If Your Premiums Go Down but Coverage Gets Worse, Does Your Healthcare Matter?

If Your Premiums Go Down but Coverage Gets Worse, Does Your Healthcare Matter?

Picture this. Amy becomes pregnant while working as a high school teacher. Her employer’s health insurance plan pays the maternity bills and she happily raises her twins.

Fast-forward a few years. She’s decided to become an entrepreneur and runs a small business. She becomes pregnant again but, this time, finds that her $400 a month individual health insurance policy won’t cover the expenses. In fine print, she discovers that she needed to purchase a special rider to activate maternity care benefits. She’ll have to pay $10,000+ out of pocket now, putting her burgeoning business at risk.

Angry at this, Amy decides to switch insurers but, to her dismay, she finds that the four largest insurers in her area don’t cover most expenses associated with a normal delivery. Amy has nowhere to go. Also, since pregnancy is a pre-existing condition, Amy is advised by her doctor to “not become pregnant again” if she wants to get quote reasonable health insurance rates during her search.

This is not an exaggerated or dystopian situation, it’s a real example from 2010.

It highlights the Russian roulette-style approach to healthcare coverage which existed prior to the introduction of Essential Health Benefits (EHBs) mandated by the Affordable Care Act (ACA).

Contrary to many hyperbolic, and tacky, bill titles in Washington like “The Reducing Barack Obama’s Unsustainable Deficit Act” or the “Big Oil Welfare Repeal Act”, EHB is a relatively subdued term describing what many Americans would consider to be crucial in a healthcare plan.  The ACA’s EHBs ensure that all Marketplace plans and coverage via the ACA’s Medicaid expansion includes the following services:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Pregnancy, maternity, and newborn care
  • Mental health and substance use disorder services
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care
  • It also ensures that key benefits for women including birth control and breastfeeding are included.

With the proposed elimination of EHBs in Medicaid in their draft healthcare bill, Senate Republicans have joined their House counterparts in creating a likely “tree falling in the woods” philosophical conundrum – if health coverage covers little, do low premiums actually mean anything?

Cost vs. Quality

The establishment of EHBs represents not only a signature achievement of the ACA but it offers a window into the entire philosophical debate currently raging regarding what health care coverage should mean in the United States. Namely, what is more important – cutting costs for individuals or promoting the proliferation of quality services?

By bundling EHB services, healthcare premiums generally do go up in the aggregate.  A recent Milliman actuarial study took the example of mandated coverage for prenatal/delivery benefits and found that there would be an across-the-board increase of $8 to $14 in health insurance premiums in a single risk pool.  EHBs are partially why the general trend has been that premiums and deductibles have been going up for many American families.

Yet, it is also true that Americans get much more for their premiums and deductibles.  EHBs represent a significant and robust floor for the breadth and quality of services that Americans can expect with their health insurance.  Healthcare consumers also get a measure of predictability in what and how much their coverage plans will cover and bans on annual and lifetime limits on EHBs further help prevent the most catastrophic economic outcome – medical debt leading to personal bankruptcy filings.  After all, as Lois Lupica of the University of Maine School of Law notes, “[i]f you’re uninsured or underinsured, you can run up a huge debt in a short period of time.

House vs. Senate Republicans

The rhetoric of House Republicans suggests that their primary motivation rests in lowering premiums and their plan of slashing EHBs for all – outlined by s. 121(c) of H.R. 1275 (hyperbolically titled “World’s Greatest Healthcare Plan of 2017”) – would likely do that. But it would do so by returning to a system where many insurance plans are “skimpy” and leave Americans on the hook for services not covered. Certain services would also become more expensive simply due to the contraction of pools from which to distribute costs. The segmenting of pools means that certain groups could simply choose not to help pay for services affecting other groups – such as men opting out of plans that cover maternity care.

Eliminating EHBs would have knock-on effects for everyone. Millions of Americans could suddenly find that their individual or small group plans no longer cover critical services such as prescription drugs or emergency room visits. Even Americans working for larger employers wouldn’t be immune from pressures as employers could once again cap reimbursements for current EHB services.

Based on their respective draft bills, Senate Republicans seem to have a better handle on the problems that this might cause – which is why they left the potential ability to weaken EHB definitions and protections to the states.  Having a blanket provision explicitly repealing EHB federally would likely adversely impact many, many groups of Americans and, to quote the President, be unnecessarily mean.  This is likely why Senate Republicans have chosen to restrict the explicit rollback of EHBs to those on Medicaid (per s. 126(b)) as they realize that low premiums may mean that Americans have difficulty accessing a decent range of services for their premiums – and they don’t want to be blamed for it.

Impact on the Poor

But where both House and Senate Republicans seem to agree is that the poor accessing Medicaid do not and should not have a right to quality coverage. Senate Republicans may have been slightly more parsimonious when it came time to repeal EHBs but their “Sunset” of required EHBs in Medicaid plans represents a public and cutthroat view of healthcare – that it is a privilege only for those capable of paying.

Ultimately, this is a value judgment – albeit an unforgiving one that may be out of touch with Americans based on recent polling.  It may also lead to self-defeating spirals as poverty already may have negative, and socially expensive, long-term health impacts.  With EHBs cut, access to a range of preventive, pediatric and managed care services critical to the welfare of lower-income Americans is jeopardized.

In light of such potential outcomes, Senate Republicans should recognize they will have difficulty in selling their healthcare bill as a pragmatic and principled plan – especially as long as “new entitlements” in the form of stabilization funding or repeals on taxes for already highly profitable (and unfairly legally protected)  pharmaceutical and medical device companies continue to be pushed.

With income inequality already a hot button issue, Senate Republicans should be aware of the droves of American voters who find such handouts distasteful.  If they survive in the final bill even as EHBs in Medicaid are clawed back, Republicans may find that distaste with their values and priorities to be a political – and generational – problem.  After all, 2020 looms as the first general election where Millenials will outnumber Baby Boomers.

Jason Chung is currently senior researcher and attorney at NYU SPS Sports and Society, in New York. He tweets at @ChungSports.



Whether or Not Republicans Are Able to Replace Obamacare …

Whether or Not Republicans Are Able to Replace Obamacare …

… There is a far more fundamental issue affecting the overall success of our healthcare system.  Doctors and patients need more transparency when it comes to health care costs.

Healthcare is becoming more expensive by the year. In 1960, healthcare costs accounted for 5% of the gross domestic product. In 2015, they made up 17.8 percent. Although the rates of spending growth actually decreased since 2010 when the Affordable Care Act was enacted, a recent study demonstrated that for employees under 65 with employer sponsored health insurance, the proportion of income consumed by health insurance premiums has increased from 6.5% in 2006 to 10.1% in 2015.

Why does this matter? Health care costs, often from an unexpected medical emergency are the #1 cause of personal bankruptcy in the US. There are 1.7 million Americans live in households that declared bankruptcy due to unpaid medical bills. Also, while more subtle, the rising incremental costs of routine medical care are wearing on the financial stability of many families leaving less funds for essentials such as housing and food, let alone other needs and hobbies.

So what can be done? Doctors could help patients understand the costs of their healthcare options. This type of shared-decision making already exists to help patients weigh the potential risks and benefits of various treatment options. However, these discussions do not typically include cost as a factor.  They should. The same service can be dramatically more expensive depending on where it is done.  Take for instance the differences in surgical costs at an independent direct pay surgery center, the Surgery Center of Oklahoma, which offers common surgeries at a quarter to one fifth the cost of the large hospitals in Oklahoma City.  The same is true when choosing between medications.  For example, when choosing between blood thinners, generic warfarin runs around $20 for a one month supply, while opting for the identical medication in its brand name version Coumadin ups the price to $90.  Newer options such as Xarelto, Eliquis or Pradaxa come with a price tag of over $500.

Unfortunately, cost data is not always easy to come by even for doctors. In truth the answer to “how much is this going to cost the patient?” often is “it depends”.  There are some significant barriers to getting a straight answer.  The reasons are multiple, complex and interwoven.  To begin with, a majority of Americans pay for their healthcare, including routine primary care, lab work and medications through their insurance.  The rate paid by the insurance company depends on their negotiated contract discount rate which varies for one insurer to another.  Effectively, Medicare pays a different rate than Blue Cross or Aetna for the same service and each may pay different providers in the same area a different rate.  Insured individuals benefit from these discounted rates, however, out of pocket costs also depend on deductible and co-insurance in addition to these discounts.

As a result of varied reimbursement rates for one insurer to another, and because for some the discounts are so steep hospitals and healthcare providers struggle to cover basic expenses, billing prices are raised further.  For instance, say insurer A gets a 35% discount, then for every $100 billed they (or the patient) pay $65.  If that $65 is not enough to cover the hospital’s expenses, the hospital may resort to charging $154 for the same service in order to recoup the $100 of expenses.  The result is price inflation and prices that do not reflect value of services provided.  This sort of price inflation has been able to continue because, until recently, patients were not footing a significant portion of the bill.  A patient with a 20% copay would pay $20 on that $100 discounted rate, a solid 87% savings on the total bill of $154.  After paying clearance prices for healthcare for years, shifting to a high deductible plan and being strapped with the full bill feels like a major rip off.  And yet here we are.

To make matters worse, the increasing trend of physicians becoming employees rather than owners of independent practices, enlarging health care organizations and billing outsourced to other companies, make the process of anticipating charges all the more challenging.  More than 75% of physicians are now employed by larger organizations and employed physicians do not set their own charges or contract directly with billers, these all become centralized decisions.  The ties of charges to expenses and to the value of the service provided become murkier with increasing distance and bureaucratic complexity.

Certainly, there are other reasons besides lack of price transparency for health care costs to rise. Factors such as inflated prescription drug prices, ballooning administrative costs, overuse of costly testing and redundancy from fragmented care also need to be addressed. But unlike other causes, increasing transparency can empower health care consumers to take control of their health expenses.

The American Hospital Association has a policy statement in support of pricing transparency and calls for the provision of pricing information that is “easy to access, understand and use”.  HealthPartners in Minnesota offers a website and mobile app to help consumers estimate costs of clinic visits, labs and imaging tests upfront.  These efforts are steps in the right direction but more can and needs to be done to offer clear, comprehensive, accurate and timely information.

Megan Adamson MD is a primary care physician at Dartmouth-Hitchcock Medical Center.

Healthcare’s Fake News Epidemic

Healthcare’s Fake News Epidemic

Fake news has replaced responsible journalism. It’s hard to know what to believe. It wasn’t long ago that supermarket tabloids like National Enquirer were considered fake news. Now it seems the Enquirer and TMZ may be more reliable sources of accurate news than the New York Times or Washington Post.

Government agencies aren’t immune from the fake news trend either. The Congressional Budget Office describes itself as, “Strictly nonpartisan; conducts objective, impartial analysis; and hires its employees solely on the basis of professional competence without regard to political affiliation.”

I’ll bet most newspapers and television news networks say the same about their own objectivity.

The CBO analyzed the American Health Care Act of 2017, a lame effort by Republicans to repeal and replace Obamacare.  Passed by the House, it’s now on to “the greatest deliberative body in the world.”

Here the Senate will dither and dawdle, and likely not pass anything. What about the election? What about Trump’s campaign promise to repeal and replace? Campaign promises are for chumps, after all. Congress has had years to repeal and replace Obamacare and has done nothing. Ditto on tax cuts, immigration reform, building a wall, and other campaign promises easily made but not kept.

Even Senate Majority Leader Mitch McConnell has thrown in the towel, saying, “I don’t know how we get to 50 votes at the moment.” He has 52 votes in his caucus, but perhaps it’s Common Core math leading him to conclude that 52 is less than 50. Senator Lindsay Graham joined the chorus of naysayers also saying no Obamacare repeal this year. Does the GOP establishment even want to repeal Obamacare? I wonder.

The CBO threw cold water on the House repeal effort claiming 23 million more would be uninsured by 2026 under AHCA compared to the status quo of Obamacare. This assumes that when the individual mandate disappears, the law requiring everyone to purchase health insurance whether or not they want or need it, no one will purchase insurance of any kind. Really?

If inexpensive catastrophic plans became available as an alternative to Obamacare, no one would buy them? That’s like saying if BMW went out of business, sales of other car brands would remain the same, not increase with BMW customers choosing Fords or Toyotas instead. Inexpensive catastrophic plans are ideal for many young healthy adults but are not available under the rules of Obamacare. They would, however, be purchased if priced reasonably. Just like with expensive cars.

A bit of positive news too from the ACHA which has not been reported. The CBO also predicted a $120 billion savings from the ACHA over the next 10 years, but this wasn’t deemed newsworthy by the media, burying this fact in the 18th paragraph of their stories.

Those wanting to maintain the status quo of Obamacare, such as California Senator Kamala Harris, doubled down on CBO projections saying “129 million people with preexisting conditions could be denied coverage.” How real is that number?

The Kaiser Family Foundation notes that 49 percent of Americans receive employer-based insurance, which covers preexisting conditions. Ditto for 20 percent on Medicaid and 14 percent on Medicare. Leaving only 16 percent on individual plans (Obamacare) or uninsured. The uninsured constitute 9 percent and preexisting conditions are moot as these individuals don’t have insurance anyway. Leaving 7 percent on Obamacare plans.

As an interesting aside, why are 9 percent of Americans still uninsured? I thought Obamacare was supposed to fix this?

Of the 7 percent on Obamacare plans, the good news for them is that the ACHA does require coverage for preexisting conditions. Even CNN concedes that point.

The devil, however, is in the details. Covering a condition doesn’t mean coverage for each and every available treatment option. Those with Obamacare policies already know this. Limited formularies. Many top hospitals and physicians out of network. Unaffordable copays and deductibles.

Your heart problem may be covered but the only hospitals and surgeons able to treat your particular problem are not in your insurance network.  Or the out-of-pocket portion is unaffordable. So you are technically covered for your preexisting condition but may not like or be able to afford the treatment options available to you. In other words, if you like your doctor you may not be able to keep your doctor.

The reality is that only 500,000 individuals are in potential danger of losing their preexisting coverage if Obamacare is repealed, according to a detailed analysis by Betsy McCaughey. All told, a drop in the bucket, but for the media, the sky is falling.

These half million individuals could easily be placed on Medicaid, covering their preexisting conditions with little out-of-pocket expense. Much smarter to attend to this small group rather than make a mess of the system for the remaining 99-plus percent.

Right now we only have a House bill. One of many small steps before grand pronouncements can be made about what replaces Obamacare. It’s not law, simply a bill. The Senate needs to pass their own bill, a long shot at this point. Then back to a House-Senate conference to reconcile the two different bills. Followed by another vote in both the House and Senate before it even gets to President Trump for signature and passage into law.

The media, by throwing out fake or exaggerated news as the legislative process has just gotten underway, undermines any realistic chance of dismantling Obamacare. Despite the fact that it is unaffordable for many and in its own death spiral.

It seems preserving Obama’s legacy is the media’s priority over thoughtful reporting and analysis. Expect the media to double down after Trump threw away one of the other Obama legacies, the Paris Climate Agreement. If the media continues to throw cold water on every repeal and replace effort from Congress, via fake news and fear-mongering, Congress will cower and eventually do nothing. Leading to the irony of Obama’s legacy being the ashes of Obamacare once it finally implodes.

Brian Joondeph is a writer and ophthalmologist based in Denver.

Will Senate Republicans Get 50 Votes to Repeal the ACA?

Will Senate Republicans Get 50 Votes to Repeal the ACA?

THCB readers are well aware this coming week Senate Republicans plan to begin debate on passing their amended version of the House-passed American Health Care Act (AHCA), titled the Better Care Reconciliation Act.   As of today, June 23rd, immediate reactions by Republican senators to the June 22ndreleased discussion draft have been limited largely because members immediately left town after the draft’s release. The Congressional Budget Office’s (CBO’s) score, that will again be influential, is expected this Monday or Tuesday. Senate debate on the legislation will likely begin next Wednesday with a vote expected late Friday or early Saturday morning, or just prior to their week-long July 4th recess.   Here is an assessment of the legislation’s prospects.

What’s at Stake

One of the best or most thorough assessments of US population health is the 2013 National Academies report titled, Shorter Lives, Poorer Health. As the title plainly indicates the report found that compared to residents in 16 peer countries Americans experience higher mortality and comparative inferior health status. Americans live shorter lives and suffer pervasive health disadvantages throughout their life course.

For example, the report found the US experiences higher rates of infant mortality, injuries, particularly automotive, and homicides, higher rates of teenage pregnancy and STDs, higher rates of HIV/AIDs, higher drug and alcohol-related mortality and morbidity, higher rates of diabetes and obesity, more heart and chronic lung disease and more disabilities including arthritis, and all without any compression of disease.

Senate Republican Motivations

Congressional Republicans have obeen promising to repeal the Affordable Care Act (ACA) since it became law in 2010. They believe they need to keep this promise. If not, they fear, particularly House Republicans, getting primaried, as former House Majority Leader, Eric Cantor, was in 2014 (though his defeat was due largely to his immigration reform position). Their other primary motivation is tax reform. The House bill cuts $834 billion in Medicaid spending over the ten year budget window largely pay for less generous individual tax credits. The Senate bill largely does the same. With a massive reduction in Medicaid spending Republicans are also able to repeal ACA taxes on corporations and on higher income earners. For example, under the House AHCA, those earning over $1 million annually would see $144 billion in tax relief and those earning $200,000 to $900,000 would see $274 billion in tax abatements over the next 10 years. Cutting ACA taxes also lowers the government’s tax revenue baseline. This sets up Republicans to pass a tax reform bill that would allow for approximately $1 trillion in less revenue while still being defined as revenue neutral.

Congressional Budget Office (CBO) Scoring

The CBO concluded the House-passed AHCA would reduce the number of covered lives by 14 million in 2018 and by 23 million in 2026. The bill would cut Medicaid spending, as noted, by $834 million. By 2020, state marketplaces would become unstable for about one-sixth of the population. This is because AHCA waivers would allow states to drop the essential health benefit requirement and would allow insurance underwriting for those that had not demonstrated continuous coverage. For example, the CBO estimated for a single individual age 64 with an income of $26,500, or 175 percent of the Federal Poverty Level (FPL), their premium would increase from $1,700 to upwards of $16,100. A similar score of the Senate’s proposed legislation is likely.

Stakeholder or Lobbying Efforts

In sum, stakeholder opposition to the AHCA has been limited if not anemic. This is explained in part by fear of retaliation, for example, the administration would cut off cost saving reduction repayments. Repealing the ACA means health care companies, including pharmaceuticals and medical device manufacturers, would receive a tax cut estimated at $200 billion. The industry is also hoping for further favorable tax treatment when the Republicans move on to rewriting the tax code. Others believe Republican efforts will collapse under its own weight. Medicaid managed care organizations including Molina and Blue Shield of California, have been obviously vocal. The hospital industry has as well in part over concerns fewer covered lives means more bad debt and how Republicans have structured Disproportionate Share Hospital (DSH) funding. The AARP, the American Academy of Pediatrics, the American College of Physicians, the Association of American Medical Colleges (AAMC), the American Medical Association (AMA), disease groups like the American Cancer Society and patient advocacy groups like Families USA and related others have also expressed opposition.

Among those on the sidelines, the American Health Insurance Plans (AHIP) has not weighed in. Association criticism is though muted or offset by their continued funding of Republican leadership re-election campaigns. Republican governors in Medicaid expanded states, for example, Ohio’s John Kasich and Maryland’s Larry Hogan have stated respectively “deep concerns,” or argued legislators “should go back to the drawing board.” Despite the fact Arkansas has added 300,000 Medicaid under ACA expansion, Governor Asa Hutchinson stated “there are significant positive changes in the Senate bill.”

The Senate Parliamentarian, Reconciliation and the Byrd Rule

Since Senate Republican efforts fall under budget reconciliation rules, that allow them to pass their health bill with a simple majority vote, provisions within the bill must conform to the so called Byrd rule. Simply explained, this means provisions that are considered extraneous, i.e., generally do not increase spending or decrease revenues, the Senate Parliamentarian, Ms. Elizabeth MacDonough, must strike from the legislation. There are provisions that may not meet Byrd rule requirements. These include the cost sharing reduction payments, state stabilization funds (moneys to stabilize state marketplaces) and the House ban on the use of federal tax credits for abortion. If these provisions are struck, Republicans will move these to Medicaid CHIP legislation in September and/or likely find other ways to address.

Timing and Process

Majority Leader McConnell is pushing for a vote before the July 4th recess for at least three reasons. The Senate needs to move on to other matters including raising the debt ceiling, the desire for a legislative win before the August recess and, leaving aside the potential for extraneous variables and crowd out, there’s no guarantee McConnell would be successful should he work the bill through the latter half of the year. Also of note, Republicans cannot move on to tax reform legislation, that they’ll forward under a 2018 reconciliation resolution such that again they can pass with a simple Senate majority vote, until they dispense with the ACA repeal-related 2017 budget resolution.

As has been widely reported McConnell drafted the Senate bill in secret. All Republican meetings were closed to the press. There were no committee hearings and will be no committee markups. This has enabled his members to credibly say when asked about the bill, that they have no comment because they’ve seen no language. Legislating in the dark subverts media coverage or criticism. Media Matters reported the three major networks ran a total of three related segments between June 1 and June 14.

Since the Senate bill is again being considered under reconciliation, Senate floor debate is limited to 20 hours. The time is equally divided between the majority and minority. There is no limit to the number of amendments members can offer during consideration of the bill. Once the 20 hours have expired, amendments not withdrawn are voted on with no debate via what’s termed a “vote-a-rama.”

Senate Republican Votes

None of the 48 Democratic Senators are expected to vote for the Republican bill. No House Democrat voted for the AHCA.

With a 52 member caucus, McConnell can only lose two votes. If he loses two, Vice President Pence will vote to break the tie. Republican votes in play are on the extremes. On the far right is Ted Cruz (TX), Mike Lee (UT) and Rand Paul (KT). Cruz, representing the state with the highest percent of uninsured, is up for re-election next year with current polling showing Texas voters only “leaning” Republican. This is offset by the fact Cruz already has a substantial campaign war chest and is not expecting a primary challenge. The moderates likely in play are seven: Shelly Moore Capito (WV); Bill Cassidy (LA); Susan Collins (ME); Jeff Flake (AZ); Dean Heller (NV); Lisa Murkowski (AK); and, Rob Portman (OH).

Despite a June 22 press release stating “we are not yet ready to vote for this bill” by Cruz, Lee, Paul and Ron Johnson (WI), it appears Cruz, Johnson and Lee will ultimately vote for the bill. Paul will likely vote against. He has consistently stated he does not want to end up with “Obamacare lite.” He wants full repeal. Nebraska’s Senator Ben Sasse may also be a no vote. This means McConnell can only lose one or two more votes.

Among the moderates Flake and Heller are particularly on the bubble. Both Arizona and Nevada expanded Medicaid coverage under the ACA. Both are up for re-election next year and current polling shows voters in both states are also only “leaning” Republican. Heller is more hard pressed. Hillary Clinton easily won Nevada in 2016 by eight points, the popular Nevada Governor, Brian Sandoval, has been a strong supporter of ACA Medicaid expansion that has enabled the state to increase coverage by 33 percent. He has warned Nevada would lose $100s of millions of federal Medicaid funding if Congressional Republicans were to succeed. Heller is presently polling at 39 percent versus 46 percent for any Democratic opponent. Not surprisingly late today, June 23rd, Heller announced he cannot support the Senate bill. Also not surprising immediately after Heller made his announcement a Republican super PAC announced it would spend seven figures on advertising to “influence” the freshman senator.

Concerning the three female senators, West Virginia expanded its Medicaid program under the ACA largely because the state has the seventh highest percent of Medicaid residents, or three in ten. Also, unlike most states West Virginia’s Medicaid beneficiaries tend to remain Medicaid beneficiaries over time. For Senator Murkowski, Alaska is one of the most expensive cost-of-living states due in part to high health insurance premiums. The state has 14,000 enrolled in its marketplace with currently one insurance plan participating. Of those enrolled 90 percent receive subsidies. The Center for Budget and Policy Priorities (CBPP) estimated under the AHCA, Alaskans would pay an average of $12,599 more per year of out-of-pocket for health care costs. For Senator Collins, Republican policy is to decrease premiums for young adults while substantially increasing costs for older Americans presents a problem because Maine has the oldest residents in the US with a median age 44. For Murkowski and Collins, the only two pro choice Republicans, Planned Parenthood funding matters. Ohio’s Senator Portman, who saw an over 20 percent increase in drug overdose deaths between 2014 and 2015, has similar or related concerns.

What to Watch

Medicaid: Compared to the House, the Senate’s bill delays the ACA’s Medicaid expansion by three years. However, the Senate’s annual Medicaid update factor beginning in 2025 is less generous than the House. This latter issue is inherently problematic under either update formula because a fixed update percent, particularly the Senate’s that will track less accurately with actual medical spending growth, does not account for varying patterns of spending due to epidemics or other public health realities, for example weather extremes caused by the climate penalty. In an effort to mitigate the effect of lost lives, or to specifically to win Senator Murkowski’s vote, the Senate bill includes a provision whereby the government will redistribute two percent of Medicaid funds by reducing reimbursements from states that spend more generously on Medicaid beneficiaries to states than spend less generously except for high spending states with low population densities, like Alaska. To win Senator Portman’s vote the Senate bill also excludes the Medicaid ACE (Advancing Care for Exceptional Kids) demonstration program. By intention, because of the phase out is delayed (as well as a less realistic update factor) the number of lives lost under Medicaid may likely be scored somewhat lower than the House bill which CBO determined would drop 14 million lives by 2026. Since the Senate bill succeeds of fails largely on its Medicaid provision, the CBO’s score is particularly relevant to the moderates since all but Maine expanded their Medicaid programs under the ACA. Whether CBO’s score meets whatever lost lives tolerance level the moderates have set for themselves is the begged question.

Tax Credits: From a CBO scoring prospective, tax credits could prove to be as contentious as cuts to Medicaid. Per the CBPP, compared to ACA subsidies, in 2020 the House AHCA’s plan would reduce tax credits for Alaskans by over $10,000, for West Virginians by over $4,200 and in Louisiana and Maine by over $2,600. For those over 60, premium costs would almost triple. Under the Senate bill, beginning in 2020 tax credits would be bench marked at 58 percent of actuarial value (AV) of the median premium marketplace plan. This is substantially less generous than current ACA subsidies at 70 percent of AV. This effect may mitigated by the Senate’s lowering the availability of credits from 400 percent to 350 percent of the FPL and the fact that the Senate bill also allows states to use, ironically, the ACA’s 1332 waiver process to drop the essential health benefit requirement and the requirement that plans meeting certain actuarial values. Under a far more liberal 1332 wavier, states could also close down their ACA marketplaces. Not surprisngly, Senate Republicans incent states to submit 1332 waivers via $2 billion in grants. Like the House bill, the Senate includes a 5:1 age rating band and drops the individual and employer mandates. It appears these provisions, in sum, would, as CBO concluded in scoring the AHCA, cause the non-group market to become unstable for a significant percent of the population, or leave individuals and families unable to purchase insurance at premiums comparable to those under current law.

Cost Sharing Reduction (CSR) Payments: The Senate bill is more generous than the House in that it extends CSR payments through calendar 2019. (It’s at least ironic Republicans have generally termed these payments “bail outs” and challenged them in court since 2003 Republican-led Medicare Part D legislation made these programs permanent.) The combination of a changing 2020 individual market rules with no guard rails for insurer participation may cause moderate senators to pause particularly if the CBO validates their concern. The Senate bill does propose two “stabilization” funds but these moneys are modest, between $5 and $15 billion per year, and expire in 2021.

Opioid Funding: The seven moderate senators identified represent states that have the highest drug related deaths in 2015. West Virginia had the nation’s highest age adjusted drug related death rate. The Senate bill appropriates $2 billion in 2018 for grants to states to support substance abuse disorder treatment and recovery. Considering the fact opioid abuse fatalities in 2015 numbers over 33,000, a 16 percent increase over 2014, both the amount and duration of funding appears to be far from inadequate. The $2 billion may be purposeful since McConnell could likely raise the amount substantially to win particularly Capito’s vote.

Planned Parenthood: Like the House bill, the Senate will also cut Planned Parenthood funding, approximately $550 million or 30 percent of the organization’s budget, for one year. This, despite the fact Planned Parenthood, which operates 700 clinics nation-wide, and other abortion providers are already banned from billing taxpayer-funded programs for the procedure. The 2015 ACA repeal bill that President Obama vetoed in early 2016, included defunding Planned Parenthood. Collins and Murkowski supported an amendment to strike the provision. This may also be an issue for Senator Heller since Nevada has the 5th highest percentage of births to unwed mothers.

Amendments: The fate of the Senate bill may come down to amendments during the floor debate (and/or McConnell offering a substitute bills prior to and/or during floor debate). Look for Republican offered amendments, along with Democratic offered amendments, related to these issues and others that in sum will illustrate or attempt to reinforce each faction’s position or in the Democrats case further divide the two.

McConnell: Unlike House members, Senators are far more independent or less willing to bend to caucus leadership and/or White House pressure. Nevertheless, McConnell can and does exert considerable influence over his members. To what extent the Majority Leader pressures or provides his moderates with life boat provisions will substantially determine the outcome. It has been reported over and again McConnell is “agnostic” concerning the outcome, in part, because, again, he’d prefer to move on to tax reform. Many suspect or believe he actually would have preferred the House to have quit after they initially failed on March 24th. He also knows well Senate Republicans will lose by winning since they’ll own every inevitable adverse consequence that can reasonably tied to his legislation.

House and White House Response

Should the Senate Republicans prevail, despite posturing this past week by the House Freedom Caucus and the Republican Study Committee, it is difficult if not impossible to believe the House will attempt to rewrite the Senate bill, nor will House and Senate leaders appoint conferees to a conference committee to resolve their differences, or draft a third bill both House and Senate Republicans can accept. (One problem with the ACA was there was no conferencing the Senate and House versions.) This is to say the House will pass the Senate’s version or in DC parlance the Senate will jam the House. President Trump will sign the legislation before the Congress takes its scheduled five-week summer recess.

What Does Failure or Success Mean?

Failure means a few Senate Republicans were willing to believe the CBO and not dramatically cut Medicaid, a program that provides health care services to nearly one-quarter of Americans, or approximately 70 million poor perinatal, pregnant women, disabled children and adults and the frail elderly. That they were sensitive to public opinion polling that shows less than 20 percent, and not a single state, supports the House AHCA. That they at least defacto believe the ACA’s individual market is not in a “death spiral” or that per Standard and Poor’s analysis, last year most plans found a stable and profitable price points and/or per Oliver Wyman, two-thirds of higher premiums are due to political uncertainty. Perhaps more importantly they were neither interested in disguising the legislation’s intent by delaying its implementation by a few years nor ultimately in discounting the future.

Success constitutes a lifetime win for the ideological right. Success means the vast majority if not the entirety of Republican Senators repealed, or more accurately partially repealed, the ACA in order redistribute wealth from the poor and middle class to the nation’s wealthiest. Though too infrequently defined in this way, the ACA is, or was, essentially wealth transfer bill. Although it took him seven years to say it, in his recent Facebook post former President Obama wrote the Senate Republican bill is ‘not a health care bill” but instead “a massive transfer of wealth . . . to the richest people in America.” Success means Republican Senators view access to and coverage for health care as simply a product or commodity and that providing all Americans with health care services is not a priority. Success in the face of certain public disapproval means as Gilens and Page concluded in a 2014 study that the “American public actually have little influence over the policies our government adopts,” or phrased another way, “when a majority of citizens disagrees with economic elites or with organized interests,” Gilens and Page concluded, “they generally lose.”

A Primer For Conservatives: Health Insurance is not Really Insurance

A Primer For Conservatives: Health Insurance is not Really Insurance

Is health insurance a plan to help healthy people mitigate against an unexpected illness, or an income subsidy to help the sick pay for medical care?

Conservatives ought to have a clear answer to that question. Not long ago Congressman Morris Brooks from Alabama did not and found himself on the receiving end of liberal ridicule.

By suggesting that those who take better care of themselves should pay lower health insurance premiums, Brooks implied that health insurance is indeed a type of insurance arrangement. After all, the risk adjustment of premiums is a practice proper to all other kinds of insurance services. A prudent driver pays less for auto insurance than one with a negative driving record. A homeowner pays more for home insurance if the property is on muddy terrain rather than on sturdy ground. A smoker pays more for life insurance than a non-smoker, as does anyone whose risk of dying prematurely is high, even if that predisposition is inherited genetically.

Brooks’s conception of health insurance, however, intuitive as it may be, is wrong. Health insurance is not insurance even if, on the surface, health insurance policies meet the dictionary definition of insurance as contractual arrangements “in which one party agrees to indemnify or reimburse another for loss that occurs under the terms of the contract.”

Health insurance cannot really be insurance because human health is un-insurable: human beings are not machines or buildings whose function or condition can be ascertained objectively. Yet, an objective assessment of damages and costs is essential for any contractual arrangement to function in a sustainable manner.

Consider, for example, that medical care is based on the legal principle of “medical necessity.” Medical necessity is invoked when, presumably, there is an impairment in the patient’s health that could be remedied by a medical intervention. But medical necessity is a perniciously elastic concept that cannot possibly satisfy the precise contractual requirements of insurance.

Take Joe, an overweight truck driver, who suffers from back pain and whose MRI shows a slipped disk at the location corresponding to his symptoms. He and his doctor wish to proceed with surgery. Is surgery medically necessary?

To answer that question, the insurer would need to know several other things. To what degree is Joe incapacitated by his back pain? Did he give physical therapy a fair try? Could he improve his condition by losing weight? If so, how willing is he to try to lose weight? In other words, did he do his very best to avoid expensive medical care? And, similarly, for the doctor. Did he carefully advise Joe on all his options? Is his advice disinterested? How confident is he that the surgery will help?

These are all legitimate questions, the answers to which are completely inaccessible to the insurer, for they reside in Joe’s mind and his doctor’s—and possibly below their level of consciousness.

No amount of utilization review can overcome this insurmountable “information asymmetry,” yet medical care is replete with situations that are just like Joe’s: doctors and patients who wish to pursue a plan of care, without objective evidence to show—one way or another—that the care is necessary, let alone effective.

This consideration is not meant to cast doubt on the integrity of doctors and patients, but to point out that medicine is an occupation that frequently deals with intangibles. And even for conditions which, on the surface, seem objectively determinable, like heart attacks or cancer, the tentative way in which medical care necessarily proceeds is antagonistic to the aims of insurance.

Take Laura, who has sudden severe chest pain in the middle of the night. Concerned, she calls an ambulance and is taken to an emergency department staffed by competent and cost-conscious doctors. For a variety of reasons (the character of the pain, the fact that Laura has a family history of heart disease, the equivocal finding on the electrocardiogram, etc.), expensive tests and scans must be performed before the doctors can reassure themselves—and Laura—that she is fine, and that her chest pain was simply a bad case of acid reflux, or perhaps a panic attack.

Should the insurance cover the expensive work-up for this false alarm? A “no” answer seems absurd: people cannot be penalized for misjudging the severity of their condition. If the answer is “yes,” on the other hand, the program is no longer insuring against objective health impairments, but against any concern that can cross someone’s mind—be he a stoic or a hypochondriac.

In short, it’s in the uncertain nature of medical care to conspire against insurance plans that, by nature, must necessarily deal with objectively verifiable claims to remain viable.

So, health insurance is definitely not insurance in the proper sense of the term. Instead, health insurance is—and always was—an income subsidy, ostensibly designed to help the sick pay for medical care.

Such an understanding of the essence of health insurance should not be controversial if we consider government health insurance programs. After all, the first health insurance program was plainly designed by Bismarck as an income subsidy, if only to gain for the Prussian state the loyalty of the working class.

In the United States, the Medicare and Medicaid programs were also enacted as income subsidies to help the elderly and the poor pay for medical care. The subsidies seemed justified by the sharp increase in the cost of medical care that followed the widespread adoption of private health insurance after World War II.

As it turns out, however, even American private health insurance plans were conceived as income subsidy programs. In the 1930s, the early Blue Cross and Blue Shield experiments were carried out not to actually provide insurance against illness, but to alleviate the surge in hospital bed vacancies that occurred when the Great Depression corrected the hospital construction boom of the 1920s.

A decade or two later, employer-based private health insurance emerged as a means for businesses to circumvent wartime wage controls and recruit employees whose salaries could not be raised. After the war ended, the government made that form of income subsidy permanent by specifically exempting health insurance from payroll and income taxes.

In short, be it a public initiative or privately provided service, health insurance is an income subsidy program and can only be considered as such.

As far as income subsidy programs go, however, health insurance has its own peculiarities.

First, health insurance essentially operates as an unlimited voucher program for medical care, since neither the government nor private insurers can set limits to the amount of allowable coverage. As such, then, health insurance is one of the most generous income subsidy programs conceivable. It is no wonder, then, that the healthcare industry has grown to command nearly one fifth of the gross domestic product.

Second, the income subsidy conveyed by health insurance is not allocated based on a person’s income or wealth. After all, it is the wealthy and securely employed who have historically benefited from “Cadillac plans,” while those uninsured tend to come primarily from the lower middle class.

By forcing health insurance on everyone, the Affordable Care Act is admittedly trying to close the gap separating those who do from those who do not currently benefit from health insurance. The plain result of that policy is to ensure that, in principle, no one is left un-subsidized.

Are income subsidy programs that make unlimited amounts of health care funds available to anyone and everyone sustainable? Conservatives had better answer that question correctly.

Michel Accad, MD, practices cardiology and internal medicine in San Francisco, offering individualized care in a free-market setting. He is the author of Moving Mountains: A Socratic Challenge to the Theory and Practice of Population Medicine. His blog about health-care and medicine is AlertandOriented.com.

Examining How Senate Republicans Frame Their Health Care Bill

Examining How Senate Republicans Frame Their Health Care Bill

You can find the full text of the Senate Bill here.

Following is the Senate Republicans summary of their Obamacare replacement bill, with comments by NYU’s Jason Chung.

Seven years ago, Democrats imposed a risky health care experiment on Americans that led to skyrocketing costs and collapsing insurance markets.  Senate Republicans are working to fix the mess Democrats made by acting to rescue the millions trapped by Obamacare.

Jason Chung: While Obamacare has been largely successful in its aims to get millions of uninsured Americans medical coverage, including low-income and those with pre-existing conditions, it has also thus far failed to rein in premiums.  Some of that can be attributed to Obamacare failing to institute a public option, which would charge premium lower by 7% to 8% according to the Congressional Budget Office.

This is a nuanced position.  One can support former President Obama for extending coverage for up to 17.7 million more people and criticize him for failing to account for or communicate the possibility of rising premiums in an unchecked for-profit health insurance model.

The discussion draft will:

Help stabilize collapsing insurance markets that have left millions of Americans with no options.

Jason Chung: As noted by the New York Times, Obamacare failed to create competition in the insurance marketplace but it didn’t create the lack of options that already existed.

Free the American people from the onerous Obamacare mandates that require them to purchase insurance they don’t want or can’t afford.

Jason Chung: Though the individual mandate was one of the least popular elements of Obamacare, it still had the support of 50% of  those polled in March 2017.


It’s noteworthy that the individual mandate was actually the creation of conservative economist, Mark Pauly, to solve the free rider problem


Without a single payer option, it is notable that any individual mandate will have difficulties as some people will simply not comply with the law or have coverage that is too low as the Cato Institute notes.


Improve the affordability of health insurance, which keeps getting more expensive under Obamacare.

Jason Chung: The draft bill includes the sunset of “Essential Health Benefits” as per s. 126(b).  These benefits currently ensure that health insurance includes items that make having health insurance worthwhile such as:

–        Outpatient care

–        Emergency room trips

–        In-hospital care

–        Pregnancy, maternity and newborn care

–        And more…


Dropping these provisions would bring down the costs of basic premiums but also ensure that the most basic coverage is saddled with unaffordable co-pays and deductibles for those least likely to be able to afford them.

Preserve access to care for Americans with pre-existing conditions, and allow children to stay on their parents’ health insurance through age 26.

Jason Chung: This was a key promise made by then-candidate Trump to 60 Minutes on the campaign trail.  He admitted at the time that this would “add costs”.


Strengthen Medicaid for those who need it most by giving states more flexibility while ensuring that those who rely on this program won’t have the rug pulled out from under them.

Jason Chung: States would have more flexibility but the impact is unclear.

Currently, Medicaid funds all needs of patients but the new s. 1903B states that starting 2020 states will have to choose between a  capped  block grant or a capped amount per capita.

Overview of the Discussion Draft of Senate Amendment to H.R. 1628

Help stabilize collapsing insurance markets that have left millions of Americans with no options.

Short-Term Stabilization Fund: To help balance premium costs and promote more choice in insurance markets throughout the country, this stabilization fund would help address coverage and access disruption – providing $15 billion per year in 2018 and 2019; $10 billion per year in 2020 and 2021.

Jason Chung writes: S. 106(h)(1) specifies that these amounts are intended to “fund arrangements with health insurance issuers to address coverage and access disruption…” Rand Paul opposes this fund as an example of “new entitlements”.


Cost-Sharing Reductions: Continues federal assistance – through 2019 – to help lower health care costs for low-income Americans in the individual market.

Jason Chung writes: 

Ensured by s. 207 but s. 208 explicitly repeals the cost-sharing subsidy after 2019.

Extending the subsidy but eliminating penalties is described as “a contradiction in many ways” by Michael Dowling, the CEO of Northwell Health.  He points out that subsidies will now have to be substantial to attract people.


Free the American people from the onerous Obamacare mandates that require them to purchase insurance they don’t want or can’t afford.

Repeals the individual and employer mandates.

Improve the affordability of health insurance, which keeps getting more expensive under Obamacare.

Long-Term State Innovation Fund: Dedicates $62 billion, over 8 years, to encourage states to assist high-cost and low-income individuals to purchase health insurance by making it more affordable.

Tax Credits: Targeted tax credits will help defray the cost of purchasing insurance; these advanceable and refundable credits – adjusted for income, age and geography – will help ensure those who truly need financial assistance can afford a health plan.

Jason Chung: Eligibility for the premium tax credit will be reduced from those making 400 percent of the poverty line to 350 percent, as per s. 102(a)(1)(A). But, as the Atlantic notes, the poor and near poor would probably fare slightly better under this regime.


Health Savings Accounts: Expanded tax-free Health Savings Accounts to give Americans greater flexibility and control over medical costs; increased contribution limits to help pay for out-of-pocket health costs and to help pay for over-the-counter medications.

Repeals Obamacare Taxes: Repeal costly Obamacare taxes that contribute to premium increases and hurt life-saving health care innovation, like the taxes on health insurance, prescription drugs, medical devices, and “high-cost” employer sponsored plans.

Jason Chung: The Democrats are sure to focus on ss. 112 and 113 which repeals taxes on pharmaceuticals and medical device

companies – two constituencies not exactly popular with the public at the moment.


Oddly, s. 118 repeals the tanning tax despite the usage of tanning salons leading to increases in rates of melanoma, basal cell carcinoma          and squamous cell carcinoma.


Senator Bob Casey (D- PA), highlights this “without comment”.

Empowers states through state innovation waivers (Obamacare 1332 Waiver): Provide states additional flexibility to use waivers that exist in current law to decide the rules of insurance and ultimately better allow customers to buy the health insurance they want.  Allow the Department of Health and Human Services (HHS) to fast-track applications from states experiencing an Obamacare emergency.

Jason Chung: 1332 waivers allow states to develop innovative solutions for their individual health care markets.  Hawaii’s application was the first in the nation to be approved.


It remains to be seen how Republicans will react if 1332 waivers are used to push through single-payer health care in certain states.


Preserve access to care for Americans with pre-existing conditions, and allow children to stay on their parents’ health insurance through age 26. (There are no changes to current law as it applies to Veterans, Medicare, or Social Security benefits.) 

Jason Chung: S. 202 provides states with $2,000,000,000 in grants for fiscal year 2018.  But this may be a one-off handout as it has no apparent mechanism for renewal.

Strengthen Medicaid for those who need it most by giving states more flexibility while ensuring that those who rely on this program won’t have the rug pulled out from under them.

Targets Medicaid to Those Most in Need: In 2021, begins gradual reductions in the amount of federal Obamacare funds provided to expand Medicaid, restoring levels of federal support to preexisting law by 2024 while providing fairness for non-expansion states.

New Protection for the Most Vulnerable Guarantees children with medically complex disabilities will continue to be covered.

Provides additional state flexibility to address the substance abuse and mental health crisis.

Flexibilities for Governors:  Allows states to choose between block grant and per-capita support for their Medicaid population beginning in 2020, with a flexibility in the calculation of the base year.  Allows states to impose a work requirement on non-pregnant, non-disabled, non-elderly individuals receiving Medicaid.

New Protections for Taxpayers: Curbs Medicaid funding gimmicks that drive up federal costs.

Can Amazon Crack the Rx Code?

Can Amazon Crack the Rx Code?

Although many participants in the healthcare supply chain like to shroud drug transactions in a cloak of complexity and regulation, drugs are just ‘packaged technology’ and could be transacted much like other technology-based products, albeit regulated ones. As those in the Rx supply chain know, drug transactions have been carefully engineered to be anything but simple.

There is a lot of scuttlebutt about retail powerhouse Amazon bringing its proven brand of simplicity to the drug markets. We at VIVIO Health applaud this effort and hope it becomes successful as the result will be significant progress toward a market-driven industry, a much-needed first for healthcare consumers. Unfortunately, Amazon, even with its storied history of disrupting archaic industries must overcome four key structural roadblocks.

It’s easy to see the Amazon experience starting with consumers who are buying generic prescriptions either without insurance, when the price is lower than their copay, or as purchases counting toward plan deductibles. Beyond this point, Amazon’s path gets significantly bumpier. After satisfying deductible requirements, many consumers only pay 10-20% of the purchase price as coinsurance cost while the plan pays the rest. Amazon knows many people’s post-deductible out-of-pocket costs, especially on higher cost generic and branded drugs, will be significantly lower when using their plan rather than the Amazon platform. This is the first structural challenge they need to overcome.

To overcome this obstacle, Amazon will need to be designated as ‘in network’ by the major pharmaceutical benefit managers (PBMs) which is the second structural challenge. Without this designation, Amazon won’t be reimbursed as a supplier since these benefit managers control who gets reimbursed and who doesn’t. All major PBMs have their own mail order operations and as a result prevent other suppliers to ship via mail by removing them from their network. Amazon has a few options here. They could develop partnerships with independent pharmacies, but this introduces one-by-one negotiation, supply chain and regulatory complexity. A turnkey but expensive solution to immediately achieve scale would be for Amazon to buy a large PBM. If Bezos and team aren’t willing to do either, then an indirect but still viable path would be to convince large employers and employer purchasing groups to mandate in network status for Amazon and disallow any surcharges.

Third, today’s drug transaction model requires prescriptions (‘scripts’) to be delivered electronically to pharmacies. While on the surface that sounds like it would make the process easier, like most things healthcare-related, it too is controlled by a little known company that dominates the majority of script transactions in America. Coincidently, this company is owned and controlled by PBMs and legacy pharmacy chains. It along with large electronic medical record (EMR) vendors have implemented prescription workflows in a manner that has effectively removed even the few consumer choices that existed when we had paper scripts. Default choices on EMR systems dictate where scripts go preventing most consumers from choosing pharmacies based on typical preferences like price and convenience. Worse, state pharmacy boards have been the drivers of arcane pharmacy drug transfer laws making e-script movement from one pharmacy to another a manual and arduous process. It really is as if the pharmacy now ‘owns’ a consumer’s scripts. Yes, Amazon has the clout to fight state pharmacy boards and give the script back to the consumer, but this process will be a tough uphill battle. Amazon could of course jumpstart this by evolving and creating technologies that can create a new pathway.

Fourth, Amazon will have to cut through a Gordian knot of perverse supply chain incentives that have made Heather Bresch of Mylan (Epi-Pen) and Martin Shkreli (Daraprim) household names. Mysterious rebates amount to kickbacks of hundreds or even thousands of dollars per script that rarely benefit the consumers, employers and taxpayers who actually pay for healthcare. Killing these nearly invisible rebates would be another nail in the coffin of today’s opaque drug supply chain while opening the door to competitors like Amazon to create efficient markets for high cost drugs. Brand rebates, will likely force Amazon to follow the easier path of selling generics that comprise 90% of all scripts, but only about 20% of dollar volume. Cracking the remaining 80% of spend will require directly negotiated agreements with pharmaceutical manufacturers or better yet development of new processes that allow open market competition for brand drugs.

While there have been recent announcements of innovation in this space, it’s reasonable to question whether these new solutions are really wolves in sheep’s clothing. For example, there is a new low cost offering from a partnership between an online discounter and a PBM. Great, right? Unfortunately, the fine print in this program disallows employer-sponsored plans from reimbursing cost conscious consumers for purchasing the drug for less than what the plan normally pays for the same drug, effectively squashing adoption of this program for the majority of Americans. Why would these two well-known companies construct their service in this way? It’s pretty simple: lowering initial costs helps drive brand drug use before the consumer deductible is met, while continued purchases through the consumer’s plan are subsidized by employers paying highly inflated prices. This ingenious scheme has the same net result as copay cards; namely, making American consumers unbelievably price insensitive to the actual cost of the drug.

Realistically, history shows just how difficult it is to crack the Rx code. Two examples are worth mentioning. First, one of the world’s largest companies tried to disrupt the drug industry a decade ago when they offered a revolutionary generic drug pricing program. Fast-forward to today and you’ll find this company has single digit market share, certainly better than nothing, but still a rounding error compared to the incumbent legacy players.   A second example showcases just how much control PBMs wield even on large established incumbents. A few years ago, when a contract between a large public pharmacy chain and one of the major PBMs failed to materialize. Wall Street’s brutal response to the well-regarded retailer was a 33% loss in market cap forcing the retailer to bow to the intermediary’s demands.

The US drug industry is playing a brilliant game of cat and mouse against disrupters like Amazon. Over the last five years, margins and revenue have shifted from generics and brand drugs to specialty and even more exotic orphan drugs. In 2003, specialty drugs comprised 1% of all scripts but accounted for what we once thought was an outrageous 11% of total drug spend. Fourteen short years later, specialty drugs still comprise about the same percentage of scripts, but will soon account for 50% of total US drug spend.

I am not privy to boardroom discussions at entrenched supply chain players, but it’s a fair bet they believe themselves to be several steps ahead of Jeff Bezos even in the unlikely event that Amazon captures a majority of scripts written in America. But American consumers desperately need innovators who have the scale and deep pockets to reengineer the drug supply chain along with the strength of character to stand up to a powerful and entrenched industry. Jeff Bezos and Amazon stand as good a chance as any to break some china and crack the Rx industry and that would be a consumer problem worth solving.

PRAMOD JOHN is CEO of ViV!O Health

Trump’s Brain: What’s Going On?

Trump’s Brain: What’s Going On?

In late May the science and health news site STAT ran a provocative article titled: “Trump wasn’t always so linguistically challenged. What could explain the change?”

Not surprisingly, the piece went viral.   After all, aren’t most of us wondering whether something is up with the President’s—how shall I say it—state of mind, psychological status, character, personality, and yes, mental health?

For over a year, there’s been speculation about this. Most of the talk is loose and politically inflected. But substantive reflections by mental health professionals and serious commentators are on the rise.

At first, media outlets were very careful. They didn’t want to say the president was “lying” let alone possibly crazy.   Their caution was grounded mostly in journalistic ethics and policies. But that caution was also attributable to a thing called the “Goldwater Rule,” which warrants explaining because it infuses this whole issue.

Barry Goldwater, the Republican nominee for president in 1964, successfully sued a now-defunct magazine called FACT (for $50,000) after the magazine ran a pre-election special issue titled “The Unconscious of a Conservative: A Special Issue on the Mind of Barry Goldwater.”

The two main articles in the magazine contended that Goldwater was mentally unfit to be president.   According to Wikipedia, the magazine “supported this claim with the results of a poll of board-certified psychiatrists. FACT had mailed questionnaires to 12,356 psychiatrists, receiving responses from 2,417, of whom 1,189 said Goldwater was mentally incapable of holding the office of president.”

The other 1,228 psychiatrists declined to render a judgment. Most of them cited a de facto rule among mental health professionals that speculating about the mental health status or diagnosis of people not in their own care—and especially public figures—was unethical and very unwise.

Though it took a few more years, the American Psychiatric Association in 1973 codified this practice by adding what is now called the Goldwater Rule to its ethics guidelines.

So, to be clear, the Goldwater Rule applies to mental health professionals, but because of the successful lawsuit came to apply to media as well. Idle chatter or speculation about the mental health of public figures was to be generally avoided.   And it was, for many years.

Fast forward to spring 2016. The presidential campaign is in full swing and Trump is saying and doing some very strange, unconventional things. In response, a small band of psychiatrists and clinical psychologists, under the banner of an ad hoc group called “Duty to Warn,” decided to violate the Goldwater Rule.

In articles and blogs, the group claimed that Donald Trump displays “an assortment of personality problems, including grandiosity, a lack of empathy, and ‘malignant narcissism.’” Separately, the group’s leader, psychologist John Gartner, said Trump “has a dangerous mental illness.”

The media and social media, of course, picked up on this, and commentaries begin to appear. Most were online but some found their way into the mainstream media. Most notably, on March 7, 2016 The New York Times publishes an essay titled, “Should Therapists Analyze Presidential Candidates?” by Robert Klitzman, a professor of psychiatry at Columbia University.

Klitzman’s conclusion: mental health professionals and the media should stand firm on the Goldwater Rule and not speculate on the mental health of presidential candidates, including Trump. Four days later, on March 11, 2016, in letter to the Times, the president of the American Psychological Association agreed.

As Trump’s chances of electoral success seemed remote to everyone, the discussion subsided. Then, surprisingly, Trump wins the Republican nomination and the presidency.

And much of the nation is in shock.

The issue of whether Trump is mentally (clinically) afflicted in some way is no longer academic, or a fun pastime subject.   Millions of people – the vast majority of them Democrats, of course—think something is seriously wrong with the man. And they talk about it all the time. At home and around the proverbial water cooler, in bars, and on the web.

Indeed, Trump commentary and jokes quickly becomes a national pastime, as the president-elect and then president fails spectacularly to honor his pledge to “become really presidential, so presidential” or conform to behavioral norms. Much of the commentary and humor is tinged with the implicit or explicit talk of Trump’s mental stability. This become a meme, if you will.

As the months go by, idle chat becomes more formal and liberal op-ed columnists—especially those affiliated with the Times and The Washington Post—are less and less restrained in suggesting President Trump suffers from a clinical disorder.

The words narcissism and “instability” are invoked over and over. But there’s also reference to the president’s erratic behavior, aggression, malevolence, lying, paranoia, impulsiveness, inconsistency, poor judgment, and self-destructive behavior.  And, of course, there’s that painful-to-watch inability to form coherent thoughts when not scripted. (Yes, we are getting back to that and the STAT story in just a minute.)

But first, fast forward again to Feb. 13, 2017 when in response to a column in the Times by Charles Blow, Dr. Lance Dodes and 34 other psychiatrists, psychologists and social workers publish a letter in the Times. http://www.lancedodes.com/new-york-times-letter   It said:

“Silence from the country’s mental health organizations…. has resulted in a failure to lend our expertise to worried journalists and members of Congress at this critical time. We fear that too much is at stake to be silent any longer.   Mr. Trump’s speech and actions demonstrate an inability to tolerate views different from his own, leading to rage reactions. His words and behavior suggest a profound inability to empathize. Individuals with these traits distort reality to suit their psychological state, attacking facts and those who convey them (journalists, scientists).

In a powerful leader, these attacks are likely to increase, as his personal myth of greatness appears to be confirmed. We believe that the grave emotional instability indicated by Mr. Trump’s speech and actions makes him incapable of serving safely as president.”

Following that, on April 5, 2017, Rolling Stone magazine (which has had its troubles lately) bucked the Goldwater Rule with an article by Alex Morris titled “Why Trump Is Not Mentally Fit to Be President” and the subtitle “Diagnosing the president was off-limits to experts – until a textbook case entered the White House.”

The article concludes that Trump fits all the criteria for “narcissistic personality disorder,” a formal diagnostic entity in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM-5).

In May, psychologist John Gartner, Duty to Warn’s founder, re-entered the fray with an op-ed in USA TODAY.   I guess you could say USA TODAY entered the fray, too.

Mincing no words, Gartner said Trump was “psychotic” and suffered from “malignant narcissism.”   He claimed that more than 53,000 people, including thousands of mental health professionals, had signed a petition stating Trump should be removed under the 25th Amendment because he is “too mentally ill to competently serve.” (Of note: Gartner is the author of In Search of Bill Clinton: A Psychological Biography.)

One politician is also not mincing words about Trump. And he’s a doctor. Virginia Democratic gubernatorial nominee Ralph Northam, a pediatric neurologist, at campaign events and in TV ads routinely calls Trump a “narcissistic maniac.”

“We want to be medically correct,” he recently quipped in a radio interview, according to an article in the Washington Post.

The STAT Analysis

Now, back to the STAT analysis of Trump’s speech patterns and communication style. Veteran science and medical journalist Sharon Begley and her colleagues gathered decades of Trump’s old unscripted on-air interviews and compared them to interviews and unscripted speeches and media Q&A sessions since his inauguration. They then asked experts in neuro-linguistics and cognitive scientists, as well as psychologists and psychiatrists, to carefully compare the clips and samples.

“The differences are striking and unmistakable,” Begley writes. The experts she tapped, from both political parties, agreed there was marked deterioration.

In interviews, even lengthy ones, from the 1980s and 1990s, Begley says Trump more often than not “spoke articulately, used sophisticated vocabulary, inserted dependent clauses into his sentences without losing his train of thought, and strung together sentences into a polished paragraph, which — and this is no mean feat — would have scanned just fine in print.”

By comparison, Trump’s speech in recent interviews is fragmented, even incoherent or disoriented at times, and uses much simpler words. In addition, he frequently repeats the same point, words or phrases and routinely strays into tangential points or unrelated topics.

Begley cites several examples, including this one from an interview with the Associated Press in April 2017:

“People want the border wall. My base definitely wants the border wall, my base really wants it — you’ve been to many of the rallies. OK, the thing they want more than anything is the wall. My base, which is a big base; I think my base is 45 percent. You know, it’s funny. The Democrats, they have a big advantage in the Electoral College. Big, big, big advantage. … The Electoral College is very difficult for a Republican to win, and I will tell you, the people want to see it. They want to see the wall.”

We have all noticed this. Some of us are bothered by it, others not so much. What Begley then brings to the table is a solid discussion of the possible causes of this particular Trump impairment, if indeed it is one. To her credit, she doesn’t speculate on whether this impairment is linked to Trump’s overall mental health, or other possible diagnoses.

Her experts—some clearly with the Goldwater Rule in mind—agreed that the changes in Trump’s speech patterns and language likely reflect cognitive decline. But they differed on the key point of whether that decline is due to “normal aging” or something more serious, even the beginnings of dementia or other neurodegenerative disease.   Some also noted that linguistic decline is commonly triggered by stress, anxiety, frustration, anger, or just plain fatigue and lack of sleep.

As I was writing this piece I happened upon a Q&A interview in TIME magazine with Sir Harold Evans (June 12, 2017 issue, page 60).   An esteemed editor and writer for decades, Evans has written a new book titled Do I Make Myself Clear.   https://en.wikipedia.org/wiki/Harold_Evans

The interview has this interesting exchange (edited slightly for length):

Q: Which presidents have been the least clear in their writing, and where does Donald Trump rank?

A: Donald Trump can actually be very clear. But the thought is zero, virtually.   The real problem with him not the clarity of language.

Q: You talk about the seduction of Trump’s “insistent certainty”….

A: Exactly, It’s very seductive…..Trump has an ability to be clear when he wants to be and is aware surely of the immortality of falsehoods. “We’re going to stop immigration” We’re going to have a wall.”

Evans is not the first to suggest that Trump’s simplistic rhetoric and repetitive speech is quite intentional.   That brings to mind H.L. Mencken’s quip: “No one ever went broke underestimating the intelligence of the American public. Nor has anyone ever lost public office thereby.”

Summing up

The Goldwater Rule makes all kinds of sense—morally, ethically, and legally. But we are in uncharted waters with President Trump on so many levels. At the very least, the mental health community, ethicists, philosophers, media professionals, and legal scholars should engage in a wider discussion of the points raised by the Duty to Warn folks.

At the same time, a serious public debate seems warranted about (a) whether candidates for president should receive a more formal vetting as to their health, including mental health, and (b) whether an age cut-off should be imposed for the presidency.

Yes, I know, both those suggestions may appear shocking, even laughable. But we’ve had two presidents in the past 50 years—Nixon and now Trump—whose mental health (or character, forged in part by possibly unsound mental health, in the case of Nixon) has been called into serious question.

And we’ve had one president—Reagan—who was very likely cognitively impaired in his final years in office.

Research is clear on cognitive decline with age. We may be wiser at 70 or 75 but none of us are as sharp, mentally agile or energetic at that age as we are at 50 or 60. And, recent studies suggest, for a growing number of seniors that decline lies somewhere between the minor deterioration associated with “normal aging” and the more-serious decline of dementia.

Neurologists call this mild cognitive impairment, or MCI. Online sources define MCI as “problems with memory, language, thinking and judgment that are greater than normal age-related changes.”

Of course, none of this means that seniors—with or without MCI—can’t be productive members of society, or continue working. Maybe just not as President of the United States.

Both areas—mental health status and age—together and apart, are tough and fraught subjects. I wouldn’t even hazard a guess as to what public opinion polls would reveal on these subjects, or where a robust public debate would end up.

In fact, it’s quite feasible we’d end up with this tacit or default approach: there’ll always be a risk we’ll get mental and character-challenged bad apples as presidents (or members of Congress or governors) because there’s no way to prevent that in an open democracy like ours, and/or because we think such bad apples reflect society as much as good apples do.

For now, I’m just saying we ought to be having the discussion.

[Addendum: STAT also published a “reporter’s notebook piece by Sharon Begley on May 25 about how her piece on Trump came about.


Overdiagnosing Trump

Overdiagnosing Trump

When I first read about neurosyphilis in medical school, I became convinced that Mrs. Thatcher, who I detested intensely because it was fashionable detesting her, had General Paralysis of the Insane. The condition, marked by episodic bouts of temporary insanity, which indicated that the spirochetes were feasting on expensive real estate in the brain, seemed a plausible explanation why she had introduced the retarded Poll Tax.

A little bit of medical knowledge can lead to tomfoolery by the juvenile. I began diagnosing the powerful with medical conditions. I thought the former leader of the Labour Party, Neil Kinnock, who had an odd affect, was both hyperthyroid and hypothyroid – when he spoke he looked myxedematous and when was silent he looked like he had Grave’s Disease. The tacit, but not silent enough, Prince Charles spoke in a tone that seemed a cry for help for acutely thrombosed piles. I also realized that the Prince of Wales –  who is the most compelling evidence for the magical kingdom of elves – wasn’t reducible to a single diagnostic code. Diagnosing Hillary was relatively straightforward. After reading a third of her memoirs, which permanently cured my insomnia, I felt someone had inadvertently given her dextrose without thiamine.

There’s something delightfully empowering, and annoyingly juvenile, about diagnosing the famous with medical conditions. It is also strangely pedagogic. I’ll never forget the symptoms of syphilis, not because I’ve seen patients with them (nor because I have them), but because I’ve templated these symptoms on people who almost certainly don’t suffer from syphilis.

Thus, it’s no surprise that many are keen to diagnose Mr. Trump with a medical condition – my preferred diagnosis would be Kluver Bucy syndrome, but that would expose my juvenile intent. Far removed from childish diagnostic name calling, many serious people seriously believe that Mr. Trump has a neurocognitive condition which is seriously impairing his judgment and decision making.

Analyzing Trump’s speech pattern, experts have questioned what his decline of verbal fluency indicates. Possibly mild cognitive impairment (MCI)? Possibly the first signal of dementia? Possibly normal aging?  STAT News outlines the evidence. STAT has gallantly fought overdiagnosis and overmedicalization. MCI is the mother of overdiagnosed conditions – it’s more capacious than the Pacific Ocean – technically anyone can have it on a bad day, or after opening the 2nd bottle of wine. I hope STAT will do an expose of physician-industry relationships which have lead to overdiagnosis of MCI.

That even Mr. Findlay, a serious journalist with hardly the juvenile disposition that I possess in abundance, has fallen for the medicalization of Trump, begs the question – what gives?

There is, of course, a historical curiosity how pain and disease influence a person’s worldview. Thoreau once said that nothing drives a revolution more forcefully than a man with unfulfilled bowels. Many historians believe that Karl Marx’s hidradenitis suppurativa – painful inflammation of the sweat glands – made him angry about capitalism. Which means that the Bolshevik revolution was conceived, not by the events of Bloody Sunday, but under the smelly arm pits of an unkept Nineteenth Century Londoner.

The analysis of Trump is not historical but in the present and Mr. Trump is certainly no Karl Marx. Even so, there’s little precedence for medicalizing POTUS because of their policies. When Bush Jr. alluded that he spoke to God, no one tried diagnosing him with temporal lobe epilepsy. Even Bill Clinton, the man who once put a preposition on trial, escaped the wrath of DSM.

Why, then, are people so obsessed with giving Mr. Trump an ICD-10 or DSM-5 code?

Many readers will say that conflating Mr. Trump with the flawed, yet genuine leaders that I’ve mentioned is moral relativism. And I’d agree. The Iron Lady was no follower. Bill had several leadership moments, even when he wasn’t alone. Even Bush rose to the occasion – he rose to other occasions when the world might have been better off if he stayed sitting. Even Hillary would, arguably, have been more of a leader than the comically bumbling Trump.

The comically bumbling Trump who could, in a parallel universe, be auditioning for the next Austin Powers, and who seems not to be enjoying his presidency terribly, is the heart of the problem. There’s an incessant attempt at delegitimizing Trump. It was never enough saying “Trump is a joke.” And “Trump is evil” no longer suffices – even though the look on the Pope’s face, when he stood next to Trump resembled the look on Gregory Peck’s face when he saw that his adopted son, Damian, had “666” written on his scalp.



The medicalization of Trump is part of an emerging phenomenon, thus far innominate, which I’ll call “rational delegitimization,” in which scholars, incredulous of Trump’s behavior, seek biological substrates to delegitimize him. It is an extension of the very legitimate and necessary legitimization of variation we like when we find that the variation has a biological explanation. But this is a very slippery slope.

Researchers have tried to show that conservatives and progressives have different brain structures – apparently, progressives have a larger anterior cingulate gyrus and conservatives have a larger amygdala. I’ll let you guess the abundance of which structure is more desirable.

This type of research can ossify polarization permanently. Already, many believe that their moral high ground shuts debate with opposing worldviews. The last thing you want is for people to believe they have not just the moral, but biological high ground. Tying biology with morality breeds a new class of biological theocrats who make the Ayatollah a libertarian, free love-seeking, cannabis smoker in comparison. Combining tribalism, functional MRI and p <0.05 can spit out BS of a scale one struggles to comprehend.

A colleague of mine hasn’t been herself for a few months. I often put academic blues to the promotion cycle, but she has already made Associate Professor. So, I inquired. With eyes swelling with genuine tears she told me that she was very upset that many “normal” (the air quotes are hers, not mine) people voted Trump.

This gets to the crux of the issue, which is our inability to grasp the broad coastline of what is normal (note absence of air quotes). I said to my colleague, as diplomatically as I could, that she needs to expand her definition of normal – actually, I said she needs to get out more.

It is normal for normal people to disagree about the least worst presidential candidate in 2016. It is normal for normal people to ask of those who disagree with them “how could you be so stupid?” It is normal, though worrying, to shrink the real estate of legitimacy by safe spaces. This is called “having an opinion,” which is what sets us apart from other mammals, notably the duck-billed platypus and, mercifully, the sheep.

The presence or absence of a disease, organic or psychiatric, is conditionally independent of whether someone agrees or disagree with your worldview. To seek biological substrates to delegitimize opposing views risks delegitimizing the already precarious medical sciences. Ideally, normal people politely agree to disagree, but even when they don’t, they’re still normal.

Mr. Trump has a condition which is very prevalent in our society and under diagnosed in 1600 Pennsylvania Avenue. It’s called “ineptness.” It doesn’t have an ICD code, yet. Which is just as well, because if ineptness became a preexisting condition all insurance markets will truly enter an inept death spiral.

History will tell us if Mr. Trump had an unprecedented or, as he put it, “unpresidented” level of ineptness. But even if he does that doesn’t make him diseased. Normal can be aesthetically pleasing, or distasteful. And, for all his faults, and there surely are many, and notwithstanding #covfefe, Trump is probably normal.

About the author

Saurabh Jha is a contributing editor to THCB. He has an abnormally large anterior cingulate gyrus and amygdala