Drug prices are continuing their upward spiral and there seems to be no end in sight. Lucky for the drug companies (and unlucky for us) that they have very deep pockets because it appears they are going to need them as the industry is now battling on many fronts. Last week, a coalition of groups under the banner of the Campaign for Sustainable Drug Pricing released their policy agenda. The group, which includes AARP and The American College of Physicians, as well as insurers and hospital associations, is focusing on a national strategy to promote transparency with respect to drug prices, to speed generic drugs to market and to ensure that more complete data on a drug's clinical effects and associated risks is made available to the public. At the same time, congressional committees are continuing to investigate the industry and its pricing practices.

Meanwhile, tired of waiting for federal action, activists in a number of states are pushing their own initiatives to rein in drug prices. For example, a ballot initiative is moving forward in California that would limit the price the state pays for drugs to that paid by the Veterans Administration. But California is far from alone – numerous states are pressing forward with a variety of proposals

While PhRMA may be playing defense, they are far from beaten. The industry has already raised more than ten times as much money to fight the ballot question in California as proponents have. They've also recruited a whole host of allies to help them push back. And notwithstanding their scrutiny and harsh words, federal lawmakers from both parties have recently sent a letter to CMS criticizing the agency's efforts to reduce spending on Medicare- covered drugs that are administered by physicians. Even the much-maligned Valeant seems to be doing OK. Although the CEO has admitted "mistakes were made," the company's stock price seems to be holding up fine

Bottom line: While pressure on the drug industry is unlikely to abate any time soon, the fight to contain drug costs is certain to be a protracted one and, meanwhile, there is a lot of money to be made.

And Speaking of Price Increases...

The struggles of the insurance industry, led by UnitedHealth, to make a profit on their ACA Exchange business have been well documented. And while there is no doubt some carriers have underpriced their coverage relative to the risk pool, the industry also seems to be undertaking a concerted effort to soften up regulators in order to obtain rate increases. And of course, anything to do with the ACA carries a lot of political baggage, especially in an election year. But neither regulators nor the general public should take the insurance industry's distress cries at face value. First of all, not all insurers are struggling. Some are making a profit or expect to in the near future. Secondly, at least some of the high cost associated with the new Marketplace risk pools has to do with pent-up demand – people who lacked insurance previously coming with a lot of unmet medical need once they gain coverage and present to the health system. As the risk pool becomes more mature, this pent-up demand will lessen. Finally, as CMS pointed out in a report a couple of weeks ago, the increases that most people actually pay are much lower than the initial rate increases proposed by the insurance industry. Rate review, shopping for alternative plans, and most importantly, tax credits that are available to most people on the Marketplaces, bring the actual price of coverage to the consumer way down.

Give the People What They Want

Recently the legislature in UT rejected an effort to close the coverage gap in that state. Instead of helping over 100,000 people and bringing in hundreds of millions of federal dollars, the legislature opted for a much smaller proposal that, if implemented, would cover an estimated 16,000 people. The people of Utah were unimpressed, however. Over half think the legislature should have covered all of the low-income uninsured while only about 20 percent thought the expansion was adequate. Clearly, the people of the state have more common sense than their elected representatives, who continue to oppose closing the gap in defiance of logic as well as compassion.

It is Washington in April and the last year of the Obama administration and so – not unexpectedly – it has been a major week for health care policy proposals and rule changes; over 2,400 pages worth of proposals and rules that consumer advocates will be wading through for days. Stay tuned for our more in-depth analysis in the coming weeks, but in the meantime, here’s a quick rundown of some long-anticipated policies that rained down this week:

Medicaid Managed Care Regulations:  After months of review of proposed rules and comments submitted from 879 stakeholders, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that covers a range of issues including network adequacy and care coordination, disenrollment and appeals, managed long-term services and supports (LTSS), quality improvement and quality rating requirements, medical loss ratios and supplemental hospital payments. This 1,462-page rule is focused on four goals: 1) supporting state efforts on payment and delivery system reforms; 2) strengthening consumer experience of care; 3) strengthening program integrity and 4) aligning rules across coverage programs. The regulations are effective 60 days after the date of publication, with many key provisions going into effect on July 1, 2017 and more provisions phased in over 3 years.

MACRA: The new physician payment system was unveiled this week - a year after Congress approved what was referred to as the "doc fix" bill. CMS announced proposed rules for the “Quality Payment Program,” which gives doctors a choice of two paths, both of which seek to pay them in part based on how well they treat patients. The first path, called the Merit-Based Incentive Payment System (MIPS), would increase or decrease payments in the first year based on how well doctors meet benchmarks on quality, use of electronic health records and costs. The second path, known as advanced alternative payment models, would go even further in shifting towards rewarding quality. In our April 13 post on why consumers should care about MACRA, we emphasized the importance of measures that reflect patient experience and the importance of payment models that make sure providers who care for patients with complex social and medical needs will not be disadvantaged.  CMS will accept comments on the proposed rules until June 27, 2016.

Medicaid Services:  CMS issued guidance on facilitating access to covered Medicaid services for eligible individuals prior to and after a stay in a correctional institution. Medicaid coverage is important for a successful transition to the community, particularly since many have long-untreated, chronic health conditions, as well as a high incidence of substance use and mental health disorders. 

April showers, the old saying goes, bring May flowers. May a thousand Health System Transformation flowers bloom!   



Recently, UnitedHealth Group signaled they will be exiting Affordable Care Act (ACA) marketplaces in several states following losses they sustained because too many sick people are buying their plans and using their insurance.

UnitedHealth seems to have learned what many people at the bottom of the health care delivery system have known all along: Those who haven’t had insurance often need it the most. UnitedHealth is in good company, though, as many players selling plans in the marketplace seem to have underestimated the pent-up demand for medical services. Thus, they priced themselves a little too competitively, while also ending up with significantly sicker enrollees than they had anticipated. The attitude coming from UnitedHealth seems to be to cut their losses (insured people) and maybe come back in when the market’s more palatable and they have plans that stand to make them more revenue.

UnitedHealth seems to be a victim of the law’s success. It turns out that the people who had been locked out of access to affordable insurance prior to implementation of the ACA, perhaps due to a pre-existing medical condition, lack of steady income or working for an employer who doesn’t offer it, haven’t been getting the regular (now free, thanks to the ACA) preventive maintenance their bodies need. As a result, they need a little – or in some cases, a lot – more of a tune-up now that they can actually afford to purchase and use insurance. 

These sick Americans have posed a problem for a company like UnitedHealth, the nation’s largest health insurer, who cited losses in the markets of $720 million last year, or 0.46 percent of their annual revenue.

At this point, it feels like UnitedHealth is trying to signal three horn blasts from the Wall. Unfortunately, the threat they face is not an undead army threatening peace throughout the world, but actually a chronically ill, severely underserved population whose threat seems to mainly consist of making a very minor dent in United’s $157.1 billion in 2015 revenue

I can only imagine that insurers like United were salivating at the pool of 12.7 million new potential customers who purchased health insurance through marketplaces. After all, economic theory tends to hold that a bunch of new customers = $$$$$$. And while I’m not sure that’s exactly how it’s spelled out in “The Wealth of Nations,” it does hold that this great new economic market created by the ACA is taking its time in getting settled as insurers get accustomed to who marketplace consumers are, what they need and how companies can best provide it while still making significant amounts of money.

It has certainly not been smooth sailing, but it turns out the ACA isn’t going anywhere. The positive things it has done – covering people with pre-existing conditions, allowing young people to stay on their parents’ plans longer and capping out-of-pocket expenses – are too darn common-sensical and liked(!) for even critics of the law to propose abolishing.

And while debating topics like the Congressional undermining of “risk corridor adjustment” payments speaks to the wonk in all of us, it speaks to the practicality of none – especially the thousands of affected patients and their families impacted by UnitedHealth leaving the market who may, once again, be looking for good insurance. 

Martin Luther King, Jr. said, “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.” Thankfully, he was a little more optimistic in saying, “The arc of the moral universe is long, but it bends towards justice.” I hope that the arc of history is long enough for UnitedHealth to regret not offering insurance to hardworking families.

The fourth in our National Minority Health Month blog series.

For National Minority Health month, we are celebrating the 32 states including the District of Columbia that have chosen to close the coverage gap. Not only have these states extended health insurance to millions of low-income working families, they have also reduced stubborn health care disparities experienced by communities of color.

Remarkable Gains in Coverage Among Communities of Color

Historically, communities of color were much more likely to be uninsured compared to Whites (see Figure 1). One in three Latinos and Native Americans, as well as one in five Blacks did not have insurance compared to one in seven Whites. Likewise, Black and Latino adults were less likely to have a usual source of care and more likely to skip getting care because of costs.


Figure 1: Coverage gains by ethnicity pre and post ACA. Source: NYTimes, 2016


The ACA has lifted rates of insurance for adults of color at a rate that outpaces the gains in coverage among Whites (see Figure 1). These improvements have been much greater in states that accepted federal dollars to close the coverage gap than in those that did not. Some clinics in states that have closed the gap have reported seeing an uptick in patients of color using preventive services. In one health clinic in California, a vast majority of new patients are people of color who are newly eligible for Medicaid. As a result of more patients having insurance, the clinic has seen a 44 percent increase in cervical cancer screenings, a 25 percent increase in tobacco cessation therapy, and a 22 percent increase in the share of patients with controlled hypertension since 2014.


Despite these outstanding gains in coverage and coverage disparities reduction, 19 states are continuing to leave 3 million adults in the gap; over half are adults of color. Uninsured Black adults are nearly twice as likely as both White and Latino uninsured adults to fall in the coverage gap (see Figure 2), mainly explained by the fact that 60 percent of poor uninsured Blacks live in states that have so far chosen not to increase Medicaid access.


Figure 2. Source: KFF, 2015.

With many racial and ethnic groups still behind their White peers in insured rates as indicated in Figure 1, closing the coverage gap is a critical first step in reducing longstanding disparities in health.

Voices of Minorities Are a Key Part of Close the Gap Campaigns

Communities of color have been an integral part of state campaigns to close the coverage gap. Here are some exciting examples:

  • In Virginia, consumer health advocates are partnering with African American faith organizations and churches to make a unified, faith-based push to compel their state leaders to close the coverage gap. Virginia Consumer Voices for Healthcare (VCV), with its parent organization - the Virginia Interfaith Center for Public Policy (VICPP), delivered a letter to legislators, signed by more than 300 faith leaders, calling out the moral imperative for closing the gap and continues to target minority faith leaders for additional sign-on letters. VCV/VICPP is providing education and outreach to faith and other organizations representing communities of color on policy issues relating to expanded Medicaid access.
  • In Florida, where 27 percent of Latinos are in the coverage gap, National Council of La Raza (NCLR) conducted an intensive communications and advertisement campaign during last year’s legislative special session. They aired 300 television and radio advertisements in key Latino radio markets featuring spokespeople from the Latino faith and business communities who highlighted the moral and economic responsibility that state representatives have to increase health access. The ads encouraged listeners to call their state representative to support expansion during the legislative session, particularly to increase pressure on “moveable” Latino state representatives.  Although the state did not close the gap, the effort drummed up lots of media attention and put hundreds of constituents in contact with their representative. They were also able to move a moderate Latino Republican to support closing the gap during the session.

Extending coverage to more people in the remaining 19 states would continue to drive down health disparities among working adults of color who are more likely to face problems paying medical bills and who, therefore, more often delay and forgo needed care. We hope that by this time next year when National Minority Health Month comes around, coverage inequities will be further reduced thanks to more states having closed the coverage gap!

The third in our National Minority Health Month blog series.

In 2014, Tennessee became the first state in the country to pass a law making it a criminal offense to use drugs while pregnant. Now, two years later, the state is reversing its position by allowing the law to sunset. We applaud the closing of this chapter – allowing the law to sunset, particularly at the height of an opioid epidemic, sends a clear message of the flawed logic leading to the passage of the law in the first place.

While this is good news, Tennessee is not the only state in the nation to impose punitive action on pregnant women with a substance use disorder. Since 2005, 800 women have been jailed nationwide for drug use during pregnancy. Based on their respective state Supreme Court rulings, both South Carolina and Alabama have been able to prosecute women under similar statutes. In three other states, substance use during pregnancy is considered grounds for civil commitment - either involuntary commitment of a pregnant person to treatment or involuntary placement of a pregnant person in protective custody of the State. Civil commitment looks different in each of these states, but in Wisconsin, for instance, a woman can be detained against her will for the duration of her pregnancy. And in 18 states, substance use during pregnancy is considered child abuse, which sets as-yet unborn children on a course to be separated from their parent(s).

It is well documented that punitive approaches to substance use during pregnancy are harmful to both parents and their children. The threat of punishment discourages pregnant people from seeking vital prenatal care and of equal importance to the growing babytreatment for their substance use disorders. People across the country have gone without care altogether throughout their pregnancies, out of fear of possible consequences related to their substance use. After babies are born, we know that best practice, including for those with neonatal abstinence syndrome, is to keep them with their mothers and provide robust care for the pair.

Rules that guide the care of mother and child during pregnancy when there is a substance use involved, such as the laws mentioned above, can disproportionately impact moms of color. Despite the fact that multiple studies have found no significant differences in maternal substance use by race, black women and their babies are more than 1.5 times more likely to be drug tested in a hospital setting than non-black women, and ten times more likely to be reported to public health officials.

What can we do to protect pregnant people and their children, and ensure the best outcomes for both? Halting the criminalization and disproportionate action against women of color can be addressed on multiple fronts, including:

  • Changing harmful state laws. ProPublica has compiled an interactive map of how states handle drug use during pregnancy; learn more here. Advocates, public health and medical associations from across the country have unanimously agreed - we should dismantle laws that punish pregnant people for their substance use disorder.
  • Reducing explicit and implicit bias in the health care system. Implicit bias training for health care providers has been shown to help reduce racial disparities in provision of care.
  • Clarifying screening and reporting rules. Providers need more clarity and transparency from state government about mandatory reporting rules to ensure that pregnant people are screened and referred to appropriate services, based on best practices for patients.
  • Expanding access to prevention and treatment. It is critical that we expand use of preventive screenings, like SBIRT (Screening, Brief Intervention, and Referral to Treatment), for all consumers, and especially for pregnant people, as a public health measure.
  • Intensive case management. Case management can help ensure mothers get access to treatment and other supportive services, and has been shown to be an effective strategy for reducing future substance exposure during pregnancy.