Health Care Fight Among 2020 Democrats Shifts to Taxes

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Source: The Hill

Taxes are playing a leading role in the health care debate that’s dividing the field of 2020 Democratic presidential candidates.

Centrist candidates are criticizing their opponents on the left who support the single-payer proposal known as “Medicare for All” by arguing that it is too expensive and would require tax hikes for the middle class.

Progressives counter that Americans will be better off overall under their plan because the amount households spend on health care will go down, even if their taxes go up.

Experts say the discussion over taxes stems from the fact that Democrats all want to expand the federal government’s role in providing coverage.

“The reason it’s getting more attention is that there’s a broad agreement in the Democratic field that the public sector needs to be taking on a much bigger role in health care,” said Michael Linden, a fellow at the left-leaning Roosevelt Institute. “With that, comes questions of financing.”

White House hopefuls are also looking to differentiate themselves from the pack.

The primary will be about “candidates trying to distinguish themselves and separate themselves from one another on the issues,” said Mollyann Brodie, who directs public opinion and survey research at the Kaiser Family Foundation.

The fight over taxes and health care was front-and-center during the recent debates in Detroit.

During the first night of the debates, Sen. Elizabeth Warren (D-Mass.), who supports Medicare for All, was asked by CNN’s Jake Tapper if she would raise taxes on the middle class to pay for her plan. Fellow candidate Sen. Bernie Sanders (I-Vt.) has said he would do just that.

Warren did not directly answer the question but said that large corporations and billionaires would pay more while “middle-class families are going to pay less out of pocket for their health care.”

Sanders, who was on stage with Warren, called Tapper’s questions Republican talking points, while noting that his Medicare for All legislation doesn’t include deductibles or co-payments.

Meanwhile, candidates who do not support Medicare for All, such as former Rep. Beto O’Rourke (D-Texas) and former Rep. John Delaney (D-Md.), emphasized their plans wouldn’t result in middle-class tax increases.

During the second night of debates, Sen. Michael Bennet (D-Colo.) criticized the progressives’ health care plan for necessitating middle class tax increases. New York City Mayor Bill de Blasio (D) responded by accusing Bennet of “fearmongering” and argued that the costs associated with premiums and deductibles are “worse than any tax.”

In the lead-up to the debates, Sen. Kamala Harris (D-Calif.) unveiled a health plan that would provide universal coverage but keep a role for insurance companies, and said she would not raise taxes on people making less than $100,000 to pay for it. But other candidates, such as former Vice President Joe Biden, disputed that Harris’s plan wouldn’t require tax increases for the middle class.

The amount of new federal costs associated with candidates’ health plans will ultimately depend on the details of their proposals. Many of those plans have not been fully fleshed out.

Sanders said at an event hosted by The Washington Post last month that he thinks Medicare for All will cost somewhere between $30 trillion and $40 trillion over 10 years, but that it would be less expensive overall than the current health care system. Analysts across the ideological spectrum have estimated that past versions of Sanders’s Medicare for All plan would cost about $25 trillion to $36 trillion.

Sanders put out a white paper earlier this year that included financing options for his plan: a 4-percent “income-based premium” on household income above $29,000; a 7.5-percent “income-based premium” paid by employers that exempts the first $2 million in payroll; a wealth tax; and an expansion of the estate tax.

Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, a deficit-hawk group, said the options Sanders describes as premiums look more like taxes because they are a compelled percentage of taxpayers’ income, rather than a fixed dollar amount.

He also said that Sanders’s financing options would not raise enough revenue to pay for his plan.

“Looking through and eyeballing it, it’s really hard to see them getting past $20 trillion, and I wouldn’t be surprised if it was closer to $15 trillion,” said Goldwein.

Harris said she backs many of Sanders’s financing options, including the premium paid by employers, but would only impose the employee premium on workers who make more than $100,000 and instead would create a financial transactions tax and tax companies’ foreign earnings at the same rate as their domestic earnings.

Goldwein said the employer-side tax would be an “indirect tax on the middle class,” since businesses would pass on the costs to employees.

A spokesman for Harris’s campaign told The Hill that employers would end up having less in per-employee health costs under the plan than they do currently.

Other proposals are expected to increase federal costs by less than Medicare for All would, though they would not eliminate premiums like Sanders’s plan would.

A proposal similar to the one O’Rourke supports, proposed by the left-leaning Center for American Progress (CAP), has been estimated to cost $2.8 trillion to $4.5 trillion over 10 years.

Both O’Rourke’s preferred plan and the CAP proposal would allow employers to continue offering private plans, but they could also sponsor a plan that’s similar to Medicare. Employees would have the choice to enroll in that plan, rather than their employer coverage.

Biden’s campaign estimates that his plan — which gives people the option of a government plan but allows private, employer-based insurance to remain — would cost about $750 billion over 10 years, and that the cost would be offset by increasing taxes on high earners.

Experts note that candidates are proposing trade-offs: tax increases that eliminate premiums and deductibles. Medicare for All proponents have been making the case that people’s overall health care costs would decrease even if taxes are higher, as polls show that many Americans could be scared off by the tax hikes.

A survey conducted by the Kaiser Family Foundation in January found that overall support for Medicare for All drops when people hear that it would require most Americans to pay more in taxes. At the same time, favorability for the plan increases when people are told it would eliminate premiums and reduce out-of-pocket health care costs for most Americans.

Brodie, who directs the foundation’s survey research, said the U.S. is in the “early stages” in the debate over Medicare for All, and that the public doesn’t have a strong understanding of what it would entail, so arguments from supporters and opponents are more likely to sway public opinion.

A poll conducted by Kaiser in July found that Democrats and Democratic-leaning independents would prefer lawmakers build on ObamaCare rather than replace ObamaCare with Medicare for All. Similarly, a Monmouth University survey released Thursday found that a majority of likely Iowa Democratic caucusgoers prefer a health plan where people can opt-in to Medicare over Medicare for All.

Patrick Murray, director of Monmouth’s polling institute, said that the preference for a public option among Democrats has more to do with concerns about losing private insurance and viewing Medicare for All as unrealistic than concerns about tax increases. But that could change in a general election, and Democratic voters who aren’t personally worried about tax increases might be worried about how Medicare for All would play in a general election, he added.

“If we were polling a general electorate, we’d be talking about the tax issue as well as concerns about losing private insurance,” Murray said.

Linden, of the Roosevelt Institute, said he thinks it’s a mistake for Democrats to attack other Democratic candidates’ health plans over tax increases, arguing it’s misleading to focus just on taxes if people will ultimately have more take-home pay.

But Jim Kessler, vice president for policy at the center-left think tank Third Way, said there’s no guarantee that employers will pass on any savings they receive to employees. He also said there may not end up being cost savings in the U.S. health system under a single-payer plan, and that it depends on the reimbursement rate for doctors and hospitals.

Kessler said the debate in the primary on taxes to finance health plans is important “because if Democrats don’t have it internally, they’re going to hear it when the general election starts.”

Data Shows Drop in Coverage Among People Ineligible for ObamaCare Subsidies

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Source: The Hill

Health insurance enrollment declined among people who do not qualify for financial help under ObamaCare as premiums rose to make coverage less affordable, new federal data shows.

The data released by the Centers for Medicare and Medicaid Services (CMS) on Monday shows that enrollment declined by 1.2 million people, or 24 percent, between 2017 and 2018 among people with incomes too high to qualify for ObamaCare subsidies.

In contrast, in the same period, enrollment ticked up by 300,000 people among those with lower incomes who did qualify for financial help under ObamaCare.

The data illustrates that while ObamaCare remains stable given the subsidies available to lower-income people, premium increases helped drive away people with higher incomes, experts said.

“As premiums have risen recently, middle-class people have taken it on the chin,” Larry Levitt, a health policy expert at the Kaiser Family Foundation, wrote on Twitter. Premiums increased by 26 percent between 2017 and 2018, the report found.

Among people who do qualify for ObamaCare subsidies, those making below about $100,000 for a family of four, the picture is far more stable.

The data shows 10.6 million people had coverage on the ObamaCare exchanges as of February 2019, about the same number as the year before.

And after years of steep increases, average ObamaCare premiums actually declined by 1 percent between 2018 and 2019, as many insurers stopped losing money in the market.

The Trump administration pointed to the enrollment declines among people not getting subsidies to argue ObamaCare is failing.

“As President Trump predicted, people are fleeing the individual market,” said CMS Administrator Seema Verma. “Obamacare is failing the American people, and the ongoing exodus of the unsubsidized population from the market proves that Obamacare’s sky-high premiums are unaffordable.”

Cynthia Cox, another Kaiser Family Foundation expert, pointed out that the individual market for health insurance, including both those who receive and do not receive ObamaCare subsidies, is still larger than it was before the Affordable Care Act (ACA).

“There are about 10.6 million people signed up ON the exchange markets in early 2019,” she wrote on Twitter. “Plus, there are a few more million people signed up OFF-exchange.”

“Pre-ACA, the entire individual market was about 10.5 million people,” she added.

For the Sake of the Economy, California Legislators Must Fix the Flawed California Consumer Privacy Act

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Source: Cal Matters Commentary by John Kabateck

The Legislature must fix the California Consumer Privacy Act before it takes effect on Jan. 1, 2020.

The law is riddled with unclear definitions, overly broad mandates, and small errors that will lead to unnecessary costs and widespread confusion about compliance.

When the California Consumer Privacy Act  passed in 2018, we heard many promises that the Legislature would take the time to fix its flaws and address its unintended consequences. That time is growing alarmingly shorter.

When the Legislature returns Monday for its final month of the year, finding reasonable solutions to the problems associated with the California Consumer Privacy Act must be a top priority.

Immediately after passage of the act, the California Chamber of Commerce provided the Legislature with a comprehensive list of concerns that needed to be addressed. Following the chamber, legal scholars and privacy lawyers sent letters and wrote analyses detailing significant problems with the legislation.

The advertising industry added its concerns about the impact of the act on advertising agencies and media, and entertainment and technology businesses that are dependent on internet advertising revenue.

Many other business sectors have explained to the Legislature the changes needed to make the law work, sectors ranging from restaurants to wineries to blogging to start-up tech companies. All have expressed their concerns about impacts on their business operations.

Two easy fixes would help:

  • One, originally in Assembly Bill 873, would clarify that “personal information” as defined in the consumer privacy act applies to information that identifies or links, directly or indirectly, to a particular consumer.
  • Two, as originally proposed in Senate Bill 753, the Legislature should refine the provision defining the “sale” of information, so that businesses can comply with the request to not sell data while continuing to provide customized content and relevant advertising to consumers.

These straightforward changes neither repeal any provisions of the California Consumer Privacy Act, nor weaken any protection of consumers’ personal information.

In fact, they’re a necessary step toward strengthening the act to ensure it’s a policy that works in the real world, not just sounds good on paper.

The changes would allow businesses to continue to provide consumers with the goods and services they desire, while operating under the intent and goals of the California Consumer Privacy Act.

Several legislators—Sen. Henry Stern and Assembly members Marc Berman, Autumn Burke, Ed Chau, Ken Cooley, Jacqui Irwin—have been working hard on the fixes. But so far, legislative leadership is failing to keep its promise. Important bills have stall in the Senate Judiciary Committee, and leaders have not stepped in to make things right.

The stakes are high and the window to act closing. Because the law has not yet taken effect, many California companies have not begun to focus on the change required by the California Consumer Privacy Act.

But when they do, there will be anger over the high costs of compliance, uncertainty about how to comply, confusion about the management of data, misinformation about liability, and concern about the changes to the internet economy.

There is still time for the act to be modified to address these concerns. But that requires legislative leaders to stick to their word, and allow solutions to be considered. If legislators do not attempt to fix the law, then businesses in their districts will have good reason to hold them accountable for the consequences.

Financial Performance of Medicare Advantage, Individual, and Group Health Insurance Markets

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Source: Kaiser Family Foundation

Medicare-for-All proposals have sparked discussion about the role of private health insurance in the U.S. health care system. Some of the current Medicare-for-All proposals would essentially eliminate private insurance. Others would allow private insurers to administer benefits under the new public program, similar to the role of Medicare Advantage plans today, which serve as a private-plan alternative to traditional Medicare. Another set of proposals would create a new Medicare-like public plan option, but preserve a role for private health insurance, including employer-sponsored coverage and policies sold to individuals and families in the Affordable Care Act (ACA) Marketplaces.

As context for these discussions, this brief examines and compares the financial performance of insurers in the Medicare Advantage, individual, and fully-insured group markets, using data reported by insurance companies to the National Association of Insurance Commissioners and compiled by Mark Farrah Associates. We analyze how insurers’ gross margins vary across the three markets, over time, and among insurers. Gross margins are the difference between premiums collected and medical expenses and do not account for administrative expenses. The brief also examines medical expenses as a percentage of premiums collected (simple loss ratios) across these three markets. See the Methods section for more information on calculations.

Key findings include:

  • Annual gross margins in the Medicare Advantage market averaged $1,608 per covered person between 2016 and 2018, about double the margins in the individual and group markets (E.S. Figure). Between 2016 and 2018, the individual market experienced substantial volatility, and the three-year average gross margins are not representative of any single year.  In 2016, individual market insurers saw significant losses, and in 2018, margins were unusually high and plans were overpriced due to policy uncertainty.
  • When aggregated across all plans in this analysis, annual gross margins sum to $23.9 billion, $10.6 billion, and $26.5 billion for the Medicare Advantage, individual, and group markets, respectively, for 2016-2018.
  • Total medical expenses as a share of premiums collected (simple loss ratios) were similar for across the three markets between 2016 and 2018 (about 84-86%; E.S. Figure).

Each of these three health insurance markets now appear to generate high gross margins per person, particularly for insurers of Medicare Advantage plans.

As ‘Medicare for All’ Debate Gains Steam, Many Americans Are On The Fence: Survey

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Source: Fierce Healthcare

Though support or opposition for “Medicare for All” is dominating the 2020 primary headlines, a large group of Americans is more ambivalent about the proposal, a new survey shows.

Urban Institute, a left-leaning think tank, surveyed close to 9,600 people about their thoughts on single-payer healthcare. It found about 41% neither support or oppose such a transition.

By comparison, about 30% said they support “Medicare for All” outright and about 28% said they oppose it, according to the survey.

The roughly half of respondents who were on the fence didn’t change when they were asked about other plans for attaining universal coverage. For example, 45% of respondents said they do not support or oppose offering a public option plan, while about 33% said they would support it and 21% oppose it.

“This largely reflects that it’s all very complicated stuff,” John Holahan, a fellow at the institute and one of the report’s authors, told FierceHealthcare. “People kind of think they understand it, but then they’re not so sure.”

The survey also dives into demographic characteristics of people more likely to support or oppose single-payer and examines attitudes and perceptions of the policy from both sides of the debate.

Urban Institute found that young people, people of color and those who receive public health benefits were more likely to support. Older whites with higher incomes were more likely to oppose “Medicare for All,” according to the study.

The racial divide was most stark, the survey found. About 35% of white respondents said that oppose single-payer, compared to about 12% of black respondents, 16% of Hispanic respondents and about 22% of multiracial respondents.

Demographically, people who landed on the fence about “Medicare for All” were more similar to the policy’s supporters than its opponents, according to the report.

“I think it’s not necessarily surprising those people who fall in the middle are people who look a lot like supporters,” Holahan said. “They’re maybe just not as confident in what they think about this.”

The survey also found a pretty clear divide in how “Medicare for All” proponents and opponents view the potential impacts of the policy. For example, about 69% of supporters believe that wait times for care would be “about the same” under a single-payer system as they are today, while about 78% of opponents believe wait times would worsen.

About 63% of supporters believe they would have similar access to their choice of providers under “Medicare for All,” while about 70% of opponents believe single-payer would make it harder to see the doctor of their choosing.

“Medicare for All” supporters also largely believe that quality of care would remain the same, while opponents believe it would get worse, according to the survey.

Respondents falling into the middle were generally in line with supporters on these beliefs, the survey found.

“I think the biggest thing that surprised me is when you give the option of neither support or oppose how many took that option,” Holahan said. “People are persuadable probably in either direction.”

Health Insurers Mount Battle Against Medicare for All

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Source: Benefits Pro

If health insurers have their way, Medicare for All will be a nonstarter. And they’ve got the lobbying battle lines drawn to prove it—with pharmaceutical companies on their side.

The Hartford Courant reports that insurers, which dominate the state economy in Connecticut, have teamed up not just with the pharmaceutical industry but also with the American Medical Association and the Federation of American Hospitals in a pitched-battle effort to keep “Medicare for All proposals and other Democratic plans to alter the nation’s health care” from becoming reality.

The alliance’s ammunition includes a battery of digital and television ads aimed at undermining support for Medicare-for-all proposals and plans for a “public option.” The ads are being run under the aegis of the Partnership for America’s Health Care Future, a blanket organization including insurers and their allies. The partnership, which was formed a little over a year ago, aims at protecting the existing health care system, including the Affordable Care Act, Medicare and Medicaid.

But now that the Republicans’ desperate attempt in 2017 to repeal the ACA is history, the group has stayed together to defend its mutual interests—which are now threatened by the potential for some version of Medicare for All or a public option that would rein in profits. Insurers, for their part, oppose all Democratic proposals for a change in health care that were addressed during the two nights of candidate debates.

The groups have plenty of clout, especially in Connecticut, where data from industry group and member of the alliance America’s Health Insurance Plan reveal that the health insurance industry “employs 12,296 workers directly and generates another 13,586 jobs indirectly,” as well as being responsible for payrolls totaling more than $3.8 billion a year with average annual salaries of $112,770.

That number could be even higher, according to the Connecticut Association of Health Plans. According to its numbers, Connecticut employs 25,000 health insurance industry workers directly and as many as 24,000 indirectly. In addition, premium taxes collected annually in Connecticut on policies sold in the state are nothing to sneeze at, either, amounting to nearly $200 million.

Connecticut, unsurprisingly, failed to pass a public option during 2019’s last legislative session.

Spending behind the Partnership for America’s Health Care Future is big, and likely to get bigger, with members already having spent a combined $143 million lobbying on Capitol Hill just 2018, according to data from the Center for Responsive Politics. And AHIP all by itself, says the report, spent more than $5 million on lobbying expenses just in the first six months of this year, looking likely to top the $6.7 million it spent on lobbying in 2018.

Still, there’s plenty of Democratic opposition to the status quo these days. After Senator Bernie Sanders, I-VT, started the discussion with his championing of Medicare for All, Senator Elizabeth Warren, D-MA, said in the most recent debates, “These insurance companies do not have a God-given right to make $23 billion in profits and suck it out of our health care system.”

Hospitals, Insurers Signal Major Fight Over CMS Price Transparency Proposal

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Source: Fierce Healthcare

Hospitals and insurers are signaling a major fight with the Trump administration over a proposed rule to reveal negotiated prices for items and services.

Industry groups for both providers and payers came out vehemently opposing parts of the proposed outpatient payment rule released late Monday by the Centers for Medicare & Medicaid Services (CMS). Nestled in the rule is a proposal to make hospitals publish online starting next year the list and negotiated prices for “shoppable” hospital services and products such as clinic visits or lab tests.

“Disclosing the negotiated rate between insurers and hospitals will not help patients make decisions about their care,” according to a statement from five hospital groups released late Monday. “Instead, this disclosure could harm patients by reducing patient access to care.”

The American Hospital Association (AHA), America’s Essential Hospitals, Children’s Hospital Association, the Federation of American Hospitals and the Association of American Medical Colleges signed the statement.

AHA President and CEO Rick Pollack added in a separate statement that price disclosure could “limit the choices available to patients in the private market and fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry.”

Pollack did not elaborate on what specific anticompetitive behavior could arise.

The AHA may pursue legal options if the proposal is finalized, an association spokesperson said.

Hospitals have an unlikely ally in the insurance industry, which also isn’t so happy about the prospect of publishing negotiated rates. “Disclosing such rates will make it harder to bargain for lower rates, which will create a ‘floor’—not a ceiling—for the prices that hospitals would be willing to accept,” said Matt Eyles, president and CEO of the insurance lobby group America’s Health Insurance Plans, in a statement.

But while hospitals and insurers ruminated over the proposal, some physicians were happy.

“By arming patients with more information, and transparency about hospital costs, CMS is helping to shine a light on major site-of-care differences,” said Ted Okon, executive director of the oncology advocacy group Community Oncology Alliance.

The goal of the proposal, which would go into effect Jan. 1, is to spur transparency in the hospital industry by enabling consumers to compare prices. Hospitals will have from the time the rule is finalized to Jan. 1 to publish the list in an easy-to-understand and searchable format online.

The rule also has a stiff penalty for noncompliance, with hospitals facing a $300-a-day penalty for each day they don’t have the list up.

CMS Administrator Seema Verma said the stiff penalties were added to ensure compliance from hospitals after lax compliance with a requirement starting this year for facilities to post only list prices online.

Hospitals shouldn’t wait to get started on gathering their prices in the hopes that the administration backs off the rule, said Michael Abrams, managing partner of the consulting firm Numerof & Associates.

“There is enough political pressure on the administration to do something that makes a meaningful difference on the cost of healthcare that I don’t think they are going to back away from this,” he said.

But Abrams is doubtful that hospitals will get a jump-start on complying with the rule.

“I expect a lot of resistance,” he said. “Until that has dissipated many organizations won’t do anything. They will hope in vain that somehow this will go away.”

White House Weighs September Rollout of Health Plan

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Source: The Wall Street Journal

The Trump administration is considering releasing its long-promised health-care plan in the fall as part of a campaign strategy to offer an alternative to Democratic candidates who back Medicare for All, according to people familiar with the discussions.

White House officials are discussing unveiling the proposal during a September speech in which President Trump would seek to draw a contrast with Democrats while reassuring voters the administration is prepared if the courts abolish the Affordable Care Act. The timing of the speech could shift, officials said.

Elements of the plan could include providing coverage for people with pre-existing conditions, the people said, and spurring the sale of insurance across state lines. Other provisions being discussed include giving states more flexibility, expanding health savings accounts, linking price transparency to quality metrics, and more insurance options for consumers, they said. The plan would include a number of new elements that haven’t yet been released, one person familiar with the work said.

White House officials stressed that the plans haven’t been completed, and some close to the president have privately expressed skepticism. One former White House official raised the possibility that the plan may not materialize this fall if Mr. Trump second-guesses the effort. The administration is also still weighing how specific the plan should be, the people familiar with the plan said, and the ideas have yet to get Mr. Trump’s sign off.

“President Trump has said we will protect people with pre-existing conditions, lower drug prices, end surprise medical bills, and make sure Americans get the highest quality of care they deserve,” White House spokesman Judd Deere said in a statement.

Kellyanne Conway, a senior adviser to the president who is involved in the discussions, met recently with House Republicans to brief them on the progress of the administration’s efforts, two people present said. She stressed that the administration’s plan would protect pre-existing conditions and she reviewed possible legal outcomes in the lawsuit to strike down the ACA. She is planning to brief Senate Republicans after they return from their August recess.

The push to put out a plan, which has already involved months of behind-the-scenes work, underscores growing concern on Mr. Trump’s team that the president could be vulnerable on health care. A recent Fox News poll of registered voters found Democrats had a 14-point advantage over Republicans on which party would do a better job handling the issue.

The administration is backing a lawsuit from GOP-led states to strike down the ACA, a stance that leaves Mr. Trump open to attacks from Democratic presidential candidates who say he is a threat to coverage.

“We are the Democrats. We are not about trying to take away health care from anyone,” Sen. Elizabeth Warren of Massachusetts said in the second Democratic debate in Detroit this week. “That’s what the Republicans are trying to do.”

The case may not be fully resolved until next year, placing health care at the center of the 2020 presidential campaign. An estimated 20 million people have gained coverage because of the ACA, and more than 100 million people with existing medical conditions could see their coverage lost or become more expensive if the law is struck down.

The White House has already released initiatives or been working on regulations that would accomplish some of the goals that could be in the president’s plan. But his fall proposal, if released, could go further—for example, calling for state or state and federal high-risk pools, which aim to provide coverage to people who can’t get insurance because of expensive pre-existing health conditions, according to one person familiar with the planning.

“They definitely want to show they’re protecting pre-existing conditions,” said one GOP Hill staffer familiar with the discussions.

Parts of the plan would probably require congressional action, which is unlikely because the House and Senate remain divided.

The plan could call for grants to states to establish high-risk pools or programs that pay a portion of high-cost claims to buffer insurers and help drive down premiums. High-risk pools were used by more than 30 states and covered more than 200,000 people before the ACA, but some people had trouble getting coverage as states capped enrollment amid funding pressures.

The return of high-risk pools has been a longtime Republican goal; House Republicans pushed for the creation of a $15 billion federal high-risk pool in their proposals to replace the ACA. Critics say they cost too much money and have a long history of problems.

Mr. Trump may also lay out new strategies to jump start the sale of insurance across state lines, an idea he included in his 2016 campaign platform. The Centers for Medicare and Medicaid Service in March sought public input on how to eliminate barriers to such sales, which are already permitted, but have had few takers. Mr. Trump has also said he wants to let people on Medicare contribute to health savings accounts.

The proposal could also call for more action to link price information in health care to quality. Actions to provide more alternative forms of insurance that don’t comply with ACA regulations and consumer protections are also being discussed, one person familiar with the planning said.

The tentative release of a more complete plan in September is part of a broader strategy ahead of the 2020 election. The White House is planning to ramp up Mr. Trump’s speeches and actions on health care this fall because polls show it is a top issue for voters. The administration has already unveiled new efforts on a range of health-related issues, from improving kidney health to making it easier to import prescription drugs from other countries.

But skepticism abounds because Mr. Trump has repeatedly promised a health plan without delivering one. During the GOP push to repeal the ACA in 2017, he said he was close to finishing a plan that aimed to provide “insurance for everybody.”

Fault lines have emerged within the White House over how to accomplish aspects of the plan and how specific to be largely because of concerns it could open Mr. Trump up to attacks from Democratic presidential candidates, according to two people familiar with the discussions.

Yet allies of Mr. Trump believe it would give a boost to the president even though Congress is unlikely to take action on any of the ideas that require legislation.
At the White House, regular meetings on broad health-care strategy are being led by Domestic Policy Council Director Joe Grogan, with participation from Centers for Medicare and Medicaid Services head Seema Verma, Health and Human Services Department officials, and senior aides from the National Economic Council, Council of Economic Advisers and other White House offices, according to people involved in the talks.

Will Canada Fight Back?

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Source: Reuters

Canada’s main pharmaceutical lobby group has urged the government not to wait for drug shortages before responding to U.S. plans to import Canadian drugs, according to documents seen by Reuters.

The talking points were prepared last month by Innovative Medicines Canada (IMC) for its staff and member companies, before the Trump administration announced on Wednesday that it would allow U.S. states and other groups to start pilot programs importing cheap drugs from Canada in an effort to lower drug costs.

In one early version of its talking points, the IMC proposed the Canadian government ban all drug exports “unless otherwise permitted by regulation.”

“Wholesalers should not be permitted to export drugs in bulk from Canada, and there should be strict and significant penalties for exporting drugs where their export is prohibited by law,” a document prepared in May said.

It warned that “reliance on reactive measures after shortages occur may pose a risk to Canadian patients.”

Asked about the possibility of an export ban, IMC said in a statement: “This is not part of our current positioning shared with our members. That said, we believe the government has tools that could be used to prevent shortages.”

The lobby group’s efforts so far suggest industry is eager to derail the Trump administration’s plan. IMC’s members include major drug companies based in the United States and abroad, and large-scale shipments of cheap drugs from Canada could lower their profits.

The group works closely with PhRMA, the Pharmaceutical Research and Manufacturers of America, the industry’s U.S lobbying group.

“Our government’s priority is ensuring that all Canadians can get and afford the medications they need,” Alexander Cohen, a spokesman for Canada’s health minister, said in a statement.

“All statements and decisions surrounding Canada’s drug supply are made based in the best interest of Canadians, and we are examining all options to ensure it remains secure.”

In the position papers reviewed by Reuters, the IMC warned it may not be possible for drug manufacturers to enforce contract terms with Canadian buyers that forbid the re-export of drugs.

“Although purchasing agreements with suppliers may contain clauses that would prevent bulk export to the US, many Canadian pharmaceutical companies are subsidiaries of US corporations and may become obliged to do so through US legislation,” the group warned in July.

Even if the U.S. plan proceeds as the administration has promised, shipments could be a year or more away, because of consultations required to pass new regulations.

The IMC documents suggest that a “first step” for the Canadian government would be to state publicly that it will act to protect drugs intended for Canadian patients in the event of any shortages.

Prime Minister Justin Trudeau delivered something like that message personally on Thursday, at an event in the Arctic city of Iqaluit.

“We recognize the new situation brought on by American announcements, and Health Canada will continue to ensure that our priority is always ensuring that Canadians have access to the medication they need at affordable prices,” he said.

Reuters reported last month that Canadian officials had privately warned the United States they oppose any import programs that might threaten Canada’s supply or raise costs for Canadians.

Trump Administration ‘Open For Business’ On Drug Imports From Canada

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Source: Kaiser Health News

A year after calling proposals allowing Americans to import cheaper drugs from Canada a “gimmick,” Health and Human Services Secretary Alex Azar said the federal government is “open for business” on such a strategy.

Azar announced a preliminary plan Wednesday to allow Americans to import certain lower-cost drugs from Canada. Insulin, biological drugs, controlled substances and intravenous drugs would not be included.

The plan relies on states to come up with proposals for safe importation and submit them for federal approval.

Under a second option, manufacturers could import versions of any FDA-approved drugs from foreign countries — including insulin — and sell them at a lower cost than the same U.S. versions. This appears to be a way drugmakers could avoid some of the contracts they have with drug middlemen, known as pharmacy benefit managers.

“The administration has reason to believe that manufacturers might use this pathway as an opportunity to offer Americans lower cost versions of their own drugs,” according to the plan announced Wednesday. “In recent years, multiple manufacturers have stated (either publicly or in statements to the administration) that they wanted to offer lower cost versions but could not readily do so because they were locked into contracts with other parties in the supply chain.”

The announcement marked the latest shift by the Trump administration on the decades-old debate about formally allowing Americans to buy drugs from Canada, where prices are significantly lower.

Drugmakers were quick to criticize the plan. Stephen J. Ubl, president and CEO of the brand-name drug trade group, the Pharmaceutical Research and Manufacturers of America, called the plan “far too dangerous for American patients.”

“There is no way to guarantee the safety of drugs that come into the country from outside the United States’ gold-standard supply chain,” he said in a statement. “Drugs coming through Canada could have originated from anywhere in the world and may not have undergone stringent review by the FDA.”

But Sen. Lamar Alexander (R-Tenn.), chairman of the Health, Education, Labor and Pensions Committee, said he welcomed the administration’s move to reduce costs. “The key for me is whether this plan preserves the Food and Drug Administration’s gold standard for safety and effectiveness,” he said in a statement.

The same medicines are often cheaper in other countries than in the U.S. since most developed countries negotiate with drugmakers to set prices. But opponents of importation say sending drugs over the border will increase the chances Americans get counterfeit medications, a claim often boosted by the drug industry.

As drug prices have soared here, Americans are more open to buying drugs from Canada. Some have for decades been driving over the border; others use online pharmacies or place orders at storefronts that connect buyers to pharmacies in Canada and other countries.

Although these strategies are technically illegal, the government does not prosecute individual offenders. Nor has it moved to stop the dozens of cities, counties and school districts across the United States that have programs for employees to buy drugs from Canada and elsewhere.

The administration is offering “a real plan for America to benefit from prescription drug importation, but the proof is in the follow-through,” said Gabriel Levitt, the co-founder of, a private company that verifies international online pharmacies and compares prescription drug prices for consumers. He said, given Azar’s support, he thinks the plan “has a good chance.”

While Families USA Executive Director Frederick Isasi praised the announcement, he cautioned it’s not a major fix for high U.S. drug prices.

“This is a tactic not a policy solution,” he said. “We should not fool ourselves into thinking that relying on Canada’s ability to regulate drug prices is a comprehensive or long-term solution for the United States. Most importantly, it also does not solve the egregious problem of pharmaceutical price abuses in America.”

In May 2018, Azar said the prospect of importing drugs from Canada was just a “gimmick” because that country is not large enough to meet all the drug needs of the United States.

But lowering drug prices has been a key promise of President Donald Trump, and a few months later, Azar said he was forming a work group that would explore allowing certain drugs that had seen major price hikes to be imported.

The idea got a boost this spring when Trump offered his support, marking the first time drug importation has won a presidential endorsement.

The 2003 Medicare Modernization Act allows states to import cheaper drugs from Canada, but only if the HHS secretary verifies their safety. Previous attempts by states to allow importation failed because the secretary opposed them.

Azar, a former top executive at the drugmaker Eli Lilly, said Wednesday that the federal government has changed its “mindset” on the issue. In the past few years, “the landscape and opportunities for safe linkages of the drug supply chain have changed, and that is why we are open to importation,” he added.

He acknowledged that HHS and the Food and Drug Administration have consistently said there was no way importing drugs from Canada could be done without putting patients at risk for counterfeit drugs.

“Today we are saying we are open and there is a pathway and we are laying out criteria for states, wholesale drug distributors and pharmacies to convince us they have a plan that protects the integrity of the drug supply chain.”

Canadian health officials have expressed concerns about U.S. importation, Azar said, but he added that it is up to states that want to start a program to work to overcome the obstacles, such as a lack of supply, Canadians foresee.

“That is for them to work out, and there are hurdles, but we think those hurdles are surmountable and this can be done,” Azar said. “We are open-minded. We are open for business.”

Three states — Colorado, Florida and Vermont — have approved legislation to import drugs and are working on proposals.

Vermont, which passed legislation to start planning the program a year ago, is still trying to find a way to ensure the safety of imported drugs and so far has identified only 17 medicines that would save enough money to be worth bringing over the border. Those drugs include treatments for conditions including diabetes, hepatitis C, cancer and HIV/AIDS.

Florida Gov. Ron DeSantis tweeted his thanks to the president “for supporting my efforts to lower prescription drug costs for Floridians. You are helping Florida lead the way to make safe and affordable prescription drugs a reality.”

Trish Riley, executive director of the National Academy for State Health Policy, which is working with states on their importation plans, said the plan to have states set up programs could take years to set up because of the slow federal rule-making process.

Azar did not offer any timeframe on when a system to import drugs from Canada could be in place in any states.

Last Updated 08/18/2019

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