“Inexcusable”: Administration Over-Counted Obamacare Sign-Ups by 380,000

 

The media seems to think that Obamacare’s second open enrollment is going just swimmingly. (How could it be going worse than last year’s?)

Unfortunately, the Administration still isn’t counting last year’s sign-ups accurately. Jonathan Cohn of The New Republic has called the Administration’s over-counting of Obamacare sign-Ups “inexcusable“. And that’s from one of Obamacare’s biggest fans.

What happened is that the Administration counted 400,000 dental-only plans as Obamacare plans. On November 10, the Administration announced that 7.1 million people signed up for Obamacare as of the end of October, but that included the dental plans. The correct figure is only 6.7 million. And this figure was not disclosed by the Administration, but dug out by Republican Congressional staffers.

Gilead Pays $125 Million for Priority Review Voucher

 

Last May, we discussed Priority Review Vouchers, a type of intellectual-property right whereby the inventor of a drug for a rare disease, which is unlikely to be profitable because very few patients suffer from it, earns a marketable voucher that it can sell to another drug-maker that it can cash in at the FDA for a priority review of another new drug.

In the previous case, Knight Pharmaceuticals figured it could sell the voucher for $125 million to $300 million. Well, the market is now proven to function. Gilead Sciences has paid Knight $125 million for the voucher.

Gilead is the firm criticized for the prices it charges for Hepatitis C drugs. It appears to be putting those revenues to good use. The NCPA believes that fundamental reforms to the FDA’s regulatory obstacles to innovation are necessary to speed up innovation and reduce the prices of drugs. Until them, the Priority Review Voucher is a valuable work-around.

“Unprecedented”: 3 in 4 Insurance Brokers Saw Clients Drop Group Coverage

 

In yesterday’s Health Alert, I noted that employers which offer health benefits are not yet rushing to the exits. That might change quickly, according to a new survey of brokers:

An unprecedented number of employers stopped offering group health benefits this year, according to a recent survey of over 1,000 insurance brokers conducted by Benefitter. In 2014 alone, more than 3 out of 4 brokers had employer clients who dropped health coverage and instructed their employees to purchase their own insurance on the public exchange. Early signs indicate this trend may only accelerate in 2015, as 17% of brokers expect at least 25% of their clients to drop coverage in the coming year.

“As we enter open enrollment for the public market, it’s becoming more apparent that individual rates are often much more affordable than group rates. It’s no surprise that many business owners are responding to continued group rate increases with their feet,” says Benefitter CEO, Brian Poger.

Right to Try Laws Now in 5 States

 

After this month’s elections, the number of states that have “right to try” laws for experimental drugs has hit five. One in ten states: Not bad for an effort run out of one think tank in Arizona.

However, I have seen no evidence that any manufacturer of an experimental drug is taking advantage of these laws to supply medicines to desperately ill patients in these states. This is understandable: Doling out the medicines to needy patients threatens the sanctity of clinical trials and, therefore, FDA approval.

Congress needs to reform the rules governing the FDA to make use of more real-world evidence in approving new medicines. This is statistically challenging and not to be undertaken lightly. Nevertheless, if more states pass “right to try” laws, I expect that Congress will see the necessity of action.

Post-Obamacare Reform: Will Health Insurers Be Redeemed?

 

A version of this Health Alert appeared at Forbes.

Robert Pear of the New York Times recently described the “symbiotic” relationship between the Obama administration and health insurers. It was not always so:

But since the Affordable Care Act was enacted in 2010, the relationship between the Obama administration and insurers has evolved into a powerful, mutually beneficial partnership that has been a boon to the nation’s largest private health plans and led to a profitable surge in their Medicaid enrollment.

“Insurers and the government have developed a symbiotic relationship, nurtured by tens of billions of dollars that flow from the federal Treasury to insurers each year,” said Michael F. Cannon, director of health policy studies at the libertarian Cato Institute.

The entire article is a depressing read. And it is not just the fact that insurers are profiting from Obamacare. It’s that Obamacare is motivating health insurers to consider other harmful public policies. Most glaringly, health insurers appear to be inches away from endorsing price or profit controls on research-based pharmaceutical firms. (The pharmaceutical industry’s response to this threat is also somewhat short-sighted, but that is another story for another Health Alert.)

This poses quite a challenge for health reform after Obamacare is repealed by the next president in January 2017. Just as Ronald Reagan’s 1981 tax reforms did not drop out of the sky when he took office but had been developed in Congress for years by Jack Kemp and William V. Roth, the newly elected Congress has the opportunity and responsibility to pursue a consensus on post-Obamacare health reform that puts patients’ needs in front of politicians’ delusions, so the next president has something with which to replace Obamacare. 

Your Kaiser Permanente Doctor Will See You Now – at Target

 

You probably won’t find more criticism of large health systems on any other health policy blog than you will here. Nevertheless, we like innovation wherever we find it happening, and it is happening in some large health systems:

In a move that reflects the increasing wave of consumer-driven healthcare, Target Corporation is teaming up with Kaiser Permanente to open four in-store Target Clinics in Southern California, taking a host of services directly to thousands of customers.

The clinics opened at Target stores in Vista, San Diego and Fontana, and a fourth clinic will open in West Fullerton Dec. 6. They will be staffed by nurse practitioners from Kaiser.

While Target has maintained clinics for the past 10 years at a number of stores, the partnership will allow for a much broader array of services than it typically offered at retail outlets. Expanded services include telemedicine consultations, prescription reviews, pediatric primary care visits, OB-GYN services, vaccinations and flu shots, pediatric and adolescent care and management of chronic illnesses like diabetes and high blood pressure, according to John Holcomb, vice president of healthcare for Target. (Dan Verel, MEDCity News)

The “Average” Obamacare Rate Hike May Be Much Lower than Advertised — and That Indicates More Adverse Selection

 

Now that we are on the third day of open enrollment, it may be time to puncture the balloon of “tame” Obamacare premium hikes. There has been a drumbeat of positive news about premiums in the Obamacare exchanges. Here are some of the higher profile reports:

  • According to PricewaterhouseCoopers (PwC), seven states and DC (which had announced approved rates by November 4) have an average premium (across metal tiers and ages) of about $344, an increase from 2014 of 3.5 percent. By contrast, the average premium increase across all reporting states is 5.6 percent, and the average premium is $381;
  • According to the Robert Wood Johnson (RWJ) Foundation and the Urban Institute, which reviewed 17 states, six states will have average premium reductions across the carriers’ lowest cost silver plans, 10 will have small premium increases (defined as 5 percent or less) and two will have increases greater than 5 percent;
  • According to the Kaiser Family Foundation, which reviewed the lowest-cost bronze plan and the second-lowest-cost silver plans in 15 states, the average premium for a bronze plan will jump up 3.3 percent, and the average silver premium will drop 0.8 percent.

Good news? Well, not really. First, we have no idea what the “average” change in premium will be until after the dust settles on open enrollment next February 15. A simple average of rates announced prospectively does not tell us much until we see which plans Obamacare enrollees actually choose.

American Medical Association Backs Telemedicine Compact

 

Laptop and StethoscopeOur blog usually does not cheer the American Medical Association, because it is largely responsible for the Soviet-style centrally fixed prices that prevail in Medicare. Well, today we applaud the AMA for pledging its support to an important initiative that will increase the adoption of telehealth.

The Federation of State Medical Boards (FSMB) has developed an interstate compact to allow physicians licensed in one state to provide telemedicine services in other states which join the compact. It will greatly advance the effective adoption of telehealth nationwide. Yes, I am aware that the pure libertarian view is that licensing should be abolished and certification by private organizations govern the recognition of professions. Unfortunately, that is not on the radar screen. An interstate compact allowing physicians to practice telehealth across state lines is a very positive step that will pre-empt federal interference in professional licensing.

Why California Hospitals Can’t Cut Capital Costs

 

After two major earthquakes, California’s legislature passed SB 1953 in 1994. The law imposed a mandate requiring hospitals at risk of earthquake damage to retrofit or replace their buildings. Many chose replacement. The state provided no capital grants. Twenty years later, the mandate has caused an explosion of capital expenditure dollars that are coming home now. In the San Francisco Bay Area alone, at this date, the capital costs of just 12 projects amounting to almost $10 billion are being committed that will end up being reflected in hospital prices.

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Source: San Francisco Business Times, 10/31/14

Health Insurance without an Expiration Date

 

Hangsheng Liu and Soeren Mattke have written a useful short article at Health Affairs, promoting “health insurance without an expiration date,” criticizing the one-year term of most U.S. health insurance, which features open enrollment at the end of each calendar year:

Moreover, when consumers know they can change plans if their health worsens, they lose at least one incentive to adopt healthy lifestyles. Insurers, too, have few incentives to invest in their enrollees’ health through wellness and disease management programs because those investments, studies show, may not pay off for up to three years. By then, enrollees may have moved on to another insurer. Thus, a greater role for exchange plans and price competition might inadvertently counteract current efforts to shift the payment system toward one that rewards providers for providing long-term health care management for their patients.