Chart of the Week
Congress
Infrastructure. The Senate passed their infrastructure package, demonstrated bipartisanship is possible and, in an increasingly fragile geopolitical environment, necessary. Then they left town.
Reconciliation. Senate Majority Leader Schumer released reconciliation instructions for a $3.5T budget package this week. Instructions to Senate Finance, one of the two primary committees of jurisdiction, for spending $1.5T include:
Expenditures
- Paid family and medical leave
- Permanent expansion of ACA to make premium subsidies available to people making over 400% of Federal Poverty Threshold ((-) NSP, (+) OSCR)
- Expanding Medicare to include dental, vision, hearing benefits ((+) CANO, AGL, OSH) ((-) CLOV, ALHC, HUM)
- Lowering eligibility age for Medicare to 60
- Addressing health care provider shortages through Graduate Medical Education funding
- Extension of the Child Tax Credit and others
- Funding for long-term care for seniors and people with disabilities through Medicaid’s HCBS program
- Investments in health equity initiatives in maternal, behavioral and racial justice.
Offsets
- “Health care savings” which may include the biggest item in the rumor mill, cuts to Medicare Advantage plans. Another possibility is past-acute.
Instructions for spending $726B to Senate HELP include:
- Research at HBCUs, MSIs, TCUs and ANNHIs
- Funding of primary care including Community Health Centers, National Health Corps, Nurse Corps and Teaching Health Center Graduate Medical Education
- Investments in health equity initiatives in maternal, behavioral and racial justice
- Pandemic preparedness
Notwithstanding President Biden’s efforts to assure progressives, the size of the package is going to shrink. Sen. Joe Manchin has already indicated opposition to the cost. Not saying anything, but also opposed include Sen. Mark Kelly of AZ, Krysten Sinema of AZ and almost certainly a few more.
Likely candidate for the chopping block is a reduction in the Medicare eligibility age. Neither the White House nor Sen. Wyden have expressed support and the provider community is strongly opposed.
Moderate Rebellion. Speaker Nancy Pelosi’s legislative strategy to leverage a very popular bill to drive as many concessions as possible from moderates on both sides of the Hill hit a snag.
A group of ten House Democrats usually considered moderates wrote a nice note to Pelosi expressing disagreement over her announcement that she would bring the Senate-passed bipartisan infrastructure bill forward only after reconciliation.
Their actions are a reminder that Pelosi enjoys nearly as a thin a majority as Majority Leader Schumer and even reconciliation – normally a highly partisan move – must bend a bit to the political realities at home. The pressure will be on making the final package smaller and with more sincere offsets than infrastructure.
The White House.
Medicaid Enrollment Post- PHE. Today, CMS sent to State Medicaid Directors an update on enrollment policy once the PHE ends. Original guidance indicated that state should make redeterminations of eligibility within six months from the end of the PHE. Today, CMS announced they would have 12 months. As the PHE is likely to endure through the winter of 2021-22, Disenrollment is not likely to begin until 2023. ((+) MOH, CNC, ANTM)
Drug Price Policy. After passage of an infrastructure bill that has progressives worried he might be too accommodating of the demands of moderates and Republicans, President Biden went in front of the microphones to publicly declare support for Sen. Ron Wyden’s drug price policy agenda. Specifically, President Biden stated:
- “Medicare should negotiate the price for a subset of expensive drugs that don’t face any competition in the market.” This refers mostly to Part B drugs, many of which have already have biosimilar competition.
- “Drug companies that raise their prices faster then inflation should have to pay a penalty.” The president may rue this one given where inflation is going so it may get watered down.
- “Build on existing progress to lower the cost of prescription drugs.” The president cites HR 3 which has already been rejected by moderates and Republicans. However, H.R. 3 also includes a revision to the Part D benefit design that may accomplish certain goals related to out-of-pocket expenses. Unlike most of the bill, changes to Part D have bipartisan and pharmaceutical industry support.
Medicare Rule-A-Rama. No rules pending
Most Favored Nation Model (Part B drugs): The proposed rule was released after publication of Dose last week. The Biden administration plans to withdraw it after public comment.
Vaccine Mandate. They are sprouting up left and right with HHS being the latest federal agency to require it of all employees of the Indian Health Service and the National Institutes of Health.
Left unsaid is whether CMS will require COVID-19 vaccinations as a Condition of Participation in Medicare and Medicaid. Lawsuits are expected if they do. According to a few polls we have seen around town, childbearing-age health workers make up a large chunk of the vaccine resistant. It remains to be seen if it becomes a choice between employment and vaccination.
Boosters. Not wanting to give up any ground to the Delta variant among the most at-risk, the FDA authorized booster shots for immunocompromised people. The authorization is limited to patients with organ transplant or a similar condition that weakens their immune system.
Other Stuff
Producer Price Index. Thursday’s release of PPI brought with it more signs that acuity continues as a tailwind for providers and an almost unpredictable headwind for insurers. PPI for neoplasms accelerated slightly in July and remains 13% above pre-COVID levels.
Interestingly, PPI for care of patients reporting “factors affecting health status and access to health services,” dropped while treatment of most other conditions treated by General Medical Hospitals hooked up. The reversal suggests, and anecdotes support, that the health care system is welcoming more people in worse condition.
Another new trend appears to be those covered by private insurance are using more/more expensive care. As private insurance covers about half the U.S., the implications are more profound than is the case with Medicare and Medicaid which serves a lot of children.
If the trend holds, the margin implications for providers are positive as commercial reimbursement tends to be higher than government sponsored insurance. ((+) HCA, THC, SGRY) ((-) HUM, UNH, ALHC, CLOV, OSCR, BHG)
SPAC and S-1 Corner
IPOs. None to report.
SPACs. MTAC is teaming up with Menic Innovative Surgery which produces a robotic transvaginal robotic solution. Two new SPACs added to the list include DTRT Health Acquisition and Canna-Global. The latter had an interesting disclosure versions of which have been popping up recently:
Notwithstanding the foregoing, we are not limited to a particular industry or geographic region and may consummate a business combination with a target business in any industry or region if we believe the business combination is attractive to our company and stockholders, however, we expressly disclaim any intent to and will not consummate a business combination with a target business located in China or Hong Kong.
You can access the updated SPAC spreadsheet here.
If you are investing in SPACs but not super familiar with health care, hit and we can help.
Recent Events
Replay Brad Smith, former Director of the Innovation Center at CMS and I will be talking about the history and potential of direct contracting.
Upcoming Events
Aug. 25 @10 a.m. ET Policy Trends in Managed Care, Post-Earnings.
Sept. 7-10th What is Next for Health Care? Virtual Event with Matthew Holt of The Health Care Blog and Jess DaMassa, Host and Executive Producer of WTF Health. At this point, it looks like I will be sharing a panel with Matthew and Bill Taranto of MRK’s Global Health Innovation Fund, among others. The line-up is great if you are interested in innovation. Early Bird registration ends TODAY. Sign up here.
Emily Evans
Managing Director – Health Policy
Twitter
LinkedIn
