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This Week in Health Care Reform: January 26th, 2018

Lawmakers agree to a critical stopgap funding measure; health care spending growth is shown to be largely driven by increased prices; as hospitals grow, so does what patients are paying; and, the new head of HHS is confirmed.

Week in Review

CR+CHIP+HIT: On the heels of three days of tense negotiations, the government reopened Monday evening after Congress passed a continuing resolution (CR) that the President then signed.  That measure, set to expire on February 8th, also included a handful of noteworthy health care provisions, specifically, a six-year funding extension for the Children’s Health Insurance Program (CHIP).  The CR also delayed several health care-related taxes, including a suspension of the unpopular health insurance tax (HIT) for 2019.  While that decision was applauded by stakeholders, who otherwise would’ve been on the hook for the costly burden imposed by the HIT, it only served to increase the urgency with which they continue to urge lawmakers to provide relief this year for small businesses, working families, and seniors from the onerous tax.

HCCI Study: A new report from the Health Care Cost Institute (HCCI) shines a light on an aspect of our increased health care spending that is slowly working its way into the larger conversation regarding rising health care costs.  From 2015 to 2016, health care spending per person grew at a faster rate (4.6 percent) than it had in recent years.  Pointedly, the HCCI study shows that spending has increased, not because Americans are using more health care, rather, because prices are going up.  In fact, utilization of health care services went unchanged – actually declining in some observed settings – over the period measured.  While the usual suspects (e.g., prescription drugs, which saw a 27 percent increase) were trotted out as cost drivers, large spending increases were actually found in outpatient ER visits (34 percent) and surgeries (12 percent).  Put simply, experts were quick to point out, we’re using less health care, but somehow paying more.

Paying More for Less:
Building off that theme, a recent article sought to explore the impact that increased hospital consolidation is also having on patients and communities across the country.  Of particular interest is the transition away from inpatient services and towards outpatient care, a trend that appears to be reshaping the hospital care delivery model.  While these large hospital systems point to changing patient consumption patterns as justification for the gradual shift, residents of these communities counter that the resulting hollowing-out of their historic community hospitals has only led to higher prices and fewer services.

Azar Confirmation:
Alex Azar was confirmed by the Senate on Wednesday in a 55-43 vote to serve as Secretary of the Department of Health & Human Services (HHS).  Azar’s confirmation to lead the embattled agency, which has been without someone in that role since former Secretary Tom Price resigned last September, was not without some controversy, as opponents to his nomination questioned the objectivity he would be able to bring to the role after having spent years working in the pharmaceutical industry.  Supporters were quick to offer up his experience having served at HHS under previous Administrations to counter that narrative.  Regardless, Mr. Azar steps into his new role tasked with addressing a growing list of priorities, including stabilizing the exchange markets and combatting the rising cost of prescription drugs.      

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Having passed a CHIP-funding bill, Congress now turns its attention to putting together a legislative package aimed at stabilizing the individual insurance market.

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