|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
No Obamacare bailout in the omnibus
Continuing their tradition of staying up later than a college student writing a term paper, the Senate passed a $1.3T omnibus spending bill early Friday morning, sending it to the President for signature and narrowly avoiding yet another government shutdown. The legislation includes modestly-increased funding of the NIH and efforts to combat the opioid epidemic, but notably left out was funding to stabilize insurance company finances in the wake of the Trump administration ending the Obamacare cost-sharing reduction payments. Although a group of Senate Republicans put forward a stabilization package, it was opposed by Democrats who were wary of its impact on subsidies to ACA marketplace enrollees. The Obamacare exchanges are likely to be a political football at least through the rest of this President’s term, and the potential for dramatic premium increases is likely to feature prominently in the upcoming midterm elections.
The insurance companies will be just fine, says the White House
Meanwhile, the White House’s Council of Economic Advisers released a report this week saying that despite turmoil in the Obamacare markets, health insurer profits have increased. Citing rising premiums, growing enrollment in managed Medicaid, and Federal tax credits paid to carriers, the CEA report paints a rosy picture of insurer fortunes, and predicts even greater windfalls to come as a result of the new tax reform law. Indeed, (in case you’re looking to the White House for stock picking advice), the report points out that health insurance company stocks have risen 272% over the past four years, versus the 106% increase in the S&P over the same time period. The ranks of Medicare and Medicaid enrollees continue to swell, representing a key growth opportunity for insurers and bolstering their continued profitability for years to come.
HCA announced a noteworthy acquisition
The for-profit hospital chain HCA Healthcare announced an agreement to acquire Mission Health, a 7-hospital not-for-profit system in Asheville, NC, and the area’s largest employer and healthcare provider. Mission’s board and executive leadership cited demographic shifts, reimbursement pressures, the need to continue to generate cost savings, and the potential efficiencies to be gained from joining a large, national hospital company as the rationale behind the sale. If the deal goes forward, it will represent HCA’s most significant acquisition of a non-profit system in recent years. It will be worth watching how other non-profits in the state respond, especially with the announcement coming on the heels of Atrium Health and UNC Health Care calling off their proposed merger. More broadly, it’s likely executive teams and boards of directors at not-for-profits across the country will pay close attention to the deal, as they grapple with the same market forces that put Mission Health in play.