Health in 2014

This year was always a big one for the Affordable Care Act, and as such, a big year for health policy too. 2014 marked the first year people could access Obamacare’s subsidized health insurance, and despite the federal exchange being almost entirely broken for the first few weeks of enrollment, people signed up in the millions. Meanwhile, health costs maintained their historically slow growth, and the battle within the industry over who is responsible for those costs reached a fever pitch.  Below we recap the most important developments in health policy in 2014, as well as links to some of the most-read stories on each topic.

9) Providers Merge, and the FTC Notices.

Mergers between hospitals and physician groups kept up their breakneck pace in 2014, as providers and payers try to figure out how to keep healthcare costs affordable for consumers. Provider mergers and acquisitions were up 13.4 percent the first three quarters of 2014 since last year, according to a Modern Healthcare report.

The usual battle lines over this issue have remained firm. Hospitals contend that the mergers will ultimately reduce the cost of healthcare, thanks to increased coordination and scaled services. Insurers strongly oppose that argument, saying it leads to monopolies in regional markets and leaves them powerless to negotiate prices down.

The Federal Trade Commission has pushed back on some hospital mergers with success this year, arguing that some hospital mergers are not simply to coordinate care but to reduce competition and set higher prices. One notable victory for the FTC came in April in Ohio, when a federal appeals court reversed a merger between a major hospital system and a local hospital in Cincinnati.

Top Stories:

—F.T.C. Wary of Mergers by Hospitals
from New York Times by Robert Pear

—Court Strikes Down Ohio Hospital Merger
from Wall Street Journal by Jacob Gershman

—Expect More Not-For-Profit Hospital Mergers And Acquisitions
from Modern Healthcare by Beth Kutscher

—Hospital Mergers Can Lower Costs and Improve Medical Care
from Wall Street Journal by Kenneth L. Davis

8) Sovaldi and Increased Scrutiny on Drug Prices

Gilead Sciences made headlines this year with their blockbuster drug Sovaldi, a drug treatment that can cure Hepatitis C but also costs $84,000 for a 12-week course of treatment. Gilead and the pharmaceutical industry got hammered for the high cost of drugs, culminating in letters from committees and most recently, a lawsuit from Southeastern Pennsylvania’s Transportation Authority suing Gilead for its pricing.

Rising generic drug costs also captured Congress’ attention. Sen. Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD) held a hearing in November about this and introduced legislation mandating generic drug makers extend rebates to Medicare and Medicaid if their prices rise faster than the rate of inflation. Meanwhile, Maine started allowing residents to mail order prescription medicines from licensed pharmacies in Canada, Britain, Australia and New Zealand.

Top Stories:

—Voters Fear Specialty Drug Pricing
from Morning Consult by Marissa Evans

—Will ‘Son of Sovaldi’ Cause State Medicaid programs To Erect High Hurdles?
from Wall Street Journal by Ed Silverman

—Gilead Wins U.S. Approval for Hepatitis C Combo Pill
from Bloomberg by Anna Edney

—Lawmakers Look for Ways to Provide Relief for Rising Cost of Generic Drugs
from New York Times by Elisabeth Rosenthal

—Should Generic Drug Makers pay Medicaid Rebates Tied to Inflation?
from Wall Street Journal by Ed Silverman

7) Red States Slowly Expand Medicaid

Pennsylvania, Oregon, Ohio, Michigan and New Hampshire expanded their Medicaid programs this year, while Wyoming, Tennessee, Virginia, Indiana, Alaska and Utah are exploring how to expand their programs. That brings the total number of expanded Medicaid programs up to 28 states and the District of Columbia.

Wyoming, Tennessee and Utah are wins for the Obama administration, as they all have Republican governors. In addition, Pennsylvania, Ohio and Michigan were also led by Republicans who have launched their expansions. Pennsylvania’s expansion launched in December but it could be tough for Governor-Elect Tom Wolf (D-PA) to make changes. Meanwhile, Gov. Mike Pence (R-IN) is in limbo with HHS over Indiana’s prospective alternative approach to Medicaid expansion. But there were also some notable losses – Virginia Democrat Gov. Terry McAuliffe could not get his state legislature to sign off on the expansion, a key issue of his campaign.

Top Stories:

—Majority of Voters Want State Autonomy for Medicaid Programs
from Morning Consult by Marissa Evans

—Three Republican Governors Will Push Medicaid Expansion
from Washington Post by Jason Millman

—Wyoming Health Department Announces Medicaid Expansion Plan
from Jackson Hole Daily by Michael Polhamus

—Alaska’s Governor Eager To Expand Medicaid
from NPR by Annie Feidt

—Gov. Mike Pence, Feds Unable To Reach Deal On Medicaid Expansion
from Indianapolis Star by Maureen Groppe

—Pennsylvania Launches Medicaid Expansion, Overhaul
from Associated Press by Marc Levy

—Incoming Pa. Governor Faces Big Hurdles To Change Medicaid Plans
from Modern Healthcare by Virgil Dickson

6) Federal Government Released Doctor Data

This was a big year for publicly available information on doctors. In April, the federal government released for the first time Medicare billing information on physicians. The Centers for Medicare and Medicaid Services (CMS) reported 880,000 providers received $77 billion collectively under the Medicare program in 2012.

In October, a database established in the Affordable Care Act went live, allowing people to see how much money doctors were paid by drug and medical device companies between August and December 2013. There were 4.4 million payments made totaling  $3.5 billion, according to the CMS. Payments were made to 546,000 physicians and nearly 1,360 teaching hospitals.

There were problems with both sets of data. Critics said the Medicare billing data didn’t give a full scope of why patients may have need certain treatments as opposed to other ones. In addition, doctors were unable to view the billing data prior to its release, increasing the risk of inaccuracies.  In the pharmaceutical and medical device payment database, physician groups contend that the numbers were misleading because they did not differentiate between payments types. For example, funding to do clinical research versus money received to give a speech in support of a particular drug or device.

The database didn’t differentiate between payments that could be interpreted as positive, such as a physician doing clinical research, or negative, like money for a trip to promote a certain drug or device.

Top Stories:

—How Patients Will Use Physician Payment Data
from Morning Consult  by Marissa Evans

—Our First Dive Into the New Open Payments System
from ProPublica by Charles Ornstein

—Sliver of Medicare Doctors Get Big Share of Payouts
from New York Times by Reed Abelson and Sarah Cohen

5) Health Spending Growth, Including Medicare, Kept Slowing

We found out this year that the rate of health spending in America continued its downward trend in 2013, coming in with the smallest year-over-year increase in spending since the federal government started tracking that figure in 1960. It was the fifth straight year of declines in the rate of health spending. The downward trend was also seen in Medicare, where the annual increase in spending has hovered around 3 percent since 2009, an unprecedented slowdown. That slowdown led the Congressional Budget Office to reduce projected federal health spending by 15 percent and the Medicare Trustees to extend the solvency of the program’s hospital insurance trust fund an additional four years.

The economic debate over what is causing this slowdown also continued this year. Some argue that the recession is the major force behind the slower health spending, as people tightened their budgets and put off seeking healthcare. Others point to changes in the Affordable Care Act, like a financial penalty for hospitals that readmit a lot of patients or cuts to payment rates for hospitals and home health care, as part of a force that could be bending the health care cost curve. Regardless, health spending it expected to increase in the 2014 report, thanks to the millions of Americans who picked up health insurance via Obamacare.

Top Stories:

—National Health Spending in 2013
from Health Affairs by Micah Hartman (et al)

—How Much of Medicare Spending Slowdown Can Be Explained?
from Kaiser Family Foundation by Chapin White, Juliette Cubanski and Tricia Neuman

—Health Spending Slowdown Is Mostly Due To Economic Factors
from Health Affairs by David Dranove, Craig Garthwaite and Christopher Ody

—Health Spending Rises Only Modestly
from New York Times by Robert Pear

—Good News for Medicare Spending, Bad News For Medicare Reformers
from Morning Consult by Meghan McCarthy

4) Uninsured Rate Reached Historic Lows

The number of uninsured Americans ages 18 to 64 decreased three percentage points from 2013 to the first half of 2014, according to the Centers for Disease Control and Prevention. In 2013, 20 percent of people were uninsured, compared to 17 percent in 2014.  That drop shows the Affordable Care Act is having a real impact on insurance coverage, but there is still far to go on the entire uninsured population in the United States. The uninsured rate in the states that have chosen to expand Medicaid and create their own state exchange has declined more in the first half of 2014 than in states that have not done so, according to Gallup Healthways Well Being Index. Gallup reported earlier this year states that chose to expand Medicaid and create their own exchanges had a lower uninsured rate to begin with: 16.1% compared with 18.7% for the remaining states. That’s down 2.6 percentage points.

HHS estimates between 9 million and 9.9 million individuals will be enrolled in health insurance plans through the federal exchange site by the end of 2015. That’s almost 4 million fewer people than estimated by the Congressional Budget Office in April, and the federal government appears to be on track to beat its own (low) estimate.

Top Stories:

—Arkansas, Kentucky Report Sharpest Drops in Uninsured Rate
from Gallup Healthways Well Being Index by Dan Witters

—Highest Uninsured States Less Likely to Embrace Health Law
from Gallup Healthways Well Being Index by Dan Witters

—Is The Affordable Care Act Working?
from New York Times by Margot Sanger-Katz

3) The Second Obamacare Enrollment Period Opened and Healthcare.gov Worked

Just a few weeks after the first enrollment period for the Affordable Care Act closed, then-HHS secretary Kathleen Sebelius stepped down after weathering intense criticism over Healthcare.gov’s glitch-ridden debut last fall. Sylvia Burwell took over the agency in June, gliding through the confirmation process with 78 votes in support of her nomination in the Senate.

That didn’t mean HHS was ready to throw caution to the wind. Ahead of the second open enrollment period starting this November, HHS and Centers for Medicare and Medicaid Services (CMS) officials used the phrase “improvement but not perfection” to describe the exchanges.

So far Healthcare.gov is a significant improvement over last year. HHS reported in mid-December 2.5 million people have enrolled, and people still have until February 15 to sign up. Of course, the enrollment period hasn’t come without a few bumps. HHS officials included 400,000 dental insurance enrollees in enrollment figures, artificially increasing the total of people getting insurance on the exchange to 7 million.

Top Stories:

—Voters, Administration Don’t Expect Perfection on Exchanges
from Morning Consult by Marissa Evans

—HealthCare.gov Holds Up Amid Enrollment Surge
from Wall Street Journal by Stephanie Armour and Louise Radnofsky

—Obamacare Sign-Ups Were Inflated With Dental Plans
from Bloomberg by Alex Wayne

2) The Supreme Court Takes On King v. Burwell

Four little words written in the Affordable Care Act could turn the law upside down this summer. In November the Supreme Court agreed to hear King v. Burwell, a case that challenges whether Americans can receive federal health insurance subsidies if they live in a states that didn’t create its own exchange site. The ruling could eliminate subsidies in as many as 34 states, a move that would likely send the individual insurance market into turmoil. Some experts argue the decision could be as dangerous to the future of the Affordable Care Act as the 2012 Supreme Court decision on the constitutionality of the law.

This particular challenge to the Affordable Care Act was pushed along in large part by the Cato Institute’s Michael Cannon, who led a quixotic (and often ignored) effort to challenge the legality of the IRS distributing subsidies in states without their own exchange. Democrats who helped write the law say it is simply a drafting error that could be easily fixed with legislation. Of course, that isn’t likely to happen in a Republican Congress.

Top Stories:

—For Big Insurers, A Legal Blow To Federal Subsidies May Not Hurt Much
from Modern Healthcare by Bob Herman

—Obama Administration Urges Justices To Keep Subsidies
from Modern Healthcare by Lisa Schencker

—Many States Will Be Unprepared If Court Weakens Health Law
from New York Times by Margot Sanger-Katz

1) Republicans Took the Senate, And the ACA Could See Major Changes

Republicans gained nine new seats in the Senate in the midterm election, giving the GOP its first majority since 2006. For the Affordable Care Act, that means Republicans will now be able to at least consider repeal legislation in the Senate. While a full repeal won’t get Obama’s signature, a Republican majority will likely force the president to support or veto legislation that removes certain pieces of the law. The most likely to go first are changes that have some bipartisan support, like ending the medical device tax or the Independent Payment Advisory Board. In the bill to fund the government in 2015, Republicans scored a victory with their expanded leverage by capping spending on a “risk corridors” program for ACA health insurers and cutting IPAB funding.

The Republican majority in the Senate means committee gavels change hands. Sen. Lamar Alexander (R-Tenn.) is expected to lead the Senate Health, Education, Labor and Pensions committee, while Sen. Orrin Hatch (R-UT) is likely the incoming chairman for the Senate Finance Committee. Both committees have jurisdiction over the ACA. In addition to and will likely focus on undoing individual provisions of Obamacare, like the medical device tax. In addition, he’s also still mulling how to best handle Medicare’s sustainable growth rate (also known as “the doc fix”).

Top Stories:

—Republican Senate and Obamacare
from Morning Consult by Marissa Evans

—Republicans Remain Focused on Risk Corridors
from Morning Consult by Meghan McCarthy