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This Week in Health Care Reform: June 28th, 2019

The Administration advances its focus on health care costs; the Supreme Court agrees to hear arguments involving cost-sharing reductions; employers health care costs are projected to go up next year; and, a new social wellness project is launched.

Week in Review

Executive Order: On Monday, the Administration released its highly anticipated executive order on health care price and quality transparency.  While the directive in and of itself is not a change in law or regulations, it does instruct various federal agencies to issue rules and guidance to better arm consumers with necessary information on the price and quality of a medical good or service in order to help them be more engaged in their own health care decisions.  In reaction to the executive order, stakeholders were generally supportive of efforts to make health care more affordable for consumers, acknowledging the important role that accurate and timely information about costs plays in helping to accomplish that goal.  However, there were more specific concerns that public disclosure of privately negotiated rates could undermine the market dynamics shaping industry-wide efforts to connect consumers with affordable, quality health care.

CSR Appeal: Also this week, the Supreme Court announced that it would hear arguments related to the cost-sharing reduction (CSR) payments health insurers participating in the exchange marketplace maintain they are owed by the federal government.  Those payments are tied to the “risk corridor” program that was established by the Affordable Care Act to keep premiums low for consumers purchasing health coverage on the exchanges by ostensibly helping insurers offset losses in the early years of the marketplace.  Congress suspended the CSR payments, arguing that it was not obligated to make those payments.  Lower court rulings have been mixed, the result being the set of appeals now added to the Supreme Court’s fall docket.

Employer Costs: According to the latest health care spending projections from the PwC Health Research Institute’s annual Medical Cost Trend survey, employer medical costs are expected to rise by 6 percent next year, higher than the 5.5 percent annual average experienced over the previous three years.  The uptick in that spend continues to be driven by prices, which are growing at a faster rate than utilization.  Drilling further into the analysis, the four-year high is attributable in large part to drug spending – specifically, expensive specialty drugs, many of which weren’t available four years ago.  In fact, researchers say that spending on these drugs now makes up over 40 percent of employers’ overall drug spend.  With drug spending projected to grow more than 3 percent next year – and doubling by 2023 – employers are looking to get ahead of the trend by exploring the use of biosimilars, being more proactive on primary care, and contracting with local health systems to provide offsite care

SDoH Project:
A new collaborative focused on sparking collaborations between insurance providers to better address social determinants of health (SDoH) was launched late last week.  Named Project Link, the initiative by America’s Health Insurance Plans (AHIP) seeks to bring together best practices from stakeholders in seeking to effectively tackle social barriers to health and long-term well-being.  Through Project Link, participants will collaborate on a number of projects, including healthy eating, housing, and transportation.  New programs created through the effort will be scalable with due attention paid to measuring outcomes and affordability metrics.      

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As our understanding of what’s driving health care costs continues to increase, so too does our recognition of the role that different stakeholders play in pushing those costs higher.  In seeking to establish a baseline from which to better evaluate the different players in the health care cost equation, experts remind us that, when it comes to hospitals, “not-for-profit” doesn’t mean the same thing as “no profit” as the corporatization of health systems threatens to dramatically reshape the contours of health care delivery in this country.

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