Top of the Funnel | Macro Data + Policy Position Monitor
Consumer Price Index. CPI for health care generally obscures the real costs since someone other than the consumer pays for most of it. Nonetheless, the February print has one nugget worth examining. CPI for prescription drugs continued its vertical trajectory in February.
As the industry raises prices in January, this result is not unsurprising which makes it noteworthy. For much of 2020 and 2021 YoY% drug inflation, despite the annual price hikes, has remained subdued. A return to a more normal, pre-pandemic pattern suggests, possibly, the same thing as JOLTS data; health care services, and commodities have settled back into their traditional pattern albeit at different baselines.
Congress.
Say Hello Again to Deficit Politics. If you had any doubt after Senators Joe Manchin and Krystin Sinema gave the Build Back Better Bill the cold shoulder that deficit politics were making a long overdue return to Washington, you should now.
The FY 2022 Omnibus pending bill that passed yesterday did not include either the $22B requested by the White House for COVID relief or the $15B agreed to by House leadership. At issue were offsets for the spending on vaccines, testing and therapeutics.
The new attitude, if it sticks, does not bode well for Medicare and Medicaid payments. There are only three buckets of money in the federal budget that can be used to meaningfully offset spending of any kind: defense, Social Security and health care. Budget realities are not today’s worry but mark your calendar. The pivot back, however imperfect, to fiscal sanity may have begun.
Note: I will be covering the end of the Public Health Emergency, timing and funding implications on Wednesday next week. Link to event here. Invite will be in tomorrow’s mail bag.
Mental Health Appropriations. The Omnibus did provide about $300M in additional funding to address addiction treatment and an additional $400M for mental health services. Most of these funds will go to non-profits in the form of grants, specifically Certified Community Behavioral Health Clinics.
NIH No More. ((TXG (+/-), ILMN (-+)) The struggle between the White House and Congress on where to house the new DARPA-like research agency, the Advanced Research Projects Agency for Health, has come down on the side of Congress. With $1B in funding, ARPA-H will be located at Health and Human Services instead of the National Institutes of Health as President Joe Biden had proposed.
The debate on where to put a newly funded research organization would probably not occurred three years ago. It is an early sign that Congress might be more than a bit concerned about NIH operations. If power shifts in November, expect more scrutiny of NIH, its funding and oversight practices.
And the retirement of Dr. Anthony Fauci.
The White House.
Medicare Advantage and Progressives. ((UNH (-), ANTM (-), HUM (-))The progressive drumbeat continues for limiting reimbursement to Medicare Advantage plans. The Center for Medicare Advocacy’s comment letter calls for more aggressive us of the Coding Intensity Adjustment and limiting the payment discrepancies between Medicare Advantage and traditional Medicare.
Although the Direct Contracting Program (now ACO REACH) is probably politically bulletproof for the near future, efforts to unwind “privatization of Medicare” are persisting. Regardless of the popularity of the program, there are many ways the Biden administration can bow to this pressure and those are primarily focused on for the PMPM is calculated.
Other Stuff
Events.
Wednesday, March 16 @10am ET End of the COVID-19 Gravy Train? Relief Funds, End of PFE + Timing. Full invite out tomorrow.
Have a great weekend/week.
Emily Evans
Managing Director – Health Policy
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