I’ve got a piece at The Atlantic this morning arguing that Judge O’Connor was wrong—and obviously so—to hear the Texas lawsuit at all. The states don’t have standing to challenge a mandate that doesn’t apply to them. And the two Texas consultants they recruited as plaintiffs don’t have standing either. Here’s the key argument:
Nantz and Hurley say they feel “obligated” to buy insurance because they “believe that following the law is the right thing to do.” But, again, the law doesn’t obligate them to do anything. It’s all in their heads. And, as the Supreme Court has held, plaintiffs can’t “manufacture standing merely by inflicting harm on themselves.”
O’Connor rejected that line of argument, saying that it “begs a leading question in the case by assuming that the Plaintiffs need not comply” with the individual mandate. But even assuming that the Texans are right that they’re technically obligated to buy insurance, being subject to an unenforceable legal command doesn’t count as an injury. The Supreme Court has flatly held that “a plaintiff who challenges a statute must demonstrate a realistic danger of sustaining a direct injury as a result of the statute’s operation or enforcement.”
So it’s not enough that you feel compelled; you must actually be compelled. In one D.C. Circuit case, for example, a family planning group challenged a provision that prohibited recipients of government grants from discriminating against individuals that refuse to provide abortions. The family planning group said it was laboring under an unconstitutional obligation. That’s not enough for standing, said the court, because there was no reason to think that “good-faith conduct violating a grant condition would trigger an immediate funding cut-off.” No risk of enforcement, no standing. Similar cases led tosimilar outcomes.
One significant implication: it matters that O’Connor hasn’t (yet) found that the red states have standing to sue. If they lack standing, he can’t enjoin the Trump administration from enforcing the law as to them: that’d be giving relief to plaintiffs who aren’t properly before the court.
Now, some courts have stretched the scope of their injunctive authority to afford relief to non-parties. But that practice is controversial and embattled, as I explained in a different article for The Atlantic that I wrote with Sam Bray. Unless and until O’Connor holds that the red states have standing to sue—and I don’t see how they do—they can’t get an injunction. O’Connor has tied his own hands.
Who cares if a zero-dollar mandate is constitutional or not? Why does it matter in the slightest? And what on earth does it have to do with the rest of ACA?
You might have thought that the right remedy would be to invalidate the penalty-free mandate. Doing so would align with Congress’s evident view that an ACA without an individual mandate was preferable to an ACA with it. That’s what I argued in an amicus brief with a bipartisan group of law professors.
Instead, the court held that the entire ACA was “inseverable” from the purportedly unconstitutional mandate. To reach that conclusion, the judge leaned heavily on Congress’s findings from 2010, where it said that the individual mandate was “essential” to the law.
But the mandate that the 2010 Congress said was essential had a penalty attached to it. The finding is irrelevant to a mandate that lacks any such penalty.
In any event, it doesn’t matter what Congress meant to do in 2010. It matters what Congress meant to do in 2017, when a different Congress made a different call about whether the mandate was essential. We know what Congress wanted to do in 2017: repeal the mandate and leave the rest of the act intact. Its judgment could not have been plainer. (I know. I was there! So were you. It wasn’t that long ago.)
You can read the whole thing here. My co-amici, Jonathan Adler and Abbe Gluck, have a New York Times op-ed sounding similar themes.
Americans are generally uncomfortable with pharmaceutical prices — which are the highest for brand drugs among wealthy nations — and with drug companies’ profits. But if policies were adopted to reduce drug prices, could there be negative consequences? On balance, would such policies be good or bad?
I asked three health policy experts to consider these questions in the context of four specific drug pricing policies.
Coverage From Private Insurers
Most Americans, including those on Medicare, get drug coverage from private insurers, which negotiate prices with drug manufacturers. (Insurers often outsource that task to pharmacy benefit management companies.)
In a competitive market, insurers that drive the hardest bargains should be able to reduce premiums and cost-sharing. That would then attract more people to enroll, increasing insurers’ revenue.
But “consumers turn out to be fairly bad at shopping and do not respond to price decreases,” said Fiona Scott Morton, an economist at the Yale School of Management. She was an author of a study showing that consumers in Medicare tend to stick with whatever plans they originally selected, even as premiums rise.
Aaron Kesselheim, an associate professor of medicine at Harvard Medical School, said: “A key disadvantage of Medicare’s drug benefit is that it has no real system in place for holding down drug prices. Drug manufacturers with monopoly products can raise prices to whatever extent the market will bear.”
Medicare rules that require insurance plans to cover all drugs in certain classes, including for cancer, help undermine plans’ ability to negotiate prices downward. Medicare “can’t walk away from the table” and refuse to cover a drug, he said.
Nicholas Bagley, a professor of law at the University of Michigan, pointed out that for many drugs — most commonly, generics — competition has lowered prices. “But for drugs that lack clinical substitutes — including some patented drugs and complex biologics — competition doesn’t work,” he said.
This is by design. Patents that the government provides to drug companies necessarily create monopolies. Therefore “we need another solution if we want private plans to get lower prices,” Mr. Bagley said.
Direct Deals With Drug Companies
Medicare could flex its market power by negotiating directly with drug manufacturers. There have been calls for Medicare to do so, and polling shows that a majority of Americans favor it.
Other government programs, including Medicaid and the Department of Veterans Affairs, obtain steeper discounts than Medicare drug plans. In part this is because of government regulations that mandate price reductions. But those programs also negotiate directly with manufacturers, obtaining additional discounts. For example, the V.A. pays about 40 percent less for drugs than Medicare drug plans do.
“The V.A. obtains larger discounts in part because it can — and does — institute a more restrictive formulary than Medicare, meaning some drugs that are more costly but no better than alternatives are not as easily obtained in the V.A. as they are from a Medicare plan,” Dr. Kesselheim said.
Ms. Scott Morton said: “Direct negotiation by Medicare would only be effective if it could say, ‘No, we won’t cover your product’ to a drug manufacturer. Is that really plausible? I’m not sure that’s what Medicare beneficiaries would want.”
Medicare could save money if it could negotiate with manufacturers and exclude high-priced drugs. That would benefit taxpayers, but it would mean reduced access to drugs for the program’s current beneficiaries and slower innovation of drugs in the future.
“If Medicare doesn’t pay attention to a drug’s benefits during those negotiations, the pharmaceutical industry won’t have the right incentives to develop the drugs we need most,” Mr. Bagley said.
How Some Other Countries Do It
One way to better align a drug price with its clinical value is to follow the lead of other countries. Some simply refuse to pay if a drug is considered too expensive relative to the benefits it delivers. In Britain, for example, the National Institute for Health and Care Excellence (NICE) advises the country’s National Health Service about which drugs to cover.
The institute considers a drug’s cost-effectiveness, as well as the type of condition it addresses and whether it’s for a particularly vulnerable population. There’s more leeway for drugs administered toward the end of life, for example.
Drug manufactures have cut prices to get their products covered in Britain. In April 2014, NICE initially did not recommend Eli Lilly’s lung cancer drug Alimta on cost-effectiveness grounds. But when Eli Lilly dropped Alimta’s price, it gained NICE’s approval.
“If we stopped covering drugs that are 1 percent better but 1,000 percent more expensive, drug manufacturers would steer their research investments toward more effective drugs,” Mr. Bagley said. “The obstacle is political.”
Ms. Scott Morton said: “The main reason we do not have a NICE-like system in the U.S. is that drug manufacturers lose when insurers know which drug is most cost-effective. It is in pharma’s interest to protect their profits and lobby vigorously against any government body that would reveal which drugs have the highest value.”
Another consideration, according to Dr. Kesselheim: “We still might be willing to pay a lot for extremely effective new drugs.”
That is, if we’re willing to pay according to value, some very high-value medications will command very high prices. “A system with less wasteful drug spending for many other conditions should be able to better afford high prices in those circumstances,” he said.
‘Value-Based Insurance Design’
There is a more nuanced variation on Britain’s take-it-or-leave-it approach. An insurer or public program could use information about the price-benefit trade-off to establish not whether to cover a drug, but how generously.
The insurer or program could make a drug more accessible by cutting cost-sharing or by clearing away administrative hurdles. Often, for a lower price, insurers are more willing to provide easier access, which increases sales of that drug — a trade-off of volume for price.
This happened with the cholesterol medication Praluent, made by Regeneron and Sanofi and approved by the Food and Drug Administration in 2015. It was originally priced at $14,000 per year. At that price, the pharmacy benefit management firm Express Scripts — which manages drug benefits for 25 million consumers — covered the drug only if a patient went through a complex review process.
In March 2018, the Institute for Clinical and Economic Reviewestimated that a cost-effective price for the drug would be, at most, $8,000 per year for high-risk patients.
In exchange for more favorable coverage by Express Scripts, Regeneron and Sanofi agreed this year to lower the price of Praluent to the level the Institute for Clinical and Economic Review recommended. More patients will have access to the drug, and it will cost insurers less per patient than originally priced.
“This kind of value-based insurance design is the holy grail, at least for new drugs,” Mr. Bagley said. “But we wouldn’t want to pay a value-based price for aspirin. Doing so would cause us to pay a lot more for it than we do today.”
Dr. Kesselheim said: “One reason imposing higher cost-sharing on less effective drugs isn’t as successful as it could be today is that drug manufacturers undermine the approach. They offer coupons to patients that counteract increased cost-sharing levels or provide physician offices with strategies to circumvent prior authorization paperwork.”
“Drug manufacturers offering financial assistance is an illegal kickback in Medicare,” Ms. Scott Morton said. “We would likely lower drug costs by extending that rule to the private sector.”
Ultimately, all these approaches have limitations. “There isn’t one best model for drug pricing,” Mr. Bagley said. “What works for generics won’t work for patented drugs, and we shouldn’t pay for antibiotics the same way that we pay for cancer drugs.”
That’s why it’s hard to boil realistic solutions down to a bumper-sticker slogan. Balancing prices and access to drugs for the patients of today with the innovation that will benefit those of tomorrow will take ingenuity, as well as a lot of political will.
The next episode of the Healthcare Triage Podcast is up! This month we’re talking about smoking, especially evidence-based solutions to the problem. Dr. Sarah Wiehe (whom I’ve known since residency!) is out guest.
The Healthcare Triage podcast is sponsored by Indiana University School of Medicine whose mission is to advance health in the state of Indiana and beyond by promoting innovation and excellence in education, research and patient care.
IU School of Medicine is leading Indiana University’s first grand challenge, the Precision Health Initiative, with bold goals to cure multiple myeloma, triple negative breast cancer, and childhood sarcoma and prevent type 2 diabetes and Alzheimer’s disease.
As always, you can find the podcast in all the usual places, like iTunes and Soundcloud.
This post was drafted for a series at the Take Care blog “offering thoughts on how Congress might address key issues in the healthcare system.”
Although this series is supposed to focus on congressional action, I’m going to resist the prompt. With divided government, meaningful legislation to adjust or reform the Affordable Care Act is off the table. Democrats won’t vote for anything that dismantles the ACA, and Republicans won’t vote for anything that doesn’t.
I’m more optimistic about the possibilities for bipartisan cooperation on lower-profile matters, including tweaks to Medicare payments, funding for community health centers, and legislation to address surprise bills. And Democrats should by all means use the next two years to plan for the next round of health reform, as Harold Pollack has urged. But Congress won’t be at the center of major health-care policymaking in the immediate future.
The states will be—and not just those red states that, at the administration’s invitation, will seek ACA waivers of dubious legality. Blue states can also act. In the immediate term, they can move to shore up their insurance markets by enacting state-level individual mandates, as New Jersey has done, or limiting the sale of short-term, limited duration plans, like California has done.
The states can also think bigger. After speaking with leaders in states across the country, David Jones, Christina Pagel, and Chris Koller reported in the New England Journal of Medicine that “the greatest opportunity for bipartisanship on health care reform would be to focus on health care costs.” Reform won’t be easy: there are deep divisions (and much confusion) about which costs should be targeted.
But if there’s a consensus that the prices are too damn high, the states have the tools to do something about it. That’s because, for all the focus on national politics, the markets for health-care services are local. And nothing in the ACA, ERISA, or any other legislation strips states of their traditional authority to regulate those markets—up to and including capping the prices that can be charged for those services.
In the near term, overt price regulation probably isn’t in the picture. But I think we’re inching toward it faster than is commonly appreciated. Markets don’t work well when one or two players dominate them. And most health-care markets are highly concentrated: by one estimate, 90% of all metropolitan areas have high hospital concentration, 65% have high specialist concentration, and 57% have high insurer concentration. Predictably, prices in highly concentrated markets are higher—often much higher—than in more competitive markets.
Where markets fail, the pressure for state action grows. Already, the states are experimenting with initiatives that—although they aren’t sold as price controls—use government power to restrain health-care prices. Think of it as creeping price regulation.
Surprise billing
Surprise bills are surprisingly common, arising in about one in five emergency room visits and many elective admissions. You get a surprise bill when you go to an in-network hospital (or other facility), but receive care from a physician who is outside the network. Instead of billing your insurer, the physician will bill you directly, often at exorbitant rates. The practice is both abusive and scummy—patients usually can’t control who they see in a hospital, and it’s reasonable to expect that your ER doc or anesthesiologist is in-network.
A number of states have moved to address surprise bills. They’ve taken different approaches, but a handful—California, most prominently—specify that an out-of-network doctor can’t charge more than 125% of the applicable Medicare rate. (Proposed federal legislation would take a similar approach.) That’s a price control, albeit for a limited class of cases.
And if 125%-of-Medicare is thought to be a reasonable rate for surprise bills, why not for other charges in other contexts? Like, say, when patients (or their insurers) lack market power? Capping payments to a percentage of Medicare rates is an off-the-shelf solution to exorbitant prices, and one that states may continue to reach for in the future.
Antitrust
Earlier this year, Xavier Becerra, the crusading California attorney general, filed an antitrust suit against Sutter Health for price gouging. It’s a noteworthy development not because Sutter’s anti-competitive conduct is especially egregious (though it is), but because state attorneys general have historically been loath to bring antitrust actions against health systems. To my mind, it’s telling that Becerra—who, like all state attorneys general, surely has ambitions for higher office—thinks that picking a fight with a powerful, politically connected hospital system will yield electoral dividends. Other attorneys general might make the same calculation.
State-level antitrust enforcement bleeds more quickly than you might think into price controls. In Massachusetts, Beth-Israel Deaconess recently moved to acquire Lahey Health so it could compete with the powerful Partners Health. The Massachusetts Attorney General, Maura Healy, had to sign off on the merger. She approved it, but only after securing an agreement from Beth-Israel to cap any price increases for seven years. The Boston Globe reported that “[t]hese are the strictest limits ever placed on a hospital merger in the state.”
A growing threat of antitrust enforcement, combined with conditional settlements, suggests that we might see more of these quasi-voluntary price caps. As Fiona Scott Morton quipped, “[i]t looks to me like Massachusetts, which is 5 years ahead of other states on healthcare, is taking the regulation route over the competition route.” That’s how it looks to me, too.
Medicaid buy-in
Last year, the Nevada legislature approved a Medicaid buy-in plan for its residents, though it was vetoed by the governor. Another half-dozen states—Iowa, Massachusetts, Minnesota, Missouri, New Jersey and Washington—are reported to have Medicaid buy-in plans under active consideration.
The appeal of allowing your residents to buy into Medicaid is not hard to understand. It’s a familiar program that scales easily. Cost-sharing is minimal to nonexistent. Doctors are generally available, even if specialists are sometimes hard to find. Any stigma that Medicaid may have once had has largely dissipated. And, perhaps most importantly, Medicaid plans are cheap.
They’re cheap because Medicaid pays much less than other payers. Hospital and physicians aren’t happy about that, but few can afford to spurn Medicaid patients altogether. That’s why, though it’s not often recognized as such, a Medicaid buy-in offers a backdoor way to regulate prices. As people buy into Medicaid, more and more of them will pay Medicaid rates instead of privately negotiated rates for their care. Providers will be squeezed, and may be forced to drop prices to close to the Medicaid rates to assure some flow of privately insured patients. The upshot is that Medicaid rates will serve as a de facto set of price controls.
* * *
Over the next few years, I suspect this sort of creeping price regulation will proliferate. Maybe that’s good: the health-care system is rife with abusive market practices, and I for one would welcome genuine efforts to address them. But blunt cuts to health-care spending will have serious knock-on effects. Among other things, recent studies suggest that patients suffer—and die more often—when payments are cut.
So, tradeoffs. Right now, I don’t think Congress is up to debating those tradeoffs. But some states might be. Only time will tell.
The number of abortions in the US continues to drop. Why? Well, there are a number of factors, but the biggest factor is more effective and more easily available than it’s ever been. Also, people know about it!
If part of a hospital stay is to recover from a procedure or illness, why is it so hard to get any rest?
There is more noise and light than is conducive for sleep. And nurses and others visit frequently to give medications, take vitals, draw blood or perform tests and checkups — in many cases waking patients to do so.
Some monitoring is necessary, of course. Medication must be given; some vital signs do need to be checked. And frequent monitoring is warranted for some patients — such as those in intensive care units. But others are best left mostly alone. Yet many hospitals don’t distinguish between the two, disrupting everyone on a predefined schedule.
Peter Ubel understands the problem as both a physician and patient. When he spent a night in the hospital recovering from surgery in 2013, he was interrupted multiple times by blood draws, vital sign checks, other lab tests, as well as by the beeping of machines. “Not an hour went by without some kind of disruption,” said Dr. Ubel, a physician with Duke University. “It’s a terrible way to start recovery.”
“In addressing a patient’s acute illness, we may inadvertently be causing harm by ignoring the important restorative powers of a healing environment,” said Harlan Krumholz, a Yale University physician who has been calling attention to posthospital syndrome for several years. “The key to a successful recovery after illness may be a less stressful, more supportive, more humane experience during the hospitalization.”
It’s an environment that, all too often, seems set up for everyone else’s convenience but the patient’s. To help patients deal with the stresses of hospitalization, sedatives are often prescribed. These medications, including opioids, carry their own risks, such as addiction.
“Instead, we could make the environment more conducive to rest and reduce the use of sedatives,” Dr. Ubel said.
Solutions aren’t hard to fathom. Dr. Ubel listed some in 2013. Hospital workers could coordinate so that one disruption serves multiple needs: a blood draw and a vitals check at the same time instead of two hours apart. Or they could allow patients’ needs to guide schedules. If a patient is at low risk and can go six or eight hours without a vitals check, for example, perhaps don’t do that check once every four hours.
Small changes in hospital routines like these can go a long way. A clinical trial to test them found that they significantly reduced the proportion of patients reporting hospital-related sleep disruptions, and they cut sedative use in half. These small changes can even increase patients’ ratings of hospitals, which are now part of Medicare quality measures. The key insight seems to be to prioritize patients over tests and other interruptions that can be deferred.
Some hospitals are trying to allow patients to get more rest. Yale-New Haven Hospital has empowered nurses to change medication schedules to minimize sleep disruptions and to tick off other tasksbefore patients go to bed.
The University of Michigan Health System has taken steps to reduce noise at night, including changing when floors are cleaned and installing sound-absorbing tiles.
“Since the 1960s, the noise level in hospitals has gone up,” said Mojtaba Navvab, associate professor of architecture at the University of Michigan and an expert in reducing noise level in buildings. He helped design acoustical changes to the university’s hospital corridors. By adding acoustic tiles to hallway walls, “the sound level was three times lower,” he said.
Being sick and hospitalized is bad enough. Being subjected to sleep deprivation adds insult (or more injury) to injury.
A couple of weeks ago, the Institute for Healthcare Policy and Innovation here at the University of Michigan invited me to talk about the legal disputes surrounding the Trump administration’s efforts to sabotage the Affordable Care Act. (Ignore the weird grimace on my face in the screen grab.)
If you’re curious about litigation around the Medicaid work requirements, the Texas lawsuit challenging the ACA, or the Take Care challenge to the Trump administration’s implementation of the law, this might be right up your alley.
Publication bias is a big problem when it comes to health research. Researchers sometimes use spin or change the outcomes and goals to make their research seem positive, and the citation system in research literature amplifies the problem.
Austin and Aaron are participants in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.
December 18, 2018 at 10:19 am
Nicholas Bagley
Comments closed
