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This Week in Health Care Reform - May 22nd, 2015

The growing population of patients with high-cost medications overwhelms state budgets; the digital revolution in health care promises to change medicine; the small group market faces potential disruptions; and, Medicaid prepares for ‘epic’ changes.


Week in Review

Rx Overwhelms: A new survey released this week shows an overwhelming majority of Americans thinks that prescription drugs are too expensive.  Compiled by Morning Consult, the poll of over 2,000 registered voters found that 3-out-of-4 respondents shared this opinion, results that are sure to resonate on the campaign trail.  With so many more people now using so many more medications, the fact that they’re also having to spend so much more for those drugs, has only served to shine a bright spotlight on the issue.  Trend analysis only foments the turbulence, drawing increased scrutiny to the criticality of the problem, as a recent study points out.  In a report released by Express Scripts last week, the population of patients with drug costs in excess of $100,000 was shown to have ballooned to 140,000 people, nearly triple the amount from the previous year.  Additionally, an estimated 576,000 Americans spent more than the median household income on prescription medications last year.  Whether or not you take the pharmaceutical industry’s long-trotted out defense of ‘the high costs associated with drug development’ as justification of their pricing determinations at good faith, it’s hard to argue that our health care system is quickly reaching the breaking point – case in point: State Medicaid programs, which find themselves teetering dangerously close to financial ruin, owing in large part to the remarkably expensive hepatitis C drug, Sovaldi.  Gilead’s $1,000-a-pill cure has all but obliterated budgets across the country, leaving many programs vulnerable to the caprices of a pricing mechanism seemingly bent on recouping supposed R&D investment in gulps rather than sips.  While Gilead continues to find itself at the center of the firestorm, many fear that it’s only a matter of time before successive waves of pricey specialty drugs hit the market, taking our already-beleaguered health care system even further down the path of unsustainability. 

Telehealth Revolution: As consumers, we have little patience or tolerance for inefficiencies when consuming our consumables.  So, why should health care be any different?  That’s the central question driving the discussion surrounding the promise of telehealth.  Already, the digital revolution has found its way into how we interact with our own health, as evidenced by the profligacy of wearable health monitoring devices.  And, it’s clear that telehealth ranks high on the priority list for health care industry stakeholders, as polling data shows.  As its reach expands, more practical applications continue to point the way forward for how and where telehealth can improve medicine: Increased access for rural communities; improved treatment and management of chronic conditions, like diabetes; a dedicated focus on population health across a variety of patient groups.  With the benefits of its increased utilization already on display and clearly making a difference in patients’ lives, telehealth’s ubiquity in the delivery of care is gradually becoming more a question of when, than if?

Small Group Changes: A
little-known definition change imposed by the Affordable Care Act threatens to cause instability for small businesses and their employees.  That provision seeks to change the definition for the small group market, whereupon companies with 51 to 100 employees would move from the large group market to the small group market.  The consequence of that change, unintended or not, would wreak havoc on the market, leading to premium increases and potentially disrupting coverage.  But, lawmakers have taken up the issue, introducing bills in both the House and the Senate to avert the change and keep the current definitions in place.

Medicaid 'Mega Reg':
This year will see the Medicaid program mark its 50th anniversary, and, like many government programs with that many years under its belt, it’s beginning to show signs of wear.  Earlier this month, the nonpartisan Government Accountability Office (GAO) released its latest report, looking into who uses Medicaid and how.  Alarmingly, their analysis found that almost half of all spending in the low-income health program was attributable to just 5 percent of beneficiaries.  Further, the most expensive 1 percent of those users accounted for up to a quarter of total costs.  With such an important milestone this year, Medicaid administrators are seizing upon the occasion to overhaul the Medicaid Managed Care portion of the program.  The new rules – the first since 2002 – are expected any day now and could touch every piece of the Managed Care program, which serves upwards of 40 million Americans through Medicaid administered by private insurers.  Given the far-reaching implications of the so-called ‘mega reg’, stakeholders are understandably wary of what these rules may portend for the program and its beneficiaries.

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Looking Ahead

With the Supreme Court expected to make its ruling in the King v. Burwell case challenging the tax subsidies extended via the federal exchange in a couple of weeks, experts have already begun the intricate work of tracing the threads back to just how the potential unraveling of this Gordian Knot will affect stakeholders, from states to business owners to lawmakers, many of whom stand poised to fill the vacuum with legislative fixes of their own. 

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