Medicare Is Unaffordable

 "If anyone here tries to cut ... Medicare ... I will stop you." That was President Biden's promise to a joint session of Congress during last week's State of the Union address.

Some may find such tough talk reassuring. But Biden's refusal to even acknowledge Medicare's dire fiscal situation — much less chart a course for the program's future — isn't encouraging.

Whoever takes the White House this fall will need a plan for rescuing the health entitlement for seniors from financial calamity. What this moment demands are practical solutions to the problems facing Medicare — of which there is no shortage.

Medicare already accounts for 12% of all federal spending — nearly as much as national defense. If current trends continue, the program's Part A hospital insurance trust fund will run out of money in just seven years.

Absent significant reform, annual spending on Medicare will more than double over the next decade from about $1 trillion in 2023 to more than $2.1 trillion by 2034, according to the latest projections from the Congressional Budget Office.

In response to this unsustainable cost growth, the most obvious reform available to lawmakers is means-testing.

That all Americans — even multi-millionaires — are eligible for government-financed health insurance at the age of 65 has never made much sense. Asking wealthier seniors to pay more for the program is only reasonable.

The same can be said for raising the eligibility age to account for the fact that Americans are living longer today than they did in 1965, when the entitlement was created.

But there's also a range of more modest reforms which, together, could add up to substantial savings for the program. A recent paper from the Paragon Health Institute's Joe Albanese advances a number of policies aimed at improving Medicare Advantage — wherein private insurers under contract with Medicare deliver benefits to seniors.

Insurers must compete for seniors' business. So they have a strong incentive to keep costs down and quality up. Last year, the average private Medicare Advantage bid for providing Medicare Part A and Part B benefits was nearly 17% lower than what traditional, publicly administered fee-for-service Medicare would have been expected to spend.

But there is still room for further savings through the program. Albanese recommends capping the federal government's base payment rate for Advantage plans at 100% of the cost of traditional Medicare coverage — except in areas with relatively low Medicare Advantage enrollment.

He also suggests ending Medicare Advantage's Quality Bonus Program, which rewards plans financially for performing well across a number of metrics, including health outcomes and customer experience. It's far from clear whether the program has had any real effect on the quality of coverage. And since traditional Medicare isn't subject to comparable quality measures, the bonus program doesn't allow patients to compare Advantage plans to the federally administered alternative.

Medicare Advantage's system of "risk coding" is also ripe for an update. The process is supposed to boost federal payments to Advantage plans for especially sick patients.

In practice, however, it encourages insurers to record a higher number of diagnoses for each patient, in order to extract more money from the government — whether that money is needed or not. A more accurate payment-adjustment system could allow Medicare to spend less without undermining quality or shifting costs onto patients.

All told, the reform package outlined in the Paragon paper could reduce the cost of Medicare Advantage by $250 billion over 10 years. It would achieve this without disrupting access to care for the millions of Americans who rely on Medicare — and all while strengthening a program that brings much-needed choice and competition to the federal healthcare entitlement for seniors.

These are the sorts of targeted policy fixes that can pull Medicare back from the precipice. And yet, you won't hear such suggestions from Democrats in Congress, or the president for that matter.

For all their talk about "protecting" Medicare, these public officials seem far too willing to watch a perfect storm of actuarial trends and looming insolvency lay waste to Medicare as we know it.

Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). 

https://www.newsmax.com/sallypipes/medicare/2024/03/14/id/1157297/

Private Equity Is the Partner Health Care Needs

 Anyone who's gone to the emergency room or had to fill a prescription for medication knows firsthand that America's healthcare system is one of the most complicated in the world. Many patients may not know it, but private equity investments are filling major gaps in the U.S. healthcare system and improving outcomes and experiences for millions of patients nationwide.

A recent report from the American Investment Council and PitchBook showcases how the industry serves as a key source of capital and management expertise that strengthens hospital systems, outpatient clinics, pharmaceutical manufacturers, medical device innovation, and other life-saving initiatives that improve patients’ lives and quality of care.

Increasing health care access for rural Americans

Americans living in rural and underserved communities face extensive barriers to accessing critical and, at times, lifesaving health care services. More than 130 rural hospitals have closed nationwide from 2010 to 2021. In 2023, 65 percent of rural areas had a shortage of primary care physicians.

Private equity has stepped up in helping to fill this gap, investing $15 billion in more than 250 urgent care clinics as of 2020. These urgent care centers are a critical development for rural communities, allowing patients to travel shorter distances to get the care they need while not overwhelming the limited number of hospitals in their areas.

MedExpress, a chain of Appalachian urgent care centers that has been heavily supported by private equity, was able to open new locations throughout a rural region of West Virginia where hospital closures have become common. According to a study from West Virginia University, new MedExpress clinics were “associated with fewer short-term admissions to hospitals, fewer inpatient days, fewer emergency room visits, and a reduction in outpatient visits at hospitals.”

Funding innovative and lifesaving treatments

Patients nationwide suffer from nearly 7,000 rare diseases, yet only 5 percent of those have an available treatment. That is because it takes 10-15 years on average and more than $2.6 billion to develop and bring a new medicine to market. Only 12 percent of the molecules that enter clinical trials ever receive Food and Drug Administration approval.

Private equity is also financing promising drug candidates that need time and funding to get into patients’ hands. These investments have enabled the development of treatments for several life-threatening conditions, such as Leukemia, Alzheimer’s, heart disease, HIV, and breast cancer, and for several debilitating conditions, including rheumatoid arthritis, diabetes, and ulcerative colitis.

Late last year, Massachusetts-based Anthos Therapeutics announced their new drug demonstrated a potential to significantly reduce the risk of blood clots, providing a safer alternative for the 12.1 million Americans expected to suffer from atrial fibrillation by 2030. The drug, abelacimab, cut the overall risk of bleeding by 67 percent when compared to the current standard of care used by patients. The Food and Drug Administration has said it would fast-track its review of the treatment after overwhelming success in the latest round of testing.

Giving doctors and nurses the resources to treat patients

Most doctors and nurses enter the medical profession because they want to care for patients. But in 2023, the average physician spent 15 hours per week on paperwork alone. Private equity-backed doctors and nurses spend more time with their patients according to research from Johns Hopkins University, Harvard Medical School, and the University of Oregon. Providers backed by private equity can also count on support in administrative tasks like burdensome paperwork and insurance claims negotiations.

Private equity-backed hospitals notably employ a higher ratio of doctors, nurses, and pharmacists compared to their non-private equity-backed counterparts, according to research from Indiana and Georgetown Universities. The same study found that wages increase significantly at hospitals supported by private equity and that, “PE-acquired hospitals have better survival prospects” for patients.

Private equity plays a critical role supporting quality, affordable health care in the United States. Many private equity firms specialize in health care and have hired scientists who are experts in researching and developing lifesaving cures and medical doctors who have run practices of their own.

The problems in the American healthcare system are complex and the solutions are not amenable to a quick fix. While private equity has become a convenient boogeyman, targeted investments from private equity into the American healthcare system will give Americans better access to quality care and innovative treatments and cures.

Drew Maloney is the President and CEO of The American Investment Council, an advocacy and resource organization for the private investment industry. Prior to joining AIC, Maloney served as the Assistant Secretary of the Treasury for Legislative Affairs. Maloney has also held senior positions for several congressmen including members of the House Leadership.

https://www.realclearhealth.com/blog/2024/03/15/private_equity_is_the_partner_health_care_needs_1018633.html

Drug Price Shenanigans

 President Biden’s State of the Union address highlighted a long list of “health care” proposals he’s planning in a second term that will exacerbate the very problems he purports to solve.

For example, he wants to increase to 50 a year—from the current cap of 20—the number of prescription drugs the federal government can target with its take-it-or-suffer-the-consequences price controls.  Either the drug companies play along and accept the government’s price or they face a confiscatory excise tax that eventually reaches 1,900% of a drug’s daily revenues.

The impact on patients will be significant as investment dries up and pharmaceutical companies pull promising drugs from the research pipeline.  The president’s Cancer Moonshot already is becoming a casualty.

Biden’s sound-bite proposals obscure the incredible complexity of the distortions that government policies create. Ditto with his plan to extend Medicare’s $2,000 annual cap on out-of-pocket drug costs to people with private insurance. Premiums will soar.

State and local governments are expressing their outrage over high drug prices by embarking on a shakedown of the pharmaceutical industry with a rash of lawsuits against insulin manufacturers and Pharmacy Benefit Managers (PBMs).  They say they conspired to drive up the cost of insulin. Arlington County, Virginia, for example, produced a dramatic graphic showing a 1,527% increase in insulin prices over the last 20 years.

Obscure drug pricing is a lush buffet, ripe for middlemen to take a generous helping, and state and local governments are regular diners.

As large employers, these governments participate in a system of kickbacks that have filled their coffers for years.  They sign contracts with private companies to manage the prescription drug part of their employee health plans and get rebates—aka kickbacks—on preferred drugs.

The PBMs put high list prices on drugs so they can give big rebates to these government customers.

Enter the new $35 cap on out-of-pocket costs for insulin that are squeezing out the rebates. This new settlement money could fill the spending appetite created by the loss of billions of dollars of tobacco and opioid settlement money.

But here’s one problem:  The very governments that signed these contracts participated in the scheme as PBMs inflate the list prices in their contracts so they could pocket the rebates. 

And there is a problem of facts.  Sanofi’s sales data demonstrates that net prices for its insulin have actually fallen 58% between 2012 and 2022.

Dan Leonard, a guru in this space, explains in a piece for Law360, “Suits against insulin pricing are driven by rebate addiction.” (It’s behind a paywall, but I can send you a summary if you reply.)

“As recently as two weeks ago on Capitol Hill, drug company CEOs testified that up to 90% of their list prices were rebated back to the middlemen. That money in the middle is going somewhere, and it's not to the patients who have seen their out-of-pocket costs rise during the same time frame,” Leonard writes.

One drugmaker called the PBM’s bluff. “In 2021, new ground was broken with the approval of the first interchangeable biosimilar insulin. Instead of launching the new insulin with a dramatic price reduction, the manufacturer, Viatris Inc., opted to launch two versions of the same medicine,” he writes. 

“The first unbranded version was priced at 65% less than the competitor, while the second branded version was launched at only 5% less, but with far greater rebates.

“Question: Which product was carried on more PBM formularies and therefore available to

more patients?

“Answer: The high-price, high-rebate version.”

Patients should be outraged at these innumerable behind-the-scenes shenanigans. Sadly for them, their co-pay is often based upon the high price that makes the headlines.

There is little or no correlation between the published or list price of a medicine and the actual price paid by the employer or insurer.

And this vast system of rebates is what the local government were participating in when they contracted with the companies they are now suing.

Penalizing drugmakers means they will be less likely to invest hundreds of millions of dollars and decades into research and development, leading to fewer treatments,” writes Joel White of the Council for Affordable Health Coverage writes in RealClearHealth. “That means people will be sicker, and costs will go up, not down.”

Former White House Economist Tomas Philipson estimates President Biden’s price control scheme will mean 135 fewer drugs over the life cycle of drug development, resulting in 330 million lost life years in the U.S. from patients who could have been treated or cured from drugs that were never developed.  Investors won’t fund research if there is little chance the company can receive a return.  And where does the money the government saves from getting cheaper drugs go?  To funding electric cars and other green projects.

We need to pull back the curtain and expose this if we are going to get to real solutions.  It starts with transparency about this harmful process.

Grace-Marie Turner runs the Galen Institute, a non-profit pro-patient research organization.  www.galen.org @gracemarietweet

https://www.realclearhealth.com/blog/2024/03/15/drug_price_shenanigans_1018718.html

Rubio: We must stop China from using TikTok against America

 Most Americans have never heard of ByteDance, but they know its product: The technology company owns TikTok and curates the app’s video feeds for 170 million American users.

But ByteDance isn’t a normal company. It’s controlled by the Chinese Communist Party, by law and corporate structure.

China’s totalitarian regime passed a sweeping national security law in 2017 that gave it the authority to compel any action by any Chinese corporation, ByteDance included.

It also owns a “golden share” of ByteDance’s stock, meaning the former government official on the board can outvote every other board member. Beijing’s control over this company is absolute.

And while TikTok may be headquartered in the United States, ByteDance engineers in China own and operate the app’s algorithm.

They use artificial intelligence to profile TikTok users’ preferences, beliefs, behavior, and values. In a way, ByteDance gets to know TikTok users better than they know themselves.

So if Chinese officials tell the company to use the app against its users, ByteDance has the power to do it — and no choice but to comply.

Does that sound farfetched? Think again. Over the past few years, ByteDance has reportedly spied on American journalists, boosted Democratic candidates in American elections, promoted Osama bin Laden’s letter justifying 9/11, skewed political opinion in favor of Hamas, and accessed Americans’ driver’s licenses, physical addresses, device IDs, tax information and Social Security numbers — all through its ownership of TikTok.

We would never allow the Chinese Communist Party to own and ultimately control The New York Post or Fox News.

So why should we tolerate Beijing’s ownership and control over TikTok, from which a third of American adults under 30 allegedly get their news?

The answer is simple: We shouldn’t.

This isn’t the first time the issue has come up on Capitol Hill. I raised concerns about where it could go back in 2019 when it became apparent the Chinese Communist Party could — and almost certainly would — weaponize TikTok against America.

A year and a half ago, Reps. Mike Gallagher (R-Wis.) and Raja Krishnamoorthi (D-Ill.) joined me to introduce the first bill to ban the app.

TikTok has since flooded Washington with well-connected lobbyists and poured millions of dollars into a self-protective political campaign.

But congressional opposition to the app’s China ties has only grown broader and stronger. It’s one of those rare occasions when common sense appears to be winning out over corporate arm-twisting.

The House of Representatives just voted overwhelmingly to approve legislation that would force TikTok and ByteDance to separate or else Tiktok would be banned.

Now the bill heads to the Senate, where Mark Warner (D-Va.) and I, the leaders of the Select Committee on Intelligence, are going to do everything we can to get it passed and signed into law.

I understand many Americans are concerned about this measure. Perhaps they see rumors online that this bill would give the government the power to ban American companies or curtail the right to free speech.

Those rumors are completely false. I want to be perfectly clear: The issue on the table is not how Americans are using TikTok but how ByteDance is using the app on Beijing’s behalf.

This bill would not stop people from doing everything they like to do on TikTok on a different app instead.

In fact, it wouldn’t stop TikTok from continuing to operate in the United States, provided it separates from ByteDance.

The only thing this bill would change is the ability of a foreign adversary to spy on and manipulate the American people.

That change is both necessary and urgent. Earlier this month, TikTok demonstrated its ability to interfere in our political process by sending tens of millions of users a push notification directing them: “Call your representative now” and protest the app’s separation from China.

Imagine if the Chinese Communist Party used similar tactics to tip the scales against Donald Trump in a second presidential term or blame the United States for COVID-19?

Allowing ByteDance to continue owning and operating TikTok is too dangerous. It would threaten our national independence and our personal liberty alike.

Every American lawmaker should support forcing the app to separate from Beijing. If we don’t stand up for our nation this time, when will we?

Marco Rubio represents Florida in the US Senate.

https://nypost.com/2024/03/14/opinion/sen-marco-rubio-we-must-stop-china-from-using-tiktok-against-america/

Judge allows East Palestine residents’ lawsuit against Norfolk Southern to proceed

 A class action suit accusing Norfolk Southern of negligence over the train derailment that released toxic chemicals in East Palestine, Ohio, last year can go forward, a federal judge determined Wednesday.

Judge Benita Yalonda Pearson rejected the railroad’s arguments that claims in the suit were protected by federal law regulating railroads, instead ruling that the case focuses on activity that is not covered by protections.

The suit represents about 500,000 people and businesses near the eastern Ohio town where nearly 40 railcars derailed last year, some of which contained toxic vinyl chloride. The railroad decided to use a controlled explosion to render the wreck safe, spreading the chemical into the air and local water supply.

In Senate testimony earlier this month, National Transportation Safety Board (NTSB) Chair Jennifer Homendy said the controlled explosion was unnecessary and alleged Norfolk Southern ignored onsite experts who said vinyl chloride release was unnecessary.

“It was stabilized well, well before the vent and burn. Many hours before,” Homendy said, referring to dangerous temperatures in railcars. “There was no justification to do a vent and burn”

Plaintiffs demand monetary damages for the contamination and repairs, as well as compensation for lost business and health risks. 

They claim the derailment was caused by lack of maintenance, causing a wheel bearing on one of the cars to overheat, light on fire and break, as well as institutional negligence.

Norfolk Southern has spent more than $1.1 billion in the cleanup process, including a home value reimbursement program and other community investments.

The railroad also faces other suits related to the derailment from the federal government, local governments and the company’s shareholders.

A federal judge in a separate case last week ruled that Norfolk Southern alone should be responsible for paying cleanup costs from the wreck. Environmental Protection Agency officials have estimated that the cleanup should be finished later this year.

https://thehill.com/regulation/court-battles/4531643-judge-east-palestine-residents-lawsuit-norfolk-sourthen-proceeds/

Abbott falls after Reckitt unit hit with $60 mln payout in baby formula case

 Shares of medical device maker Abbott Laboratories ABT.N fall 4.4% to $113.65

** Enfamil baby formula maker Reckitt Benckiser RKT.L has been ordered to pay $60 million to the mother of a premature baby who died of an intestinal disease after being fed the formula

** The verdict by an Illinois state court comes in the first trial out of hundreds of lawsuits claiming that various Enfamil and Abbott's Similac formulas caused the disease known as necrotizing enterocolitis (NEC)

** "After digging deeper into the Reckitt case, we don't think this ruling will result in the worst case scenario (for Abbott) that the initial headline read implies," J.P.Morgan analyst Robbie Marcus said in a note

** EvercoreISI analyst Vijay Kumar calls the Abbottstock move "egregious" suggesting the eventual settlement could be well under $250 mln

https://www.xm.com/research/markets/allNews/reuters/abbott-falls-after-reckitt-unit-hit-with-60-mln-payout-in-baby-formula-case-53791914

Health Insurers Split With US Over Relief After Cyberattack

 

• Insurers, health officials are expected to meet next week
• Companies fear push for payments will yield complications

Health insurers and US government officials are expected to meet next week to hash out differences over how to assist cash-strapped medical practices as a cyberattack last month continues to hold up billions of dollars in payments.

The Biden administration has been dialing up pressure on insurance companies broadly to advance payments to doctors and clinics who say the Feb. 21 hack of UnitedHealth Group Inc. subsidiary Change Healthcare has roiled their finances.

https://www.bloomberg.com/news/articles/2024-03-15/health-insurers-split-with-us-over-relief-after-change-healthcare-hack