Republican efforts in Congress to “repeal and replace” the federal Affordable Care Act are back from the dead. Again.
While the chances for this last-ditch measure appear iffy, many GOP senators are rallying around a proposal by Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.), along with Sens. Dean Heller (R-Nev.) and Ron Johnson (R-Wis.)
They are racing the clock to round up the needed 50 votes — and there are 52 Senate Republicans.
An earlier attempt to replace the ACA this summer fell just one vote short when Sens. Susan Collins (R-Maine), Lisa Murkowski (R-Alaska) and John McCain (R-Ariz.) voted against it. The latest push is setting off a massive guessing game on Capitol Hill about where the GOP can pick up the needed vote.
After Sept. 30, the end of the current fiscal year, Republicans would need 60 votes — which means eight Democrats — to pass any such legislation because special budget rules allowing approval with a simple majority will expire.
Unlike previous GOP repeal-and-replace packages that passed the House and nearly passed the Senate, the Graham-Cassidy proposal would leave in place most of the ACA taxes that generated funding to expand coverage for millions of Americans. The plan would simply give those funds as lump sums to each state. States could do almost whatever they please with them. And the Congressional Budget Office has yet to weigh in on the potential impact of the bill, although earlier estimates of similar provisions suggest premiums would go up and coverage down.
“If you believe repealing and replacing Obamacare is a good idea, this is your best and only chance to make it happen, because everything else has failed,” said Graham in unveiling the bill last week.
Here are five things to know about the latest GOP bill:
1. It would repeal most of the structure of the ACA.
The Graham-Cassidy proposal would eliminate the federal insurance exchange, healthcare.gov, along with the subsidies and tax credits that help people with low and moderate incomes — and small businesses — pay for health insurance and associated health costs. It would eliminate penalties for individuals who fail to obtain health insurance and employers who fail to provide it.
It would eliminate the tax on medical devices.
2. It would eliminate many of the popular insurance protections, including those for people with preexisting conditions, in the health law.
Under the proposal, states could “waive” rules in the law requiring insurers to provide a list of specific “essential health benefits” and mandating that premiums be the same for people regardless of their health status. That would once again expose people with preexisting health conditions to unaffordable or unavailable coverage. Republicans have consistently said they wanted to maintain these protections, which polls have shown to be popular among voters.
3. It would fundamentally restructure the Medicaid program.
Medicaid, the joint-federal health program for low-income people, currently covers more than 70 million Americans. The Graham-Cassidy proposal would end the program’s expansion under the ACA and cap funding overall, and it would redistribute the funds that had provided coverage for millions of new Medicaid enrollees. It seeks to equalize payments among states. States that did not expand Medicaid and were getting fewer federal dollars for the program would receive more money and states that did expand would see large cuts, according to the bill’s own sponsors. For example, Oklahoma would see an 88 percent increase from 2020 to 2026, while Massachusetts would see a 10 percent cut.
The proposal would also bar Planned Parenthood from getting any Medicaid funding for family planning and other reproductive health services for one year, the maximum allowed under budget rules governing this bill.
4. It’s getting mixed reviews from the states.
Sponsors of the proposal hoped for significant support from the nation’s governors as a way to help push the bill through. But, so far, the governors who are publicly supporting the measure, including Scott Walker (R-Wis.) and Doug Ducey (R-Ariz.), are being offset by opponents including Chris Sununu (R-N.H.), John Kasich (R-Ohio) and Bill Walker (I-Alaska).
On Tuesday 10 governors — five Democrats, four Republicans and Walker — sent a letter to Senate leaders urging them to pursue a more bipartisan approach. “Only open, bipartisan approaches can achieve true, lasting reforms,” said the letter.
Bill sponsor Cassidy was even taken to task publicly by his own state’s health secretary. Dr. Rebekah Gee, who was appointed by Louisiana’s Democratic governor, wrote that the bill “uniquely and disproportionately hurts Louisiana due to our recent [Medicaid] expansion and high burden of extreme poverty.”
5. The measure would come to the Senate floor with the most truncated process imaginable.
The Senate is working on its Republican-only plans under a process called “budget reconciliation,” which limits floor debate to 20 hours and prohibits a filibuster. In fact, all the time for floor debate was used up in July, when Republicans failed to advance any of several proposed overhaul plans. Senate Majority Leader Mitch McConnell (R-Ky.) could bring the bill back up anytime, but senators would immediately proceed to votes. Specifically, the next order of business would be a process called “vote-a-rama,” where votes on the bill and amendments can continue, in theory, as long as senators can stay awake to call for them.
Several senators, most notably John McCain, who cast the deciding vote to stop the process in July, have called for “regular order,” in which the bill would first be considered in the relevant committee before coming to the floor. The Senate Finance Committee, which Democrats used to write most of the ACA, has scheduled a hearing for next week. But there is not enough time for full committee consideration and a vote before the end of next week.
Meanwhile, the Congressional Budget Office said in a statement Tuesday that it could come up with an analysis by next week that would determine whether the proposal meets the requirements to be considered under the reconciliation process. But it said that more complicated questions like how many people would lose insurance under the proposal or what would happen to insurance premiums could not be answered “for at least several weeks.”
That has outraged Democrats, who are united in opposition to the measure.
“I don’t know how any senator could go home to their constituents and explain why they voted for a major bill with major consequences to so many of their people without having specific answers about how it would impact their state,” said Senate Minority Leader Chuck Schumer (D-N.Y.) on the Senate floor Tuesday.
In the wake of eight deaths a Florida nursing home following Hurricane Irma, heightened attention has focused on new federal disaster-planning rules, with which nursing homes must comply by mid-November.
It does not take a hurricane to put nursing home residents at risk when disaster strikes.
Around the country, facilities have been caught unprepared for far more mundane emergencies than the hurricanes that recently struck Florida and Houston, according to an examination of federal inspection records. Those homes rarely face severe reprimands, records show, even when inspectors identify repeated lapses.
In some cases, nursing homes failed to prepare for basic contingencies.
In one visit last May, inspectors found that an El Paso, Texas, nursing home had no plan for how to bring wheelchair-dependent people down the stairs in case of an evacuation. Inspectors in Colorado found a nursing home’s courtyard gate was locked and employees did not know the combination, inspection records show. During a fire at a Chicago facility, residents were evacuated in the wrong order, starting with the people farthest from the blaze.
Nursing home inspectors issued 2,300 violations of emergency-planning rules during the past four years. But they labeled only 20 so serious as to place residents in danger, the records show.
In addition, a third of U.S. nursing homes have been cited for another type of violation: failing to inspect their generators each week or to test them monthly. None of those violations was categorized as a major deficiency, even at 1,373 nursing facilities that were cited more than once for neglecting generator upkeep, the records show.
“That’s the essential problem with the regulatory system: It misses many issues, and even when it identifies them, it doesn’t treat them seriously enough,” said Toby Edelman, a senior policy attorney at the Center for Medicare Advocacy. “It’s always the same story: We have some pretty good standards and we don’t enforce them.”
In the wake of eight deaths at Rehabilitation Center at Hollywood Hills, Fla., following Hurricane Irma, heightened attention has focused on new federal disaster-planning rules, with which nursing homes must comply by mid-November. Those were prompted by nursing home and hospital deaths during Hurricane Katrina in Louisiana in 2005.
Dr. David Gifford, senior vice president for quality and regulatory affairs at the American Health Care Association, a nursing home industry group, said facilities have gotten better at handling disasters after each one. Most evacuations go smoothly, he said.
“After each one of these emergencies we’ve learned and gotten better,” Gifford said.
But advocates for the elderly say enforcement of rules is as great a concern, if not greater.
Dr. David Marcozzi, a former director of the federal emergency preparedness program for health care, said that inspectors — also known as surveyors — should observe nursing home staff demonstrating their emergency plans, rather than just checking that they have been written down.
“If you have not implemented and exercised plans, they are paper tigers,” said Marcozzi, now an associate professor at the University of Maryland School of Medicine. “The emphasis from the surveyor has to be ‘Show me how you do this.’ ”
Gifford said pre-planning and drills, which are important, only go so far in chaotic events such as hurricanes.
“No matter what planning you might have, what we have learned from these emergencies is these plans don’t always work,” he said. Nursing homes take surveys seriously and face closure if they do not fix flaws inspectors identify, he added.
Inspection results vary widely by state, influenced sometimes by lax nursing homes or more assertive surveyors, or a combination, according to an analysis of two types of emergency-planning deficiencies. In California, 53 percent of nursing facilities have been cited for at least one of two types of emergency-planning deficiencies, and a quarter have been cited in Texas. No nursing home in Indiana, Mississippi or Oregon was issued violations for those two emergency-planning violations during the past four years.
Asked to explain the rarity of severe citations in emergency preparation, the federal Centers for Medicare & Medicaid Services, which oversees inspections, referred a reporter to its emergency-preparedness mission statement on its website.
The danger of high temperatures for elderly residents, which the Hollywood Hills case shows can be disastrous, has been well known. In a heat wave in 2000, two nursing home residents in a Burlingame, Calif., facility died and six others suffered severe dehydration, heat stroke or exhaustion.
During the past four years, inspectors have cited 536 nursing homes for failing to maintain comfortable and safe temperature levels for residents. Inspectors deemed 15 as serious, including two where patients were harmed, records show.
“There is undoubtedly little, if any, enforcement of the laws since we see the same tragedies repeated time and again,” said Patricia McGinnis, executive director of California Advocates for Nursing Home Reform.
Clarification: This story was updated on Sept. 19 clarify to make clear that 53 percent of nursing facilities in California and a quarter of them in Texas were cited for at least one of two types of emergency-planning deficiencies — not both types of deficiencies.
The Trump administration is cutting funding to organizations that help people enroll in health plans on the federal insurance marketplaces by as much as 90 percent.
The Trump administration says many of the organizations that help people enroll in health plans on the federal insurance marketplaces don’t provide enough bang for the buck, sometimes costing thousands of dollars to sign up each customer. So, it is cutting their funding, some by as much as 90 percent, the government told the groups last week.
But the navigators, as they’re called, say the government doesn’t understand the time involved in the effort or the complexity of the enrollment challenge. Nor do federal officials appreciate the variety of tasks that navigators are asked to handle, they say.
Some customers don’t know how to use a computer. Many don’t understand insurance lingo — what’s a deductible, anyway? — or how to pick the best plan for their needs. Consumers get confused about estimating income and determining household size to qualify for premium tax credits that are available for people with incomes up to 400 percent of the poverty level (about $98,000 for a family of four). What if you’re self-employed and have no idea how many hours of work you’ll get next year? If Grandma is a dependent, does she count as part of the household? What about mixed immigrant families, in which one member is undocumented and ineligible for health insurance? These are the types of vexing questions navigators routinely field, they say.
In addition to helping people sign up, navigators often assist them throughout the year as their income or job status changes and offer community outreach and education services. Marketplace coverage is complicated and so are people’s lives, they argue, and finding the right plan can be tough.
“You can decide on the best policy, but people come from so many different backgrounds and experiences that it’s impossible to have a policy that can be applied uniformly,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms. The center has run a technical assistance project for navigators in recent years and produced an online guide that addresses frequently asked questions.
Sandy Dimick is program director for Get Covered Tennessee, part of Family and Children’s Service, the state’s primary navigator grant recipient. She said one of the common issues that navigators there deal with is helping self-employed people estimate their income for the coming year to know if they can qualify for federal subsidies to help pay for their premiums.
“We’re in Nashville, Music City, and lots of musicians are contract workers,” she said. “They think they qualify for subsidized coverage, but by the time they deduct their expenses they may be in the Medicaid gap because we didn’t expand Medicaid here.” She was referring to people whose incomes are below 100 percent of the poverty level, the minimum amount to qualify for marketplace premium tax credits, but earn too much to qualify for Medicaid.
Navigators can also be instrumental in helping clients save money on out-of-pocket costs, she said, because the federal health law offers cost-sharing reduction subsidies for people earning up to 250 percent of the federal poverty level (about $30,000 for an individual in 2018). The subsidies may bring their deductibles down to zero, potentially saving them thousands of dollars in out-of-pocket costs, Dimick said. But many marketplace customers don’t know about the subsidy and don’t realize it’s available only if they buy a silver plan on the marketplace. Unless these people work with a navigator, they may miss out because those who are financially strapped lean toward purchasing the slightly cheaper bronze plan that doesn’t qualify for cost-sharing reductions.
Dimick said her group will lose 15 percent in federal funding on its $1.6 million grant, about the amount they had anticipated.
Helping people understand how the marketplace coverage works is an ongoing challenge, said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society, New York’s largest navigator program. New York runs its own marketplace, and Benjamin said she doesn’t expect a funding cut.
“People are still struggling with the metal levels,” Benjamin said, referring to the bronze, silver, gold and platinum plan types offered on the marketplaces that pay from 60 to 90 percent of covered medical expenses. “They don’t understand that if they have premium tax credits and cost-sharing reductions they shouldn’t just lurch to the lowest-cost bronze plan.”
Erinn Garrison, a navigator in Ohio, sometimes travels to meet people at coffee shops or churches in the rural portions of the state.
“A lot of the people I work with have limited technological capability,” said Garrison, the health initiatives manager at the Ohio Association of Foodbanks in Columbus, which leads a statewide consortium of navigators. “They can’t work on a computer.”
The group’s navigator funding was cut by 71 percent for the coming year, to $485,967.
The Trump administration is taking a hard line, it says, because the navigator groups have not shown that they are providing good value. Last year, the groups received $62.5 million and enrolled 81,426 individuals. The administration said the new funding formula is based on how well each group did toward meeting its 2017 enrollment goal, but many navigator groups say there doesn’t appear to be a correlation.
The federal Centers for Medicare & Medicaid Services, which oversees the federal marketplaces, has a toll-free call center. When asked if it plans to increase staffing or undertake other enrollment activities this year, officials said, “CMS will continue to operate our year-round exchange call center to assist consumers with enrollment and as in past years we will ramp up staffing to support the higher call volume anticipated during open enrollment.”
If navigators are thin on the ground this fall, people can opt to sign up directly with insurers or brokers. The federal government plans to launch a “help on demand” tool on healthcare.gov that will connect consumers directly with agents and brokers, according to a blog post on the Health Affairs website by Timothy Jost, an emeritus professor at Washington and Lee University in Virginia and an expert on the health law. But advocates have expressed concerns that consumers may not get impartial advice from vendors who receive sales commissions for specific insurance products.
In addition to healthcare.gov, some groups have published detailed information aimed at navigators that may help intrepid consumers get answers to enrollment questions. The Georgetown navigator guide is available online, as is information from the Center on Budget and Policy Priorities.
The published CBPP information may be helpful to some individuals, but it’s not a substitute for navigators who help people one-on-one, said Judith Solomon, the center’s vice president for health policy. “It’s not boots on the ground,” she said.
Karla Ornelas said she has "always had the idea of being a doctor, I've never seen myself doing anything else." The third-year pre-medical student at the University of California-Davis said she plans to become a family medicine physician and work in California's Central Valley, where there is a great need for doctors and especially bilingual doctors.
But that dream could be uprooted if the Trump administration goes forward with its plan to end the Deferred Action for Childhood Arrivals (DACA) program, which allows young people brought to the U.S. by their parents without proper documentation to stay and work here. Ornelas, 20, was born in Mexico and came arrived to the U.S. at age 9.
Across the country, Jennifer Rodriguez, 28, faces the same problem. Rodriguez, who works at a psychiatric care facility in Elkhart, Ind., as an administrative assistant, arrived in Goshen, Ind., from Mexico when she was 3, with no recollection of her birthplace and no documents to prove she belonged in the nation she calls home. Now she is worried that she will be able to stay.
"It's hurtful that I consider this my home, yet to other people I am an illegal," she said.
In 2012, President Barack Obama established the DACA policy that gave a group of about 800,000 children and young adults freedom from concerns about being deported and the opportunity to earn a living.
On Sept. 5, Attorney General Jeff Sessions announced that President Donald Trump would cancel Obama's executive order that set up DACA. Explaining the decision, the administration said that it did not believe Obama had the authority to set up the program and that it anticipated lawsuits from states seeking to end the program.
The administration is providing a six-month grace period until these protections end, giving Congress time to pass legislation to address the legal status of these immigrants, known as "Dreamers." Trump and Democratic lawmakers have agreed to work on a plan to extend the DACA program, but there are few details and conservatives have raised concerns.
There are no firm statistics showing how many Dreamers work in the health care sector, but industry leaders suggested that DACA's end could have an impact, especially among medical students and home health aides.
Multiple health care groups denounced the administration's move. A statement released by the Association of American Medical Colleges (AAMC) said its members are "extremely dismayed" by the decision.
"Even with the ‘wind down process' described by the administration, the implications of this action for medical students, medical residents, and researchers with DACA status are serious, and will interfere with their ability to complete their training and contribute meaningfully to the health of the nation," the group wrote.
The American Medical Association (AMA) said the administration's announcement "could have severe consequences for many in the health care workforce, impacting patients and our nation's health care system." It urged Congress to pass a permanent solution.
"The more the administration threatens immigrants and their families and their communities," said Robert Espinoza, vice president of policy at PHI, a long-term care advocacy group, "the more we threaten that workforce supply."
One segment of the health care workforce that could be affected are medical students.
Students and residents may have to cut their training short, the AAMC said, and researchers may have to leave the country before completing their experiments. Foreign-born and international medical graduates also tend to work in underserved areas, said Matthew Shick, director of government relations and regulatory affairs at AAMC. Phasing out DACA could also sever a lifeline connection between doctors and populations in sore need of health care.
Karla Ornelas is a third-year pre-medical student at the University of California-Davis who registered for the DACA program. Her goal is to become a family medicine physician and return to the Central Valley. (Ana B. Ibarra/KHN)
Ornelas, whose family settled in Turlock, Calif., feels that need. For example, she said she accompanied her mother to a doctor's appointment, as she usually does to help translate. Her mother, she said, had questions about lab results, and as her mother asked in Spanish and Ornelas repeated in English, the doctor grew impatient, told them to stop asking questions and walked out of the room.
"My mom wanted to cry, and I was shocked," Ornelas said. "That's when I realized that it wasn't just my mom, it was an entire community that was relying on this doctor for health care."
Sixty-five Dreamers were enrolled in medical schools across the nation during the last academic year, Shick said.
"It sounds like a small number," he said, "but they're treating anywhere between 1,000 and 2,000 patients in their clinical panel."
Those medical students are needed to serve neglected communities as well as to alleviate the shortage of doctors. The AAMC projects a shortage of between 40,800 and 104,900 physicians by 2030. More than 43,000 of the empty slots are for primary care physicians.
Kurt Mosley, vice president of strategic alliances for Merritt Hawkins, a physician recruitment company, said he is unsure if there are any Dreamers practicing medicine given that group's age (recipients were required to be younger than 31 at the time of the executive order).
DACA's end could also have a large impact on the country's ability to care for patients in a culturally sensitive manner, he said. And statistics point to the need — minorities are expected to constitute the majority of the U.S. population by 2044, according to the U.S. Census Bureau. By 2060, Hispanics — who make up the bulk of Dreamers — are expected to account for nearly29 percent of the U.S. population.
"You know we're a nation of diversity, and our workforce should reflect that," Mosley said. "And [dissolving DACA] is a step backwards." Health care already relies on immigrants to fill the ranks. Over a fifth of Dreamers work in the health care or education industries, according to a 2016 survey by groups including the National Immigration Law Center and the Center for American Progress. Moreover, based on a separate 2015 survey by the immigrant advocacy organization United We Dream, nearly 23 percent want to pursue a career in health care.
Another sector of the workforce that heavily relies on foreign-born employees is direct care, which includes nurse aides, home health aides and personal care assistants. According to Espinoza, one-quarter of all employees are immigrants.
As the population ages, those jobs will continue to be in high demand. It's hard to tell whether the vacancies that may be created by immigrants forced out of their jobs could be filled by the remaining population, he said.
"What our sector needs most is care," Espinoza said. "And these kinds of federal decisions impede that — it impedes our ability to provide care."
Rodriguez said she sees that need at her job often. The Latino clients frequently approach her for help, she said, recognizing a friendly face and asking in bits of broken English whether their native Spanish is familiar to her.
Interpreting for clients doesn't fall under her job description, and her boss sometimes tells her to say no when she's overwhelmed.
"But I would never do that to my people," Rodriguez said. She wants to stay in the country and continue her work and life here.
Without DACA, Rodriguez said, she would have trouble caring for her family. She has two daughters and just purchased a home.
She is married to an American citizen, so she has petitioned for residency. However, the application is still being processed, she said, which means she relies on DACA to stay employed and keep her driver's license. Many of her family members also depend on the program for legal protection, and she said she is worried what will happen to them.
Rodriguez identifies herself as a Mexican-American who considers Indiana home.
"This is all we know, and we just want to be productive citizens," she said. "That's all."
FDA Commissioner Scott Gottlieb said he wants to ensure financial incentives are granted "in a way that’s consistent with the manner Congress intended."
The Food and Drug Administration is changing the way it approves medicines known as “orphan drugs” after revelations that drugmakers may be abusing a law intended to help patients with rare diseases.
In a blog post Tuesday, FDA Commissioner Scott Gottlieb said he wants to ensure financial incentives are granted “in a way that’s consistent with the manner Congress intended” when the Orphan Drug Act was passed in 1983. That legislation gave drugmakers a package of incentives, including tax credits, user fee waivers and seven years of market exclusivity if they developed medicines for rare diseases.
A KHN investigation earlier this year, which was published and aired by NPR, found many drugs that now have orphan status aren’t entirely new. Of about 450 drugs that have won orphan approval since 1983, more than 70 were drugs first approved by the FDA for mass-market use. Those include cholesterol blockbuster Crestor, Abilify for psychiatric disorders and rheumatoid arthritis drug Humira, the world’s best-selling drug.
Gottlieb announced plans to close a loophole that allows manufacturers to skip pediatric testing requirements when developing a common-disease drug for orphan use in children. He also signaled that bigger changes are being considered, announcing a public meeting to explore issues raised by scientific advances, such as the increase in precision medicine and biologics.
“We need to make sure our policies take notice of all of these new challenges and opportunities,” he wrote. Gottlieb, through his agency, declined multiple requests for interviews.
Over the years, drugmakers have fueled a boom in orphan drugs, which often carry six-figure price tags. Nearly half of the new drugs approved by the FDA are now for rare diseases — even though many of them also treat and are marketed for common diseases.
Gottlieb became commissioner in May, a few months after three key Republican senators called for a federal investigation into potential abuses of the Orphan Drug Act, and the Government Accountability Office agreed to investigate.
The GAO has yet to begin its investigation, saying it doesn’t expect to start work until late this year, when staff is available. Regardless, in late June, Gottlieb announced what would be the first in a series of updates that shift the way the FDA handles orphan drugs.
Those include:
Eliminating a backlog in drug applications for orphan designation or status. Getting a “designation” is a critical first step if a company wants to win orphan incentives once the drug is approved for treatment use. And, much like the rise in approvals, the requests by companies to get drugs designated with orphan status has also skyrocketed. Gottlieb said in June that he wanted to get rid of the backlog; on Tuesday, he said the effort was complete. About half of the 200 applications from drugmakers won orphan status.
Mandating that drugmakers prove their medicine is clinically superior before getting the market exclusivity that comes with being an orphan. The agency had lost a lawsuit in which a company said it was owed the exclusivity period regardless of whether its medicine was better. And two more lawsuits had been filed by Eagle Pharmaceuticals and, more recently, another by United Therapeutics. The FDA Reauthorization Act, which passed last month, made it law that a drug has to be clinically superior to get the incentives.
Closing the loophole for pediatric orphan drugs by requiring all drugs approved for common adult diseases, like inflammatory bowel disease, undergo pediatric testing when getting approval as a pediatric orphan drug. Pediatric testing is not required for orphan drugs, and last month Congress mandated that orphan drugs for cancer be tested for children. Still, the American Academy of Pediatrics celebrated the proposed change but warned it was only a “first step.” Dr. Bridgette Jones, chair of American Academy of Pediatrics Committee on Drugs, said late Tuesday that orphan drugs are “still mostly exempt from pediatric study requirements … children deserve access to safe, effective medications.”
Dr. Martin Makary, who wrote a critical 2015 paper on orphan approvals, said the changes at the agency indicate that Gottlieb seems “concerned about all the right things.”
“The government does a lot of lip service in general,” Makary said. “This is not lip service.”
The restructuring has been swift in some ways.
Sandra Heibel, a senior consultant at Haffner Associates, a firm that helps companies submit orphan drug applications, noted that the approval process for designations definitely sped up over the summer, and “we are absolutely getting responses from the FDA back in 90 days. That has come through.”
Other changes to the agency, though, will evolve slowly. For example, the orphan drug office has begun reaching across the FDA’s divisions for help in reviewing drugs. In May, the FDA’s orphan reviews began to work with the office of pediatric therapeutics to review pediatric applications — ideally increasing the expertise applied when considering a company’s request for orphan drug use in children.
In an emailed note Tuesday, the agency confirmed that Gottlieb’s orphan modernization plan is part of a larger effort to increase competition and decrease drug prices. One focus is on targeted drugs — especially those that affect rare diseases or diseases for which there is no effective therapy, the agency said.
“Such drugs present some of the biggest opportunities in medicine to treat and cure debilitating and very costly diseases,” the agency stated.
Two much-discussed ideas so far are funding subsidies that help moderate-income consumers pay out-of-pocket costs for health care and giving states more leeway on insurance coverage.
After a summer of flame-throwing over the Affordable Care Act’s repeal, Republicans and Democrats are now engaged in a serious collaborative effort to find a legislative solution that would ward off predicted premium rate hikes this year.
Sen. Lamar Alexander, who chairs the Senate Health, Education, Labor and Pensions (HELP) Committee, and his colleagues are up against a tight deadline to craft a bill to steady premiums in the Affordable Care Act’s shaky markets. Insurers must nail down plans late this month for the coming enrollment season.
If that weren’t challenging enough, the Tennessee Republican and the committee’s ranking Democrat, Sen. Patty Murray of Washington, have insisted their bill also be simple, bipartisan and balanced.
Two much-discussed ideas so far are funding subsidies that help moderate-income consumers pay out-of-pocket costs for health care and giving states more leeway on insurance coverage and plans for their residents.
Over three hearings in two weeks, senators solicited ideas and insights from bipartisan panels of governors, state insurance commissioners, government researchers and insurance company executives. Before the hearings, there were informal “coffee sessions” so that non-committee members from both parties could drop by to ask questions.
Noticeably absent: Democratic press conferences griping about the Republicans’ failure to permit hearings or seek input on their plans to repeal and replace the Affordable Care Act, also known as Obamacare. Such public airings were a fixture last summer when a Republican task force chosen by Senate Majority Leader Mitch McConnell drafted a replacement bill that was defeated in late July.
Civility has ruled the HELP committee’s hearings, kept them policy-focused — and mostly as dry as day-old toast. They are nearly incomprehensible to anyone but health policy experts.
On Tuesday, Alexander queried a witness about the nuances of segmenting invisible high-risk pools, and Sen. Sheldon Whitehouse (D-R.I.) asked about two types of reinsurance.
The committee’s members are a cross section of each party’s politics — from Sen. Rand Paul (R-Ky.) on the right to Sen Elizabeth Warren (D-Mass.) and Sen. Bernie Sanders (I-Vt.) on the far left.
But all 23 members get the same time to question witnesses — five minutes each. On occasion, Alexander is lenient with Democrats and Republicans alike, allowing them extra time to get detailed policy answers from witnesses.
There is no talk of death spirals, collapsing markets or sabotage — terms that colored past debates about Obamacare. Instead, HELP senators bat around the nuances of actuarial equivalence, budget neutrality and reinsurance programs.
“So far, we’ve had focused, substantive discussions in our first two hearings — and in our many conversations off the committee — on areas of significant common ground around these goals,” Murray said in her opening statement Tuesday.
This atmosphere is the antithesis of the rancor that hung over the “repeal and replace” debates. Sen. Al Franken (D-Minn.), a former comedian, has even had time to joke with Republicans.
Partisan posturing hasn’t been entirely missing at these hearings, though. Warren used some of her questioning time last week to denounce the Trump administration’s threats to end reimbursements to insurance companies for the “cost-sharing reduction” discounts they provide to enrollees with incomes under 250 percent of the federal poverty level.
Sen. Bill Cassidy (R-La.) used his time to advocate for reducing federal spending on Medicaid.
Three years after the Affordable Care Act’s coverage expansion took effect, the number of Americans without health insurance fell to 28.1 million in 2016, down from 29 million in 2015, according to a federal report released Tuesday.
The latest numbers from the U.S. Census Bureau showed the nation’s uninsured rate dropped to 8.8 percent. It had been 9.1 percent in 2015.
Both the overall number of uninsured and the percentage are record lows.
The latest figures from the Census Bureau effectively close the book on President Barack Obama’s record on lowering the number of uninsured. He made that a linchpin of his 2008 campaign, and his administration’s effort to overhaul the nation’s health system through the ACA focused on expanding coverage.
When Obama took office in 2009, during the worst economic recession since the Great Depression, more than 50 million Americans were uninsured, or nearly 17 percent of the population.
The number of uninsured has fallen from 42 million in 2013 — before the ACA in 2014 allowed states to expand Medicaid, the federal-state program that provides coverage to low-income people, and provided federal subsidies to help lower- and middle-income Americans buy coverage on the insurance marketplaces. The decline also reflected the improving economy, which has put more Americans in jobs that offer health coverage.
The dramatic drop in the uninsured over the past few years played a major role in the congressional debate over the summer about whether to replace the 2010 health law. Advocates pleaded with the Republican-controlled Congress not to take steps to reverse the gains in coverage.
The Census numbers are considered the gold standard for tracking who has insurance because the survey samples are so large.
The uninsured rate has fallen in all 50 states and the District of Columbia since 2013, although the rate has been lower among the 31 states that expanded Medicaid as part of the health law. The lowest uninsured rate last year was 2.5 percent in Massachusetts and the highest was 16.6 percent in Texas, the Census Bureau said. States that expanded Medicaid had an average uninsured rate of 6.5 percent compared with an 11.7 percent average among states that did not expand, the Census Bureau reported.
More than half of Americans — 55.7 percent — get health insurance through their jobs. But government coverage is becoming more common. Medicaid now covers more than 19 percent of the population and Medicare nearly 17 percent.
Large doctor practices, many owned by hospitals, exceed federal guidelines for market concentration in more than a fifth of the areas studied by Health Affairs.
MOUNTAIN VIEW, Calif. — When Dr. Sarah Azad followed her mother into the field of obstetrics eight years ago, she thought she’d be in private practice for the rest of her career. At the time, independent practices abounded in Silicon Valley.
“From the time we were young, my mom’s patients loved her. She was a part of their lives. That’s just always how I’ve seen medical care,” she said.
But over the past decade, she’s watched as doctor after doctor sold their practice and went to work for one of the large hospital systems in town. Today, Azad runs one of the last remaining independent OB-GYN practices in Mountain View.
The number of physician practices employed by hospitals increased by 86 percent from 2012 to 2015, according to a study conducted by Avalere Health for the Physicians Advocacy Institute, a health policy-focused nonprofit.
Perhaps nowhere has the trend been more pronounced than in Northern California.
As large hospital systems like Sutter Health, Stanford Medicine and UCSF Medical Center gobble up doctor practices, they gain market muscle that pushes costs upward. It’s a key reason why Northern California is now the most expensive place in the country to have a baby.
A studypublished this week in Health Affairs found that large doctor practices, many owned by hospitals, exceed federal guidelines for market concentration in more than a fifth of the areas studied. But the mergers are typically far too small for federal antitrust authorities to notice.
“When you have less competition, prices go up,” said Martin Gaynor, a health care economist at Carnegie Mellon University. “If you’re an insurance company and you don’t reach an agreement with Sutter, then you have a hard time offering an attractive insurance product because it’s so big and pervasive. So you don’t have the same negotiating power, and Sutter can extract higher prices.”
In the San Francisco Bay Area, the reimbursement rate for a vaginal delivery is two to four times higher for physicians who work for large hospital systems than for those who are independent, according to a Kaiser Health News analysis. The news organization examined claims data provided by Amino, a health cost transparency company, plus results from medical cost calculators available from certain employers to help workers comparison shop.
The extra money for physician services goes to the hospital system, and doctors, now on salary, might take home no more than before. Although switching from independent practice spares OB-GYNs the considerable hassles of negotiating with insurers and running an office, doctors say the lion’s share of the benefit goes to hospital systems — not to physicians or patients.
In Northern California, Sutter, Stanford and UCSF all mentioned quality as a reason why their physician prices are higher, and it might seem intuitive that integrating care among disparate physicians leads to better care.
“Sutter Health-affiliated doctor groups consistently rank among California’s highest performers,” Dr. Jeffrey Burnich, senior vice president at Sutter Health Medical and Market Networks, wrote in an email. In the long run, “by improving care quality and efficiency, we reduce costs.”
But in general, research suggests bigger is not necessarily better.
Fewer patients of small physician-owned practices, for example, are admitted to the hospital for preventable conditions than those of large hospital-owned practices, according to a 2014 study published in Health Affairs. A report from the National Academy of Social Insurance showed that the integrated delivery networks of large hospital systems have raised physician costs without evidence of higher quality. And a recent paper, also published in Health Affairs, found that high-price physician practices, which cost at least 36 percent above average, had no better quality than low-cost practices.
“All of the evidence that we see shows that the quality in these larger systems is the same or worse,” said Kristof Stremikis, associate director for policy at the Pacific Business Group on Health, which represents employers that provide health insurance.
A Personal Connection
On a sunny day this spring, Azad walked into her patient’s room wearing a colorful headscarf. Just weeks from her due date, Ruby Lin sat on the end of the exam table holding her belly. The two women greeted each other like old friends.
“Hi! You look great,” Lin told Azad.
“Thanks — I’m not where I hoped I’d be,” Azad replied, rolling her eyes and touching her stomach. The doctor gave birth to her fourth child just months earlier and hadn’t lost the “baby weight” she wanted to yet.
Dr. Sarah Azad examines patient Ruby Lin in Mountain View, Calif. Azad’s mother was also an obstetrician. (Jenny Gold/KHN)
This was Lin’s second baby with Azad as her doctor. “I get very nervous about seeing doctors and especially OB-GYNs, and Dr. Azad is the only one I’m comfortable with,” said Lin.
This sort of well-established, personal relationship is Azad’s favorite part of being a doctor, and she considers it a hallmark of independent practice. At the larger practices owned by hospital systems, she said, patients may be more likely to have the doctor on call deliver their baby rather than the obstetrician whom they’ve grown to know over months.
But Azad says running a medical practice in one of the most expensive parts of the country is getting harder. “Rent goes up 3 percent per year. Water and utilities went up 18 percent last year alone. But seven years later, [the insurers] are still paying me the same amount, despite any efforts to negotiate.”
At first, Azad tried reaching out to the insurance companies directly to ask for higher rates. They refused even to meet with her, she said. Then she hired a consultant to negotiate on her behalf. Nothing worked.
“One insurance contract responded saying, ’You don’t even have 2 percent of market share. Basically drop our contract or not — it doesn’t affect us,’” she said. Another insurer told her they couldn’t raise her rates because they had to pay too much to the larger health systems in town, she said.
Independent doctors in the Bay Area are reimbursed, on average, a median $2,408.45 for a routine vaginal delivery, which includes prenatal and postnatal visits, according to the Kaiser Health News analysis of Amino claims data.
That compares with $5,238.13 for the same bundle of services for Stanford physicians and $8,049.84 for doctors employed by University of California-San Francisco.
Health data company Amino provided KHN with median billing amounts for Bay Area obstetricians. KHN used a Medicare provider database to determine where each doctor worked. In cases where the doctor’s employment status was unclear, a reporter retrieved the information by calling the health system or physician directly. KHN then calculated the average median billing amount for a routine vaginal birth for each health system.
The Amino database did not contain many claims from doctors employed by Sutter, so KHN also reviewed OB-GYN charges on several insurers’ online cost estimators. The review found that obstetricians employed by Sutter Health are reimbursed about three times more for the same service than independent doctors, or about $6,452 for a vaginal delivery.
Many doctors are mystified as to why prices vary so dramatically — independent or not.
Same Office, Same Pay
After nearly a quarter-century in independent practice, OB-GYN Ken Weber sold his practice to Stanford, where he now works. His office is in the same place, across the street from Azad. Both physicians admit patients to the same local hospital.
But insurers now pay about twice as much for his services as before.
He still makes the same amount, he said. Stanford’s health system gets the rest.
“It doesn’t make sense to me from the insurance company’s standpoint, because they’re losing all these doctors to the bigger groups and having to pay more. And if they just had negotiated with us fairly, I think we could come to some middle ground,” Weber said.
Weber said he hung on to his independent practice as long as possible, but he grew increasingly frustrated. “It’s hard to know that you’re doing the same work someone else does at Sutter or Stanford or wherever,” yet insurers are paying more for patients to see the other person, he said.
Nonetheless, there have been some real benefits to selling his practice, he added: He no longer has to worry about dealing with billing or maintaining compliance with the new electronic health record regulations.
For their part, the big Bay Area hospital systems caution against oversimplifying the many factors that go into paying for obstetrical care. A Stanford spokeswoman, Samantha Dorman, said the health system incurred significant costs when it integrated new provider groups. For instance, many were not yet on electronic health records and needed updated equipment. Dorman added that Stanford reduced physician charges a few years ago to be more in line with other practices.
A UCSF spokeswoman said that just looking at physician reimbursement rates was misleading because while the system charges more for physician services, it charges less for other hospital services. Overall, she said, their costs are competitive.
For its part, Sutter suggested it was not accurate or fair to judge physician price discrepancies on online cost calculators. According to Burnich of its Medical and Market Networks service, the rates provided are inconsistent and often out-of-date.
The agreements between hospitals and insurers have “gag clauses” barring either party from divulging rates. The bottom line, for many patients, is that it’s almost impossible to determine either the cost or the value of the various health care providers available to them. This is particularly problematic for patients with high-deductible plans, who may be on the hook for a significant portion of those costs.
Meanwhile, the type of consolidation that Azad has witnessed in Northern California is spreading quickly throughout the country, and it is extremely difficult to reverse.
The most consolidated places like Northern California, Pittsburgh and Boston have become a “poster child of what not to do,” said economist Gaynor of Carnegie Mellon. “We should look at places that have consolidated and think about how to avoid that.”
Kaiser Health News correspondent Sydney Lupkin contributed to this report.
At issue is whether to broaden authority for states by revising or eliminating the “guardrails” intended to protect patients and the federal government.
One of the few things that Republicans and Democrats broadly agree on is that states should have some flexibility to experiment with different ways to pay for and deliver health care.
But they disagree — strongly — on how much. In fact, Republicans don’t agree with one another on this, and that dissent helped sink efforts this summer to “repeal and replace” the Affordable Care Act. Bridging these divides will help determine the success of a bipartisan effort in the Senate this month to help shore up the individual health insurance market.
“I’ve always said not all the wisdom is going to be in Washington,” said Sen. Ron Wyden (D-Ore.), the ranking Democrat on the powerful Finance Committee. “Progressive and conservative folks are going to say ‘we can do better.’”
The federal health law includes a provision that allows states to alter some of its rules if they can think of a better way to provide health care to their residents. These are known as “Section 1332 waivers,” bookmarking where they are located in the health law.
But the law strictly limits how far states can go with their experiments. It includes what are known as “guardrails.” Those limits, said Nicholas Bagley, a health law professor at the University of Michigan, “are to prevent states from undermining the Affordable Care Act goal to provide people with comprehensive coverage.”
The waivers were designed “so blue states can experiment with blue state solutions, and red states can experiment with red state solutions,” said Bagley. “But to do so and stay within the guardrails is really difficult.” For example, he said, “you can reallocate the money, but you can’t reallocate it to create losers.”
At issue is whether to broaden authority for states by revising or eliminating the “guardrails” intended to protect patients and the federal government.
Wyden, who authored the 1332 language in the ACA, is skeptical. Under the current rules, he said, “states can make changes that make health care better. But they can’t go out and make health care worse.”
It is clear that Republicans in Congress want changes to the provision. The repeal-and-replace bill that passed the House and all those considered in the Senate included some expansion of state authority to waive protections included in the health law. Bagley said the bills “would have essentially given carte blanche to states to come up with ACA alternatives without any regard to the guardrails” other than the one prohibiting additions to the federal deficit.
And Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, who is working on a bipartisan bill, said Wednesday that “Democrats will have to agree to something — more flexibility for states — that some are reluctant to support.”
So is there a compromise between Democrats who want to maintain the protections and Republicans who want states to have a freer hand?
Maybe.
David Anderson of Duke University said one possible source of agreement would be to streamline the federal approval process, starting with the guidance issued by the Obama administration in 2015 that critics said was too restrictive.
Under the rules set by the ACA, states can use waivers to adjust things like the structure of premium assistance to those with low and moderate incomes or the individual and employer requirements to have and offer coverage. But those changes must meet four key standards: States continue to provide equally comprehensive coverage to at least the same number of people, with no higher out-of-pocket costs and without costing the federal government more than it would spend under the provisions of the ACA.
The rules around the waivers also make it hard to accomplish a truly comprehensive overhaul of a state’s health care system, as states can’t use them to reach the place where most of the money funding that system comes from: tax breaks for employer-provided insurance and the federal Medicare program. Workers don’t pay taxes on the value of employer-provided insurance, which is estimated to cost the federal Treasury some $260 billion in income and payroll taxes 2017.
“If you want to reshape your state health insurance market, you’ve got to be able to grab onto the employer market or Medicare, and you can’t” using the waiver procedure, Bagley said.
States also cannot use Section 1332 to change provisions of the Medicaid and Children’s Health Insurance Program, although they can submit simultaneous waivers to each program under separate Medicaid waiver authority in the law.
So far, only two states — Hawaii and Alaska — have won federal approval for 1332 waivers under the health law.
Hawaii has had its own system for providing health coverage based on an employer requirement for coverage since the 1970s. The state’s waiver allows it to use money allocated to help small businesses afford coverage in different ways.
Alaska’s waiver, which was approved this summer, involves a “reinsurance” plan that will help spread the costs of the state’s sickest patients more widely. “By removing high-cost conditions from the risk pool, the benefits of the [reinsurance program] are shared by the entire individual health insurance market,” Lori Wing-Heier, head of the state’s insurance department, told the HELP Committee on Wednesday. In its first year, the program dropped proposed premium increases from 40 percent to “just over 7 percent,” Wing-Heier said.
Minnesota has applied for a waiver similar to Alaska’s, and approval is expected. Earlier this spring, the Department of Health and Human Services specifically invited states to apply for waivers of that type.
Other states, though, are working on proposals that would make more comprehensive changes. Iowa, for example, wants to dramatically redistribute the money available, with bigger subsidies for the middle-class customers and smaller ones for those with lower incomes. The state says that would help draw more customers into the marketplace so that the risk pool is healthier and the premiums for everyone would decrease. It would also eliminate the help lower-income people get to pay their out-of-pocket medical costs, such as deductibles and copayments.
“The Iowa waiver on its face pretty brazenly ignores the guardrails,” said Bagley.
Oklahoma, which is seeking a waiver for its own reinsurance program, is also working on a plan that would make major changes, including encouraging people to purchase insurance with higher deductibles along with a health savings account.
Part of the difficulty with the waivers is the number of hoops states must jump through to win approval, including passing legislation, seeking public comment and holding hearings around the state.
And those are not even the biggest problems, state officials say. “The part that is stifling states right now is the six-month waiting period before they receive final approval,” Alaska’s Wing-Heier told the Senate panel.
Teresa Miller, former Pennsylvania insurance commissioner, agreed at the Senate hearing, saying, “The current process is very cumbersome.”
Anderson of Duke University said one key possibility to add flexibility would be to loosen the requirement that state changes not add to the federal deficit. “Maybe they could allow for deficit neutrality over the course of the waiver rather than year by year,” he said, in which case experiments that cost money to begin with but save over time would be allowed.
Wyden said he is willing to look at any ideas to make the waivers easier to use.
But he added that the popularity of state “reinsurance” waivers that are lowering premiums shows the waiver provision is working as intended. And, he said, if GOP members try again to roll back coverage using the waiver provision “they’re going to have to roll over me, then they’re going to have to persuade people” that it meets the 1332 requirements.
The Senate has only a handful of legislative days in September before insurers must make final decisions on 2018 coverage. It may be an impossible task if committee’s hearings over the past two days are an indication.
Sen. Lamar Alexander (R-Tenn.) has a problem — and not much time to solve it.
The chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee wants to turn the page on the divisive health debate of this summer. He’s been working with the panel’s top Democrat, Patty Murray (D-Wash.), to craft a bipartisan bill aimed at shoring up the individual health insurance market.
Alexander has been looking at a proposal that would please Democrats (and insurance companies) by funding contested subsidies that help moderate-income policyholders pay their out-of-pocket health costs. To please Republicans, he has been pushing a plan to give states more flexibility to set up “reinsurance” pools that would help bring down premiums by limiting insurer exposure for the most expensive patients.
And he has to get the job done with only a handful of legislative days in September before insurers must make final decisions on 2018 coverage.
Alexander may have an impossible task ahead of him if his committee’s hearings over the past two days are an indication.
A bipartisan succession of state governors and insurance commissioners told the committee that there is no time for them to get their own reinsurance programs up and running in order to stabilize the market. What would help in the short term, they said, would be for the federal government to step in and do it — temporarily. “For the first year, you’re going to have to have the federal government help on that,” said Gov. Bill Haslam (R-Tenn.).
But a clearly frustrated Alexander said at the end of Thursday’s hearing that he couldn’t pass that kind of bill. “To get a Republican president, House and Senate to vote for just more money isn’t going to happen in the next two or three weeks,” he said.
That, however, did not convince the governors, who said this money was essential in stabilizing the markets.
“One of our great challenges is to get more people participating in the system; a reinsurance pool is one of the best ways to do that,” said Gov. John Hickenlooper, a Democrat from Colorado.
He and Haslam were echoed by Massachusetts Gov. Charlie Baker and Utah Gov. Gary Herbert, both Republicans; and Montana Gov. Steve Bullock, a Democrat.
Reinsurance provides money to insurers for the sickest and highest-cost consumers. Governors testified that reinsurance would lower premiums, thereby bringing young, healthy people into the risk pool and providing stability to the marketplace.
Alexander has been a proponent of states setting up their own reinsurance pools by applying for exemptions from the Affordable Care Act’s rules to innovate in their markets. So-called Section 1332 waivers are permitted as long as they don’t cost the federal government more money or cover fewer people. He asked in his opening remarks if there was a way to reform the clunky 1332 process to allow states to create their own reinsurance pools.
“Whether it’s reinsurance or an invisible high-risk pool or a stabilization fund — we need to think about what the state share of that should be,” Alexander said.
As written, the health law makes it impossible for states to get waivers for reinsurance pools that could be up and running in time for 2018 enrollment. The waivers require state legislation and six-month waiting periods for final federal approval. The ACA created a federal reinsurance program that ran for three years, expiring in 2016.
Bullock said the federal reinsurance pool lowered premiums by 10 to 15 percent in 2014.
Sen. Maggie Hassan (D-N.H.), a former governor of her state, supported using federal dollars to help states set up their reinsurance programs.
“At least some of the seed money should come from the feds, because the feds are going to save money if they put in place a reinsurance program and premiums go down,” Hassan said.
Without reinsurance, the federal government’s costs for premium subsidies will rise as premiums increase.
But Sen. Chris Murphy (D-Conn.) said it was unlikely that a federal reinsurance program would be ready in time to affect 2018 premiums.
"I think we're on a really tight time frame," Murphy said after the hearing. "Whatever enthusiasm exists in the Senate for a federal reinsurance program might not exist in the House."
Every governor in attendance also advocated for the extension of cost-sharing reduction payments to insurers for at least two years. Those payments, estimated at $10 billion for 2018, reimburse insurers for discounts given to low-income consumers. They are being funded on a month-to-month basis by the Trump administration.
Some Republican senators have denounced both cost-sharing payments and reinsurance as “insurance company bailouts,” but both the governors and the insurance commissioners told the committee that funding them is essential to keep insurers participating in the Obamacare marketplaces next year and prevent a spike in premiums.
Two more HELP Committee hearings are set for next week, on Tuesday and Sept. 14 — the first with health care experts and the second with a mixed panel including doctors and patient advocates. Alexander said Thursday that he wants to reach a consensus about stabilizing the individual health market by the end of next week and pass legislation before the end of September. That is when insurers need to submit their 2018 rates to state insurance regulators.