Our Take: The year’s top 5 stories
Dec 17, 2018
It’s the time of year when people gear up for the holidays and the news cycle slows down. So, we’re taking a look back at 2018 with some perspective. Here are our top five stories for the year, plus a few news items we would have written about if we weren’t committed to keeping Our Take under 1,200 words.
1. The health care battle isn’t over yet
The health care fight appeared to have ended after the midterm election. With regard to repealing Obamacare, in the wake of the election, Senate Majority Leader Mitch McConnell told reporters, “I think it’s pretty obvious, the Democratic House is not going to be interested in that.” McConnell then said that he was now willing to work on health policy issues on a bipartisan basis.
The health care fight appeared to have ended after the midterm election. With regard to repealing Obamacare, in the wake of the election, Senate Majority Leader Mitch McConnell told reporters, “I think it’s pretty obvious, the Democratic House is not going to be interested in that.” McConnell then said that he was now willing to work on health policy issues on a bipartisan basis.
But late Friday, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas ruled the Affordable Care Act (ACA) unconstitutional—just a day before open enrollment for the exchanges was to close.
In 2012, the Supreme Court upheld the ACA’s individual mandate as constitutional, stipulating that Congress could legally impose a tax on people who do not have health insurance. Fast-forward to February of this year, when Republican officials in 20 states initiated a lawsuit asserting that the entire law should be stricken because Congress repealed the fines associated with the individual mandate in a tax bill. Judge O’Connor agreed.
Although it is customary for the Justice Department to defend a federal statute when it is challenged, then-Attorney Jeff Sessions said this was the one time it would not. The case was instead defended by 17 Democratic attorneys general.
If the ruling stands, we cannot understate the damage it will deal to the American health care system. In one analysis by the Urban Institute, a left-leaning think tank, the number of uninsured would increase by 50 percent, or 17.1 million people.
Medicaid expansion, pre-existing condition coverage, subsidies, the health care exchanges—all of it will end. There will be no cap on out-of pocket costs, and lifetime limits on coverage will again be permitted. Young adults under the age of 26 will no longer be required to be covered under their parents’ insurance plans. And insurance companies can return to charging people more based on their sex, age or profession.
The Kaiser Family Foundation estimates that 52 million adults—27 percent of adult Americans under the age of 65—would be rejected for coverage under practices that existed in nearly all states before the ACA.
“As I predicted all along, Obamacare has been struck down as an UNCONSTITUTIONAL disaster!” President Trump wrote on Twitter Friday night. “Now Congress must pass a STRONG law that provides GREAT healthcare and protects pre-existing conditions,” he continued, adding in another post, “Great news for America!”
CMS Administrator Seema Verma also weighed in on Twitter, noting that the ruling would not affect current plans or coverage in 2019. “The recent federal court decision is still moving through the courts, and the exchanges are still open for business and we will continue with open enrollment,” she wrote. The White House also issued a similar statement.
The case is expected to wind up in the Supreme Court.
2. CVS-Aetna deal finalized
The CVS Health merger with Aetna is one of the most fascinating we’ve seen since Merck & Co. acquired Medco Containment Services, a PBM, in 1993. (Merck would spin off Medco a decade later, and in 2012, Medco was acquired by Express Scripts.)
The CVS Health merger with Aetna is one of the most fascinating we’ve seen since Merck & Co. acquired Medco Containment Services, a PBM, in 1993. (Merck would spin off Medco a decade later, and in 2012, Medco was acquired by Express Scripts.)
Think about it. CVS has 1,100 Minute Clinics in 9,600 stores across the U.S. If you’re in a top 100 MSA, odds are you live within 10 minutes of a CVS retail store. Now, with the country’s third-largest payer under its umbrella, CVS has every incentive to drive Aetna plan members into CVS stores for primary care.
“You can be sure that somewhere there’s a little army of MBAs who are measuring the revenue per square inch of every CVS there is, and figuring out which ones make the most sense to turn their Minute Clinics into urgent care centers,” one executive recently told us. “Here’s what’s going to happen. CVS-Aetna’s is going to tell their [members], ‘You know, if you go to our urgent care center in the CVS nearest you, your copay’s zero. But if you go to the hospital, your copay’s $500.’ Well, where do you think people are going to go?”
CVS has been a trailblazer in other ways, too. The company was the first to ban tobacco sales in its stores, even though it hurt overall sales, because it was the “right thing to do.”
CVS is now offering home delivery of prescription drugs and some over-the-counter medicines. In some urban markets it offers same-day delivery.
And just last week, CVS announced a new pharmacy benefits plan that returns 100 percent of drug rebates to its clients, a pre-emptive move ahead of new rebate-focused regulations that are all but certain to hit in 2019.
In case you missed it, you can read Our Take on the merger here.
While CVS Health and Aetna closed on the deal in November, as we reported last week, a U.S. District Court judge has ordered a hearing on the merger, citing anticompetitive concerns. The judge can’t block the merger, but he could order a halt to the integration of the two companies while he further evaluates the antitrust implications of the deal.
3. Health systems collaborate to launch a generic drug company
In January, four health systems—Intermountain, Ascension, SSM Health and Trinity Health—said they were working in consultation with the Department of Veteran’s Affairs to create a not-for-profit generic drug company.
In January, four health systems—Intermountain, Ascension, SSM Health and Trinity Health—said they were working in consultation with the Department of Veteran’s Affairs to create a not-for-profit generic drug company.
At the time, Intermountain said the goal was to provide patients with “an affordable alternative to products from generic drug companies whose capricious and unfair pricing practices are damaging the generic drug market and hurting consumers.” Another stated goal was to stabilize the supply of essential generic drugs used in hospitals.
Since then, Catholic Health Initiatives, HCA Healthcare, Mayo Clinic and Providence St. Joseph Health also have become partners in the project.
As of September, the new drug company has a name—Civica Rx—and a CEO. Martin VanTrieste, Amgen’s former chief quality officer, is leading the new company, and he’s doing so without compensation.
Since the initial announcement, the health systems appear to have pivoted, slightly, to focus on manufacturing generic drugs that are in short supply.
Civica is organized as a Delaware nonstock, not-for-profit corporation and will be headquartered in Utah. Its startup costs are being funded by the health systems.
4. Amazon, JPMorgan Chase and Berkshire Hathaway’s foray into health care
Jeff Bezos and his wealthy pals Jamie Dimon and Warren Buffett planted their flag back in February when they announced that they were creating an independent health care company for use by their employees.
Jeff Bezos and his wealthy pals Jamie Dimon and Warren Buffett planted their flag back in February when they announced that they were creating an independent health care company for use by their employees.
Bezos said their aim was to “reduce health care’s burden on the economy while improving outcomes for employees and their families.”
Since the announcement, they made one substantial hire that shows just how serious they are. In June, they named Dr. Atul Gawande as CEO of the new company. Dr. Gawande is one of those leaders who naturally draw people to follow them. You can find Our Take on Dr. Gawande here.
Amazon itself made some inroads into health care last summer with the acquisition of PillPack, an online pharmacy that packages, organizes and delivers prescription drugs. In November, Amazon launched a line of medical devices for patients with diabetes and hypertension. The exclusive brand, named “Choice,” includes glucose and blood pressure monitors.
Google has been making some bold moves as well. In July, the company appointed former Cleveland Clinic CEO Dr. Delos “Toby” Cosgrove as executive adviser to the Google Cloud Healthcare and Life Sciences team.
And, in a recent move that surprised everyone, Google snagged Dr. David Feinberg from the top spot at Geisinger. Dr. Feinberg is tasked with organizing Google’s fragmented health initiatives.
5. NYU offers free tuition for medical school students
We were blown away by New York University’s move to fully subsidize medical education. As we pointed out, NYU consistently ranks at the top of the nation’s best medical schools, making the announcement even more stunning. It’s not as if the school was having a hard time attracting talented students.
We were blown away by New York University’s move to fully subsidize medical education. As we pointed out, NYU consistently ranks at the top of the nation’s best medical schools, making the announcement even more stunning. It’s not as if the school was having a hard time attracting talented students.
We even predicted that other prestigious schools would follow suit. “It isn’t a question of if other institutions will follow NYU’s example,” we wrote. “It’s a matter of when. NYU won’t be alone on an island for long.”
What was surprising is how some members of the media covered NYU’s decision.
“Let’s hope Harvard and Johns Hopkins can resist chasing NYU’s lead,” wrote Jordan Weissman in Slate. “While it’s hard to fault a school for offering its students a free education, this dramatic gesture is, at best, a well-intentioned waste—an expensive, unnecessary subsidy for elite medical grads who already stand to make a killing one day as anesthesiologists and orthopedic surgeons. It would be a pity if other top medical schools decided to imitate it, rather than use their resources in other, more helpful ways that might solve more of the problems NYU claims to be worried about.”
“I applaud NYU’s step. I hope others will follow, but I hope they’ll follow in a more nuanced way, to really encourage and enable those physicians who want to go into these specialties,” Elizabeth Rosenthal, editor-in-chief of Kaiser Health News, told CNBC. Those areas include “primary care specialties or work in underserved areas—because that’s what we really lack in this country.”
Others complained that the move by NYU did nothing to increase the socioeconomic diversity of the applicant pool.
It took NYU 11 years and a $100 million donation from Home Depot founder Ken Langone to raise the $450 million necessary to fund the program. We understand that most medical schools won’t be able to pull that off. But that shouldn’t detract from what NYU has done.
Honorable Mention
• Cigna-Express Scripts merger
• Expansion of Geisinger’s genomics program into routine care
• Takeda’s acquisition of Shire
• Baylor Scott & White-Memorial Hermann merger
• Surging payer-provider partnerships
• Roche’s acquisition of Flatiron Health
• The Boston market for health care delivery
Best Health Policy Idea
BPCI-Advanced bundled payment model
Worst Health Policy Ideas (tie)
• Mandating pricing information in drug ads
• Tying drug prices to an international index
