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This Week in Health Care Reform - June 20th, 2014

Another state sends out Sovaldi warning signals; lessons learned from the first open enrollment period point the way towards expectations for the next go-round; the AMA places a new obstacle in front of telemedicine; narrow networks continue to draw criticism despite yielding considerable savings; and, the insurance industry refreshes its affordability education website.


Health Care Reform

New York State of Mind: Last week, we covered the opportunity cost to California’s budget were the state to purchase Sovaldi for the entirety of its Medicaid population afflicted with hepatitis C.  This week, another state sent out warnings of its own concerning the drug’s impact to its bottom line.  As you’re no doubt already aware, Sovaldi has been making headlines.  While its 90 percent success rate in curing the liver-destroying disease should be reason enough for all the attention, what’s unfortunately driving the increased press coverage is Gilead Sciences’ (the drug’s manufacturer) decision to price the specialty drug at $1,000-a-pill.  Given Sovaldi’s 12-week course of treatment, that puts the tab at $84,000, and that’s only assuming the first round of medication is successful.  So, it should come as no surprise that, outside of the pharmaceutical industry, just about every stakeholder in the health care system has expressed alarm over the drug’s price, not to mention the precedent it sets.  As mentioned, this week New York became the latest state to object to Sovaldi’s unsustainable cost.  New York, which already lays claim to the most expensive Medicaid program in the country, also has one of the largest hepatitis C populations, estimated to be 200,000.  Further, approximately 75,000 of the state’s Medicaid recipients have been diagnosed with the virus.  Currently, New York spends about $2700 per Medicaid patient per year.  Adding in the cost of Sovaldi would undoubtedly overwhelm the state’s Medicaid budget.  Taken a step further, more than half of the estimated 3.2 million Americans with hepatitis C across the country have their health coverage at least partially subsidized by taxpayers.  So, while New York might be the latest state to raise the alarm, it’s not hard to imagine that it probably won’t be the last.   

Enrollment Focus:
Earlier this week, Enroll America released its compilation of lessons learned from the first open enrollment period.  Amongst the more important takeaways, the idea that simply making coverage available was not enough to ensure that people enrolled.  But, through a massive, coordinated effort, involving numerous stakeholders, consumers were able to successfully overcome the troubled launch of, while also navigating the complexities of purchasing private insurance, to the tune of 8 million Americans eventually signing up for coverage.  Meanwhile, a separate report projects that that number will be easily eclipsed during the next open enrollment period (starting November 15th).  Compiled by, a privately held health care technology company, their analysis predicts that anywhere between 12 to 16 million people will have purchased plans by the time the next open enrollment window closes next year (slated for February 15th).    

Telehealth Hurdle:
As mentioned in last week’s newsletter, the American Medical Association (AMA) endorsed a new set of telemedicine guidelines earlier this month.  Similar to the guiding principles recently ratified by the Federation of State Medical Boards (FSMB), the AMA’s endorsement of telemedicine was meant to support the practice of virtual health care, improve access and quality, and ensure patient safety.  However, unlike the FSMB model telehealth policy, the AMA’s policy recommendation, if implemented, would not be without restrictions, namely, that physicians must be licensed in the state that their patient is in.  Further, and arguably more obstructive, the AMA goes on to recommend that the patient-physician relationship must be established prior to the provision of telemedicine services.  While not explicitly requiring that these interactions be face-to-face, that this element was included at all appears to be the AMA’s attempt to clarify the FSMB’s guidelines, which only require that the same standards of care be applied to telemedicine services as are currently in place for in-person care.

Where Cost Meets Access: Opponents of the health care law are looking to exploit an already established trend to open up a new line of attack on the Affordable Care Act.  At issue: Narrow networks.  House Republicans have zeroed in on their increased utilization as a way of criticizing the implementation of the law.  However, narrow networks were already being embraced prior to the launch of the insurance exchange marketplaces.  In fact, polling from earlier this year found that many consumers favored health plans with narrower networks if it meant that they weren’t as expensive.  Additionally, the nonpartisan Congressional Budget Office (CBO) expects narrow networks to reduce costs on the exchanges by billions of dollars.  The compromise at play in allowing insurers to use network design to restrain provider price demands as a means of keeping costs down for price-sensitive consumers is a regulatory trade-off that clearly resonates with supporters and opponents, but for very different reasons.

Time for Affordability:
Carrying on with the topic of price sensitivity, America’s Health Insurance Plans (AHIP) recently relaunched its dedicated website originally built to provide consumers and policy-makers with a balanced, educational resource that helps to explain the different changes to health insurance under the health care law and the factors that impact premiums.  The Time for Affordability campaign was first launched by AHIP, the health insurance industry’s trade association, to raise awareness around the issue of affordability and its influence on the health care reform discussion.  The newly refreshed website will continue in this vein, explaining the factors that impact premiums, including demographics, taxes and fees, benefit requirements, and the underlying cost drivers affecting the cost of coverage.  Visit the website to learn more.  

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