Cancel, Don't Delay, Meaningful Use Stage 3 for Electronic Health Records

Over one quarter of the members of the U.S. House of Representatives – 116 of them - just signed a letter to the U.S. Secretary of Health & Human Services urging delay of the next step in the federal government’s struggling effort to impose uniform federal requirements for health information technology.

The rule in question is Meaningful Use Stage 3 (MU3), imposed by the federal government via the HITECH Act of 2009. The so-called “stimulus” act committed almost $30 billion to induce physicians and health facilities to install Electronic Health Records (EHRs) and move patient records beyond clipboards and manila file folders. This proved a huge boon to companies selling EHRs.

Yet, there remains one obstacle: The EHRs were supposed to be interoperable – to speak to each other.  They do not.

Read the entire column at Forbes.

Health Spending Growing Share of GDP

Last week’s third estimate of Gross Domestic Product for the second quarter confirms that growth in health spending might be moderating somewhat from its initial Obamacare fueled rush. Unfortunately, it is not a clear break in the trend of health spending consuming an increasing share of our national income.

Read the entire entry at NCPA's Health Policy Blog.

Congress Uses "Reconciliation" to Push Deficit-Funded Obamacare

Congressional Republicans are using a procedural tool called “reconciliation” to repeal a miniscule number of Obamacare provisions, according to Chris Jacobs of the Conservative Review. Most of these provisions are tax-related. Jacobs notes 14 other Obamacare taxes could be repealed through reconciliation, but have been ignored. They must have harmed less powerful interest groups than the taxes described above.

However that is really beside the point: Repealing Obamacare’s taxes does not repeal Obamacare. It leaves a deficit-funded Obamacare. And that assumes President Obama will sign these bills.

Read the entire entry at NCPA's Health Policy Blog.

Martin Shkreli A Creature of FDA Regulation, Not Pharma Industry Greed

Perhaps it is just unfortunate coincidence, but Hillary Clinton’s proposal to impose federal controls on prescription drug prices was perfectly timed to ride the public outrage over a hedge-fund manager turned pharmaceutical executive, Martin Shkreli, who raised the price of a  decades-old drug drug from $13.50 per pill to $750.

Mrs. Clinton lumps all nominally expensive prescription drugs into the same category of so-called “specialty drugs.” However there is a world of difference between Mr. Shkreli’s Daraprim and specialty drugs like Sovaldi and Harvoni. The latter are newly invented medicines that required many years and huge amounts of capital investment to achieve therapeutic advances for patients suffering Hepatitis C that radically increase their quality of life. They comprise intellectual property protected by patents, which allow the drug makers to compete without fear that their innovations will be copied immediately by manufacturers who made no comparable investment in R&D.

Read the entire column at Forbes.

Employee Health Benefit Costs On A "Winning Streak"?

Mercer, a leading firm of consulting actuaries, tells us that the cost of employee benefits in 2016 will grow slowly – a “winning streak”:

Early responses from a major Mercer survey still in the field show employers predicting that health benefit cost per employee will rise by 4.2% on average in 2016 (see Fig. 1) after they make planned changes such as raising deductibles or switching carriers.

A closer look indicates no real reduction in the rate of cost growth of employee benefits.

Read the entire entry at NCPA's Health Policy Blog.

Health Plan Deductibles Grew Seven Times Faster Than Wages

The Kaiser Family Foundation has just released its 2015 Employer Benefits Survey:

Single and family premiums for employer-sponsored health insurance rose an average of 4 percent this year, continuing a decade-long period of moderate growth, according to the Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2015 Employer Health Benefits Survey released today
The average annual premium for single coverage is $6,251, of which workers on average pay $1,071. The average family premium is $17,545, with workers on average contributing $4,955.
Since 2010, both the share of workers with deductibles and the size of those deductibles have increased sharply. These two trends together result in a 67 percent increase in deductibles since 2010, much faster than the rise in single premiums (24%) and about seven times the rise in workers’ wages (10%) and general inflation (9%).
“With deductibles rising so much faster than premiums and wages, it’s no surprise that consumers have not felt the slowdown in health spending,” Foundation President and CEO Drew Altman said.

I would state that a little differently: It is consumers who are causing some of the slowdown, because they are increasingly sensitive to health spending. So, the movement to faster growing deductibles and slower growing premiums as a good thing. However, I have to qualify that remark: There is still too much price-fixing conducted between health insurers and providers, and not enough price formation by consumers and providers directly.

Read the entire entry at NCPA's Health Policy Blog.

Oscar And The Changing Health Insurance Landscape

Yesterday, the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing on “Examining Consolidation in the Health Insurance Industry and Its Impact on Consumers,” at which the CEOs of Anthem and Aetna testified.  Both of these health insurers have announced friendly take-overs of two other insurers, Cigna and Humana.

One indicator regulators use to determine whether a business combination will reduce competition is whether there are significant barriers to entry in the industry. If there are, new competitors will not exploit openings created by incumbents’ consolidation. During the hearing, the CEOs of Anthem and Aetna each (independently) pointed to Oscar, a new health insurer with highly pedigreed investors, as evidence that health insurance is an easy business to enter.

Oscar is indeed an interesting enterprise, which has attracted fawning coverage in the business press both for its innovation and the quality of its investors. Nevertheless, Oscar is a curious start up, because it focuses exclusively on a market – Obamacare exchanges – in which insurers are taking on a lot of pain

Read the entire column at Forbes.

Health Technology Forum: DC Meetup September 24

The Final schedule is announced for our Meetup on Thursday:

6:00-6:40 PM - Networking & Refreshments

6:40-6:45 PM - Announcements & Introduction

6:45-7:15 PM - Leslie Heyer, Cycle Technologies

7:15-7:45 PM -  Dr. Huy Nguyen, MD, Care 24/7

7:45-8:15 PM - Dr. Berit Johne,  Royal Norwegian Embassy

8:15-9:00 PM - Networking & Refreshments

(If you are concerned about the Pope's visit, please don't be. He will be at Saint Patrick's and Catholic Charities, 10th St and G St, NW at lunch, but is scheduled wheels up at Andrews Air Force Base at 4 p.m. Metro is highly recommended, not car.)

We will start with 45 minutes of networking with soft and hard drinks, hot and cold food, provided by our generous hosts, Troutman Sanders. Full speaker bios are at our Meetup page.

There is still time to RSVP!

Hillary's Tweet Crushes Hopes and Dreams

Hillary Clinton has tweeted a teaser for her forthcoming proposal to lower prescription drug prices. See it and read my response at NCPA's Health Policy Blog.

Are Medicare ACOs Gaining a Foothold?

This blog has never gotten very excited by Medicare’s Accountable Care Organizations (ACOs). ACOs are risk-sharing arrangements between Medicare and providers, which are supposed to save money through efficiency. As a concept, they are fine – certainly an improvement over the incumbent, Soviet-style fee schedule. However, it is unlikely that the government has the incentives to get the risk-sharing incentives right.

I had anticipated that ACOs might end “with a whimper.” The Centers for Medicare & Medicare Services (CMS) have released results of Pioneer ACO’s third year of operation and 2014 results for Medicare Shared Savings Program (MSSP) ACOs which launched in 2012 through 2014. While ACOs are hardly taking off like the administration hoped, they seem to have gained a foothold.

Read the entire entry at NCPA's Health Policy Blog.

Consumer Price Index: Amid Disinflation, Medical Prices Increasing

Yesterday’s Consumer Price Index (CPI) release confirmed prices of medical goods and services continue to rise at a steady pace, despite the general deflationary environment. The CPI declined 0.1 percent from July to August (seasonally adjusted), and increased just 0.2 percent in the last twelve months.

Much of the disinflation is caused by dropping energy prices. Excluding food and energy, the CPI increased 0.1 percent last month and 1.8 percent over the last twelve months. Medical care, although flat last month, increased 2.5 percent over the last twelve months. This is moderate by historical standards, but still excessive relative to current CPI.

Read the entire entry at NCPA's Health Policy Blog.

Cross-Over Investors Key Players in Health Deal Boom

Silicon Valley Bank has published its mid-year report on the state of financing in biotech, medical devices, and diagnostics. The key take-away is that both private financing and exits continue to be strong. One development in the structure of the market that has made deals easier to move through the pipeline is the rise of cross-over investors. These are mutual funds or hedge funds (usually investors in listed securities) which are increasingly investing in private health deals.

Read the entire column at Forbes.

Health Technology Forum: DC September 24 Meetup - 3rd Speaker Announced

Please join us in Washington, DC on September 24 for Challenges & Opportunities in Global Health: International Perspectives. Our third speaker will be Dr. Berit Johne,

Dr. Johne is Counselor for Science at the Royal Norwegian Embassy in Washington DC.  Until recently she was Special Adviser for international cooperation for U.S. and Canada in the Research Council of Norway. Her scientific experience includes basic biomedical research; technology transfer, biotech start up; Health Technology Assessment, human biobanks program coordinator, and manager of a national foresight “Biotech Norway 2020”. Dr. Johne will present on:

US-Norway Cooperation in Medical Technology: Public and Private Funding, Financing & Market Opportunities

Read more and RSVP at this link.

British National Health Service Stops Paying for Lifesaving Drugs

Britain’s government-monopoly (single-payer) health plan, the National Health Service (NHS) has announced plans to stop paying for the most innovative, lifesaving drugs:

More than 5,000 cancer patients will be denied life-extending drugs under plans which charities say are a “dreadful” step backwards for the NHS. 

Health officials have just announced sweeping restrictions on treatment, which will mean patients with breast, bowel, skin and pancreatic cancer will no longer be able to receive drugs funded by the NHS.

In total, 17 cancer drugs for 25 different indications will no longer be paid for in future.
Charities said the direction the health service was heading in could set progress back by centuries.

The Cancer Drugs Fund was launched in 2011, following a manifesto pledge by David Cameron, who said patients should no longer be denied drugs on cost grounds.

Drugs which will no longer be funded include Kadcyla for advanced breast cancer, Avastin for many bowel and breast cancer patients, Revlimid and Imnovid for multiple myeloma, and Abraxane, the first treatment for pancreatic cancer in 17 years.

(Laura Donnelly, “Thousands of Cancer Patients to be Denied Treatment,” The Telegraph, September 4, 2015)

This is the second round of cuts this year. All in all, reimbursement for 25 drugs used by about 8,000 patients has been cut off. Unfortunately, this is not surprising.

Read the entire entry at NCPA's Health Policy Blog.

15 Percent of Obamacare's 2nd Season Enrollees Were Gone By June 30

Obamacare’s second enrollment season closed around the end of February, with 11.7 million signed up. By March 31, that had dropped to 10.2 million who actually paid their first month’s premium. New data from the administration report that number dropped further to 9.9 million by June 30.

What is also notable is that the entire drop of paid enrollees occurred in states using the federal exchange, not state-based exchanges (for which enrolment stayed at 2.7 million). There is no word on whether the drop-outs got employer-based coverage, descended into Medicaid, or stayed uninsured. 423,000 were dropped by the administration because of lack of documentation of citizenship or immigration status.

A stable market? Not quite, I guess.

Read the entire entry at NCPA's Health Policy Blog.

Why No Car Care Crisis?

Our health care is in “crisis.” We seem to have achieved the remarkable result of spending too much money while not ensuring access for enough people. Every politician says so, and most citizens agree. Indeed, no presidential candidate can be viewed as credible without proposing a health reform “plan.”

Hillary Clinton has sworn to protect and uphold the Affordable Care Act against all right-wing conspirators; Bernie Sanders has long advocated a government-monopoly, single-payer system; and Republican contenders will continue to roll out plans to “repeal and replace Obamacare” that will immediately come under attack by conservatives and libertarians as “Obamacare-lite.”

Let’s put the crisis in perspective. According to actuaries at the federal government, spending on health care per person in 2014 was $9,176. Yet according to the American Automobile Association (AAA), the average cost of operating and maintaining an average sedan in 2014 was $8,876 — almost exactly the same as health spending. Of course, not everyone owns a car, but most of us do. According to IHS Automotive, an industry research firm, 253 million cars traveled America’s roads last year. According to the Census Bureau, there were 239 million of us aged 18 through 84; that’s slightly more than one car per person in prime driving years.

Read the entire op-ed at RealClearPolicy.

PPI: Gap Between Hospital Inpatient, Outpatient Prices

August’s Producer Price Index was flat, month on month, and dropped 0.8 percent, year on year, continuing the trend we saw last month. Producer prices for health goods and services are rising faster than other producer prices.

What is interesting is the difference in the rate of inflation for hospital inpatient versus outpatient services. Outpatient prices are declining, while inpatient prices are rising, resulting in quite a gap.

I’d like to believe the outpatient prices are under pressure from ambulatory clinics. As for inpatient prices – well, this data gibes well with the Quarterly Services Survey, which showed an increase in hospital profits.

Read the entire entry at NCPA's Health Policy Blog.

Health Plan Mergers: Clash of Lobbying Titans

One month ago, I noted that the market was pricing a very high risk premium into two of three take-overs among health insurers. In a volatile stock market, the merger-arbitrage spreads for the three deals currently in play are remarkably stable. Anthem's take-over of Cigna and Aetna's take-over of Humana continue to be viewed as highly risky, while Centene’s take-over of HealthNet is viewed as almost certain to take place as announced.

Two deals – Anthem’s takeover of Cigna, and Aetna’s takeover of Humana – are trading at spreads indicating rates of return of over 20 percent, an extremely high risk premium. Opponents of the mergers have started to launch their campaigns, designed to provoke public and political opposition to health plans’ consolidation.

Read the entire column at Forbes.

Hospital Margins Up 9 Percent

This morning’s Quarterly Services Survey (QSS), published by the Census Bureau, reported that:

The estimate of U.S. health care and social assistance revenue for the second quarter of 2015, not adjusted for seasonal variation, or price changes, was $591.3 billion, an increase of 2.2 percent (± 0.8%) from the first quarter of 2015 and up 6.4 percent (± 1.3%) from the second quarter of 2014. The fourth quarter of 2014 to first quarter of 2015 percent change was revised from -0.4 percent (± 1.1%) to -0.5 percent (± 1.1%).

The QSS adds important information to the more widely reported quarterly Gross Domestic Product (GDP) and Employment Situation Summary (ESS) releases that I frequently discuss on the blog.

Read the entire entry at NCPA's Health Policy Blog.

Health Technology Forum: DC September 24 Meetup - 2nd Speaker Announced

We have three great speakers lined up for our next Meetup on September 24 in Washington, DC.

Our second speaker is Dr. Huy Nguyen, MD,  Executive Chairman of Care 24/7 headquartered in Knoxville, TN, and expert consultant on cross-border business development and strategies for A-Team based in Munich, Germany. Dr. Nguyen will present on Value-Based Care for the Chronically Ill.

Dr. Nguyen, will discuss how the health system is evolving towards "value-based care" - focusing on provider efficiency and proactive patient outreach - to improve health outcomes and control costs for the most vulnerable patients, the chronically ill.

He joins our previously announced speaker Leslie Heyer, Founder & President of Cycle Technologies.

Please join us. More information and RSVP at Health Technology Forum: DC.

One Quarter of August Job Growth Was Health Services

This morning’s Employment Situation Summary, which showed slow job growth overall, contained a big jump for health services: 23 percent of last month’s jobs were in health services. Of the 41,000 health jobs, a little more than half were in ambulatory settings.

Because of a long-term shift in the location of care, there are now almost seven million people working in ambulatory settings, versus just under five million working in hospitals. This is a positive development, because hospitals are very expensive facilities and have very concentrated lobbying power that they bring to bear to keep their payments higher than they would otherwise be.

Read the entire entry at NCPA's Health Policy Blog.

Selling Health Insurance Across State Lines

Here we go again: Republican politicians are rolling out the easily digested soundbite of “selling health insurance across state lines” as a solution to high premiums.

In the New York Times, Margot Sanger-Katz examines the idea. The only problem? It makes no sense. “I’ve tried for 10 years to explain this to Republicans; it is a big problem,” said Merrill Matthews, a resident scholar at the Institute for Policy Innovation.

Read the entire entry at NCPA's Health Policy Blog.

Immigrants and Medicaid

The Center for Immigration Studies’ latest report concludes that 42 percent of immigrant households, both legal and illegal, used Medicaid in 2012. Only 23 percent of households headed by a native-born American used Medicaid.

The report also discusses other welfare, including housing, food stamps, et cetera. It is a very thorough report with a wealth of detail. For example, immigrant households from Latin America are more likely to claim welfare than the native-born, while immigrant households from Asia or Europe are less likely. However, when stratified by education or income, it appears that immigrants at the same level as the native-born are more dependent on welfare.

Medicaid is a serious burden on the nation’s prosperity, and if immigrants are a big factor that should certainly be a policy issue. Nevertheless, the report itself invites a number of questions for further inquiry.

Read the entire entry at NCPA's Health Policy Blog.

Occupational Licensing and Health Spending

In July, the Obama administration released an important report on the harmful effects of occupational licensing. Compiled by experts at the Department of the Treasury, the Council of Economic Advisers, and the Department of Labor, and bearing the imprimatur of the White House itself, the report concludes that:

There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines.

Reducing the burden of licensing would give consumers more choices at lower prices. Nowher Nowhere is this need more pressing than in healthcare, where licensing restrictions dominate.

Read the entire op-ed in The Hill.

Health Technology Forum: DC September 24 Meetup - First Speaker Announced

We have three great speakers lined up for our next Meetup on September 24 in Washington, DC.

Our first speaker is Leslie Heyer, Founder & President of Cycle Technologies. Her presentation will be: From Smartphones to Smart Birth Control: Can Mobile Technology Provide Effective Family Planning Solutions?

Cycle Technologies is a socially minded company focused on reproductive health.  Since 2002, the company has worked with researchers and health partners to bring to market sustainable family planning technologies globally.

Leslie received her MBA from Harvard Business School and was named a 2015 Top 50 Most Talented Social Innovator.

More information and RSVP at Health Technology Forum: DC.

Health Facilities Lag Booming Building Market

This morning’s release of a booming construction report from the Census Bureau once again shows lagging spending on new health facilities, especially in the public sector.

Total construction spending topped $1 trillion (annualized) in July, of which less than $41 billion was health care. Health construction spending shrank 0.5 percent from June and grew only 6.4 percent year on year, less than half the rate of growth of all other construction spending.

Separating the data into private and public spending, health construction spending was stagnant in July versus June, while other private construction grew. However, private spending on health care construction has increased 13.3 percent, year on year, versus 17.1 percent for other private construction spending. It still grew a lot, although less than other construction.

It is in the public ledger where health construction has collapsed, year on year, by 12.9 percent. Other public construction spending grew by 6.4 percent.

Read the entire entry at NCPA's Health Policy Blog.