is a starting point. Its fate is uncertain until and unless bipartisan policymakers step back and take a fresh look.
“KFF Health Tracking Poll: The Public’s Views on the ACA”; June 3, 2021; Kaiser Family Foundation
“Healthy People 2030” Office of Disease Prevention and Health Promotion
“COVID-19 ruined finances across the US. Here’s Who Suffered Most”; June 16, 2021; McKinsey
“Altarum June 2021 Health Sector Economic Indicator Briefs”; June 17, 2021; Altarum
“Supreme Court Ruling on Obamacare Emboldens Democrats”; June 18, 2021; Wall Street Journal
“Business Speaks: The Future of Employer-Sponsored Insurance”; Gallup West Health
“Five takeaways on the Supreme Court’s Obamacare decision”; June 17, 2021; The Hill
Current Stats: CDC, WHO, Kaiser Family Foundation, Johns Hopkins
In 15 states, at least 70% of adults have received at least one dose of a COVID-19 vaccine. The majority of states (29) have reached 60% or more of adults with at least one dose of the vaccine.
Fewer than 50% of adults have gotten at least one shot in four states including Wyoming, Louisiana, Mississippi and Alabama.
Last week, Vermont became the first U.S. state to have 80% of its eligible population receive at least one vaccine dose.
KFF Study: at the current rate of vaccinations, 65% of those ages 12 and older will have gotten at least one Covid shot by July 4. (70% of Asians, 63% for Hispanics and 51% for Blacks).
The 7-day average of new daily cases is 12,192, down nearly 16% from the previous week.
Hopkins Study: Hospitals Aggressive in Patient Debt Collection during Pandemic
Johns Hopkins researchers analyzed the patient collection activity in the 100 hospitals with the highest revenues in the U.S. between 2018 and 2020. Highlights:
The biggest hospitals pursued 38,965 lawsuits and other court actions against patients, seeking more than $71.7 million.
Of the 100 U.S. hospitals with the highest revenues, 26 filed 38,965 court actions against patients, which is likely an undercount since some court records remained inaccessible during the investigation. 6 of the 26 hospitals were in New York.
“How America’s top hospitals hound patients with predatory billing “; June 16, 2021; Axios
HCA Trauma Activity Labelled “Money Grab”
Ed Knight fell from a ladder and ended up at HCA Chippenham in Richmond. He required 30 stitches and was discharged. The bill: $52,238 which included a facility fee charge of $17,000 for its trauma unit. An outside analysis conducted for Kaiser Health News (KHN) estimates the bill should have been $3500. The KHN headline called it a “money grab” by the nation’s biggest hospital operator with 179 hospitals.
KHN found the average HCA trauma activation charges is $26,000 in states where the company does business — three times higher than those of non-HCA hospitals, according to data from Hospital Pricing Specialists, a consulting firm that analyzed trauma charges in Medicare claims for KHN. HCA’s substantially higher charges didn’t necessarily result from patients with especially severe injuries, South Florida University researchers found.
Jay Hancock “In alleged healthcare ‘money grab,’ nation’s largest hospital chain cashes in on trauma centers”; June 14, 2021; Kaiser Health News
Trust: Physicians, Nurses, Hospitals Trusted Sources for Consumers
NORC survey of 2069 U.S. adults conducted December 29, 2020, through January 26, 2021: “In general, how much do you trust” (% Completely/Somewhat Trust vs. Slightly/Completely Distrust”
The U.S. health system as a whole:64/17
Government Health Agencies i.e. CDC, FDA: 56/23
Pharmaceutical companies: 34/42
Health insurance companies: 33/40
“Surveys of Trust in the U.S. Health Care System”; NORC
Study: Generic Drug Prices Rise for First Time in Seven Months
Per 46 Brooklyn’s June prescription drug pricing report:
For the first time in seven months, Medicaid’s weighted average generic drug mix experienced inflation this month reversing a 6-month decrease costing the sector $331 million in revenues.
Price increases ranged from 2.3% to 10% and impacted $35 million in prior year gross Medicaid expenditures.
“Generic drug prices rise for first time in seven months”; June 16, 2021; 46brooklyn
JD Power Medicare Advantage Study: Member Satisfaction Slipped in Last Year
According to the 7th edition of the J.D. Power 2021 U.S. Medicare Advantage Study released last Thursday:
55% of Medicare Advantage plan members actively managed their care in the past year, a decline of 9% from 2019.
Member satisfaction scores improved (54 points on a 1,000-point scale) when members successfully engaged with their plan to ask a question or solve a problem than when they have no engagement at all.
34% of new Medicare Advantage plan members (those ages 65-68 or in their first year with the plan) say they are in “very good” or “better” health and 46% say they have an annual income of $50,000 or more. These compare with 39% of established plan members (ages 69+ and not in the first year of the plan) who say they are in “very good” or “better” health and 56% who earn $50,000 or more.
Overall MA Plan rankings: #1-Kaiser Foundation Health Plan (846), #2-Highmark (834) and #3-Cigna HealthSpring (822).
“2021 Medicare Advantage Study”; June 17, 2021: JD Power
Study: Physicians have Confidence in Peers and Nurses, but not Hospitals and System
In 2021, the American Board of Internal Medicine (ABIM) Foundation engaged NORC at the University of Chicago to measure physician perceptions of trust in the U.S. health system. Highlights:
32% of physicians report their confidence in health care system and health care organization leadership has decreased.
43% of physicians say their trust in government health care agencies decreased during the pandemic.
90% of physicians believe patients can easily schedule appointments, but 24% of patients disagree.
98% of physicians say that spending an appropriate amount of time with patients is important, but only 77% of patients think their doctor spends an appropriate amount of time with them.
78% of people trust their primary doctor.
“Public & Physician Trust in the U.S. Health Care System”; May 21, 2021; ABIM
Study: Cost Effectiveness of Medicare Part D Drugs Inadequate
In this cross-sectional study of 250 drugs with the greatest Medicare Part D spending in 2016, cost-effectiveness analyses were unavailable for 46.0%, with these drugs representing 33.0% of Medicare Part D spending. For the 54.0% of drugs with available cost-effectiveness studies, many of the studies did not meet minimum quality standards.
Note: Medicare Part D is the prescription drug program for more than 40 million Medicare beneficiaries. Accounting for $100 billion of annual expenditures and 30% of all prescription drug spending in the US. Medicare Part D spending composes 77% of total Medicare drug spending.
Tisdale et al “Availability of Cost-effectiveness Studies for Drugs With High Medicare Part D Expenditures”; June 18, 2021; JAMA Network
Digital Therapeutics Getting More Attention
About 35 to 40 digital therapeutics have been approved by the FDA since 2017, though the agency doesn’t have a specific definition for the products.
73% of U.S. adults described digital health tools as convenient, while 60% said they are safe and 56% said they are accurate.
42% of adults said artificial intelligence can help clinicians deliver better health care, while 21% said AI can make it more difficult to provide quality care.
Background: The Digital therapeutics sector — clinically tested tools that deliver medical interventions via software — have been gaining traction for years from the first prescription digital therapeutic—the Pear Therapeutics Inc.’s mobile app in 2017 for patients with substance abuse disorders.
Gaby Galvin, “COVID-19 Accelerated Use of Digital Therapeutics, but Coverage Issues and Regulatory Questions Could Slow Their Momentum” June 15, 2021; Morning Consult
Study: Beverage Tax Results in Higher Prices for Consumers
Researchers analyzed the impact of the 2017 1.5 cents/oz. beverage tax on changes in beverage prices and purchases in independent food retail stores in Philadelphia. Key finding:
2 years after tax implementation, price audits of stores showed 137% of the tax was passed through to prices and bag checks indicated a 42% decline in volume of taxed beverages purchased in Philadelphia compared with Baltimore.
Bleich et al “Association of a Sweetened Beverage Tax With Purchases of Beverages and High-Sugar Foods at Independent Stores in Philadelphia”; June 15, 2021; JAMA Network
KHN Investigation: Illegal Payments to Orthopedic Surgeons Widespread
Kaiser Health News investigative journalists examined court documents about inducements by device manufacturers to encourage physicians to use their products. Highlights:
Manufacturers paid at least $3.1 billion in cash and other compensation flows to orthopedic and neurological surgeons from medical device manufacturers between August 2013 and December 2019. Orthopedic surgeons were the most frequent beneficiaries of manufacturer payments.
At least 100 fraud and whistle-blower lawsuits were filed against implant surgeons accused of taking illegal compensation from device makers and 700 surgeons were identified as recipients of questionable compensation from device manufacturers in recent years.
Fred Schulte Elizabeth Lucas “Device Makers Have Funneled Billions to Orthopedic Surgeons Who Use Their Products”; June 17, 2021; Kaiser Health News
REGULATORY / POLITICAL NEWS
MedPAC’s Report Urges Changes to MA payment Methodology Among Major Recommendations to Congress
In its 2021 healthcare delivery system report, released last Tuesday, MedPAC recommended:
Medicare Advantage: Replace benchmark policy with one that applies a rebate of at least 75%, a discount rate of at least 2% and blend of per capita local area fee-for-service spending with price-standardized per capita national fee-for-service spending.
Alternative payment models: Harmonized portfolio of fewer alternative payment models, to reduce spending and improve quality.
Skilled nursing facilities:replace current value-based purchasing program with a value incentive program with fewer, more meaningful performance measures.
Medical education: require CMS to transition to empirically justified indirect medical education adjustments to both inpatient and outpatient Medicare payments.
Vaccines: Congress should cover all appropriate preventive vaccines and their administration under Part B instead of Part D without beneficiary cost sharing.
“Medicare and the Health Care Delivery System”; June 2021; MedPac
GAO: Direct to Consumer Ad Spending Level Since 2016 at $6 billion/year
In its report, the Government Accountability Office found drug manufacturers spent $17.8 billion on direct-to -consumer advertising (DTCA) for 553 drugs from 2016 through 2018. Spending averaged $6 billion/year. Almost half of this spending was for three therapeutic categories of drugs that treat chronic medical conditions, such as arthritis, diabetes, and depression.
Note: The U.S. is one of only two countries that permits the pharmaceutical industry to advertise medicines directly to consumers. (The other is New Zealand.)
“Prescription Drugs: Medicare Spending on Drugs with Direct-to-Consumer Advertising”; June 17, 2021; GAO