This Saturday marks the 14th anniversary of the Affordable Care Act passage. It is arguably the most consequential healthcare legislation since passage of the Medicare and Medicaid Act in 1965.
in 2010, 46% were favorable toward the law vs. 40% who were opposed. Today, those favorable has increased to 59% while opposition has stayed at 40% (Kaiser Tracking Poll). In the March 2024 Keckley Poll of 805 U.S. adults, mixed feelings and confusion about the law are clear:
- 27% agree “the Affordable Care Act has hurt the U.S. healthcare system” vs. 32% who have mixed feelings and 31% who disagree.
- 59% favor “Congressional action to Fix and Repair the ACA” over Repeal and Replace vs. 14% who favor Repeal.
- 53% say they “understand what’s in the ACA” vs. 47% who don’t.
Few elected officials and even fewer voters have actually read the law. It’s understandable: 955 pages, 10 major sections (Titles) and mountains of enabling rules, regulations, administrative actions, executive orders, amendments and legal challenges that followed. It continues to be under-reported in media and misrepresented in campaign rhetoric by candidates for public office. Campaign 2024 seems likely to be more of the same.
In 2009, I facilitated discussions about health reform between the White House Office of Health Reform and the major private sector trade groups (the American Medical Association, the American Hospital Association, America’s Health Insurance Plans, AdvaMed, PhRMA, and BIO). The impetus for these deliberations was the Obama administration’s pledge that systemic reform was necessary with three-aims: reduce cost, increase access via insurance coverage and improve the quality of care provided by a private system. In parallel, key Committees in the House and Senate held hearings ultimately resulting in passage of separate House and Senate versions with the Senate’s becoming the substance of the final legislation. Think tanks on the left (I.e. the Center for American Progress et al.) and on the right (i.e. the Heritage Foundation) weighed in with members of Congress and several new ‘coalitions, centers and institutes’ formed to advocate for and against key provisions of the law often under pseudonyms intended to convey a groups predisposition toward solutions that advantage their members and hurt others. And all this played out against the 2008 recession—the most significant downturn in the U.S. economy since the Great Depression (1929-1939).
So, as the ACA resurfaces in Campaign 2024, an objective view of its effectiveness and perspective about its future are worthwhile.
The Patient Protection and Affordable Care Act (ACA) of 2010: Results are Mixed
Has the ACA resulted in improved quality across the system? Yes, primarily through market-driven new drugs, technologies, clinical processes, facility modernization and digitalization with a caveat: quality and safety improvements have not been universally accessible (disparities persist), user experiences with the system are dismal and eroding and its workforce is frustrated and fearful about the future.
Has the ACA increased access to health insurance coverage? Yes. The combination of Medicaid expansion in 40 states and subsides for lower income and small businesses to purchase coverage lowered the uninsured rate to 8% today from 16%, and restriction imposed on insurers (pre-existing conditions, lifetime limits, coverage for “young invincibles”, et al) remain popular in 2010 but a caveat: annual insurance premiums for those under 65 have increased faster than their wages and in Medicare, its Advantage Plans, risk-adjustments based on suspect coding schemes has resulted in overpayments to insurers and the cybersecurity breach of Change Healthcare has inflamed already intense antipathy by providers against its owner, UnitedHealth Group now also facing Congressional investigation.
Has the ACA lowered cost? No. It turbo-charged competition in each sector resulting in consolidation and concentrated market power and weakened those left out. The Congressional Budget Office forecast the ACA would increase spending by a $1.1 trillion (2010-2019) but insurance subsidies alone cost $3 trillion. Between 2010 and 2021, total health spending increased 64% while the U.S. population increased only 7%. Its alternative payment programs delivered mediocre savings to Medicare and medical inflation has offset its efficiency gains.
So, at best, the ACA moved needles in each of the three but its effectiveness is a mixed bag. Nonetheless, it has survived 7 Supreme Court challenges and more than 70 Repeal votes in Congress and is now a permanent fixture in healthcare’s regulatory framework. Hanging chads aside, it is here to stay.
ACA 2.0: What’s Ahead?
In 2010, the healthcare industry did not imagine the massive role of private equity, the emergence of generative AI, the consolidation of mega-players in each sector, the emergence of state health policies around prices and competition, the intrusion of national retailers and global tech players, the significance of social determinants in health nor the dominance of vertically integrated systems of health and oligopolies. Employers sat on the sidelines as the ACA was crafted, and media attention was minimal. It was oriented toward patients and enrollees, not consumers and individuals (aka the Patient Protection and Affordable Care Act). ‘Protection’ was about access, not cybersecurity; ‘Affordability’ was about insurance premiums and subsidies, not total out-of-pocket spending by consumers. It presumed interoperability and data sharing and imagined universal coverage in a private system. It did not envision the impact of “Fat Joe” sparking a tsunami against opaque hospital prices nor assaults on PBMs and GPOs as unnecessary middlemen. Its funding assumptions were flawed and its hanging chads were many.
Trust and confidence in the U.S. health system is low and in free-fall. 69% of adults agree “the system is fundamentally flawed and needs major change” vs. 9% who disagree (Keckley Poll March 2024). Though the ACA remains popular and public understanding of its specifics is low, its Repeal is unlikely because many of its inventions are embedded in its infrastructure today.
What’s needed is ACA 2.0: a modernized version that’s framed in the context of the future state of the industry in the U.S. and globally. Unlike the process in 2009-2010 that gave birth to the ACA, it needs 3 fundamental changes:
- Active input from employers, state health officials and the public health communities.
- Objective data about supply, demand, costs and utilization.
- Definitions and industry-wide adoption of specific milestones for affordability, value and system effectiveness.
The need for ACA 2.0 is apparent and urgent. The motivation to initiate the process is uncertain: tribalism in U.S. healthcare, where near-term advantage takes precedent over long-term solutions by many organizations, is the rule, not the exception.
What’s needed is a coalition committed first and foremost to the long-term future of the health system: it doesn’t exist today.
On the 14th anniversary of the ACA, it’s future needs attention.
Paul
Sections
- Quotables
- Hospitals
- Physicians
- Population Health
- Prescription Drugs
- Regulators, NGOs, Courts
Quotables
Re: health system transformation: “The $4.5 trillion US healthcare market is on an unsustainable path, with spending fast outpacing improvement in outcomes.…the healthcare industry is undergoing a sea change known as value-based care, which focuses on improving holistic patient outcomes while controlling costs. More precisely, it involves alternative reimbursement models that reward healthcare providers for keeping patients healthy through holistic and preventative care—in contrast to traditional, fee-for-service reimbursement, which rewards providers simply for providing a higher volume of care. VBC is transformative—and transformative isn’t easy. Pursuing this model requires healthcare providers to fundamentally change the way they operate.”
Enablement companies are key to the future of value-based care Pitchbook March
Re: Change Healthcare, UnitedHealth Group: “United’s reputational damage from this incident is likely to be considerable. It could lose Change health plan customers due to this incident, as well as care systems being unwilling to participate in their payment system. United’s legal liability for failing adequately to protect its data systems from this attack is also likely to be substantial, but it is unknown as of this writing.
US health care is 17.3%of the US GDP and by itself now exceeds the GDP of Germany. It has grown to the point where the uninterrupted functioning of health care payments is vital to national security. There is no reason why private sector firms cannot provide high-quality technical support for health care payment. A completely centralized, federally owned system of health care payment is neither practical nor desirable.
However, the current IT system fragmentation, fragility, and the absurd complexity of health care payment rules all cry out for a much higher level of systemic security, stability, and simplicity. Simplifying health care payment will not happen with the current system of over 1,100 independent health plans without federal action. There is no excuse for the Change Healthcare data breach happening again.”
Will The Change Healthcare Incident Change Health Care? | Health Affairs
Re: private equity in healthcare: “The problem lies in the simple fact that our healthcare industry is massive, and there exists regulatory complexity and lack of transparency that presents arbitrage opportunities and loopholes. Private equity has gained a reputation for being one of the worst offenders in this arena. But profiteering extends across healthcare. This dynamic brings us to where we are today, including the most recent March 5th FTC workshop and movement against PE.”
Blake Madden “Private Equity in Healthcare: Let’s Find an Equilibrium” Hospitalogy March 14, 2024
Re: spirituality and medical practice: “…many medical ethicists recognize that the principles of beneficence and respect for patients as whole persons require physicians to do more than attend to the details of physiological and anatomical derangements. Spirituality and religion are essential to many patients’ identities as persons. Patients (and their families) experience illness, healing, and death as whole persons. Ignoring the spiritual aspects of their lives and identities is not respectful, and it divorces medical practice from a fundamental mode of patient experience and coping. Promoting the good of patients requires attention to their notion of the highest good. Respecting patients as persons demands attention to their spiritual needs.
Physicians, Spirituality, and Compassionate Patient Care | NEJM
Re: consulting industry trends: “Big and established consulting firms such as McKinsey, BCG and Deloitte, which are paid to predict the future for the world’s biggest corporations, have gotten their own destiny wrong. The fallout is messy…
In the U.S., the consulting market is expected to grow by 6% in 2024, down from double-digit growth in the pandemic, according to Source Global Research estimates. That group found that 86% of U.S. clients said they plan to cut spending on consulting this year…
Private-equity work—a big wellspring of consulting contracts for top firms—has dried up, due to a drop in dealmaking amid high interest rates. Management consultants often advise on due diligence for mergers and acquisitions and then get contracts to integrate one firm with another. The overall M&A market, globally, dropped 15% last year to a total value of $3.2 trillion, according to a Bain analysis. “
Consultants Are Paid to Fix Businesses. Why Can’t They Fix Their Own? – WSJ
Re: processed food consumption and mental health: “Ultra-processed foods may not only affect our bodies, but our brains too.
New research suggests links between ultra-processed foods—such as chips, many cereals and most packaged snacks at the grocery store—and changes in the way we learn, remember and feel. These foods can act like addictive substances, researchers say, and some scientists are proposing a new mental-health condition called “ultra-processed food use disorder.” Diets filled with such foods may raise the risk of mental health and sleep problems.
The science is still early and researchers say there is a lot they don’t know. Not all ultra-processed foods are equal, some scientists say, adding that some might be good for you. A diet high in ultra-processed foods has been linked with obesity, Type 2 diabetes, cancer and cardiovascular disease, but researchers are still figuring out exactly why, beyond calorie counts and nutrient composition.
Makers of foods such as processed meats and muffins defend their products, and note that there isn’t a consistent, universally accepted definition of ultra-processed food.
Some scientists are proposing a new mental health condition — “ultra-processed food use disorder,”
The New Science on What Ultra-Processed Food Does to Your Brain – WSJ March 11, 2024
Re: moral injury: “When a registered nurse knows the level, the quality of care that they are able to provide a patient, but they are unable to provide that level of care because of unsafe staffing levels and working conditions, that causes deep moral injury,”
Amirah Sequeira, national government relations director of National Nurses United at POLITICO’s Health Care Summit last week.
It’s not burnout, it’s moral injury – pkeckley@paulkeckley.com – PaulKeckley.com Mail (google.com)
Re: specialist participation in alternative payment models: “The Centers for Medicare & Medicaid Services Innovation Center (CMMI) has set the goal for 100% of traditional Medicare beneficiaries to be part of an accountable care relationship by 2030. Lack of meaningful financial incentives, intolerable or unpredictable risk, infrastructure costs, patient engagement, voluntary participation, and operational complexity have been noted by the provider and health care delivery community as barriers to participation or reasons for exiting programs. In addition, most piloted and implemented population-based total cost of care (PB-TCOC) payment models have focused on the role of the primary care physician being the accountability (that is, attributable) leader of a patient’s multifaceted care team as well as acting as the mayor of the “medical neighborhood,” leaving the role of specialty care physicians undefined. Successful provider specialist integration into PB-TCOC models includes meaningful participation of specialists in achieving whole-person, high-value care where all providers are financially motivated to participate; there is unambiguous prospective attribution and clearly defined accountability for each participating party throughout the care journey or episode; there is a known care attribution transition accountability plan; there is actionable, transparent, and timely data available with appropriate data development and basic analytic costs covered; and there is advanced payment to the accountable person or entity for management of the care episode that is part of a longitudinal care plan.”
Re: competition in U.S. capitalism: “There is also a broader significance to the settlement. It’s a case study of a central flaw in free-market economic theory. That theory suggests that capitalist competition can almost always protect consumers from businesses that charge too much.
To be clear, competition is indeed a powerful force that frequently makes both consumers and businesses better off. That’s why capitalist economies have such a better record than communist or socialist economies. Just look at South Korea and North Korea. (Are you familiar with the satellite images that compare the two Koreas at night?) Or consider the recent economic struggles of Venezuela.
Market competition, however, isn’t the panacea that free-market advocates claim. Sometimes, businesses can amass enough economic power to squash competition — as real estate brokers did.
The solution to this concentration of economic power often requires political power — namely, antitrust enforcement by the government. After years of refusing to change their tactics, the Realtors’ agreed to a settlement now because they were vulnerable to government action.
Since the 1980s, antitrust enforcement has been unfashionable in the U.S. Free-market economic theory has been ascendant instead. But the results of this laissez-faire era have been disappointing for most Americans. Businesses have grown larger, and corporate profits have surged. Incomes and wealth for most Americans have grown only slowly…. This new movement remains in its early stages, and it’s too soon to know how successful it will be. But the real estate settlement looks like the movement’s biggest victory yet
The Morning: The Realtors’ big defeat – pkeckley@paulkeckley.com – PaulKeckley.com Mail (google.com)
Hospitals
AHA survey of Change Health disruption: Results from nearly 1,000 hospitals and were collected between March 9, 2024 and March 12, 2024.:
- 74% of hospitals reported direct impact of the CH cyberattack
- 40% said it had caused delays in patient care
- 82% reported a negative impact on their cash flow (33% said the impact was more than half their revenue)
Steward, Private equity and Investigations: “Steward’s Massachusetts hospitals are in deep financial distress and appear to be in danger of closure because of years of mismanagement, private equity schemes, and executive profiteering. You have run this hospital system for 14 years, and reportedly have had access to two private jets while owning two luxury yachts. Meanwhile, suppliers were unpaid, the system piled on debt, and patients in Steward hospitals … suffered because of inadequate care.”
Letter from U.S. Sen. Ed Markey to Dallas-based Steward Health Care CEO Ralph de la Torre, MD, to testify at an April 3 field hearing in Boston regarding unanswered questions over the health system’s troubled finances
“In December, Congress announced a bipartisan investigation into private equity’s influence in healthcare. MPT (Medical Property Trust) was included on the list of companies that received subpoenas. Sen. Chuck Grassley, the ranking Republican on the Senate Finance Committee, has asked Apollo and Leonard Green to submit details about its deals with MPT, among other things; the Massachusetts congressional delegation is asking Cerberus to account for what happened at Steward. The fundamental question is: Where did all the money go? If Congress does its job and follows the money, it may find itself confronting one of the biggest financial heists in American history — one that transferred billions of dollars from needy patients to greedy investors. Lawmakers aren’t empowered to get any of that money back. But they can at least make MPT and its private-equity partners account for what they got away with.”
How Wealthy Investors Got Rich Looting Needy Hospitals.pdf (Business Insider)March 6, 2024
Study: Trauma Center Pricing for Nontrauma Care: “Rising prices for health care services are a major determinant of increased health care spending and health insurance premiums. Hospital prices (for inpatient and outpatient care) are the largest driver of rising health care spending in the commercial market in the US. Researchers analyzed trauma center paid claims data from 2011–18. Findings:
- The share of all hospitals in our study sample serving as trauma centers grew from approximately 21% in 2012 to 28% in 2018, for an increase of approximately 33%. This represents a net addition of 138 trauma centers during the period.
- Consistent with this growth in trauma centers, the share of total nontrauma patients admitted to hospitals with a trauma center increased substantially between 2012 and 2018 (from 41% in 2012 to 50% in 2018_, for an increase of 22% Similarly, the percentage of total nontrauma ED visits occurring in hospitals serving as trauma centers increased from 34% in 2012 to 44% in 2018.
- The average price for nontrauma inpatient admissions for the full sample during the study period was $21,112. Always trauma center hospitals had a higher average price of $22,568 per inpatient admission during this period (opened trauma center hospitals’ average price was slightly lower, at $22,097); never trauma center hospitals had the lowest average price, at $19,769 per inpatient admission (closed trauma center hospitals had a slightly higher average price, at
“…hospitals serving as trauma centers had significantly higher nontrauma prices for both inpatient admissions and ED visits than hospitals not serving as trauma centers.”
Physicians
IMG residency requirements changes in states: “Four states (TN, IL, FL, VA) have or are very close to having eliminated residency requirements for certain IMGs (international medical graduates).
In April 2023, Tennessee Gov. Bill Lee (R) signed into law a bill that enables IMGs to skip residency and instead get a 2-year provisional license to work at a healthcare facility that has an accredited residency program. After 2 years, they can apply for a full license. However, applicants must already be “legally entitled to live or work in” the U.S., and must obtain their own visa or permanent resident card. They also must be certified by the Educational Commission for Foreign Medical Graduates (ECFMG), now a division of Intealth; pass the U.S. Medical Licensing Exam (USMLE) Step 1 and 2 CK; and have completed at least a 3-year residency at an accredited international program.
The Tennessee law goes into effect on July 1 of this year. Two additional states are close to enacting legislation that cuts residency requirements and establishes an alternative, permanent pathway to licensure for some IMGs: Florida and Virginia
More States Cut Training Requirements for Some International Medical Graduates | MedPage Today
Match Day results: On March 15, medical students in the National Residency Match, hoping to matriculate into a Graduate Medical Education (GME) program According to estimates from the Association of American Medical Colleges (AAMC), the U.S. faces a shortage of up to 124,000 physicians in just 10 years, a problem made worse by an exodus from the workforce of more than 100,000 physicians in 2021 alone. Results for 2024 Match Day:
- Hospitals and medical centers offered 41,503 residency positions in 2024, a 3% increase from last year.
- 44,850 people applied for residencies this year, the highest in the history of the 72-year-old match program. “The increase was driven by U.S. osteopathic medicine doctorate candidates and non-U.S. citizen international medical school graduates.”
- Applicants filled 93.8% of slots — 38,941 positions — during the residency match, a similar percentage to last year. Internal and emergency medicine, thoracic surgery, integrated interventional radiology and obstetrics-gynecology filled the highest percentage of residency.
It’s Match Week, but That Won’t Fix the Physician Shortage | MedPage Today
Match Day 2024: Record number of residency positions filled | Modern Healthcare
Population Health
Covid 19 mortality: Per CDC data: in the 4 years since identifying the Covid 19 virus (March 11, 2020), statistics for the U.S.:
- 18 million have died
- 6 million have been hospitalized (15,141 current weekly avg March 2, 2024)
- 8% of US adults have long Covid
- 23% of hospital ED visits are diagnosed as covid
- 6% of adults and 13.5% of children have received the booster vaccine
Wellness Visits by Race and Ethnicity: % who had a wellness visit in past year
| Race/Ethnicity | 2019 (pre-pandemic) | 2021 | 2022 |
| Asian | 86.1% | 74.4% | 81.9% |
| Black | 87.1% | 86.0% | 84.7% |
| Hispanic | 77.0% | 74.8% | 76.0% |
| White | 85.9% | 83.4% | 85.0% |
| Other | 82.0% | 79.6% | 73.8% |
| Overall | 84.5% | 81.6% | 82.9% |
JAMA Network: Changes in Health Care Access and Preventive Health Screenings by Race and Ethnicity, February 2024
Prescription Drugs
Op Ed: FDA reform needed with emphasis on small molecule drugs: “With the Biden administration focus on implementing the Inflation Reduction Act (IRA), developers of small molecule drugs face an uncertain future.
Small molecule drugs, which play a critical role in treating many diseases, can often be more convenient for patients, and cheaper to develop and manufacture…The IRA’s authors arbitrarily decided that biologics are more innovative, which subjects the drugs to government price controls 13 years after U.S. Food and Drug Administration (FDA) approval, while small molecule drugs face the same sentence at only 9 years. As a former reviewer at the FDA, I know that there are multiple levers that the agency can pull to lessen the burden of small molecule drug development.
First, drug trials can target patient-reported outcomes, or real-world evidence…A shift to include patient-reported outcomes in clinical trials as endpoints could reduce costs while focusing on the facets of disease that matter to patients: how they feel…. flexibility in trial design is a must.
The reality of the IRA is that innovators are forced to make tough decisions about their pipelines even sooner, since the government has the ability to select a drug for negotiation at seven years post-market entry with the negotiated rate taking effect after nine years. With the ongoing implementation of the IRA and one-third of Americans suffering from chronic disease, now is the time for FDA reform.”
Brian J. Miller is a nonresident fellow at the American Enterprise Institute and an assistant professor of medicine at Johns Hopkins University
How government price controls are holding back small molecule innovation | The Hill
Study: ALS drug efficacy disappointment: “ALS, also known as Lou Gehrig’s disease, is a devastating disease: It gradually robs patients of all movement, eventually killing them. The best drugs out there extend patients’ lives by mere months at most. So despite the controversial Food and Drug Administration decision to approve Amylyx Pharmaceuticals’ Relyvrio in 2022, many were rooting for the drug to work in a late-stage study…
Unfortunately, the worst possible thing happened on Friday for the company, patients and investors. Amylyx announced that the drug failed to slow the progression of the disease in a study of 664 ALS patients. The company reported that its drug made no significant difference versus a placebo in terms of helping patients perform daily-living tasks such as walking and breathing…
Investors didn’t take the news well. The stock closed 82% lower on Friday, giving the stock a $229 million market capitalization, which is significantly below its cash position of $371 million.”.”
Wall Street Predicted a Blockbuster. Now the Drug May Be Withdrawn. – WSJ March 10, 2024
Regulators, NGOs, Courts
White House: Last Monday, President Biden released the administration’s $7.3-trillion budget proposal for fiscal year 2025 which, features tax increases on corporations and high income households raising federal revenue $4.5 trillion, a new tax credit for first-time home buyers, and a pledge to reduce the federal deficit.
An Explicitly Redistributive Budget for an Election Year | The New Yorker March 12, 2024
FDA: Last Thursday, the FDA granted accelerated approval to resmetirom (Rezdiffra) as the first treatment for adults with noncirrhotic non-alcoholic steatohepatitis (NASH), also now referred to as metabolic dysfunction-associated steatohepatitis (MASH). A once-daily oral agent, resmetirom is a liver-directed thyroid hormone receptor (THR)-β selective agonist designed to target key underlying causes of NASH; the drug is specifically indicated for NASH patients with moderate to advanced liver fibrosis, consistent with stages F2 to F3 fibrosis, and should be used along with diet and exercise.
FDA Approves First Treatment for Patients with Liver Scarring Due to Fatty Liver Disease | FDA
MedPAC March Report: Highlights from the 561-page annual report to Congress released last week:
- Hospital inpatient and outpatient services should get 1.5% more in 2025 Medicare payments, skilled nursing homes should receive 3% less, base payment rates for home health agencies should drop by 7%, and physicians should receive what current law allows plus 50% of the projected increase in the Medicare Economic Index.
- Medicare will pay MA plans $455 billion this year, not including sums paid for prescription drugs, but which include an estimated $2,142 per beneficiary of extra benefits. The amount to be paid to MA plans this year is 22%, or $83 billion more than what Medicare would spend if those beneficiaries were enrolled in FFS. ($50 billion of this attributable to higher risk scores.
- MedPAC estimates that Part B premiums will be about $13 billion higher in 2024 because of that higher MA spending.
Mar24_MedPAC_Report_To_Congress_SEC.pdf
8th Circuit Court ruling in Arkansas: Last Tuesday, On Tuesday, the 8th US Circuit Court of Appeals ruled PhRMA (The Pharmaceutical Research and Manufacturers of America) which had sued to prevent Arkansas from requiring drug manufacturers to distribute discounted drugs to 340B contract pharmacies. The ruling, in essence, allows states to establish regulations on top of the federal 340B law, which does not actually reference contract pharmacies.
