Top of the Funnel | Macro Data + Policy Position Monitor
Employment. Health care added 28.3k jobs in May, a healthy 1.56% YoY%. The hospital sector contributed the most with 16k jobs added, followed by ambulatory at 7k and even nursing homes saw an uptick of 6k.
Other notable callouts are near zero growth in ESRD employment as it remains at multi-year low. Less labor at dialysis centers means one or two things; less treatments per patient and/or less patients to treat.
Aggregate hours worked in home health in April continued to drop from peak in February 2022. Employment in home health and skilled nursing remained flat.
Overtime hours in medical equipment and supplies manufacturing continued to drop suggesting some relief on those cost inputs. Employment in surgical and medical instrument manufacturing continued deceleration into April but remains above pre-pandemic levels.
Employment workbook is here.
Policy Position Monitor is here.
CONGRESS
The Memorial Day holiday kept Members of Congress away from their workstations and out of trouble this week. However, since sell-side has produced a “threat-of-drug-price-legislation-is-higher-than-you-think-note” I should tell you it is too early to reach such a conclusion.
It is too early because the Senate’s future has yet to be determined. There is a high probability that House will flip. Anywhere from 30-ish to 60-ish seats could go to Republicans in mid-term elections. The Senate is unclear. We don’t even know who the GOP candidate will be in Pennsylvania. Probabilities with that much uncertainty are meaningless.
HOWEVER, it is not to early to ponder the worse case scenario which is both chambers flip in November elections and Democrats view the lame duck session as their last, best chance to secure the vision of the Build Back Better agenda.
That worst case scenario does include drug price legislation – something Senators Joe Manchin and Krysten Sinema support in some form – and tax increases on the revenue side and Medicaid gap filling, ACA exchange subsidies on the expense side.
With respect to drug pricing, reform of Part D has the best shot.
LDT regulation. ((MYGN (-), NTRA (-), ILMN (-)) Next week, the Senate will mark up the FDA User Fee legislation. Recall this version includes regulation of LDTs. As written it would not affect existing tests but it does make growth an open question for many of the testing labs.
The White House
Medicare Trustees Report. (HUM (-), UNH (-), ANTM (-) CLOV (-), ALHC (-) DVA (-) AMED (-) CHE (-)) The Medicare Trustees moved their projected date for insolvency of the Part A Hospital Trust Fund from 2026 to 2028 due to better than expected economic recovery that resulted in higher payroll tax collections; higher than expected mortality from COVID and non-COVID among seniors; and deferral of health care visits during pandemic waves.
The CBO has reached a similar conclusion but has fixed the insolvency date as 2030. The Committee for a Responsible Federal Budget, in their analysis of the CBO’s estimates, noted 2% lower enrollment in Medicare due to higher than expected mortality.
The delay in insolvency – at which point Medicare would pay only part of submitted claims – takes some of the urgency out of finding budgetary solutions. However, lower enrollment projections is unqualified bad news for the Medicare Advantage MCOs which are already in a knife fight in large markets for each additional member.
Mortality that has been significant enough to alter enrollment projections is an important signal for the Medicare dependent providers, most especially DVA, AMED and CHE, to name a few.
End of the PHE. ((ANTM (+), MOH (+), CNC (+)) CMS held its first webinar with states to urge notification to beneficiaries about the pending end of the PHE. The priority of the administration is to prevent loss of coverage for those that have accumulated on the Medicaid rolls during the PHE.
On the one hand the administration prefers the PHE to end sooner rather than later so they can end the emergency border policies on asylum. On the other hand, significant coverage losses could cause some political pain and irritate the already stressed hospital systems.
The current estimate for an end to the PHE is October (my preferred date) but the CBO’s recent report on the budget pegged it at July 2023.
Pre-Certification at FDA End. The FDA has ended its pre-certification program for digital technologies citing a lack of statutory authority. The Trump-era program was designed to encourage the development of digital health technologies by establishing pre-certification standards. Another blow for innovation in health care.
CDC on Long COVID. ((PFE (-), MRNA (-) DVA (-)) The CDC’s reduction in status to pharmaceutical salesman for PFE means my nose twitches when I see studies like this one on post-COVID sequelae. Like other long-COVID studies this one relies on EHR data which automatically makes it deeply flawed. EHRs serve the purpose of getting paid so their data tends to overstate diagnoses.
Another flaw in the study is the lack of consideration for vaccine status. As we have pointed out all year, there has been an unusual excess death pattern in the wake of widespread vaccinations in early 2021 and again after mandates were imposed by the White House later in the year.
Is there a relationship between vaccinations and excess deaths? Just a guess at this point so a study that considered that variable would have been useful but, of course, explosive unless it absolved PFE and MRNA.
Nonetheless, the CDC knows of the excess deaths and they know the relationship between them and COVID disease gets thinner and thinner. Are they trying to explain them away instead of looking at adverse reactions to shots or implications of lock-down orders and other mandates they championed?
Maybe.
Other Stuff
JAMA on Drug Approvals. A review of 38 FDA-approved drugs under the accelerated program from 2012-2017 has the authors of a new study concluding that a lot of them lacked clinical benefit.
The study is timely as, in this post-Aduhelm world, accelerated approvals are getting a closer look and may become part of the FDA user fee legislation pending in Congress.
Upcoming Events.
Venture View with Marcus Whitney. On Wednesday @ 10am we will be discussing the new capital markets environment and how lower valuations and more serious business plans might be a good thing. Add to outlook calendar.
Calendar.
You can find 2022 here with searchable ticker list.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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