ACA and the Health Sector

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA and the Health Sector (last updated 6.6.16)

General Provisions Affecting Multiple Sectors

ACA and Private Insurance

ACA and Hospitals

ACA and Physicians

ACA and Mental Health Care

ACA and Nurses

  • Obamacare’s Killer Burden on Nurses. [Opinion]: “With the ACA, there are more patients entering hospital infrastructures that have been diminished. Patients visit the emergency room and wait longer before being admitted. When they do get admitted, rather than being sent home and told to follow up with their primary care physician, they are often much sicker and require more care…While I hope the ACA will get care to millions of other Americans, I worry that it may make it harder for people to get comprehensive, timely care from trained and compassionate health care practitioners, including nurses like me.” (Time.com, 5.6.14)
  • Preserving Staffing Resources as a System: Nurses Leading Operations and Efficiency Initiatives. “Nurse executives are feeling pressure from multiple perspectives to staff safely, yet cost effectively…Based on health care reform and redesign, the climate of care is changing dramatically. Factors include increasing expectations for service, high acuities, complex social factors, pressure to avoid re-admissions, and increased patient churn for efficiency (Beglinger, 2013; Kerfoot & Douglas, 2013). Adding to this stress is decreased nursing productivity due, in part, to higher levels of adoption of electronic medical records (Needleman, 2013). Managing the influence of these factors and meeting expectations for quality are a leadership imperative and a financial reality (Berkow, Vonderhaar, Stewart, Virkstis, & Terry, 2014).” (Nursing Economics, May 2015)
  • Fewer Nurses, Working Longer Hours, Under Obamacare Cost Cuts. “Across the country, fewer nurses are working longer hours while caring for sicker patients…As the Affordable Care Act (ACA) rolled out, deep cuts to Medicaid’s supplemental payments for the uninsured (who were presumed to be fewer after the ACA went into effect) forced many hospitals to reduce staff or close. Faced with a $650 million shortfall, New York City Health and Hospitals Corp., the country’s largest public health system, introduced a $300 million cost-cutting plan that will eliminate one-tenth of the corporation’s workforce over five years. The organization plans to cut the equivalent of 1,000 additional full-time staff in the next 18 months to save another $100 million a year. New York is not the only state where nurse leaders decry higher patient workloads.” (World News Group, 2.15.16)

ACA and Pharmaceuticals

Overview

  • New England Journal of Medicine, Drugs, Devices and the FDA
  • White House Affirms Deal on Drug Cost. “Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion…A deputy White House chief of staff, Jim Messina, confirmed Mr. Tauzin’s account of the deal in an e-mail message on Wednesday night. ‘The president encouraged this approach,’ Mr. Messina wrote. ‘He wanted to bring all the parties to the table to discuss health insurance reform’…The pressure from Mr. Tauzin to affirm the deal offers a window on the secretive and potentially risky game the Obama administration has played as it tries to line up support from industry groups typically hostile to government health care initiatives, even as their lobbyists pushed to influence the health measure for their benefit.” (New York Times, 8.6.09)

Research and Analysis

Items are in reverse chronological order.

  • Health Insurers Find Back Door to Limit Choice. “As cutting edge drugs come to market, insurance companies are scrambling to find ways to justify not paying for them… The flawed justification was normalized by President Obama in 2009, when he oversimplified pharmacoeconomics, saying, ‘If there’s a blue pill and a red pill, and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that’s going to make you well?’ Insurance companies are using this concept to cut costs by excluding the red pills. To do so,  they’ve cooked up a clever way to justify exclusions from formularies by founding and funding a group called the Institute for Clinical and Economic Review.” (USA Today, 5.26.16)
  • Cancer Meds Often Bring Big Out-Of-Pocket Costs For Patients, Report Finds. “[M]ost insurance plans in the six states that were examined placed all or nearly all of the 22 medications studied into payment ‘tiers’ that require the biggest out-of-pocket costs by patients, the American Cancer Society Cancer Action Network said. Those drugs include some well-known treatments, such as Gleevec for certain types of leukemia and Herceptin for breast cancer, and even some generics…With many cancer drugs costing more than $5,000 a month, paying a percentage, also known as ‘co-insurance,’ means patients must pay hundreds or even thousands of dollars at the pharmacy counter until they reach their annual insurance deductible. This appears ‘not to be designed to encourage use of cheaper or more effective alternatives, but to extract the maximum patient cost-sharing for cancer drugs,’ the report said. The study out Wednesday by ACS/CAN reviewed the drug formularies for 66 silver-level plans available to consumers in California, Florida, Illinois, North Carolina, Texas and Washington. These plans cover about half of marketplace enrollees nationwide.” (Kaiser Health News, 11.19.15)
  • Access to Specialty Care Lacking in Many ACA Plans. “Data from a new study show that…nine of 19 plans (47.4%; 95% CI, 25.0% – 70.8%) did not cover medications prescribed by out-of-network providers.” (Medscape Medical News, 10.30.15)
  • Altarum Institute. An analysis of U.S. Census Bureau’s Quarterly Services Survey (QSS) shows that year-over-year growth in prescription drug prices was 2.0% in 2014Q1, rising steadily to 5.0% by 2014Q4, increasing further to 5.5% in 2015Q1 and then declining to 5.2% in 2015Q2.
  • Council of Economic Advisors. This report provides a chart showing 4Q over 4Q trends in the growth of aggregate spending on pharmaceuticals from 2008-2015. The Council of Economic Advisers concludes: “There was a sharp uptick in the rate of spending growth in mid-2013. The uptick in spending growth is much larger than can be accounted for by recent coverage expansions. Available data indicate that the main factor driving faster drug spending has been the arrival of costly, though often effective, new therapies. While the implications of the recent acceleration in drug spending for the overall health care spending outlook should not be overstated since drug spending currently accounts for only about one-tenth of total health care spending and drug spending growth may decline somewhat relative to its recent rapid pace, trends in this area have raised concerns about access and affordability in both the public and private sectors.”
  • Avalere Analysis: Exchange Benefit Designs Increasingly Place All Medications for Some Conditions on Specialty Drug Tier. “New analysis from Avalere Health finds that some exchange plans place all drugs used to treat complex diseases – such as HIV, cancer, and multiple sclerosis – on the highest drug formulary cost-sharing tier. ‘Plans continue to innovate on benefit design in the exchange markets,’ said Dan Mendelson, CEO of Avalere. ‘These designs are calibrated to optimize enrollment by delivering low and stable premiums – the primary metric that consumers use to select a plan.’” (Avalere, 2.11.15)
  • New England Journal of Medicine. (1.29.15) Using Drugs to Discriminate — Adverse Selection in the Insurance Marketplace. “We found evidence of adverse tiering in 12 of the 48 plans — 7 of the 24 plans in the states with insurers listed in the HHS complaint and 5 of the 24 plans in the other six states (see the Supplementary Appendix for sample formularies). The differences in out-of-pocket HIV drug costs between adverse-tiering plans (ATPs) and other plans were stark (see graph). ATP enrollees had an average annual cost per drug of more than triple that of enrollees in non-ATPs ($4,892 vs. $1,615), with a nearly $2,000 difference even for generic drugs. Fifty percent of ATPs had a drug-specific deductible, as compared with only 19% of other plans. Even after factoring in the lower premiums in ATPs and the ACA’s cap on out-of-pocket spending, we estimate that a person with HIV would pay more than $3,000 for treatment annually in an ATP than in another plan. Our findings suggest that many insurers may be using benefit design to dissuade sicker people from choosing their plans. A recent analysis of insurance coverage for several other high-cost chronic conditions such as mental illness, cancer, diabetes, and rheumatoid arthritis showed similar evidence of adverse tiering, with 52% of marketplace plans requiring at least 30% coinsurance for all covered drugs in at least one class. Thus, this phenomenon is apparently not limited to just a few plans or conditions.”
  • According to VOX, “Americans took more medications in 2013, too. The number of prescriptions filled rose by 3.8 percent after holding steady since 2009, according to pharmacy chain CVS Caremark.”
  • Morgan Lewis (April 2010). Healthcare Reform Law: Impact on Pharmaceutical Manufacturers (April 15, 2010). Provides a broad overview of the potential effects of the law by systematically examining each component that might affect the industry.

News

  • How ObamaCare More Than Doubled One Family’s Yearly Pharmaceutical Costs (Video). North Carolina resident Pattie Curan describes how pharmaceutical care for her two sons with mitochondrial disease has been impacted by the ACA. (FOX News Videos, 10.5.14)

ACA and Medical Devices

Overview

In a report for the device-makers’ trade association, AdvaMed, Ernst & Young concluded that the 2.3% excise tax on medical devices would add 29 percent to companies’ U.S. corporate taxes.  According to John Graham, “Devon Herrick of the National Center for Policy Analysis published research explaining that that most medical-device firms in the U.S. are relatively small. 95 percent of U.S. headquartered firms have sales less than $100 million, and focus on domestic rather than international sales. It is more difficult for these companies to avoid the tax by focusing on exports. Herrick also concluded that the excise tax doubled the effective corporate tax burden.”

Research and Analysis

News

  • Startups Struggle with Obamacare Excise Tax. “On April 4, the Senate Finance Committee passed a tax reform bill that failed to address one of the most hotly debated provisions of the Affordable Care Act, otherwise known as Obamacare: a 2.3 percent excise tax on the sale of many medical devices. The ‘tax extenders package’ that passed that day covered 50 provisions worth $85.3 billion, but left unanswered the question of whether the device excise tax should be repealed. The medical device excise tax, in effect since 2013, has been controversial since the day it was enacted. Legislators who support the tax say it’s a justifiable way for a very profitable industry to help fund Obamacare. But industry leaders say that because it’s a tax on sales, it can hamper startups by delaying profitability, for example, or forcing cutbacks in the research spending that’s needed for the industry to produce more innovations in the future.” (Entrepreneur, 4.15.14)
  • Audit: Obamacare Medical Device Tax Not Meeting Revenue Target. “An Obamacare tax on medical devices is falling short of its revenue target because thousands of companies aren’t paying it, according to a government audit released Tuesday. The audit by the Treasury inspector general for tax administration says the IRS needs to do a better job policing the tax. The tax agency, however, doesn’t have adequate tools to identify which companies owe it, the audit said. The report could add fuel to efforts to repeal the tax, which is opposed by Republicans and many Democrats.” (Associated Press, 8.19.14)
  • Obamacare’s Device Tax Grows More Devious. “Business is not going well at the Internal Revenue Service. The agency projected that it would collect $1.2 billion between April and September of last year from Obamacare’s medical device tax, which went into effect at the beginning of 2013. But the tax take was just three-quarters of that. Implementing the tax has proven nightmarish. Administrative errors, overpayments, and erroneous penalties have grown common. And these snafus are nothing compared to the havoc the device tax is beginning to wreak on the economy and the job market.” Pipes, Sally. (Forbes, 9.8.14)

ACA and Long Term Care

  • NAHUCLASS Act.
  • CLASS Act.  The Community Living Assistance Services and Supports (CLASS) program, would have established a national, voluntary insurance program for purchasing community living services and supports designed to expand options for people who become functionally disabled and require long-term help. It was widely criticized as one of the gimmicks made to make the ACA look more affordable, since the government would have collected a large amount in premiums during its first 10 years while paying out relatively little. Even Sen. Kent Conrad (D-N.D.) called the CLASS Act “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.” In October 2011, the Secretary of Health and Human Services announced that the CLASS Act was fiscally unsustainable as written. It was finally repealed as part of the The American Taxpayer Relief Act of 2012, signed by the President on January 2, 2013.