| THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
- Congressional control still undecided, but voters protect and expand state-level healthcare access in midterms. While the final balance of the House and Senate are still unknown after Tuesday’s midterm elections, both chambers are expected to be narrowly divided. Ballot initiatives on reproductive health produced more unambiguous results, with three states—California, Michigan, and Vermont—amending their constitutions to affirm reproductive rights, and two states—Kentucky and Montana—voting down proposals that would have imposed greater legal barriers to abortion access. South Dakota became the seventh, and likely final, state to expand Medicaid via ballot initiative, making an additional 28K South Dakotans eligible for coverage, and reducing the number of states that have yet to expand Medicaid down to 11.
The Gist: Democrats beat expectations, bucking historical trends in which midterm voters swing strongly against the President’s party. But healthcare did not feature prominently in voters’ choices, with this being the first election in over a decade where the state of the Affordable Care Act and protecting individuals’ access to care and coverage was not a significant choice driver. The fallout from the Supreme Court’s decision in June to overturn Roe v. Wade had a clear impact on voter turnout, with abortion tying inflation for voters’ top concern in exit polls. At the state level, South Dakota voters approved Medicaid expansion, where over 40 percent of the state’s uninsured adults could now gain access to coverage—another clear sign that voters, regardless of party affiliation, are behind the ACA’s expanded vision for the safety net program. Moving forward, a closely divided Congress is unlikely to take on significant healthcare legislation, regardless of who ultimately holds the House and Senate.
- Residents at New York City hospitals seek union recognition. Last week, over 1,200 resident physicians and interns at Montefiore Medical Center, one of the largest employers in New York City, with four hospitals in the Bronx, held an organizing vote and requested voluntary recognition of their bargaining unit. The residents organized under the Committee of Interns and Residents, a unit of the Service Employees International Union that claims 22K members and has established unions at five hospitals this year. Roughly seven percent of practicing doctors were unionized as of 2019; that number has grown in the wake of pandemic-induced burnout and industry consolidation. Montefiore Medical Center declined to voluntarily recognize the union and has requested that the union re-form via a secret ballot election.
The Gist: Health system executives may see the possibility of resident unions as another headache amid the ongoing labor crisis, but the drivers of the crisis—burnout, workplace safety concerns, work-life balance, and real-wage erosion—are responsible for the growing appeal of unions for physicians. Fueled by economy-wide stressors, unionization has been growing in nontraditional labor sectors, including among baristas and tech workers, and medical residents may be the next to join that wave. Health systems worried about resident unionization should address residents’ concerns about working conditions proactively, which may involve reevaluating wages in light of residents’ significant contributions to operational and financial success.
- Oscar Health pulls out of major Medicare Advantage (MA) markets. In its Q3 earnings call, Oscar Health CEO Mario Schlosser revealed that the “insurtech” has pulled out of the MA market in Texas and New York, leaving it with only one Florida-based plan. Oscar entered the MA business with high hopes in 2020, but counted fewer than 5K MA members in Q3 2022. Although its Affordable Care Act exchange enrollment has nearly doubled since last year, now covering more than 1M lives, Oscar is still struggling with high medical loss ratios, which have kept it from turning a profit. The company’s stock price is at an all-time low, having declined over 90 percent from its peak, shortly after its 2021 IPO.
The Gist: Like Bright HealthCare before them, Oscar pulling out of MA is another sign that the chance of meaningful disruption from “insurtechs” has nearly vanished. While still privately held, Oscar achieved fame in the early 2010s through catchy marketing that targeted a young, tech-savvy client base, and its move into MA before the pandemic signaled broader ambitions. Oscar’s travails illustrate just how hard it is to start an insurance company from scratch, even with an intriguing and comprehensive technology platform. The company proved unable to overcome its lack of market power in negotiations with providers, and faced difficulty managing a small, unstable risk pool. Now that more traditional insurers are improving their mobile tech interfaces and telehealth offerings, the differentiated value Oscar offers to its members has clearly diminished.
Plus—what we’ve been reading.
- Agents and brokers for Medicare Advantage plans using deceptive marketing tactics. In their latest article scrutinizing the MA program, New York Times reporters Reed Abelson and Margot Sanger-Katz highlight MA marketing practices brought to light in a recent report from the Senate Finance Committee. Complaints to the Centers for Medicare and Medicaid Services (CMS) about MA marketing more than doubled from 2020 to 2021, as agents and brokers took advantage of oversight rules relaxed during the Trump administration. Some of the most egregious alleged abuses include agents switching seniors into new plans without their consent, and exploiting individuals with cognitive impairments.
The Gist: Media interest is finally catching up to the building legislative and regulatory pressure on Medicare Advantage. While earlier reporting has highlighted how plans can inflate payments from Medicare, this new story shows how the process of selecting a plan can be fraught for the seniors enrolled. Plan design is confusing even for industry insiders, so it is no surprise that seniors might find themselves ‘choosing’ plans that omit key providers, or even drug coverage they already rely on, particularly after being badgered or misled by agents and brokers. Many of the regulatory fixes highlighted in the report can be implemented directly by CMS, but insurers, who remember the managed care backlash of the 90s, shouldn’t wait to tighten the reins on questionable marketing practices, lest they risk losing public support for one of their most lucrative business lines.
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