How Fed's Playing Whack-A-Mole with Healthcare's High Costs

How the Fed’s Playing “Whack-a-Mole”​ with Healthcare’s High Costs

As we get closer to the 2020 elections, it’s clear that the majority of the 24 Democratic candidates want something akin to “Medicare for All.” Assumably, once THE Democratic candidate emerges, likely on March 3rd, when California and a dozen other “super Tuesday” states hold their primary elections, we’ll get closer to knowing who will be the likely Democratic contender on the November 3rd ballot – and what “Medicare for All” will actually look like.

In the meantime, the current Administration has recently announced several proposals aimed at cutting healthcare spending, as concerns about medical costs emerge as a major issue for both sides of the aisle in the lead-up to next year’s presidential election…

First, after three years of listening to the nation’s 126 PACE programs, CMS has finally finalized a rule to update and modernize requirements for the Programs of All-Inclusive Care for the Elderly, the more cost-effective alternative to nursing home care for frail, elderly individuals, who are typically dually eligible for both Medicare and Medicaid. Thanks to the comprehensive array of medical and social services PACE programs provide, their members can still live safely in the community. As ABL Member Linda Trowbridge, CEO of Center for Elders Independence (CEI), added: “[the new Rule] will allow some flexibility for us to come up with new models and to potentially serve Medicare only. At least it gives us a fighting chance. While we did not get everything we wanted, it is a great improvement.” Linda also commended the National PACE Association’s PACE Final Rule: Highlights of the Updated Requirement, and summarized that it offers “A few new areas of flexibility, for example, in types of [allowed] primary care providers, assessments, periodic audits, and marketing. It actually seems to allow [us] to contract with brokers if they are appropriately trained about PACE, which is a big priority for some of our members and more flexible than what was in the proposed rule.”

Next, with an eye to reducing spending, President Trump wants to make it easier for patients and employers to comparison shop for healthcare, by way of an Executive Order on Pricing Transparency. The Order potentially could direct federal agencies to force insurers and hospitals to disclose for the first time the discounted rates they negotiate for services, which are typically shrouded in secrecy. Apparently the Administration is also looking at using agencies such as the Justice Department to tackle regional monopolies of hospitals and health-insurance plans over concerns they are driving up the cost of care, according to two unnamed sources.

HELP: the Senate Health, Education, Labor, and Pensions Committee’s Chairman, Tennessee Republican Lamar Alexander (R-TN) and Washington Democrat Patty Murray have teamed up to release the “Lower Health Care Costs Act” of 2019. The bipartisan draft legislation contains five titles addressing various health policies under the committee’s jurisdiction: surprise billing, drug pricing, transparency in healthcare, improvements to public health, and promotion of health information technology. Washington Beltway insiders believe there’s support for curbing drug prices on both sides of the aisle. Only two issues stand in the way: how to do it – as how drugs are actually priced is more complex than what Churchill would have called a “riddle wrapped in a mystery inside an enigma;” and secondly, which political party will get the credit for doing it? So stay tuned to see if this “draft” legislation is enacted next month, as its co-sponsors would like.

Since the FDA is also part of the Administration’s Department of Health and Human Services, the fact that it’s soliciting companies to test out its recently developed Digital Health Software Pre-certification Program is also news. This “Pre-Cert” model is aimed at streamlining the regulation of digital health products prone to frequent update – think software. So the FDA is looking for volunteer cases to represent a broad spectrum of software developers: small and large software development firms, companies that develop a range of products, including those that are both low- and high-risk Software as a Medical Device (AKA: SaMD), and companies that are not considered traditional medical device manufacturers yet, but who intend to make SaMD.

Meanwhile, across the country from Washington, DC, a game of fiscal one-upsmanship is transpiring in Sacramento. Governor Gavin Newsom wants to spend about $98 million a year to provide Medi-Cal to low-income, undocumented immigrants between the ages of 19 and 25. (Those younger than 19 are already covered.) The state Senate’s budget proposal would also add coverage for people 65 and older living in the country illegally. Not to be outdone, the California Assembly voted 44-11 to “extend eligibility for full-scope Medi-Cal benefits to individuals of all ages, if otherwise eligible for those benefits, but for their immigration status.” Demonstrating some fiscal restraint, Newsom has raised concern about the Assembly’s bill, because it is estimated to cost over $3 billion a year.

That said, Newsom wants to reinstate the ACA’s concept of a tax penalty for not having healthcare coverage to fund his plan to help approximately 850,000 Californians pay their health insurance premiums. The only difference: it would be a California tax penalty. If he succeeds, California would be the first state to subsidize middle-income people who make too much to qualify for federal financial aid, and the first to have a statewide mandate for health insurance.

Obviously, the race to 2020 has begun in earnest. And we’re bound to see a lot more political action – at both the federal and state level – before next year’s general elections, when Millennials and Gen Z are expected to make up 36% of the electorate. So, stay tuned!

by Mimi Grant, President, Adaptive Business Leaders (ABL) Organization – Round Tables and Events for CEOs of Healthcare and Technology Companies