|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Paul Ryan decides retirement would be a better way
Speaker of the House Paul Ryan announced this week that he plans to retire from Congress at the end of his current term, and will not seek re-election in the upcoming midterms. Ryan plans to return to his family in Wisconsin and has not announced future plans. He was first elected to the House in 1998, and quickly built a reputation as a “policy wonk,” deeply versed in the details of the Federal budget. During his tenure in Congress, and especially during his Speakership, to which he was elected in 2015, he was committed to two major policy objectives: overhauling the tax code and reforming the healthcare entitlement programs. After a frustrating 2017, which saw Ryan and his Republican colleagues fall short on “repeal and replace” of Obamacare (an effort that Ryan used to attempt a major restructuring of Medicaid), the Speaker was able to deliver major tax cut legislation for the President’s signature at the end of the year. Although he was not able to enact the two pillars of the “Better Way” healthcare reform he sought—“premium support” for Medicare and block grants for Medicaid—the long-term consequence of the tax cut Ryan brought to passage will almost certainly be major cuts to the entitlement programs by the next Congress, which his successor will be left to enact.
Moving toward Medicaid expansion in Virginia
Virginia’s Republican-controlled House and Senate reconvened in special session this week, called back to Richmond by Democratic Governor Ralph Northam. Lawmakers there appear to be close to a deal to expand Medicaid eligibility in the Commonwealth, a huge breakthrough in a state that has stubbornly resisted participation in the Obama-era health reforms. Two key Republican state senators signaled their support for expanding Medicaid, contingent on the inclusion of work requirements and other “fiscally responsible and conservative” measures. Virginia would join 32 other states and the District of Columbia in expanding Medicaid, which stands to benefit more than 400,000 Virginians who will become eligible. If expansion goes forward in Virginia, it could be the beginning of a new wave of states re-examining their opposition to Medicaid expansion in the post-Obama era, using conservative health policy principles promoted by the Trump administration to make the move more palatable to Republican legislators.
California debates price controls, but have they worked in Maryland?
California legislators introduced a bill to create an independent, nine-member commission that would set payment rates for doctors, hospitals and other healthcare services. Supporters of the “Health Care Price Relief Act,” including labor and consumer groups, hope the proposal will slow healthcare cost growth, which is consuming a growing portion of wages. Provider groups argue that rate setting could result in hospital closures and an exodus of doctors, noting the state’s above-average labor and facility costs. The bill comes as single-payer healthcare is being hotly debated in the state’s gubernatorial race.
The California bill is modeled on Maryland’s all-payer model, which has set uniform provider rates since 1977 with mixed success. Price growth has been constrained, but rising utilization and cost growth led to a revamping of the program, which implemented a global budget for inpatient and outpatient hospital spending. Policymakers had hoped this “hospital capitation” would encourage health systems to align with physicians to decrease utilization. Despite these efforts, two recent studies show no impact on hospital or primary care utilization.
While providers in Maryland are largely supportive of the current system, many feel that capping hospital spending doesn’t provide the incentives needed to encourage physicians and other providers to participate. California should learn from Maryland’s lengthy experience: price controls may provide temporary relief, but alignment around total-cost management provides the best mechanism for long-term cost control.