Here’s the main culprit of last year’s accelerating spending on health care: An Obamacare tax on health plans that insurers are pushing once again to delay.
That finding, from an annual health-care spending report the federal government released last week, is feeding the fire the insurance industry is continually lighting under Congress to delay or even repeal the health insurance tax they’ve bitterly dubbed the “HIT.”
Insurance lobbyists are urging lawmakers to tack a delay of the HIT – and two other Obamacare taxes – onto a year-end funding agreement that is currently in flux on Capitol Hill. As lawmakers negotiate over how to fund the government past Dec. 20, another fight over money for President Trump’s Mexico border wall is a central sticking point in the discussions.
While the Obamacare taxes were all included in the 2010 health-care law to help fund it, delaying them has become a perennial issue as the industry continually complains the taxes will ultimately make premiums more expensive. It’s mostly because of the HIT that health-care spending in the United States grew somewhat faster in 2018, according to actuaries for the Centers for Medicare and Medicaid Services. The net cost of insurance, which includes nonmedical expenses such as administration and taxes, grew 13.2 percent in 2018, compared to 4.3 percent growth in 2017, when the tax wasn’t in place.
“From the beginning, we’ve said the HIT only serves to raise health-care costs for Americans, and that’s why we so strongly believe it’s important to delay this tax for 2020 and beyond,” said Kristine Grow, a spokeswoman for the insurance trade group America’s Health Insurance Plans.
Congress has already heeded insurers’ calls several times. After the HIT was in effect from 2014 through 2016, lawmakers suspended it for 2017 and then again in 2019. In 2018, insurers paid the federal government roughly $14.3 billion in payments tied to each company’s market share.
Two other Affordable Care Act taxes have received similar treatment under heavy industry pressure. Congress has repeatedly delayed the so-called “Cadillac” tax on the cushiest employer plans, so that it’s now not set to take effect until 2022. More than 1,000 organizations sent a letter on Thursday urging Senate leaders to include a full repeal of the 40 percent tax in a year-end legislative package.
“Employers are making decisions today to avoid this looming tax,” says the letter, signed by companies such as AT&T, Lockheed Martin, Ikea and Pfizer. “Many millions of working Americans will pay more out of pocket for medical treatment or face reduced health coverage in narrower networks.”
Senate Democrats have offered to repeal the tax as part of the negotiations over a deal to fund the government, the Hill reported over the weekend.
And a 2.3 percent tax on sales of medical devices has been delayed since 2016, but, like the HIT, is scheduled to activate on Jan. 1 barring congressional action.
Lobbyists say Congress is most likely to grant delays on all three taxes, if it acts at all. There’s some talk of paying for delays with provisions to reform surprise medical billing, but it’s anyone’s guess at this point how spending discussions will shake out before the holiday break. And even if Congress delayed the HIT for 2020, it’s already baked into premiums which were decided months ago.
“All three taxes will move or nothing,” an insurance industry strategist told me.
The effects of HIT aside, it’s not unusual for health-care spending in the United States to grow faster than wages and inflation – that’s been the case for years, as expensive drugs and devices come to market and the elderly population swells. Overall health-care spending increased 4.6 percent in 2018, compared to 4.2 percent the year prior, according to the federal report.
But CMS officials stressed that growth in the largest category of health-care spending – actual medical care received from doctors and in hospitals, and prescription drugs – remained even at 4.1 percent in 2017 and 2018.
And the report contained another piece of positive news on health-care spending. Retail drug prices fell slightly last year for the first time in four decades, my colleague Amy Goldstein reports.
It’s true that total spending on prescription drugs rose 2.5 percent last year to $335 billion. Yet there was “a 1 percent decrease in retail drug prices as consumers relied more heavily on generic medicines and prices rose relatively slowly for many brand-name pharmaceuticals,” Amy writes.
The slowing of drug price increases “means buyers are being smarter and more sensitive” looking for generic alternatives and other ways to avoid high-priced medicines, Dan Mendelson, founder of the consulting firm Avalere Health, told Amy.
“It’s tempting to declare victory when spending growth attenuates,” Mendelson said. But in part because health plans are shifting more of the burden to their customers, “the polling this year very clearly shows we are in a health-care affordability crisis, and consumers are facing a big squeeze on their finances,” he said.
AHH, OOF and OUCH
AHH: Congressional lawmakers and the White House are close to a deal to offer 12 weeks of paid parental leave for federal workers in exchange for the creation of a Space Force long touted by President Trump. The agreement would be part of a defense authorization bill that’s set to pass this month.
“If consummated, the agreement could mark one of the biggest deals President Trump has cut with Congress,” our Washington Post colleagues Jeff Stein, Josh Dawsey and Robert Costa report. “It would secure a massive expansion of benefits for federal workers, something Democrats have long sought, in exchange for a realignment of the U.S. military that Trump has sought to secure as part of his legacy.”
The extension of such leave for federal works would create a benefit to more than 2 million federal civilian workers who are currently only eligible for unpaid leave. It would “mark one of the biggest extensions of a new work benefit for the federal workforce in recent history," our colleagues report.
“The agreement must be ratified by negotiators and then passed through Congress,” Jeff, Josh and our colleague Lisa Rein report. “Importantly, it is unclear whether it will have enough support among Republicans to pass the Senate. And support for the idea isn’t unanimous within the Trump administration. Treasury Secretary Steven Mnuchin has raised concerns about approving parental-leave benefits because of the cost, three people briefed on the talks said.”
OOF: Unsealed court documents reveal drug manufacturers engaged in extensive marketing strategies to help push aggressive pain treatment, including paying doctors and movie stars to promote the drugs, our colleagues Sari Horwitz, Scott Higham, Dalton Bennett and Meryl Kornfield write in this latest story in The Post’s series of investigative pieces on the opioid epidemic.
Even after Purdue Pharma was fined by the government in 2007 for misbranding OxyContin as safer and less addictive than other painkillers, attorneys suing two dozen drug companies in a landmark federal case say other companies continued their aggressive tactics.
The lawyers allege that other drugmakers “positioned themselves to take advantage of the opportunity Purdue created, developing both branded and generic opioids to compete with OxyContin, while, together with Purdue and each other, misrepresenting the safety and efficacy of their products.”
Meanwhile, drug manufacturers reject the allegations, insisting they did not misrepresent the products’ safety.
Our colleagues write about one example of a senior sales manager who wrote in a 2013 email to a sales team at Mallinckrodt, the largest manufacturer of oxycodone: “You only have 1 responsibility…SELL BABY SELL!”
Former FDA commissioner David A. Kessler, who is a paid expert for the plaintiffs, said in a deposition that the marketing of opioids “changed American medicine.” He said the efforts “range from regional advisory boards to the speaker’s bureaus, to the e-marketing to doctors, to the alternative channels, to the advocacy groups, to the unbranded publication plans.”
OOF: CMS Administrator Seema Verma made a $47,000 claim for lost property after she had luggage stolen from a rental car during a work-related trip – and she wanted taxpayers to cover the losses.
The claim included $43,065 for two dozen pieces of jewelry, including a $5,900 Ivanka Trump-brand pendant, Politico’s Dan Diamond reports. It also included more than $4,000 to cover the cost of other stolen items, including clothing, moisturizer and noise-cancelling headphones.
“The federal health department ultimately reimbursed Verma $2,852.40 for her claim, a CMS spokesperson said,” Dan writes. “…A spokesperson for the Department of Health and Human Services, which includes CMS, said the department has a longstanding policy of paying for certain goods when they are lost during a work trip, so long as they ‘are not inherently for other uses,’ which is why Verma was partially reimbursed.”
He adds the news comes amid a time of “unusual scrutiny for Verma."
The Ivanka Trump-brand pendant appeared to be a favorite of Verma’s, based on a review of her public appearances and photos with Trump.— Dan Diamond (@ddiamond) December 8, 2019
Here she appears to be wearing it when announcing her plan for Medicaid work requirements in November 2017. pic.twitter.com/N4QgtBFKgH
— Meanwhile, Modern Healthcare named Verma the most influential person in health care.
“While her agenda and personal style elicit controversy, veteran CMS watchers give Verma credit for boldly articulating and pursuing her vision of strengthening market forces to improve healthcare quality and access, and reduce costs,” Modern Healthcare’s Harris Meyer writes. “That includes goosing the sluggish transition to value-based payment.”
He noted Verma is the first CMS chief to be named to the position.
HHS Secretary Alex Azar is listed 18th in the ranking and President Trump is 9th, as Politico's Dan Diamond points out:
In its annual list, Modern Healthcare just named SEEMA VERMA the #1 most influential person in health care. https://t.co/igXWIS8pgw— Dan Diamond (@ddiamond) December 7, 2019
DONALD TRUMP ranks 9th. ALEX AZAR — Verma’s nominal boss — ranks 18th.
— Sen. Elizabeth Warren (D-Mass.) released a letter from her doctor along with five pages of medical records, “making her the first septuagenarian in the Democratic presidential contest to provide a glimpse at the details of her health,” our Post colleague Annie Linskey reports.
Dr. Beverly Woo, a physician at Brigham and Women’s Hospital in Boston, who has been seeing Warren for two decades, called her “very healthy” and added: “There are no medical conditions or health problems that would keep her from fulfilling the duties of the President of the United States.”
“In addition to the letter from her physician, which is similar to what most recent presidential candidates have offered, Warren also provided a hematology report including information on everything from her platelet count to the size of her red blood cells,” Annie writes.
The released information is sure to ramp up pressure on other candidates to provide such information. The health of the candidates, four of whom 70 or older, has been especially significant.
HEALTH ON THE HILL
— Leaders on the Senate Health, Education and Labor Committee and House Energy and Commerce Committee announced they’ve reached an agreement on legislation to end surprise medical bills, to raise the age to purchase tobacco to 21, and provide five years of funding for community health centers.
The deal will enable a "new system of dispute resolution that includes arbitration" to tackle surprise medical bills, the lawmakers said. The Health 202 wrote earlier this year that doctors, who largely supported measures allowing for arbitration, seemed to be gaining an edge. But efforts to move surprise medical billing legislation forward had stalled in recent months.
Senate HELP chairman Lamar Alexander (R-Tenn.) called on lawmakers in a statement to "pass the bill promptly and give the American people a very good Christmas present.”
Politico's Rachel Roubein and Susannah Luthi report the Trump administration is "supportive."
"The top Democrat on Senate HELP Committee, Patty Murray notably hasn't signed on to the deal — in a sign significant hurdles could remain," they add. A Murray aide told them the Washington Democrat "believes the overall agreement takes important steps forward on a number of issues impacting patients and families, and is working with some members of her caucus on concerns they still have."
— And here are a few more good reads:
- The House Energy and Commerce Subcommittee on Health holds a hearing on universal health care coverage proposals on Tuesday.
- The House Energy and Commerce Subcommittee on Oversight and Investigations holds a hearing on the FDA’s foreign inspection program on Tuesday.
- The Senate Indian Affairs Committee holds a hearing on the nomination of Michael D. Weahkee to be Director of the Indian Health Service on Wednesday.