The Week that Altered the National Discussion about Health Reform and More

I’ve studied heath policy and industry trends for 40 years. Since passage of the Patient Protection and Affordable Care Act on March 23, 2010, I do not recall a week in which the confluence of legislative actions, regulatory determinations and executive orders was as consequential as last week. Here’s a recap and the key questions they raise:

Legislative Actions:

Last Monday, California Governor Jerry Brown signed a drug price transparency bill (S.B. 17) that will force drug makers to justify big price hikes. It requires drug companies to give 60 days’ notice and justification to state agencies and health insurers when they plan to raise the price of a drug with a wholesale cost of $40 or higher by 16% or more over two years. Similar legislative actions have passed in Maryland and New York. Key questions: will states become the frontline for drug price controls? And how will these actions impact how drug manufacturers negotiate, especially in classes of drugs where they have monopolies on compounds?

Last week, the House Energy and Commerce Committee announced a delay of funding reauthorization for the Children’s Health Insurance Program (CHIP) pending ‘bipartisan negotiation’. This means, at least for the time being, states will scramble to cover 9 million kids through their already-stretched Medicaid programs. Key questions: how deep will the GOP-led House cut federal spending on health programs like CHIP, preventive health and other programs to reduce budget deficits? What are the next cuts for 2018 and beyond?

Regulatory Determinations:

Thursday, a regulatory advisory committee of 16 experts unanimously agreed that the benefits outweigh risks for a first-ever gene therapy for an inherited condition.  Spark Therapeutics’ Luxturna therapy, which targets a small group of 6000 patients worldwide with mutations in the RPE65 gene that causes them to lose vision over time and eventually go blind, expects to charge $1 million for both eyes. The approval of Luxturna sets a precedent: gene therapies used one-time to cure conditions like hemophilia, muscular dystrophy, sickle cell and other inherited conditions are proving efficacious but priced at levels beyond reach for patients, hospitals and third-party payers. Key question: how should gene therapies be priced and regulated so they are accessible to patients?

Executive Orders:

On Thursday, the President announced a plan to authorize association health plans (AHPs) and expand access to short term insurance policies for individuals. Traditionally, these plans cover less with cheaper premiums thus skirting essential health benefit requirements in the Affordable Care Act.  Key question: will small employers and healthy individuals migrate to skinny AHP options leaving older, sicker patients to buy plans with unaffordable premiums?

On Friday, the President announced immediate suspension of cost sharing subsidies (CSRs) used by non-Medicaid eligible low-income individuals in the healthcare exchanges to lower their out of pocket costs. While making the announcement two weeks before the six-week enrollment period for year five of the Healthcare.gov marketplaces starts, the President demonized insurers calling attention to their profitability. He said the move was necessary since the DC Appeals Court had deemed the annual $7 billion tab unconstitutional because it had not been appropriated in the Affordable Care Act by Congress. Key questions: will enrollment in the market places be dampened by the elimination of the CSR funding? Will Congress authorize these payments to the 8 million individuals? Will insurers exit the individual insurance market since it’s already their least profitable and most risk? And what’s to become of the individual marketplace for insurance long-term: is it viable?

Combined, these actions lend to the growing uncertainty about the future state of healthcare in the U.S. They assure that healthcare reform will be front and center in the partisan sparring in DC and force states to take center stage to stabilize their insurance markets, stimulate provider participation, address drug pricing and offset federal budget cuts in key health programs. Complicating matters, states face an opioid crisis that’s killing 142 daily and increased pressure to prepare for natural disasters and prevent man-made disasters like Las Vegas and Sandy Hook.

The events of last week will have repercussions that impact every stakeholder in the system and every individual in our society. Republicans will offer they are a step toward the Repeal and Replace promise they made; Democrats will call them calculated sabotage to the Affordable Care Act and call foul.

It was a momentous week. That’s where we are.

Paul

P.S. The spotlight on how the U.S. has responded to Maria’s impact on Puerto Rico has shone bright these past two weeks. The territory’s debt ($73 billion) and anticipated recovery costs ($30 billion) complicate matters for fiscal hawks in Congress who see humanitarian aid as essential but difficult to manage. Lost in the debate is the Island’s role in the mainland’s drug manufacturing supply chain: Puerto Rico is sole source home to drug manufacturing operations for 13 drugs used in the U.S. supply chain. And recovery of infrastructure, roads, utilities and the power grid has been slow to date.