Takeaway: Republicans are warming up to replacement with repeal...sort of; drug price politics simmer; and health care employment growth slows.

It was an exciting week in health care with what we expect to be the beginning of the end of the ACA. Although Republicans are getting out organized at this point, the pressure to stay on the repeal reservation is enormous. Drug pricing politics continue to simmer in the background and health care employment growth slows, helped along by a 900 person layoff at MD Anderson due to a painful Epic integration. Here are some highlights from the week:

  • Republicans launched the opening salvo in what is sure to be a bruising messaging war with Democrats trying to preserve the principal legacy of the Obama Administration - the ACA.
    • Senate Finance Committee Chairman, Mike Enzi filed the FY 2017 budget resolution that requests the relevant House and Senate Committees to come up with changes in law to reduce the deficit - code for repeal of the ACA.
    • Proponents of the ACA are demanding a replacement proposal before repeal. They are supported by the utter compexity of the law that makes partial repeal through reconciliation (at least as concieved in 2015 reconciliation bill) potentially chaotic. The need for a replacement was gaining traction as the week ended with Senators Alexander, Cotton, Corker and Collins suggesting there needs to be at least a "framework" for replacement.
    • Speaker Paul Ryan said that defunding Planned Parenthood for FY 2017 will be included in the ACA repeal - no doubt to keep the more conservative wing of his party under control since he is likely to have to propose at least a transitional plan for ACA beneficiaries.
    • The conservative Republican Study Committee released its replacement plan which like other Republican plans, relies on portable tax credits to purchase insurance..
    • To counter Congressional Democrats accusations that repeal of the ACA would "Make America Sick Again" House Energy and Commerce released a chartback that highlights the failings of the ACA.
    • President-elect Trump is not interested in accepting any blame for the consequences of repeal of the ACA. The Tweeter in chief used his 140 characters yesterday thusly, "The Democrats lead by head clown Chuck Schumer, know how bad ObamaCare is and what a mess they are in. Instead of working to fix it, they do the typical political thing and BLAME. The fact is ObamaCare was a lie from the beginning. 'Keep your doctor, keep your plan!' It is time for Republicans & democrats to get together and come up with a healthcare plan that really works - much less expensive and FAR BETTER!
  • Say what you will about the Obama administration but you cannot dispute they are good at campaigns. Their final one kicked off this week in defense of the ACA and the picture the Democrats paint sounds alot like the scene described by John of Patmos in Revelations...or, if you refer, Ray Stantz, PhD in Ghostbusters. Their strategy is a well-coordinated one across government, media, think tanks and grass roots organizations:
    • Presdident Obama went to Capitol Hill to rally House and Senate Democrats to defend his signature political achievement.
    • The New England Journal of Medicine once again publishes a note from the President on the ACA.
    • The SEIU and other groups, calling themselves the Alliance for Health Care Security, launched their CareNotChaos.com Campaign in defense of the ACA. The campaign includes ad buys in several states including Tennessee which voted for Trump 61-39.% Go figure.
    • The Center for American Progress, formerly the policy arm of the Clinton Campaign, released issue briefs on all the horrible things that will happen if the ACA is repealed and not replaced.
    • The very ACA sympathetic VOX interviewed the President who says he is ok with repeal as long as Republicans have a better idea.
    • Repeal will cost $350 billion over 10 years (but only if Medicare cuts are repealed and that is unlikely), according to the Committee for a Responsible Federal Budget..
    • California could lose 334,000 jobs in 2019 of the ACA is repealed according to the Commonwealth Fund.
    • Kana Enomoto, head of the Substance Abuse and Mental Health Services Administration at HHS, and predicted a loss in mental health coverage is the ACA is repealed.
    • Congressional Democrats announced a "Day of Action" on Jan. 15th to rally grassroots to the cause
    • Acting CMS Director Andy Slavitt has dedicated his twitter feed with 13,000 followers to defending the law he has helped implement.
  • As of Dec. 31, 8.8 million people have selected ACA plans on the Federal Marketplace, according to CMS. The enrollment figure represents a 200,000 increase or 2% YoY. Of the 8.8 million selecting a plan, 2.2 were new customers and 6.6 were returning customers. Of the returning customers, 2/3 actively selected a plan and the balance were automatic reenrollments
  • Rate of growth in health care employment slowed again. The Hedgeye Health Care team breaks it down for you here and here. (Hit re: access)
  • Trying to put a number on how much money Medicare saves on joint replacement bundled payments? The answer is 20.8% according to JAMA study released on Tuesday.
  • HHS finalized the requirements for price ceilings and fines for overcharging in the much maligned and easily abused 340B Drug Program. We are still waiting on the "mega-guidance" which we assume will be released before Jan. 20. Look for 340B Program to factor into drug pricing discussions this year.
  • Rep. Tom Price, Trump's nominee for HHS Secretary is getting some heat for trading health care stocks.
  • House Democrats want to see if Trump will keep his campaign promise that Medicare should be able to negotiate prices. They filed HR 242 and S 41 this week which empower the Secretary of HHS to negotiated Part D drug prices.
  • MD Anderson is cutting jobs due to a painful rollout of the EHR system which is....wait for it..... Epic!

The Hedgeye View:

EXAS | COLOGUARD-TRACKER PROJECTS RECORD NUMBER OF DOC ADDS IN 4Q16, Jan. 6, 2017

MD | HIRING INTO A SLOWDOWN | ACQUISITION MULTIPLES "HIGHER THAN EVER", Jan. 6, 2017 

#ACA2.0 | HEALTHCARE EMPLOYMENT +2.8% IN DECEMBER, Jan. 6, 2017

#ACA2.0 | ADP HEALTHCARE EMPLOYMENT CONTINUES TO DETERIORATE, Jan. 5, 2017

MD | VRAD IS STILL A BAD IDEA, Jan. 5, 2017

FIELD NOTES (ATHN, MDRX, QSII) | CARECLOUD STRUGGLING | PICKING OFF STREAMLINED CUSTOMERS, Jan. 4, 2017

THAT WAS QUICK: SENATE INTRODUCES BUDGET RESOLUTION IN FIRST STEP TO ACA REPEAL, Jan. 3, 2017

FIELD NOTES (ATHN, CPSI, CERN) | KICKING THE TIRES | RURAL HOSPITAL CEO, Jan. 3, 2017

ACA REPEAL: STATE OF PLAY, Jan. 2, 2017

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Q1 2017 Health Care Themes Call - Jan. 18, 2017

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Stay warm in this colder weather and have a great weekend.

Emily Evans

Managing Director

Health Policy

@HedgeyeEEvans