Trump Health Pick Parries Questions On Drug Cost, Health Law

Image result for alex azar imagesSource: Associated Press

Calling it the opportunity of his lifetime, President Donald Trump’s pick for health secretary pledged Wednesday to help lower drug prices and said he’d carry out the Obama-era health law his boss has been unable to erase.

Alex Azar’s assurances to the Senate Health, Education, Labor and Pensions committee were met with doubt by lawmakers of both parties, especially Democrats concerned about his ties to the pharmaceutical industry.

Nonetheless the 50-year-old former drug company and government executive deflected Democratic attempts to paint him as a political partisan beholden to a powerful industry. Some Democrats, including Sens. Maggie Hassan of New Hampshire and Sheldon Whitehouse of Rhode Island, focused their questions on practical policy issues not tinged by ideological conflict.

“I don’t have pharma’s policy agenda,” Azar said at one point. “This is the most important job I will have in a lifetime, and my commitment is to the American people.”

Committee chair Lamar Alexander, R-Tenn., told Azar at the conclusion of the hearing that he believes the Senate will vote to confirm him.

Known as a brainy policy expert with a conservative political pedigree, Azar said his main priorities would be lowering drug prices, making health insurance more affordable, continuing Medicare’s efforts to pay for value not just volume, and confronting the opioid epidemic.

On prescription drug costs, he said his combination of industry and government experience makes him uniquely suited to find solutions. Azar spent a decade as a top executive of pharmaceutical giant Eli Lilly and served in senior positions during a previous stint at the Department of Health and Human Services, which he’d now lead.

That was insufficient for Sen. Rand Paul, R-Ky.

“You’ve got some convincing to make me believe you’re going to represent the American people, not big pharma,” said Paul.

Paul demanded a written explanation from Azar on why it wouldn’t be safe for U.S. patients to import lower-cost prescription drugs from other advanced countries. Drug companies have succeeded in staving off the imports challenge through successive administration of both parties.

Pressed on drug pricing, Azar said all players in the system — drug manufacturers, insurers, pharmacy benefit managers, and government — share some of the blame.

One of his top priorities would be to increase generic and brand drug competition, he said, and he vowed to crack down on drug company “gaming” to extend patents that ward off generic competition.

“Finger-pointing is not a constructive exercise — everybody in the system owns a piece of this,” he said.

Sen. Elizabeth Warren, D-Mass., delivered a blunt appraisal: “Your resume reads like a how-to manual for profiting from government service,” she told Azar, noting the millions he earned at Lilly.

Warren and other Democrats also said they worried Azar will continue the administration’s efforts to “sabotage” the Obama-era Affordable Care Act, only do so with a polite smile instead of Trump’s hard-edged rhetoric.

Azar confirmed he’s no fan of the ACA, but refrained from calling it “Obamacare,” a term coined by Republicans as a pejorative and now widely used.

He said he disagrees with the law’s penalties on people who don’t get health insurance. He asserted that the government should act to help consumers who don’t qualify for health law subsidies but face its high premiums. He said he supports bipartisan legislation to stabilize insurance markets.

“If it remains the law my goal is to implement it in a way that leads to affordable insurance,” said Azar. But Democrats dismissed that as coded language for undermining consumer protections such as minimum benefits.

“I don’t think we can have an HHS secretary who doesn’t support the health care safety net,” said Sen. Tim Kaine, D-Va.

Azar was also quizzed about the Trump administration’s “conscience exemption,” which allows employers to opt out of providing free birth control to women. He said very few employers have invoked it, and signaled that he supported their ability to do so.

Health care issues have been a flashpoint between social and religious conservatives and those who are scientifically minded. Azar said, “I firmly believe in following evidence and science where it will take us.”

The Senate Finance Committee will hold another hearing on Azar soon and formally decide whether to send the nomination to the full Senate.

Before resigning from Eli Lilly earlier this year, Azar built a financial portfolio now worth between $9.5 million to $20.6 million, according to disclosure records filed with the Office of Government Ethics.

If confirmed, Azar would be Trump’s second HHS secretary, replacing Tom Price, who resigned under pressure after using private charter flights at taxpayer expense.

Red Flags Raised About Skinny Plans

Image result for apex xpress health care imagesSource: Kaiser Health News

Consumers coping with the high cost of health insurance are the target market for new plans claiming to be lower-cost alternatives to the Affordable Care Act that fulfill the law’s requirement for health coverage.

But experts and regulators warn consumers to be cautious — and are raising red flags about one set of limited benefit plans marketed to individuals for as little as $93 a month. Offered through brokers and online ads, the plans promise to be an “ACA compliant, affordable, integrated solution that help … individuals avoid the penalties under [the health law].”

Such skinny plans — sold for the first time to individuals — come amid uncertainty over the fate of the ACA and whether President Donald Trump’s administration will ease rules on plans for individuals. Dozens of brokers are offering the plans.

“The Trump administration is injecting a significant amount of confusion into the implementation of the ACA,” said Kevin Lucia, project director at Georgetown University’s Health Policy Institute. “So it doesn’t surprise me that we would have arrangements popping up that might be trying to take advantage of that confusion.”

Apex Management Group of the Chicago area and Pennsylvania-based Xpress Healthcare have teamed up to offer the plans, and executives from both companies say they don’t need approval from state regulators to sell them. They are selling the policies across the country, although their websites note one state — Massachusetts — where the plans are not offered.

David Shull, Apex’s director of business development, said “this is not insurance” and the plans are designed to meet the “bulk of someone’s day-to-day needs.”

Legal and policy experts have raised concerns that the new plans could leave buyers incorrectly thinking they are exempt from paying a penalty for not having coverage. Additionally, they say, plans sold to individuals must be state-licensed — and one regulator has already asked for an investigation.

“Generally speaking, any entity selling health insurance in the state of California has to have a license,” Dave Jones, the Golden State’s insurance commissioner, said earlier this month. “I have asked the Department of Insurance staff to open an investigation with regard to this company to ascertain whether it is in violation of California law if they are selling it in California.”

Asked about a possible investigation, Apex owner Jeffrey Bemoras emailed a statement last week saying the firm is not offering plans to individuals in California. He also noted that the individual market accounts for only 2 percent of the company’s business.

“To be clear, Apex Management group adheres closely to all state and federal rules and regulations surrounding offering a self-insured MEC [minimal essential coverage] program,” he wrote. “We are test marketing our product in the individual environment, if at some point it doesn’t make sense to continue that investment we will not invest or focus in on that market.”

Price-Tag Appeal, But What About Coverage?

The new plans promise to be a solution for individuals who say that conventional health insurance is too expensive. Those looking for alternatives to the ACA often earn too much to qualify for tax subsidies under the federal law.

Donna Harper, an insurance agent who runs a two-person brokerage in Crystal Lake, Ill., found herself in that situation. She sells the Xpress plans — and decided to buy one herself.

Harper says she canceled her BlueCross BlueShield plan, which did meet the ACA’s requirements, after it rose to nearly $11,000 in premiums this year, with a $6,000 annual deductible.

“Self-employed people are being priced out of the market,” she said, noting the new Xpress plan will save her more than $500 a month.

The Xpress Minimum Essential Coverage plans come in three levels, costing as little as $93 a month for individuals to as much as $516 for a family. They cover preventive care — including certain cancer screenings and vaccinations — while providing limited benefits for doctor visits, lab tests and lower-cost prescription drugs.

There is little or no coverage for hospital, emergency room care and expensive prescription drugs, such as chemotherapy.

Harper said she generally recommends that her clients who sign up for an Xpress plan also buy a hospital-only policy offered by other insurers. That extra policy would pay a set amount toward in-patient care — often ranging from $1,500 to $5,000 or so a day.

Still, experts caution that hospital bills are generally much higher than those amounts. A three-day stay averages $30,000, according to the federal government’s insurance website. And hospital plans can have tougher requirements. Unlike the Xpress programs, which don’t reject applicants who have preexisting medical conditions, most hospital-only coverage often does. Harper says she personally was rejected for one.

“I haven’t been in the hospital for 40 years, so I’m going to roll the dice,” she said.  And if she winds up in the hospital? “I’ll just pay the bill.”

About 100 brokers nationwide are selling the plans, and interest “is picking up quick,” said Edward Pettola, co-owner and founder of Xpress, which for years has sold programs that offer discounts on dental, vision and prescription services.

Caveat Emptor

Experts question whether the plans exempt policyholders from the ACA’s tax penalty for not having “qualified” coverage, defined as a policy from an employer, a government program or a licensed product purchased on the individual market.

The penalty for tax year 2017 is the greater of a flat fee or a percentage of income. The annual total could range from as little as $695 for an individual to as much as $3,264 for a family.

Trump issued an executive order in October designed to loosen insurance restrictions on lower-cost, alternative forms of coverage, but the administration has not signaled its view on what would be deemed qualified coverage.

Responding to questions from KHN, officials from Apex and Xpress said their plans are designed to be affordable, not to mimic ACA health plans.

“If that is what we are expected to do, just deliver what every Marketplace plan or carriers do, provide a Bronze, Silver Plan, etc. it would not solve the problem in addressing a benefit plan that is affordable,” the companies said in a joint email on Nov. 14. “Individuals are not required to have an insurance plan, but a plan that meets minimum essential coverage, the required preventive care services.”

Bemoras, in a separate interview, said his company has been selling a version of the plan to employers since 2015.

“As we see the political environment moving and wavering and not understanding what needs to be done, the individual market became extremely attractive to us,” Bemoras said.

Still, experts who reviewed the plans for KHN said policies sold to individuals must cover 10 broad categories of health care to qualify as ACA-compliant, including hospitalization and emergency room care, and cannot set annual or lifetime limits.

The Xpress/Apex programs do set limits, paying zero to $2,500 annually toward hospital care. Doctor visits are covered for a $20 copayment, but coverage is limited to three per year. Lab tests are limited to five services annually. To get those prices, patients have to use a physician or facility in the PHCS network, which says it has 900,000 providers nationwide. Low-cost generics are covered for as little as a $1 copay, but the amount patients pay rises sharply for more expensive drugs.

“I’m very skeptical,” said attorney Alden J. Bianchi of Mintz Levin, who advises firms on employee benefits. “That would be hard [to do] because in the individual market, you have to cover all the essential health benefits.”

The details can be confusing, partly because federal law allows group health plans — generally those offered by large employers — to provide workers with self-funded, minimal coverage plans like those offered by Apex, Bianchi said.

Apex’s Shull said last week in an email that the firm simply wants to offer coverage to people who otherwise could not afford an ACA plan.

“There will be states that want to halt this. Why, I do not understand,” he wrote. “Would an individual be better off going without anything? If they need prescriptions, lab or imaging services subject to a small copay, would you want to be the one to deny them?”

Some consumers might find the price attractive, but also find themselves vulnerable to unexpected costs, including the tax liability.

Harper, the broker who signed up for one of the plans, remains confident: “As long as Xpress satisfies the [mandate], which I’m told it does, my clients are in good hands. Even if it doesn’t, I don’t think it’s a big deal. You are saving that [the tax penalty amount] a month.”

Funding Bill Could Provide Short-Term CHIP Relief

Image result for children's health insurance program imagesSource: The Hill

The legislation to fund the government for two weeks could also provide some short-term relief to help states keep their Children’s Health Insurance Programs (CHIP) afloat.

The bill, which would fund the government through Dec. 22, would temporarily lift certain spending constraints to allow states to get more money for CHIP from the federal government.

Without action from Congress, the government will run out of money Friday.

The policy was first mentioned by House Energy and Commerce Committee Chairman Greg Walden(R-Ore.) last week.

Congress let federal funding for CHIP expire on Sept. 30. As a result, a number of states are running low on money for the program and have asked the Centers for Medicare and Medicaid Services (CMS) for help.

CMS has been awarding millions in unused money to states in need for the past two months. CHIP is jointly funded by states and the federal government.

A provision in the funding bill would make it easier for states to receive leftover money from CMS. There are restrictions on the amount of unused funds a state can get, but the bill would lift those through Dec. 31.

The House has already passed legislation for a five-year extension of CHIP, along with funding for community health centers, but Democrats objected to how the bill was paid for.

The Senate Finance Committee passed a CHIP extension bill but did not say how it would be paid for.

Senate Majority Leader Mitch McConnell (R-Ky.) on Sunday said a CHIP provision will be included in the second year-end spending bill later this month.

“We need to make sure the Children’s Health Insurance Program, which is expiring, gets to panel before the end of the year,” McConnell said on ABC’s “This Week.”

“We have another supplemental for Puerto Rico, and for Florida, and for Texas. All of that will be in this package that we’ll [be] dealing with at some point here in the next couple of weeks.”

Democrats and advocates had been pushing to include a CHIP extension in the first short-term government funding bill, to avoid it being caught up in the politics of the longer-term bill.

Loss of the Individual Mandate, Loosened Regulation of Short-Term Plans Feared by Healthcare Industry

Image result for individual mandate imagesSource: Modern Healthcare

Health insurers—and hospitals—soon may be socked by a double whammy that could drive away insurers’ healthier customers, induce them to spike premiums and unravel the individual market.

First, the Senate Republican tax cut bill would repeal the Affordable Care Act’s requirement that nearly everyone get insurance. That provision, which House Republicans support, is projected to reduce the number of insured Americans, particularly healthier people, by 13 million in 2027 and boost premiums each year by an average of 10%, according to the Congressional Budget Office.

Second, under an executive order by President Donald Trump, HHS is expected to issue a proposed rule by Dec. 12 that allows insurers to sell short-term health plans lasting up to 364 days that do not comply with ACA rules and offer lower premiums than available from ACA-compliant plans. The Obama administration last year limited the duration of such plans to 90 days, making them less appealing to consumers.

Premiums for short-term plans are lower because insurers don’t have to sell these plans to people with pre-existing conditions. They can exclude coverage for maternity care, behavioral health, prescription drugs and other ACA-required benefits. They can impose annual and lifetime benefit caps. And they can deny benefits or even rescind policies if enrollees file claims for what insurers deem pre-existing conditions. That’s why some critics call them “gotcha” plans.

The combination of the mandate repeal and the expansion of short-term plans could deliver a severe blow to the ACA-regulated individual market serving nearly 20 million Americans.

“The loss of the mandate is bad enough, but combined with (expansion of) gotcha plans, this will accelerate the coming death spiral in the individual market,” said Margaret Murray, CEO of the Association for Community Affiliated Plans, which represents safety net insurers.

“Without the mandate and with these other plans out there,” she added,” that will suck more people out of qualified health plans, which will become a high-risk pool for the sickest and most expensive people.”

Despite their coverage gaps, the popularity of short-term plans has grown due to the rise in premiums for ACA-compliant plans, even though many buyers must pay the law’s tax penalty for not having qualified coverage.

Experts expect that sales will grow even more if Republicans repeal the ACA’s mandate penalty, eliminating that financial disincentive for buying short-term plans. The typical monthly premium for an individual in a short-term plan is $175, with a $5,000 deductible, according to Jeff Smedsrud, co-founder of, a health plan shopping website. That compares favorably with rates for ACA-regulated plans.

If the mandate is repealed and the duration of plans is lengthened from 90 to 364 days, “for sure people will be more inclined to buy short-term plans because the price is so low,” said Cindy Holtzman, an insurance broker in Woodstock, Ga.

Since the Obama administration limited these plans to 90 days, Holtzman has not sold any short-term plans because consumers would have to go through the insurer’s medical underwriting process to renew their policy after each 90-day period. She expects many of her higher-income and younger clients will opt for short-term products if the mandate disappears and the rules change.

Smedsrud said he and his wife, who are in their 50s, just bought a short-term plan from Companion Life because they’re moving from Minnesota to Arizona. “Individuals have a difficult decision to make,” he said. “What can my budget afford now versus what might the long-term risks be? It’s not exactly what they want to do, but it may be the best solution for now.”

State insurance regulators are wary about the growth of such plans, due to coverage problems consumers in these plans have faced both before and after the ACA was passed. There have been a number of lawsuits filed against insurers selling such plans, including UnitedHealth Group’s Golden Rule Insurance and Tokio Marine HCC.

The carriers have been accused of refusing to pay claims for what they say are pre-existing conditions—even when the condition had not been diagnosed at the time the policy was purchased. That’s known as post-claims underwriting. Still, in August, Golden Rule won dismissal of a Georgia case in which the plaintiff alleged the company left her with a $400,000 bill for breast cancer treatment.

Public anger about similar coverage denials and policy rescissions by insurers helped Democrats pass the Affordable Care Act in 2010.

“These plans reintroduce many of the problems the ACA was meant to solve,” said Murray, whose member plans do not intend to offer short-term products. “Should people actually need coverage, they’ll quickly realize these plans don’t cover much and don’t provide the same consumer protections like out-of-pocket limits.”

Some states already impose restrictions on short-term plans. But with the Trump administration expected to loosen federal rules to encourage sales of cheaper short-term plans, many state regulators now are eyeing tougher limits. That’s expected to be a major topic of discussion at the National Association of Insurance Commissioners’ meeting in Honolulu this weekend.

Currently, only New York and New Jersey effectively prohibit short-term plans by requiring insurers selling short-term products to cover all ACA-mandated essential health benefits and to issue policies to any applicant regardless of pre-existing conditions, according to Sabrina Corlette, an insurance expert at Georgetown University’s Health Policy Institute.

Regardless of the new federal rules, states have broad authority to establish their own policies on short-term plans to protect consumers and maintain the viability of their ACA-regulated market, according to a new analysis by Corlette and her Georgetown colleagues.

They can ban or limit short-term products, require them to comply with ACA market rules, limit their duration, require plans to spend a fixed percentage of premium revenue on medical services, and mandate that insurers and brokers fully disclose to consumers what coverage and protections these plans provide or don’t provide.

But state officials face political constraints because many consumers who have incomes too high to qualify for ACA premium subsidies are finding ACA-compliant plans unaffordable and are turning to short-term plans and unregulated, religious-based, healthcare cost-sharing plans as more affordable options.

“Many states will find themselves between a rock and a hard place,” Corlette said. “If you don’t regulate short-term plans and allow enrollment to grow, that will cause premiums to rise even more in the individual market. But if you do try to curtail sale of these plans, you could get an outcry from the industry and from consumers who view them as a cheaper alternative. So the politics are tough.”

Smedsrud, however, thinks the threat posed by short-term plans to the insurance market are overstated. He notes that even before the Obama administration limited the duration of these plans to 90 days, consumers stayed in short-term plans for an average of 5.7 months. He sees faith-based cost-sharing plans as growing faster and posing a bigger threat.

“Most people buy a short-term plan with a ‘punt for a while’ mentality, not as something they consider a viable long-term replacement for a permanent health plan,” he said. “It’s not as large a market as many people think.”

U.S. Senate Tax Bill Accomplishes Major Obamacare Repeal Goal

Image result for senate tax bill images

Source: The New York Times

The sweeping tax overhaul that passed the U.S. Senate on Saturday contains the Republicans’ biggest blow yet to former President Barack Obama’s healthcare law, repealing the requirement that all Americans obtain health insurance.

The individual mandate is meant to ensure a viable health insurance market by forcing younger and healthier Americans to buy coverage to help offset the cost of sicker patients. It helps uphold the most popular provision of the law, which requires insurers charge sick and healthy people the same rates.

Removing it while keeping the rest of Obama’s Affordable Care Act intact is expected to cause insurance premiums to rise and lead to millions of people losing coverage, policy experts say.

“It’s going to take a bunch of healthy people out of the insurance market,” said Craig Garthwaite, director of the healthcare programme at Northwestern University’s Kellogg School of Management.

Obamacare “is going to collapse even more now,” he said.

Republican lawmakers failed several times this year to scrap the mandate as part of a broader repeal of Obamacare, blocked by opposition from a few of the party’s senators, including Susan Collins of Maine.

Collins, still opposed to removing the mandate, said she voted for the tax bill on Saturday after being assured by Republican leaders that they will support legislation to prop up U.S. health insurance markets.

The tax bill is not yet final. The U.S. House of Representatives and Senate must now reconcile the differences in their respective versions of the legislation.

“Repealing the individual mandate simply restores to people the freedom to choose,” Republican Senator Lisa Murkowski, who has opposed previous Obamacare repeal efforts, wrote in an opinion piece in Alaska’s Fairbanks Daily News-Miner.

“Instead of taxing people for not being able to afford coverage, we should be working to reduce costs and provide options.”

One of the Obamacare stabilization bills, co-authored by Republican Senator Lamar Alexander and Democratic Senator Patty Murray, would restore billions of dollars in subsidies that health insurers use to reduce out-of-pocket costs for low income Americans.

A second, co-authored by Collins and Democratic Senator Bill Nelson, would create an additional $4.5 billion fund to compensate insurers for covering health care for the sickest patients.

Still, health policy experts said both of those measures would be needed without a mandate repeal and would not make up for expected premium increases and the rise in the numbers of uninsured Americans.

“Neither of these bills would do anything to offset the increase in uninsured resulting from a mandate repeal,” said Larry Levitt, health economist at the Kaiser Family Foundation. “The marketplaces would limp along without a mandate but it’s probably not a stable place.”

Without the mandate, health insurance premiums would rise 10 percent in most years over the next decade on the individual market and 13 million people would lose coverage by 2027, the nonpartisan Congressional Budget Office said in a report last month.

Levitt said that insurers would need around $10 billion per year to offset the lost revenue from the individual mandate rather than raise premiums.

Republicans, who control the White House, U.S. House of Representatives and Senate, failed for months to make good on a top campaign pledge of President Donald Trump.

Trump has said Congress will return to repeal-and-replace efforts next year and over the past several months has taken regulatory and executive actions to steadily undermine the Obamacare law.

Insurers and leading medical groups have already urged Congress to preserve the individual mandate and warned of “serious consequences” such as rising premiums and a rise in the number of uninsured if it were repealed.

CVS to Buy Aetna for $69 Billion in a Deal That May Reshape the Health Industry

Image result for cvs images

Source: The New York Times

CVS Health said on Sunday that it had agreed to buy Aetna for about $69 billion in a deal that would combine the drugstore giant with one of the biggest health insurers in the United States and has the potential to reshape the nation’s health care industry.

The transaction, one of the largest of the year, reflects the increasingly blurred lines between the traditionally separate spheres of a rapidly changing industry. It represents an effort to make both companies more appealing to consumers as health care that was once delivered in a doctor’s office more often reaches consumers over the phone, at a retail clinic or via an app.

The merger comes at a time of turbulent transformation in health care. Insurers, hospitals and pharmacy companies are bracing for a possible disruption in government programs like Medicare as a result of the Republicans’ plan to cut taxes. Congress remains at an impasse over the future of the Affordable Care Act, while employers and consumers are struggling under the weight of rising medical costs, including the soaring price of prescription drugs. And rapid changes in technology have raised the specter of new competitors — most notably Amazon.

A combined CVS-Aetna could position itself as a formidable figure in this changing landscape. Together, the companies touch most of the basic health services that people regularly use, providing an opportunity to benefit consumers. CVS operates a chain of pharmacies and retail clinics that could be used by Aetna to provide care directly to patients, while the merged company could be better able to offer employers one-stop shopping for health insurance for their workers.

But critics worry that customers could also find their choices sharply limited. The deal risks leaving patients with less choice of where to get care or fill a prescription if those with Aetna insurance are forced to go to CVS for much of their care.

On Sunday, the two companies emphasized their ability to transform CVS’s 10,000 pharmacy and clinic locations into community-based sites of care that would be far less expensive for patients.

“We think of it as creating a new front door to health care in America,” CVS Health’s chief executive, Larry J. Merlo, said in an interview.

The merger would establish a new way of delivering care, with nurses, pharmacists and others available to counsel people about their diabetes or do the lab work necessary to diagnose a condition, Mr. Merlo said. “We know we can make health care more affordable and less expensive.”

Mark T. Bertolini, Aetna’s chief executive, said that by using CVS’s locations, the company can provide people with a better way of accessing medical care.

“It’s in their community. It’s in their home,” he said. He added, “CVS has the draw. People trust their pharmacist.”

It is the development of community-based clinics — capable of delivering care with the technology and health information available from both parties — that could prove to be the biggest change brought about the deal.

The hope would be that consumers would not only be able to see savings by going to a retail store to treat a sore throat but also have better oversight of a chronic illness, such as diabetes or heart disease. They could get advice on how to lose weight, or undergo tests to monitor their health.

“If they can drive the adoption of the care delivery model, that’s a big deal,” said Ana Gupte, a senior health care analyst for Leerink Partners.

The merger agreement came as another factor weighs on the minds of all in the health care industry: Amazon, which has been rumored to be preparingfor an entry into the pharmacy business. Jeff Bezos, the Amazon chief executive, and his e-commerce juggernaut have already overturned many industries: book buying, retail shopping, groceries and Hollywood, using fierce customer loyalty and enormous reach as cudgels against incumbent players.

But CVS and Aetna have had a business partnership dating back seven years, and have steadily converged into similar visions of how the health care industry was evolving. Conversations about a deeper bond eventually crystallized into deal talks within the last two months, according to a person with direct knowledge of the discussions.

Although neither chief executive mentioned Amazon by name, both said that what they were creating was a compelling opportunity in and of itself.

“Chasing our competitors has never been a solution,” Mr. Bertolini said. He added, “Our competitors will do what they do.”

Many companies are seeking shelter in the arms of their former adversaries, with well-known medical groups like the Cleveland Clinic joining with Oscar Health, an insurer. With federal officials blocking traditional mergers — like the megadeal that featured Anthem and Cigna, the nation’s largest insurers, and one involving Aetna and its rival Humana — companies are looking at combinations that take them beyond their traditional lines of business.

Many analysts view the combination of CVS and Aetna as a defensive move by the companies. CVS Health, which also recently signed an agreement with Anthem to help the insurer start its own internal pharmacy benefit manager, is looking to protect its business with Aetna as it fends off rivals like UnitedHealth Group’s OptumRx and others. Aetna, foiled in its attempt to buy Humana, is searching for new ways to expand its business.

The merger could also fundamentally reshape the business of overseeing drug coverage for insurers, an industry that is dominated by three large players and that has increasingly come under scrutiny over the past year as public anger over high drug prices has expanded beyond the usual culprits — most notably the pharmaceutical industry — to lesser-known players like pharmacy benefit managers.

Under the terms of the deal, CVS will pay about $207 a share, based on Friday’s closing prices. Roughly $145 a share of that would be in cash, with the remainder in newly issued CVS stock. The deal is expected to close in the second half of next year, subject to approval by shareholders of both companies as well as regulators.

Antitrust approval has become an interesting question in the Trump administration, which bankers and lawyers had thought would be more tolerant of consolidation than its predecessor.

A combination of a drugstore company and an insurer is considered less problematic than a merger of two players in the same business, which could reduce competition and hurt consumers. Such concerns ultimately sank Aetna’s efforts to buy Humana, and Anthem’s push to buy Cigna, when the Obama administration signaled its opposition to such consolidation.

CVS’s proposed takeover of Aetna is a so-called vertical merger, combining companies in two different industries. But while such deals have traditionally met little opposition in Washington, the Justice Department has sued to block AT&T’s $85.4 billion takeover of Time Warner on the grounds that it would create too powerful of a content company.

Both CVS and Aetna played down the prospects of regulators moving to block their deal. The breakup fee for the transaction is not especially large, reflecting that belief.

Mr. Bertolini asserted that the companies would not raise prices for consumers. “It doesn’t make sense for us to charge people more when we want more people in the store,” he said.

But analysts and other merger experts warn that the deal could be blocked by federal antitrust officials who worry that it could lessen competition. One area of focus may be Medicare; both companies are significant players in offering prescription drug plans to Medicare beneficiaries.

While the companies said they want to lower costs, CVS also makes money on rebates from drug makers and on filling prescriptions through its pharmacies.

David A. Balto, an antitrust lawyer who has been sharply critical of combinations among insurers and pharmacy benefit managers, said that he was wary of having retailers in charge of people’s health. He argued that doctors may be in a better position to treat illness than retail executives.

“Who do you want to run the health care system?” he said.

Republicans’ Latest Plan to Repeal Obamacare’s Insurance Requirement Could Wreak Havoc in Some Very Red States

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Source: Los Angeles Times

The Senate Republican plan to use tax legislation to repeal the federal requirement that Americans have health coverage threatens to derail insurance markets in conservative, rural swaths of the country, according to a Los Angeles Times data analysis.

That could leave consumers in these regions — including most or all of Alaska, Iowa, Missouri, Nebraska, Nevada and Wyoming, as well as parts of many other states — with either no options for coverage or health plans that are prohibitively expensive.

There are 454 counties nationwide with only one health insurer on the marketplace in 2018 and where the cheapest plan available to a 40-year-old consumer costs at least $500 a month. Markets in these places risk collapsing if Congress scraps the individual insurance mandate.

“It’s very, very concerning to us,” said Denise Burke, healthcare analyst at the Department of Insurance in Wyoming, where the cheapest plan for a 40-year-old consumer in most of the state will cost $586 a month next year.

The precise nationwide impact of the Senate GOP tax plan, which would eliminate the Affordable Care Act’s unpopular mandate penalty, is unclear, as many forces affect how much insurance costs and where insurers sell plans.

But the legislation is widely expected to cause insurers to raise prices or exit markets out of fear that fewer healthy people will buy plans if there is no longer a penalty for going without coverage.

The risk is greatest in places where health insurance is already very expensive and where there are few insurers.

Five Health-Care Fights Facing Congress in December

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Source: The Hill

Health-care issues are at the top of Congress’s hefty December to-do list.

Republicans spent much of the year on a failed bid to repeal and replace ObamaCare. That’s left several programs and taxes hanging in the balance as the year draws to a close, in addition to the latest health-care drama thrust into the GOP tax-reform debate.

Here are five of the biggest health-care issues Congress will face next month.

Will Republicans repeal the individual mandate?

Weeks ago, Sen. Tom Cotton (R-Ark.) began to push for a repeal of the individual mandate to be added into the GOP tax overhaul. It worked, at least in the upper chamber.

To Democrats’ dismay, the Senate Finance Committee passed a tax-reform bill before breaking for Thanksgiving that included repeal of the ObamaCare mandate that Americans without health insurance pay a fee.

The House already passed a bill out of its chamber on a party-line vote — legislation that didn’t include repealing the individual mandate. But leaders have said they’re open to it if the Senate is able to muster enough votes to pass tax reform with the repeal.

It appears that the upper chamber might be able to pull it off.

Sen. Susan Collins (R-Maine) has said the repeal shouldn’t be in the bill, but hasn’t said she would vote against the tax-reform bill if it was included. Sen. John McCain (R-Ariz.) hasn’t rung any alarms that he would vote against the bill, saying he wants to see the whole package before deciding, and applauding the Finance Committee for holding hearings on the measure.

In a boost to the effort, Sen. Lisa Murkowski (R-Alaska) wrote in the Fairbanks Daily News-Miner Tuesday that she backs repealing the individual mandate. All three senators voted against a scaled-down version of an ObamaCare repeal bill in late July, effectively sinking the measure.

GOP leaders have signaled that a bipartisan stabilization bill from Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) could pass if the individual mandate is repealed. On Sunday, Collins said she would like the Alexander-Murray bill, along with a bipartisan bill to provide funding for high-cost enrollees she introduced, to pass before tax reform does.

Sen. John Cornyn (Texas), the Senate’s No. 2 Republican, said that the deal is “likely” to be included in an end-of-the-year package.

But that effort could face resistance from Democrats, who have balked at repealing the individual mandate, and say that runs counter to the bipartisan spirit that Alexander-Murray was crafted under.

Will Congress reauthorize critical health programs it let lapse?

It’s been nearly two months since funding for the Children’s Health Insurance Program (CHIP) and community health centers expired. Advocates are holding out hope that lawmakers will reauthorize both before the new year, but are frustrated that Congress failed to reauthorize the dollars by a Sept. 30 deadline.

Roughly 9 million low- and middle-income children rely on CHIP for health coverage. Some states have asked the Centers for Medicare and Medicaid Services for funding to hold them over in the interim, and the agency has awarded about $607 million in redistributed funds to states and U.S. territories.

Community health centers have been crafting contingency plans as they wait for Congress to reauthorize a fund that amounts to 70 percent of their federal funding. These centers are a large source of comprehensive primary care for over 26 million of the nation’s most vulnerable people.

Some have already instituted hiring freezes. Others are examining which services they could cut or scale back. If the funding lapses, staff could be laid off, facility renovations or expansions could be canceled or delayed and hours of operation could be reduced.

Though the uncertainty has caused angst for health centers, they haven’t yet seen a monetary impact. But that impact could come on Jan. 1 for 25 percent of centers and on Feb. 1 for another 17 percent, because that’s when their new grant periods begin.

The Health Resources and Services Administration plans to help out on a prorated, monthly basis, according to a spokesperson.

But advocates hope it won’t come to that. The House passed a bill to fund CHIP for five years and community health centers for two. It passed on a party-line vote, as Democrats criticized how Republicans planned to pay for the bill.

The Senate Finance Committee passed a bipartisan, five-year CHIP extension, but hasn’t yet released offsets. Sens. Debbie Stabenow (D-Mich.) and Roy Blunt (R-Mo.) have introduced a bipartisan bill to extend community health center funding for five years.

Will Congress fund the opioid response?

In late October, President Trump declared the opioid epidemic a national public health emergency.

But the move didn’t come with millions of new dollars to combat the crisis, nor did it include a funding ask to Congress. This has frustrated Democrats and many advocates, who say a significant infusion of federal funds is needed to make an emergency declaration effective.

It’s not clear if money will come.

Senate Democrats introduced a bill to provide $45 billion over 10 years to address the crisis — a nod to a similar amount of funding Republicans included in an ObamaCare repeal bill, in part to attempt to offset changes to Medicaid.

But Republicans haven’t named a dollar figure. With a jam-packed December, advocates worry the new year could begin without more money to help curb the crisis of prescription painkillers and heroin that’s ravaged the country.

As for the administration, Hogan Gidley, White House deputy press secretary, said in a statement that “we will continue discussions with Congress on the appropriate level of funding needed to address this crisis” but didn’t say how much that would be.

What does Congress do on ObamaCare taxes?

Behind the scenes, industry lobbyists are working hard to ensure several ObamaCare taxes won’t kick in come January.

The medical device industry wants a full repeal of a 2.3 percent tax on the sale of certain medical devices, such as pacemakers and MRI machines.

“We feel we’re very much in play and that is for full repeal,” said Greg Crist, a spokesman for the medical device trade association AdvaMed. “We’re talking with staff and leadership for the right vehicle.”

The insurance industry is pushing for at least a one year delay of the health insurance tax. Both taxes were delayed in a 2015 spending bill, though for different durations; the medical device tax was paused for two years, and the health insurance tax for just 2017.

Ways and Means Chairman Kevin Brady (R-Texas) addressed the ObamaCare taxes during a marathon hearing on House Republican’s tax-reform bill, saying the legislation wasn’t the right vehicle to repeal or delay them. But, he added, he is working to do so by the end of the year.

“As the ranking member and members on both sides of the aisle know — we have been working with them over the past month to find a path forward,” Brady said. “We are working on common-sense temporary and targeted relief from many of these taxes to be acted on in the House before the end of the year.”

Employer groups are also pushing for a delay of the so-called Cadillac tax, a 40 percent fee levied on pricey employer-sponsored plans slated to begin in 2020. Critics of the tax argue a delay is needed now because employers will begin planning for 2020 next year.

Will Congress help Puerto Rico fund its Medicaid program?

The storm-ravaged island territory could be out of federal dollars for its Medicaid program in a matter of months.

Federal disaster funds haven’t been earmarked to go to the joint state-federal health insurance program for low-income and disabled Americans. On Nov. 17, the White House asked Congress for $44 billion for disaster relief. The notice mentioned Puerto Rico’s Medicaid program, but didn’t put a dollar amount on it.

“Though the Administration expects to work with Puerto Rico and the Congress on medium-term liquidity issues through a future request, the Administration is aware of legislation being considered to address Medicaid sooner,” the letter stated.

Puerto Rico Gov. Ricardo Roselló has asked for $1.6 billion annually for five years. Democratic lawmakers and advocates have been pushing to fulfill that request.

Actuaries Warn of Insurer Losses, Exchange Exits if Individual Mandate is Killed

Image result for Actuaries imagesSource: Fierce Healthcare

If Republicans use their tax bill to repeal the individual mandate, more insurers could end up fleeing the Affordable Care Act exchanges amid climbing financial losses, according to the American Academy of Actuaries.

In a letter (PDF) sent this week to Senate leaders, the group also predicted that a repeal of the mandate would cause premiums to rise in the individual market. That’s because without an alternative means to drive enrollment among healthy individuals, coverage rates among that population would decrease—which in turn would result in a deterioration of the risk pool.

A worsening risk pool could also lead to financial losses—and even solvency issues—for insurers, the letter warned. This is especially true if the individual mandate is repealed after they’ve set their rates, as premiums would be too low and would no longer match the costs of those covered.

As has already been the case on the ACA exchanges, insurers could only bear those losses for so long before resorting to marketplace exits. “This could lead to severe market disruption and loss of coverage among individual market enrollees,” the group said.

The American Academy of Actuaries is not the only entity to issue such predictions about the effects of repealing the individual mandate. The Congressional Budget Office projected that doing so would save the federal government $338 billion over the next 10 years but cause an additional 13 million to be uninsured and raise premiums by an average of 10%.

Ratings agency Standard & Poor’s projected more modest savings and coverage reductions, reasoning that it’s financial incentives and medical need—not the tax penalty—that compels most people to stay covered.

Another recent analysis from The Commonwealth Fund found that only some Americans who are expected to experience premium increases as a result of the mandate repeal would have those increases offset by tax cuts in the GOP’s bill. Those who would benefit the most from the tax cuts tend to be people with higher incomes.

Those analyses come amid a clear signal from one key Republican senator that she supports repealing the mandate.

“I believe that the federal government should not force anyone to buy something they do not wish to buy in order to avoid being taxed,” Alaska Sen. Lisa Murkowski wrote in an op-ed published by the Daily News-Miner on Tuesday.

Murkowski’s position is significant, as she was one of the deciding votes against the GOP’s legislative attempts to repeal and replace the ACA earlier this year. As with those bills, Senate Republican leaders can afford to lose only 50 votes to pass their measure. The House has already passed its own tax reform bill, though it does not address the individual mandate.

Trump’s Call to Stop Obamacare Payments Leads to More Cheap Plans for Low-Income Customers

Image result for trump backfire images

Source: Washington Examiner

President Trump’s decision to cut off Obamacare payments to insurers has driven up the number of zero-cost plans being sold to customers for 2018.

The move to stop the cost-sharing reduction subsidies has led to higher tax credits for low-income customers, which in turn has led to an increase in the number of cheap Obamacare plans available for no premium but high deductibles.

The eligibility for a zero-cost plan varies depending on where an enrollee lives and how much he or she makes. For instance, 2,436 counties in the U.S. offer free bronze plans — the cheapest of Obamacare’s four metal tiers — to a 40-year-old making $20,000 a year, according to an analysis from the health research organization Kaiser Family Foundation.

A separate analysis from Kaiser found that 4.5 million uninsured people are eligible for plans with zero-dollar premiums.

“There were certainly cases previously where zero premium bronze plans were available to people receiving tax credits, but the availability has increased dramatically for 2018,” said Larry Levitt, senior vice president for Kaiser.

The website Health Sherpa, which helps people find Obamacare plans, found that in the first two weeks of open enrollment, 18 percent of all enrollees found a plan with no premiums and 51 percent found plans for $50 or less a month. Nearly 2.3 million people signed up for Obamacare in the first 18 days of open enrollment, the Trump administration said Wednesday.

Levitt attributed the boon of zero-cost plans to President Trump’s decision to halt cost-sharing reduction payments last month. The payments reimburse insurers for a requirement to lower co-pays and deductibles for low-income Obamacare customers.

Trump’s decision to halt the payments on Oct. 18 led to insurers raising premiums on the individual market, both on and off the Obamacare exchanges, to compensate for the loss of the payments.

However, many states directed Obamacare insurers to put all of the costs for the cost-sharing payments onto silver plans, a term called “silver loading.” That boosted the tax credits provided to low-income Obamacare customers.

The size of the tax credits is pegged to the second-cheapest silver plan, so as the cost of silver plans rises, so do the tax credits. The Department of Health and Human Services estimated that the average second-cheapest silver plan premium would rise 37 percent for 2018.

People can use the higher tax credit to buy a cheaper bronze plan or a gold or platinum plan that offers more benefits.

Obamacare advocates are touting the zero-cost plans to boost signups on open enrollment, which ends Dec. 15.

“We think there is a gap in knowledge among consumers and the affordability of health insurance,” said Josh Peck, co-founder of the enrollment group Get America Covered. Peck was the chief marketing officer for the federally run exchanges on, which is used by residents in 39 states and the District of Columbia to buy Obamacare, under the Obama administration.

Peck said the Trump administration hasn’t highlighted the affordable options in e-mails touting the law this year. He said his group is trying to use information from foundations such as Kaiser on the affordability options and try to put that information “out front and center so people can go look for themselves.”

Other groups such as the liberal Organizing for Action highlighted zero-cost plans. “Health insurance for $0 per month? That’s right — coverage may be cheaper than you think,” the group tweeted earlier this week.

But the zero-cost plans don’t mean healthcare is completely free. The tax credits help pay down premiums for a healthcare plan, not the deductibles.

A 2017 bronze plan had an average deductible of $6,092 for an individual and $12,393 for a family, according to data from the site that provides information on health plans.

The tax credits, also, can be used only by people who earn only a certain amount of income, leaving people who earn too much forced to pay higher premiums. In 2017, 84 percent of enrollees on received a subsidy, according to an HHS report.

Last Updated 12/06/2017

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