Brainstorm Health: GOP Tax Plan and Obamacare, Trump Health Pick and Drug Prices
Hello, readers! This is Sy.
The contours of the GOP tax plan currently making its way through Congress are in flux. But the sprawling bill from the U.S. Senate would, in addition to reshaping individuals’ and corporations’ tax rates, also have broad effects on American health care—including millions in insurance coverage losses and premium hikes, even if Congress also passes certain fixes to shore up Obamacare markets, the nonpartisan Congressional Budget Office (CBO) said in a new report released Wednesday.
Health care became intimately mired in the tax reform debate as Senate Republicans heeded President Trump’s call to tack on a repeal of Obamacare’s individual mandate, one of the health law’s most unpopular measures, into their plan. The mandate requires all Americans to carry insurance (subsidized for the vast majority of people buying individual health insurance plans) or pay a tax penalty.
Trump and the Congressional GOP have long aimed to nix that requirement. But they’ve been unsuccessful to date in part because the CBO has projected that repealing the mandate would lead to millions of fewer insured Americans relative to current law while also hiking rates. And while experts may quibble over the precise magnitude of those effects, the CBO hasn’t equivocated about the overall trend.
“There’s a lot of uncertainty around how effective the mandate has been,” Larry Levitt, senior vice president at the independent health care think tank Kaiser Family Foundation (KFF), told Fortune in an interview. “But CBO has said the direction of the effect is clear. Repealing the mandate would increase premiums, would increase the number of people who are uninsured.”
Just how big of an effect would a mandate repeal have? According to CBO, 13 million fewer people would be insured in 2027 compared with current law while premiums would spike 10%. That’s because, without the policy “stick” of a mandate, healthier and wealthier people would likely drop out of Obamacare’s marketplaces, in turn making individual insurance risk pools more costly by disproportionately leaving them with sicker Americans.
That projection been a big road block for more moderate Republican Senators like Maine’s Susan Collins. But Collins reportedly has come around on the issue after Trump assured her he would support a pair of bipartisan “fixes” to Obamacare—one that would guarantee insurer payments that help lower out-of-pocket medical costs for poorer Americans and another (co-sponsored by Collins) that would establish reinsurance funding to give insurance companies more market certainty.
Whether such bills would pass a Congress with general antipathy toward Obamacare is an open question. But, even if they did, CBO now says they would do little to make up for the damage wrought by axing the individual mandate.
“If legislation were enacted that incorporated both the provisions of the Bipartisan Health Care Stabilization Act and a repeal of the individual mandate, the agencies expect that the interactions among the provisions would be small; the effects on premiums and the number of people with health insurance coverage would be similar to those referenced above,” wrote CBO in its new analysis.
A sizable number of consumers would be shielded from the rate hikes since more than 70% of Obamacare plan holders receive federal subsidies to help pay their monthly premiums. Those subsidies would rise in tandem with insurers’ rates. But Americans making too much money to qualify for the subsidies would be out of luck—which could be financially devastating for people with costly medical needs. “It would have the biggest effect on the middle class,” as Levitt explained.
Then there’s the matter of whether or not more insurance companies would exit Obamacare markets since a repeal of the individual mandate would introduce even more uncertainty to the health law. “Repeal of the individual mandate could be the final straw for some insurers,” said Levitt.
Read on for the day’s news.
DIGITAL HEALTH
Duke researchers create heart patch with stem cells. Biomedical engineers at Duke University have made an “artificial human heart muscle large enough to patch over damage typically seen in patients who have suffered a heart attack,” the university announced in a press release. In a study, the researchers used pluripotent stem cells to create a “patch” of new heart tissue that could then be placed over damaged, scarred tissue from a heart attack. Regenerating dead heart tissue is particularly hard since it viable heart muscle has to be able to both contract and emit electrical signals; the patch method instead serves as a band aid for the scarred heart tissue. (FierceBiotech)
INDICATIONS
Trump’s health secretary pick says high drug prices are a problem. Former Eli Lilly executive and George W. Bush administration official Alex Azar has come under some scrutiny for his close ties to an industry he would regulate as Secretary of Health and Human Services. That issue came up from both Democrats and Republicans during a Senate confirmation hearing for Azar on Wednesday. His response? “The current system of pricing insulins and other medicines may meet the needs of many stakeholders, but that system is not working for the patients who have to pay out of pocket, and we have to recognize that impact,” he said. Azar said that tackling high drug prices would be a top priority of his if confirmed to the HHS post. But that doesn’t mean drug makers should necessarily be shaking in their boots quite yet—most of the proposals discussed by the Trump administration and Azar are largely industry-friendly, such as fighting patent trolls and helping get drugs (especially generic drugs) to market faster.
THE BIG PICTURE
The war on HIV is working—but there’s plenty more to do. The Centers for Disease Control (CDC) is out with an encouraging report on the battle against HIV: We’re getting better at it, particularly when it comes to getting treatment early on. “[T]he estimated median time from HIV infection to diagnosis was three years in 2015. CDC previously estimated that, in 2011, the median time from HIV infection to diagnosis was three years and seven months,” wrote the health agency. “The seven-month improvement is a considerable decrease over a four-year period and reinforces other recent signs that the nation’s approach to HIV prevention is paying off.” Still, about 15% of Americans living with HIV don’t know they’re infected, and the progress hasn’t been uniform among all demographics and U.S. states.
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Intel Partners With Warner Bros to Develop VR for Self-Driving Cars, by Kirsten Korosec
Latest NSA Leak Reveals Secret Army Intelligence Project, by Don Reisinger
Produced by Sy Mukherjee @the_sy_guy sayak.mukherjee@fortune.com
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