On this year-end episode of The Dose, host Shanoor Seervai talks to David Blumenthal, M.D. about the big health care events of 2018, and what they mean for next year.
They discuss how executive action may impact the working of the Affordable Care Act, decisive action that some states are taking on Medicaid, and how large corporations made deeper inroads into health care.
SHANOOR SEERVAI: Hey there podcast listeners, this is Shanoor. Before we get started with today’s show, I have a request. The Dose is the Commonwealth Fund’s brand-new health policy podcast, and we have spent a ton of time working on it in 2018. If you are learning something new from the show, or if you have ideas for future episodes, please get in touch with us. Our email address is [email protected]. And if you want other people to find us, tell your friends about the podcast or leave us a review. Okay, here’s the show.
It’s the end of the year so everyone is either looking back at everything that happened in 2018 or making resolutions for 2019. So on today’s episode of The Dose we are going to do just that. We are going to talk about the big health care events of this past year and what they mean for next year. I am very excited to introduce our guest, David Blumenthal. David is president of the Commonwealth Fund — full disclosure: he’s also my boss — but that is not why I invited him today. David has engaged with every aspect of the U.S. health care system you can imagine. He has worked as a physician, a professor, a health system leader, as the National Coordinator for Health IT in the Obama administration, and today he is going to help us make sense of everything that has happened in health care this past year.
David, thanks for joining me.
DAVID BLUMENTHAL: My pleasure.
Open Enrollment 2019
SHANOOR SEERVAI: Let’s start by talking about open enrollment, the period in which people can buy health insurance on a marketplace. Now the federal marketplace, or HealthCare.gov, closes on December 15th. In some states, the markets are open for another few weeks, but we are recording this episode just hours before the federal marketplace is closed. We don’t know the final number of people who bought health coverage on the market this year, but we do know that enrollment is down, about 88 percent of what it was at this time last year. Why do you think enrollment is down this year?
DAVID BLUMENTHAL: Well, we don’t really know, and we may not know for a while after enrollment closes, and we may not even find that in the end enrollment is down very much because there is always a late surge. And people who get automatically reenrolled, that is don’t choose a new plan but just stay with their old plan, are not counted in the enrollment figures. But having said that, there could be some important reasons why enrollment would be down. One is that the administration has reduced funding for outreach, and assistance in enrolling. And we know that outreach and assistance do matter for getting people to choose and pay for health care. Another is that last year the Congress with the administration’s support ended the mandate effectively that people have insurance by repealing the penalty for failing to buy insurance. There may be other more benign explanations. So we are now in a full employment economy. Most people who want work can find it. So people who used to get enrolled — who used to enroll in the Obama marketplaces — may now be insured through the workplace, and that number — those data will become apparent after open enrollment ends.
SHANOOR SEERVAI: Okay, that makes sense. Can you tell me about the health plans that have been offered on the market this year, the so-called short-term health plans?
DAVID BLUMENTHAL: These are plans that last less than a year and do not have to meet the regulatory requirements of qualified health plans offered on the Obamacare marketplaces. That means that they don’t have to necessarily cover all of the things that the qualified health plans cover. They may not have to cover drugs, they may not have to cover mental health.
SHANOOR SEERVAI: And do you think that these plans might have had an impact on enrollment?
DAVID BLUMENTHAL: I think it is a little early to tell.
SHANOOR SEERVAI: Okay, so a lot of these factors you have described are executive actions that were taken at the federal level that have had an impact on the way Obamacare works. Can you tell me why the federal government has taken this approach?
DAVID BLUMENTHAL: Well the federal government, the executive branch, and the currently sitting Congress, are opposed to the Affordable Care Act, also known as Obamacare. They tried to repeal it, and failed. So the only option that they have right now, especially after the midterm elections in which the Democrats took back the House, the only option they have is to try to reduce its effectiveness through any administrative action that they can take that doesn’t require a new law.
State Action on Medicaid
SHANOOR SEERVAI: And they are also allowing states to take more action. So what are some of the things that states are doing?
DAVID BLUMENTHAL: Some of them are counteracting the administration’s rules. Some states are forbidding the marketing of short-term health plans, which we were just discussing. Some states though have sought and received permission under the Medicaid program to impose requirements for work or other kinds of voluntary or compensated or uncompensated activities as a condition for getting Medicaid. States that tend to be conservative tend to be taking action to — consistent with the administration’s desire to undermine the Affordable Care Act. States that are supportive like California, New York, Massachusetts, New Jersey, are generally taking actions to prevent the impact of the administration’s new rules.
SHANOOR SEERVAI: So let’s go back to what you said about work requirements. How many states are looking at imposing work requirements, so expecting people to show that they are employed, have some other voluntary occupation in order for them to get Medicaid?
DAVID BLUMENTHAL: So five have received approval, and ten are waiting for approval.
SHANOOR SEERVAI: And do you think that other states are also going to try to apply for similar waivers?
DAVID BLUMENTHAL: I would expect that some, especially those that have Republican governors and legislatures, will do so.
SHANOOR SEERVAI: What is this going to mean for coverage in those states?
DAVID BLUMENTHAL: It will likely reduce the numbers of people who are covered. The proportion of the population, the Medicaid population that is actually legitimately subject to work requirements is about 2 percent, but many other people get confused about the work requirements. And some who are not subject or wouldn’t be required to work are still required to report whether they are working. And if they fail to report they can lose Medicaid even though they are not required to work. Arkansas has put in place work requirements and has been implementing them, it is the only one for which we have some experience, and so far about 4,000 plus Medicaid enrollees have lost coverage each of the three months that have been monitored, so somewhat over 12,000 up to now.
SHANOOR SEERVAI: Wow, so if we do see more states applying for waivers to impose work requirements, then we will probably see fewer people covered under Medicaid in 2019.
DAVID BLUMENTHAL: That is true, and I think that is the primary intent.
SHANOOR SEERVAI: Now at the same time as we are seeing possibly that coverage could go down under Medicaid, we also saw, and this was quite startling, we saw three states this year pass ballot initiatives led by citizens saying that they wanted to expand Medicaid: Idaho, Nebraska, and Utah. This was after Maine also voted to expand Medicaid through ballot initiative in 2017. What do you think this will mean for coverage?
DAVID BLUMENTHAL: It creates the opportunity to expand coverage. Those laws or those referenda need to be implemented. There may be some cases where one or more parts of the government tries to impede the expansion. Maine is a great example of a case where a referendum supported expansion, but the governor refused to implement it despite being ordered to by the court, by the Maine court. He is now going to be leaving office, replaced by someone who is supportive of expansion, so it is quite likely that expansion will occur.
Prescription Drug Prices
SHANOOR SEERVAI: Let’s shift gears, then, and talk about another issue which has led to a lot of public outrage, even before 2018, which is how much prescription drugs cost in the U.S. So you and I did some research on this earlier in the year on why prescription drugs are so much more expensive in the U.S. than other high-income countries.
DAVID BLUMENTHAL: We did. And there is one critical factor that is working in other countries that doesn’t work here, and that is the ability of purchasers — and in most cases outside of the United States those purchasers are governments or groups of insurers — the ability of purchasers to band together and negotiate collectively as a very large purchasing unit for drugs with manufacturers. In the United States we don’t have that authority. There are also in other countries mechanisms for evaluating the value of drugs — whether there is value in buying it, and certainly value in the additional price, if any is being charged. And then, finally, once those entities, both government and the evaluation process, make a decision, the public goes along with it. There may be individuals or groups that protest it, there may be ways of addressing their concerns, but they don’t have the kind of porous opposition that we have in our government that would likely emerge if we ever put something like that in place.
SHANOOR SEERVAI: And where would this opposition be coming from?
DAVID BLUMENTHAL: Certainly it would start with pharma, the pharmaceutical industry. But it — the pharmaceutical industry has allies in other industries and in consumer groups that it heavily subsidizes.
SHANOOR SEERVAI: So we have seen some announcements from the Trump administration that they are going to try to bring prices down, right?
DAVID BLUMENTHAL: We have seen a lot of talk. We have seen jawboning by the president who has requested strongly that drug companies lower their prices, or not increase their prices. This has resulted in some concessions from drug companies. The history of that kind of jawboning is very unpromising in the United States, the history is generally in response to the president’s demand that companies make some face-saving concessions, but then as soon as the pressure is off they start raising prices again.
SHANOOR SEERVAI: So I guess it is fair to say then we can’t really expect drug prices to go down then in 2019.
DAVID BLUMENTHAL: It would be a shock if they did.
Health Care Mergers
SHANOOR SEERVAI: All right, then let’s move on. Now pharma isn’t the only part of corporate America that is really involved in our health system, and especially this past year we have seen a lot of activity from the private sector trying to get more involved in health care. So tell me some of the standout examples.
DAVID BLUMENTHAL: The one that has gotten the most recent attention has been a merger just approved by the Department of Justice between the insurance company, Aetna, and the pharmaceutical retailer and general retailer, CVS. These are very different entities. But it is an example of the kinds of mergers that we have been seeing. There have been other proposed and actual mergers often between these two general types of entities: one, an entity that sells insurance and pays the bills, and another entity that provides health care.
SHANOOR SEERVAI: And do you think we are going to see even more big health care mergers going into next year?
DAVID BLUMENTHAL: I do. There tends to be a kind of viral quality to these mergers. People — the organizations that aren’t merging get anxious that they are missing something. There is also a feeling that our current health care system is unsustainable, out of control, dysfunctional, and making everyone unhappy.
SHANOOR SEERVAI: And the sense that the system is dysfunctional actually made three really prominent private sector actors decide that they were going to form an independent health care company for their U.S. employees.
DAVID BLUMENTHAL: So the new entity goes unofficially by the term ABJ. A for Amazon, B for Berkshire Hathaway, the huge owner of many businesses based in Nebraska run by Warren Buffet. And the third is JP Morgan Chase, which is a huge financial investment entity, and banker and broker. As far as I can tell, and I think it is premature to guess their strategy, but their out-of-the-box strategy that they have been discussing publicly is to use their size and capital and capacity to be better purchasers of health care. And they have hired a brilliant individual, Atul Gawande, New Yorker writer and surgeon and innovator, to be the CEO of the company. So this is a very interesting, intriguing new development. Whether it will make a difference remains to be seen.
SHANOOR SEERVAI: Well, when you speak of Atul Gawande it makes me think of his recent article in the New Yorker about doctors and their relationship with electronic health records. And so we also saw another private actor, a tech company, get involved in the way that people can access their electronic health records. Can you talk a little bit more about Apple’s big announcement in 2018?
DAVID BLUMENTHAL: This is a really interesting development, and has an important and complicated history. Right now, or before this recent announcement of Apple’s involvement with electronic health records, it was often very hard for a patient to get access to or control over their digital health information. Apple sees an opportunity to make people’s electronic records available through its devices. And they have agreed with now over 100 provider organizations to download those records from the providers with patient permission to the patient’s iPhone, iPad, Mac, whatever. That in itself is not going to be a big deal, it is a big deal because of what it makes possible. The actual holding of that information is not going to be very useful to most people: it is too complicated, the information is hard to interpret. But Apple has been hiring doctors, and so has Amazon by the way, and I think what they are going to do is develop a suite of software that basically explains, simply explains to people what is in their record. And I see this therefore as a major, major move toward patient empowerment.
SHANOOR SEERVAI: So sort of like almost a translation service has been made possible . . .
DAVID BLUMENTHAL: It is a translation service but also a service service, you know? When you sprain your knee or your sprain your ankle at a softball game the question is, do I need to go to an emergency room, when do I need to go to an emergency room, how do I tell if it is broken, can I bear weight, should I ice it, what is the nearest emergency room, what is the wait at that emergency room, is it in network for my insurance or not? All of these very practical questions that people have to deal with, no reason why Apple couldn’t provide answers to a lot of those questions, especially for a young healthy person who has not got many risk factors for other complications.
SHANOOR SEERVAI: So before we sign off, is there anything else that we should be watching for going into 2019?
DAVID BLUMENTHAL: There is one other thing. 2019 will be the liftoff year for 2020 elections, and it is during 2019 that candidates will — other than the current president who will be the almost-certain Republican candidate — but Democratic candidates will be forming exploratory commissions, beginning to organize, declaring, and then when they declare, announcing what they stand for. And they will have to take positions on health care. In the summer/fall of 2019 as we get closer to the primaries that will happen very soon after December 31st, 2019, you should expect a lot of discussion of single-payer systems, Medicare for all, the improvement in the Affordable Care Act, preexisting conditions, improvements dealing with drug prices, a lot of things that consumers are likely to care about. So we just got through the midterms, people took a deep breath, but they don’t have long to relax. Politics will be back with a vengeance in six to eight months.
SHANOOR SEERVAI: All right, well that is a wrap. Thanks for being on the show, David, and for helping us make sense of this tumultuous year.
DAVID BLUMENTHAL: Thanks.
SHANOOR SEERVAI: Listeners, as always, thanks for joining us, and we hope you will be back next year. We have some great episodes in store for you, including one about the experiences of people living with disabilities, and another about women’s health in the United States. See you then.
Guest Bio: David Blumenthal