The president has made his strategy clear. “The Democrats will make a deal with me on healthcare as soon as ObamaCare folds — not long,” Trump tweeted March 28.

This article first appeared June 08, 2017 on Kaiser Health News.

By Julie Rovner

In his high-stakes strategy to overhaul the federal health law, President Donald Trump is threatening to upend the individual health insurance market with several key policies. But if the market actually breaks, could anyone put it back together again?

The question is more than theoretical. The Trump administration has already acted to depress enrollment in Affordable Care Act plans, has instructed the IRS to back off enforcement of the requirement that most people have health insurance or pay a penalty and threatened to withhold billions of dollars owed to insurance companies. All of those actions make it more difficult for insurers to enroll the healthy people needed to offset the costs of the sick who make it a priority to have coverage.

The president himself has made his strategy clear in interviews and tweets. “The Democrats will make a deal with me on healthcare as soon as ObamaCare folds — not long,” Trump tweeted March 28. “Do not worry, we are in very good shape!”

But the individual insurance market is not in such good shape. A growing number of insurers are asking for double-digit premium increases or deciding to leave the market altogether. In the latest announcement, Anthem said Tuesday that it was pulling out of the Ohio marketplace next year. And while most analysts say the market probably would eventually rebound, in the short term things could get messy.

“Is the administration doing what it needs to do to stabilize the market? No, they’re doing the opposite,” said Kevin Counihan, CEO of the insurance exchange program during the Obama administration.

Trump’s biggest weapon, by far, is refusing to reimburse insurance companies for billions of dollars in payments the law requires them to make to help policyholders with incomes up to 250 percent of the federal poverty level (about $30,015 for an individual and $61,500 for a family of four) afford their deductibles and other out-of-pocket payments. These “cost-sharing subsidies” are the subject of an ongoing lawsuit, and Trump can effectively end them at any time by dropping the suit.

Meanwhile, major insurance companies like Aetna and Humana have already announced that they won’t participate in the health exchange market for 2018.

Other plans have said they would like to stay in but only if they are granted huge rate hikes, citing the uncertainty of whether the Trump administration will repay them for the cost-sharing discounts and whether it will enforce the health law’s “individual mandate” that requires most people to have coverage or pay a fine. In Pennsylvania, for example, insurers are seeking premium increases of less than 10 percent for 2018 — but warn that if the mandate to have insurance is not enforced or cost-sharing reductions not paid, those increases could balloon to 36 percent or more.

Those who follow the market closely say the exits and requests for large premium increases are no surprise. “It’s just been one thing after another in this market,” said Kurt Giesa, an actuarial expert at the consulting firm Oliver Wyman. He said if the administration follows through on its threat not to fund the cost-sharing subsidies for the rest of the year, “that could be the straw that breaks the camel’s back.”

Giesa also pointed out that it’s not just insurance companies that would suffer if the individual insurance market is crippled. “That strategy of crashing the market has real human consequences,” he said. “There are 15-million-plus people relying on that.”

That group includes not only people who purchase insurance through the “health exchange” state marketplaces, but also those who purchase insurance on their own, usually because they earn too much to get federal assistance paying their premiums. Premium subsidies are available to those who earn less than 400 percent of the poverty level (about $48,240 for an individual and $98,400 for a family of four).

People who pay their own way are the ones getting hit hardest, said insurance industry consultant Robert Laszewski. “There is a horrific death spiral going on with the [non-subsidized] part of the market right now,” he said, because rate hikes are limited for those getting help from the government, but not for those paying the full premiums.

A major question is how hard would it be for the government to regain the trust of insurers as a reliable business partner, regardless of what changes are eventually made.

Counihan acknowledged that insurers felt they were treated unfairly even before the Trump administration took office, when Republicans in Congress prevented full payment of “risk corridor” funds that the law promised insurers who enrolled more than their expected share of sick people. Insurers are still owed millions of dollars and many have sued the federal government to try to get the money.

Counihan said the first words out of the mouths of most insurance CEOs he met with were “we don’t trust you guys.”

Giesa said the government’s misbehavior goes back even further — to the fall of 2013, when the Obama administration allowed some consumers to keep their old plans. That effectively kept healthy people out of the new markets, “after companies had set their prices,” Giesa said, resulting in some big losses for insurance companies.

Despite the woes, insurance analysts say they doubt the individual market would stay down for long.

One reason, said Laszewski, is that, unlike with big commercial insurers, for many nonprofit insurers serving the individual market as the insurer of last resort is part of their mission. Boards of Blue Cross Blue Shield plans and other nonprofits, he said, tend to be made up of representatives of “labor, the local hospitals, big employers. … They have community connections. So it’s going to take a lot to drive them off.”

Another reason insurers will likely return or work to remain in the individual market is that it’s part of the future of health care, said Counihan. With so many people now working for themselves in the “gig economy,” he said, selling insurance “is going to be more business-to-consumer than businessto-business.”

“This market could grow,” agreed Giesa. “And I don’t think [insurance companies] want to be left out completely from this market if there’s an opportunity to break even, or make a little money.”

In the end, said Counihan, regardless of what he considers the Trump administration’s “disorganized neglect, I think this market is here to stay.”

Prominent patient advocacy groups, such as the American Diabetes Association, have been silent while diabetes patients championed the bill— a silence that patients and experts say stems from financial ties.

This article first appeared June 07, 2017 on Kaiser Health News.

By Emily Kopp

Patients notched a rare win over the pharmaceutical industry Monday when the Nevada Legislature revived a bill requiring insulin makers to disclose the profits they make on the life-sustaining drug. In a handful of other states, bills addressing drug prices have stalled.

Many of the 1.25 million Americans who live with Type 1 diabetes cheered the legislative effort in Nevada as an important first step in their fight against skyrocketing costs of a drug on which their lives depend. The cost of insulin medications has steadily risen over the past decade by nearly 300 percent.

Prominent patient advocacy groups, like the American Diabetes Association, have maintained stony silence while diabetes patients championed the bill and lobbied the legislature during this debate — a silence that patients and experts say stems from financial ties.

“Normally all of the patient advocacy groups rally around causes and piggyback on each other in a productive way — that’s what advocacy groups are good at — but that hasn’t been the case here,” said Thom Scher, chief operating officer of Beyond Type 1, which does not accept donations from the pharmaceutical industry. Beyond Type 1 has not issued a formal opinion on the Nevada bill.

Many of the dozens of U.S. diabetes advocacy organizations, large and small, garner significant portions of their funding from insulin manufacturers. The Nevada bill also requires such organizations operating in-state to disclose all contributions they receive from the pharmaceutical industry to discourage that sort of conflict.

In 2016, two of the “big three” insulin producers — Eli Lilly and Sanofi — contributed at least $4.7 million to such national patient advocacy groups as the American Diabetes Association, Diabetes Patient Advocacy Coalition (DPAC), JDRF International and the Diabetes Hands Foundation, according to company disclosures. The third major insulin manufacturer, Novo Nordisk, does not disclose its charitable contributions.

The advocacy groups have taken no position on the Nevada legislation. Generally speaking, their advocacy focuses on pressuring insurers to pay the price of insulin, not protesting price rises.

Local diabetes groups, hardly free from conflicts with the pharmaceutical industry, have also stayed on the sidelines.

The Nevada Diabetes Association for Children and Adults officially issued a neutral opinion.

“The Nevada Diabetes Association supports regulations on medications. The problem with SB 265 is that it is not just regulating medication but the industry,” said Executive Director Sarah Gleich.

The nonprofit does not list its fiscal sponsors on its website or most recent 990 tax form.

“We disclose what we have received, and the IRS does not require that we publicly publish from whom,” Gleich said. “No one is giving out their invitation list to the party.”

Gleich said the Nevada Diabetes Association receives table sponsorships and supplies for camp programs from the pharmaceutical industry but “nothing that would make a dent on the budget.” Auditing non-monetary donations in order to meet the bill’s transparency requirement would be burdensome, Gleich said.

Membership dues accounted for only about $6,000 of the group’s $320,000 in revenue last year, according to its latest tax form.

The American Diabetes Association — which operates a Nevada chapter — accepted at least $3.9 million from Eli Lilly and Sanofi last year.

“The American Diabetes Association believes that no individual in need of lifesaving medications such as insulin should ever go without due to prohibitive costs,” Michelle Kirkwood, its director of strategic communications and media relations, said in a statement. She would not say whether the nonprofit supports the bill.

Former American Diabetes Association president Larry Hausner wrote an op-ed in the Nevada Appeal opposing the legislation. “Caring for people with diabetes involves more than what they pay for insulin or another medication,” Hausner wrote. “As a lifelong patient advocate, I know Nevadans expect more out of their elected officials.” Hausner, now the president of a consulting and public affairs firm, serves on the board of directors of Research!America, a nonprofit promoting increased federal funding for public health research, alongside Sanofi’s president of global research & development, Elias Zerhouni.

The Diabetes Hands Foundation expressed neutrality on the bill. “This state priority in Nevada is a good step towards a larger conversation about the costs of chronic care conditions like diabetes,” said the foundation’s director of advocacy, Mandy Jones. “But it’s hard to know the particular outcome of this particular bill in the U.S. market.”

JDRF International would not comment. DPAC deferred questions to the National Diabetes Volunteer Leadership Council.

Against the backdrop of silence from these patient advocacy groups, a community of diabetes patients on Twitter elevated the bill’s profile around the hashtag #insulin4all, created by T1International, a group in the United Kingdom that does not accept pharmaceutical donations.

“People feel frustrated. At the federal level, we’re not being seen because there’s so much going on politically,” said Erin Gilmer, a Colorado advocate with Type 1 diabetes. “It might have to be a state-by-state movement.”

Sen. Yvanna Cancela, who sponsored the bill, said she believed requiring diabetes advocacy groups to reveal their sources of funding was key to understanding their positions and bringing prices down. “I believe there should be transparency across the health care system,” Cancela said.

Gov. Brian Sandoval said Monday night that he intends to sign the bill, according to a Nevada Independent reporter. If the governor takes no action, the transparency rules become law. The bill, SB539, incorporates provisions of an earlier bill approved by the legislature but vetoed by Sandoval. Sponsors stripped a controversial provision that would have required insulin manufacturers to warn patients 90 days before raising prices, which stoked concerns about drug stockpiling, the Associated Press reported Monday.

The Nevada bill “is definitely a step in the right direction,” said Elizabeth Rowley, founder and director of T1International. “Almost anything requiring more transparency is incredibly important right now, especially at a time when almost all diabetes patient advocacy groups take funding from drug and device companies.”

Laura Marston, an advocate in Washington, D.C., with Type 1 diabetes, said that there is plenty of grass-roots support for legislation on insulin prices but that advocacy organizations are not listening to the right people.

“There should be more focus on the one thing we need to survive. … Without insulin, I die a horrendous death in 12 to 24 hours,” Marston said. “No grass-roots support? There’s desperation.”

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

Federal prosecutors have announced an indictment against David Blaszczak and three co-defendants, including an executive-level Medicare employee, for allegedly turning confidential government information into windfall profits on Wall Street.

This article first appeared May 30, 2017 on Kaiser Health News.

By Christina Jewett and Melissa Bailey May 30, 2017

In his prime, consultant David Blaszczak bragged that he made millions for his hedge-fund clients when he predicted important Medicare funding changes.

“Warren Buffett can eat it,” Blaszczak wrote in one email in 2013, referencing the legendary stock trader.

He boasted in that same year to a finance executive: “I am a beast that cannot be stopped.”

Stopped he was on Wednesday, when federal prosecutors announced an indictment against Blaszczak and three co-defendants, including an executive-level Medicare employee, for allegedly turning confidential government information into windfall profits on Wall Street. The Securities and Exchange Commission also has alleged securities law violations, seeking to recoup $3.9 million in “ill-gotten gains.”

The case targets the narrow but lucrative world of “political intelligence,” a web of consulting firms like one that Blaszczak co-founded in 2014. Such firms traffic in crumbs of information coaxed out of federal employees, or simply good hunches, and make money by landing contracts with Wall Street firms.

Political intelligence workers track countless decisions Medicare and the Food and Drug Administration make each month about which hospital beds, heart valves, surgical techniques or drugs will rise or fall in value — or if the government will pay for them at all.

It’s a Washington, D.C., industry that reflects the big business of U.S. health care. While patients who get radiation treatments for cancer or dialysis after kidney failure are largely unaware, small tweaks in what the government pays for these services can mean millions to hedge funds and their elite investors.

From the outside, the tips that Blaszczak fed to Wall Street clients on Medicare’s coming moves seemed uncanny. Federal investigators found time and again that each disclosure started with a meeting with Christopher Worrall, an executive staff member with the Centers for Medicaid & Medicare Services who started at the agency in 1999.

The two men became friends in 2001, records show, and began meeting for lunch, golf rounds and baseball games. Blaszczak worked at CMS from 2000 to 2005 as a health insurance specialist and, later, as special assistant to the CMS administrator. Blaszczak introduced Worrall to a political intelligence contact in 2011 who offered him a job, the SEC complaint says. Worrall declined but leveraged the offer for a $10,000 raise from Medicare, according to court records.

Prosecutors say Worrall also wrote in an email to his wife that working in political intelligence could be a “big opportunity” because of the “political links.”

“If I ever do want to really get into politics, like run for Congress, these are the types of people I’d need to be around,” Worrall said, according to the SEC complaint.

Blaszczak and Worrall had one of their meetings on May 8, 2012, at the Medicare headquarters in Baltimore, where Worrall signed his friend in as a guest. That day, prosecutors allege, Blaszczak learned that Medicare was planning to cut the amount it reimburses doctors who used certain types of therapy on cancer patients: intensity modulated radiation therapy and stereotactic body radiotherapy.

The following day, Blaszczak relayed the information to three contacts at Deerfield Management, a health-focused hedge-fund firm. All three men have been charged in the case.

Within weeks, the information led to short sales by the hedge-fund firm in three stocks that make radiation equipment and software. Because short sellers make money when a stock’s price falls, the move was essentially a bet in favor of the stocks tanking when news of the pay cut broke.

Just days after Medicare announced the proposed pay cuts in July 2012, the three stocks fell in value. For Deerfield-managed funds, it resulted in a big payday, worth more than $1.8 million, prosecutors say.

Blaszczak’s contacts at Deerfield were pleased; they sent his firm a $29,000 bonus. Ted Huber, 55, then a partner with Deerfield, credited Blaszczak: “I think Dave earned his bonus with his work on [radiology]. We did pretty well on that and it was really 100% Dave[,]” an email quoted in the indictment says.

Huber faces securities fraud, wire fraud and other charges in the case. His New York attorney, Barry Berke, said Huber “did absolutely nothing wrong.”

“Mr. Huber and his counsel look forward to his day in court where it will be shown that this prosecution is an ill-advised attempt to transform entirely innocent research and trading into a crime,” Berke said in an email.

Attorneys for Worrall and Blaszczak declined to comment; the law firm representing the fourth co-defendant, Deerfield partner Robert Olan, did not respond to requests for comment. All of the men are accused of 10 charges or more, some with maximum prison terms of 25 years, with Blaszczak facing 18 counts.

A CMS spokesman declined to comment when asked if Worrall still worked at the agency.

Deerfield said through a spokesman that it is “committed to maintaining a strict culture of compliance and the highest ethical standards. We are cooperating fully with the government’s investigation.”

Blaszczak’s note to investors predicting the radiation pay cut made its way back to Medicare, the indictment says. There, one staffer surmised someone had access to internal information. Another staffer replied: “Where does he get his information from? It is pretty unbelievable and will probably blow up at some point.”

With Worrall continuing to feed him information, prosecutors say, Blaszczak’s run continued. The two men had lunch together in January 2013 and again in March at the Medicare agency’s headquarters in Baltimore.

Soon after, Blaszczak sent a note to clients and heard back from Jordan Fogel, one of the hedge-fund contacts alleged to have profited from the radiation prediction. Fogel emailed that he wanted to “catch up soon and figure out how we can re-ignite the Blaszczak-Fogel money printing machine,” according to an email cited in the indictment.

Fogel, 33, pleaded guilty this month in the case to six counts, including conspiracy to commit securities fraud and defraud the U.S., and is cooperating with prosecutors.

Prosecutors say that on March 5, 2013, Blaszczak offered to introduce Worrall to a staffer on the Senate Finance Committee, which oversees Medicare. According to the indictment, Blaszczak wrote in an email: “after a certain amount of years in the government your knowledge and experience is going to be extremely valuable. You might as well meet as many people as possible along the way.”

Worrall replied: “I do appreciate you making offers to put me in touch with people like this.”

Later that month, Worrall allegedly gave Blaszczak confidential internal documents laying out a plan for Medicare to slash its pay rates for dialysis. Worrall oversaw a “real-time” database at Medicare showing a decline in the use of medications in dialysis, lowering the cost of care for major providers of outpatient dialysis services like Fresenius and DaVita.

Other investors were predicting a pay cut, based on public reports about the decline in drug use. But, according to the indictment, Blaszczak told contacts he had an inside track and predicted a steeper cut than anyone: 12 percent.

That summer, Worrall and Blaszczak went to a baseball game together, and Blaszczak continued to assure his hedge-fund clients that the dialysis pay cut would be significant. His contacts put in their short sales, betting that the stocks for Fresenius would soon fall.

On July 1, 2013, Medicare unveiled the proposed 12 percent cut, and soon the stock fell nearly 9 percent. The tip was worth $865,000 to the Blaszczak clients who are also accused of fraud, the indictment says. It was then, prosecutors allege, that Blaszczak boasted of being the “beast that cannot be stopped,” and revealed to his clients that internal Medicare documents guided his prediction.

Fogel expressed regret over not making a bigger bet on Blaszczak’s advice: “Wish we didn’t wuss out but will still make a couple million on it,” he wrote in an email, according to the indictment.

Soon after, prosecutors allege, Fogel’s firm renewed a contract with Blaszczak for $100,000.

Prosecutors did not claim that Worrall shared any of Blaszczak’s rewards. The cases rely on the 2012 Stop Trading on Congressional Knowledge (STOCK) Act, meant to cut down on insider trading by members of Congress, their staffs and executive branch employees.

Prosecutors say they pursue the cases to protect against corruption within government and cheating on Wall Street, according to a statement from Joon H. Kim, acting U.S. attorney for the Southern District of New York.

The indictment gives little detail of the men’s interactions after 2013, save for a 2014 email exchange between Blaszczak and Worrall. In August of that year, Blaszczak asked Worrall to become a “part owner” of a new political intelligence company he was starting, saying he expected that he and two partners would make $2 million that year.

Blaszczak wrote that the men would “kill it working together.”

Worrall replied: “You’re like a drunk whore to me. Hard to resist. Lol. Let’s talk.”

The GOP bill passed by the House would leave as many as one-sixth of Americans living in states where older and sicker people might have to pay much more for their health care or be unable to purchase insurance at all, the Congressional Budget Office said Wednesday.

This article first appeared May 25, 2017 on Kaiser Health News.

By Julie Rovner May 24, 2017

The Republican overhaul of the federal health law passed by the House this month would result in slightly lower premiums and slightly fewer uninsured Americans than an earlier proposal. But it would leave as many as one-sixth of Americans living in states where older and sicker people might have to pay much more for their health care or be unable to purchase insurance at all, the Congressional Budget Office said Wednesday.

In some states, said the report, “less healthy people would face extremely high premiums, despite the additional funding that would be available” in the bill to help offset those increases.

The report incorporates the changes to the bill made just before it narrowly passed the House on May 4. Those changes included an amendment offered by Rep. Tom MacArthur (R-N.J.) that would let states waive some key provisions of the health law, including requirements to cover “essential health benefits” and to offer insurance to people with preexisting conditions at no extra cost.

CBO said the current version would result in savings of $119 billion over 10 years and 23 million more uninsured people than would be expected under the current law.

According to the estimate, premiums would be slightly lower than under the Affordable Care Act, but mostly because “the insurance, on average, would pay for a smaller proportion of health care costs.”

Prior to the changes, the CBO estimated that the bill would result in savings of $150 billion over the next decade and grow the number of uninsured Americans by 24 million. That dollar figure was a considerable change from the original version of the bill that CBO said would have saved $337 billion, but lawmakers decided to spend back some of those savings on help for those likely to be cut off from insurance.

The two earliest versions of the bill could not muster enough support for the House leadership to bring them to a vote on the floor. Later, MacArthur and leaders of the conservative Freedom Caucus negotiated changes that they said should help bring down premium costs for consumers. That is the bill approved and now evaluated by CBO.

The CBO also estimated that in states deciding to take the option to waive requirements related to charging sicker people more, “the nongroup market would start to become unstable.” In particular, said the report, “people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under current law, if they could purchase it at all.”

And in states that chose to waive the requirements for essential benefits, even people with insurance “would experience substantial increases in what they would spend on health care,” because their policies might no longer cover expensive treatments like those for maternity care or mental health and substance abuse.

Despite repeated claims from President Donald Trump and congressional Republicans that the Affordable Care Act is collapsing, the CBO specifically said that the market would continue “to be stable in most areas” under current law. It predicted the same for the original version of the House bill.

In fact, the only place the CBO specifically said the individual insurance market might become unstable is in states that decide to waive the ACA’s coverage requirements. It did not guess which states might do that, but the report says that one-sixth of the population could be subject to that instability.

“What is clear is that these waivers make life much, much worse for people with preexisting conditions, for older people, for sicker people,” said Aviva Aron-Dine, a senior fellow at the Center on Budget and Policy Priorities and former Obama administration health staffer.

The savings in the bill are mostly the result of capping federal funding to states for the Medicaid program for those with low incomes and scaling back the tax credits that help some people with low and modest incomes pay for private insurance. An estimated 14 million of the 23 million people who would no longer have insurance would otherwise have obtained it through Medicaid.

The bill would also repeal nearly all the taxes imposed in the ACA to pay for the new benefits, including taxes on wealthy individuals and much of the health industry.

Reaction to the new estimate fell mostly along predictable party lines.

“CBO continues to find that through our patient-focused bill, premiums will go down and that our reforms will help stabilize the market,” said a statement from House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) and its health subcommittee chairman, Michael Burgess (R-Texas).

By contrast, Rep. Steny Hoyer (D-Md.) said the new estimate shows “TrumpCare will kick millions of Americans off their insurance coverage and force consumers to pay more for less.”

But the reaction was not completely partisan. Sen. Bill Cassidy (R-La.), a key swing vote in the Senate, said that “Congress’s focus must be to lower premiums with coverage which passes the Jimmy Kimmel test,” referring to the late-night host’s tearful monologue about the health problems of his newborn son. The House-passed bill, he said, “does not. I am working with Senate colleagues to do so.”