When presented with the opportunity to reform the American health care system in 2009 and embrace the advice of long tenured policy advocates like the Institute of Medicine, President Barack Obama instead made two critical policy decisions that, as expected, have been disastrous. First, he cut a deal with Billy Tauzin, president of the Pharmaceutical Research and Manufacturing Association, to leave the drug business out of it. In exchange, PhaRMA promised not to get in President Obama's way. This compromise between the artful dodger and Oliver Twist left the pharmaceutical industry unregulated in a wilderness of a revenue-hungry industry.
The second policy decision was to reject efforts to control the prices providers, specifically hospitals, charged. President Obama and his advisors knew that, coming off a recession, the last thing you wanted to do was risk employment losses. As Politico so ably described in 2016, the Affordable Care Act was also a jobs program. Since 2009, national health expenditures assumed its position of 17% of the economy - a likely understatement - and there it has stayed despite economic expansion of other sectors.
What was true then - federal health care programs offer a few levers to mute the effects of the economic cycle - is more true now. The biggest government health program, Medicaid, grew dramatically under rules established during the Public Health Emergency. These included an increased matching payment for states that maintained continuous enrollment (i.e. did not disenroll) of Medicaid beneficiaries. Medicaid and CHIP Enrollment grew to about 91M people in March of 2023.
Since April, states have been engaged to greater and lesser degrees in disenrolling Medicaid beneficiaries. Some began right away, others like New York, did not get around to until later summer. Medicaid and CHIP enrollment as of September, according to CMS is about 88M. Prior to the Public Health Emergency it was 70M.
Despite such a modest reduction CMS issued a press release this week complaining that states - especially those that did not expand Medicaid under the Affordable Care Act - were losing too many beneficiaries, especially children. The message, for those states that will listen, is that disenrollment should be slowed or stopped.
The result is an extra 15-20M a month of cash flowing from the federal treasury to the states, their MCOs, providers and all manner of health care industry participants. Stimulus by stealth is what we have called it. Is it enough to offset the decline in consumer spending? Probably not. But it helps on the margins and if you are facing a tough re-election and a bad economic climate, as President Joe Biden is, every bit helps. This analysis can probably be extended to other bits like student loan forgiveness and foreign military aid.
Let me know what you think.
Emily Evans
Managing Director – Health Policy
X
LinkedIn
Calendly Meeting Set-up
