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This Week in Health Care Reform: December 15th, 2017

Health care spending growth shows signs of abating; hospital chains threaten to dominate the health care landscape; a new study examines what can be done to make medicines more affordable; and, FDA guidance seeks to clear away regulatory hurdles for digital health.

Week in Review

Spending Growth: Growth in health care spending in this country is showing signs of tapering off according to the latest analysis from the Centers for Medicare & Medicaid Services (CMS).  Last year, health spending increased 4.3 percent to $3.3 trillion compared to the 5.8 percent growth observed in 2015.  While this level of spending represents a slowdown in the growth measured in the two years prior to 2016, health spending as a percentage of overall gross domestic product still rose slightly last year to 17.9 percent, up from the 17.7 percent seen the previous year.  But, as for the aforementioned trend growth that had been observed coming into last year, those increases were largely attributed to the expansion of the Affordable Care Act (ACA).  Whether or not last year’s slowdown in growth was a result of those processes beginning to pay dividends is somewhat immaterial, especially as health care stakeholders expand their focus on cost containment strategies.  And, with so much of that conversation now beginning to explore the role that prices are playing in driving up the cost curve, it’s expected that that focus will only continue.

Hospital Chains: Despite assurances to the contrary, the continued conglomeration of large hospital systems across the country has yet to fully deliver the savings or improvements to care for consumers and localities that has been long promised.  Rather, concern about the distance the growing concentration of ownership puts between local hospitals and the communities they serve has opened up a yawning divide, with opponents to these mergers on one side and supporters, who continued to point to the potential savings and improved quality that should result from the deeper pockets and economies of scale achieved through these combinations, on the other.  And, the pace of these deals only seems to be quickening, as this month alone, a pair of separate deals has either already been announced – involving at least 166 hospitals with a combined revenue of $39 billion – or, is under negotiation – involving 191 hospitals and nearly $45 billion in annual revenue.  While hospitals argue that these deals are necessary in order for them to be able to better marshal resources and coordinate treatments, economic research tells a different story – specifically, that these types of mergers also serve a different purpose as they boost health systems’ bargaining power with insurers and employers, both, driving up costs and reducing options for consumers.

Rx Affordability:
This week, the Senate Health, Education, Labor, & Pensions (HELP) Committee held a hearing examining the recommendations put forward in a new report on escalating prescription drug prices.  Published by The National Academies of Sciences, Engineering, and Medicine, the country’s most influential science advisory group, the report, titled, “Making Medicines Affordable: A National Imperative,” makes the argument that, as constructed, the pharmaceutical market is not sustainable and needs to change.  In speaking to the specifics of his organization’s recommendations, Chair Norman Augustine pointedly told HELP Committee members, "Drugs that are not affordable are of little value." 

Digital Guidance: L
ate last week, the Food and Drug Administration (FDA) released guidance aimed at providing greater clarity as to how digital software will be regulated going forward.  At issue is a specific category of software known as “clinical decision support”, which is designed to help doctors make enhanced data-driven decisions for their patients.  It’s that lack of clarity that continues to hamper the introduction of new technologies and the application of innovative solutions in the health care space.  While some see the guidance issued by the FDA as a step in the right direction, others worry that it doesn’t go far enough.  Separately, CMS released a final rule of its own last month that, amongst other things, included an increase in Medicare coverage for select telehealth services.  However, state licensing laws restricting the practice of telemedicine across state lines remain an obstacle.      

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We encourage you to stay involved as implementation efforts surrounding health care reform progress.  Visit the Health Action Network and be sure to let us know what's on your mind.



Health care issues continue to be a priority for Americans, irrespective of their political persuasion, at least according to a new poll from POLITICO and the Harvard School of Public Health.  Where the divide reasserts itself, however, is on what exactly respondents are focused.  Republicans remain fixated on repealing or replacing the ACA.  Democrats, meanwhile, say their priority is in getting funding for the Children’ Health Insurance Program (CHIP) reauthorized.

With the holidays upon this, this will be the final newsletter of the year. But, look for us again on the other side of the calendar.

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Have a safe and wonderful holiday season!