Patty Hearst heard the burst of Roland's Thompson gun and bought it. ~ Warren Zevon
Politics. Of all the things to be bad at, America’s federal policy apparatus has chosen victory. “Chosen,” perhaps in the way Patty Hearst chose to rob banks after being locked in a closet by the Symbionese Liberation Army for two months.
She went willingly into a Hibernia Bank branch in San Francisco with a M1 Carbine rifle, but her alternatives weren’t all that great either.
As America nears and exceeds many of the goals it established over fifty years ago – like universal health insurance coverage – the choices at Washington’s many policy wonk shops are not ideal either.
On the one hand, the health policy people at the Center for American Progress or Brookings could declare victory and head home. The uninsured population in the U.S. is below 10% and it might even be lower since that data point is largely derived from surveys.
On the other hand, health policy people might consider focusing some attention on the way in which “value-based” purchasing is anything but. Perhaps they could use the hundreds of millions of dollars that flow out of government and philanthropic organizations to develop policies that encourage good health.
Nah, no money in that.
Instead, the health policy NGOs in Washington are relying on what really seems to work these days, fear. Using dimensionless numbers like “over one million people kicked off Medicaid” the think tank class has raised the specter of insurance coverage loss as the program disenrolls after three years of accumulating ineligible members.
Fortunately for the wonks, the donor class ignores just how much things have changed in the last 10 years. For better or worse, health insurance coverage is generally universal, at least as far as anything can be comprehensive in a sprawling and diverse nation such as this one.
Nonetheless, fear sells and in Washington it flies off the shelf. You can take that to the bank.
Policy. A major criticism of the Medicaid disenrollment process has been that most people leaving the program are doing so because of “procedural issues” which is often interpreted as “red tape.”
Blaming bureaucrats is a time honor tradition but it ignores the highly efficient systems put in place after 2016 when a similar pause in eligibility determinations was implemented.
In Connecticut, for example, 71% of renewals in the month of May were accomplished via either a passive “ex parte” system or a pre-filled form that only requires a signature.
Another change that has gone unappreciated is the tendency of health care providers to employ insurance consultants. These people are responsible for ensuring all patients are maximizing their insurance eligibility while in the care of a provider. This approach will be especially important between now and July 2024 when a Special Enrollment Period ends for those who may lose Medicaid coverage.
It is not what Harry Truman envisioned when he first proposed copying the health programs of Nordic countries post-World War II. It does seem to be working reasonably well right now.
Power. (Near) universal health care coverage has not been without its negative effects but those are only just beginning to show themselves. Insurers, having to balance the demands of Special Enrollment Periods, mandatory minimum MLRs, guaranteed issue and a host of other confounders, turned to the pharmaceutical industry.
Drug rebates and spread pricing have become levers that insurers – especially the ones that actually own a Pharmacy Benefit Manager – can push and pull to manage MLR, applying nearly infinite upward pressure on list drug prices.
Congress, it appears, will finally put an end to most PBM practices in Medicare this year or next. States have moved to reform the system in Medicaid. That leaves the biggest insurer of all, employers exposed.
And they kinda like it.
Like Medicare Part C plans, self-insured employers have used rebates and spread pricing to lower benefit costs and subsidize other things on the SG&A line. There is nothing currently contemplated that would change that, at least not yet..
Those of you with pattern recognition skills may have noticed that the role of PBMs and the flotsam and jetsam of benefit consultants in the employer sponsored insurance market is getting more attention.
Last week, Stat News, a pharma-friendly publication, released a study of the relationships between PBMs, consultants and employers. Adam Fein of Drug Channels – also generally bucking the anti-drug manufacturer trend – has pointed out that data from Texas shows employers are not passing rebates along to the employees that generate them. Sen. Bernie Sanders, probably knowing what comes next, pledged to take on mandatory drug negotiation in the self-insured market.
Absent any change in law or heart, employers are pursuing the same policy of health insurance inversion that has plagued Medicare. Employees that use high list/high rebate drugs help subsidize insurance premiums for everyone else at the company. Since the C-suite would rather rob a bank themselves than listen to HR talk about the American drug channel, there are few incentives to change that. Hence, the drug industry's efforts to win hearts and minds via sympathetic channels.
Change will not come swiftly. There is too much money at stake. In the meantime, upward price pressure and with that, higher drug rebates, will be in play for employers.
Have a great rest of your weekend.
Emily Evans
Managing Director – Health Policy
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