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This Week in Health Care Reform - April 18th, 2014

A surprise leadership change at HHS opens up a new front for the health care law; analysis from CBO projects that the law’s costs will be less than expected, even as premiums cast a long shadow across the implementation landscape; the health insurance tax continues to exert undue pressure on families and small businesses; and, Gilead’s breakthrough hepatitis C drug starts drawing more than just regulators’ attention.


Health Care Reform

Surprise Resignation: On the heels of her department announcing that enrollment on the exchanges had crested the 7.5 million mark, Health & Human Services (HHS) Secretary Kathleen Sebelius announced late last week that she would be resigning her post.  Given the numerous challenges that the law – and those exchanges in particular – experienced on the road to implementation, speculation had been circulating that her announcement was in the offing.   Nevertheless, after weathering (what some would call) a rocky five years as the top administrator overseeing the passage and arguably flawed rollout of the sweeping health care law, the Secretary made the decision to leave, going so far as to tell the President that her staying on “wasn’t an option.”  While critics and supporters are left to debate her legacy and the circumstances surrounding her departure, reports have begun to surface that the former Kansas governor is in fact mulling a run for the U.S. Senate.  Regardless, in the wake of Secretary Sebelius’ resignation, the President announced that he would be promoting Office of Management and Budget (OMB) Director Sylvia Mathews Burwell to fill the soon-to-be-vacated post.  Unsurprisingly, her nomination was met with more than a little political fire, setting up what many expect to be a contentious confirmation process.  As experts warn of the challenges ahead for the new HHS Secretary and offer up lessons gleaned from her predecessor’s tenure, the White House looks ready to hit the reset button on the national conversation surrounding the Affordable Care Act, despite the majority of Americans believing that the change in who’s running HHS won’t make any difference in the law’s rollout. 

CBO Estimate:
On Monday, the nonpartisan Congressional Budget Office (CBO) released revised deficit projections for the current year and into the next decade.  Somewhat unexpectedly, CBO predicts the deficit will actually drop this year.  (But, those gains will be short-lived, as projected deficits will quickly re-expand before eventually ballooning to twice the average percent of the economy it had been averaging the past four decades – from 39 percent to 78 percent).  While the agency attributed this year’s decline to technical revisions to discretionary program spending estimates, a not insignificant chunk of those savings stems from the cost of expanding coverage under the Affordable Care Act being far less than expected.  CBO estimates that the insurance subsidies paid out under the Affordable Care Act will be about $104 billion less than initially projected, owing to a combination of factors, including lower payment rates for providers, tighter management of usage, and narrow networks. 

Premium Projections:
As the country gains distance and perspective from, what can only be charitably described as, a troubled rollout, attention has begun to turn to what’s on the horizon for health care reform.  Practically speaking, for states, there are lessons learned and best practices to be shared.  And, politically, polling data would tell us that the health care reform war is anything but over.  Whether or not we’re able to find our way to calmer waters, there’s growing concern amongst at least one group of stakeholders that we may, in fact, be in for rougher seas.  According to a recent survey of insurance brokers selling coverage in the individual and small group markets, premiums are already “skyrocketing”, showing sharp increases across numerous states.  Further analysis goes on to show just how much they’ve gone up over the last four years alone, leaving some experts to ascribe the increases as being “largely due to changes under the ACA.”

HIT Irony:
The Affordable Care Act’s health insurance tax (HIT) is a study in misplaced intentions.  Despite the health care law’s titular promise, the HIT does the exact opposite, ultimately making coverage more expensive for families, seniors, and small businesses.  Just this week, local leaders in West Virginia discovered this for themselves when Marshall County commissioners were told that the health insurance premiums that the county pays for its employees were going up by about 2 percent because of the HIT.  Recently, lawmakers have also drawn attention to the harmful effects of the new tax, delivering speeches on the floor of the U.S. Senate and speaking out against the HIT in open committee sessions.  And, just last week, a new study released by the American Action Forum estimates that the HIT will cost consumers an extra $101 this year alone.

Sovaldi in the Crosshairs:
The steady drumbeat that has been building in opposition to Gilead Sciences pricing its new hepatitis C drug, Sovaldi, at $1,000-a-pill, or $84,000 for a 12-week course of treatment, continues to marshal a diverse array of stakeholders to its cause.  Last week, the World Health Organization (WHO) weighed in, calling for a “concerted effort” to bring down the cost of the drug.  However, given that Sovaldi’s been shown to be effective in curing the liver-destroying virus, many are finding it impossible to call for an outright boycott.  In Texas, the state’s Health and Human Services Commission, which oversees Medicaid, is reconsidering its proposed policy allowing Sovaldi to be used mainly for sicker patients.  And, earlier this week, the Department of Veterans Affairs and a California panel made separate recommendations that the drug should be given only to those with advanced liver disease, while asking others to wait.  Already, the pharmaceutical industry’s leading trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), has come to Gilead’s defense, saying that life-saving treatments such as Sovaldi offer a priceless breakthrough.  In the meantime, Gilead competitor, Merck, has been developing a potential rival two-drug combination that clinical trials have shown to be nearly as effective as Sovaldi.          

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Looking Ahead

As taxpayers struggled to incorporate the intricacies of the health care law into their filings, the IRS finds itself having to fulfill an entirely different kind of enforcer role.  And, as mentioned in last week’s newsletter, the Federation of State Medical Boards (FSMB) is slated to consider a new set of guiding principles for telehealth at its annual meeting next week.  Before they do, why not let them know why you think telehealth is so important.

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