|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Reversing course on Trump-era healthcare policy
Ahead of a Supreme Court hearing in March to consider the legality of imposing work requirements as a condition of gaining Medicaid coverage, the Centers for Medicare and Medicaid Services (CMS) were expected to inform states on Friday of plans to rescind the controversial Trump administration policy. Under the previous administration, ten states had applied for and were approved to use waiver authority to impose work requirements on Medicaid enrollees, and several other states were in the process of submitting applications. Critics (including us) have long held that such requirements, while nominally intended to introduce an element of “personal responsibility” to the safety-net coverage program for low-income Americans, actually serve to hinder access to care, and jeopardize the health status of already vulnerable populations; in addition, the added expense of program infrastructure often exceeds anticipated cost savings. The policy was a favored project of former CMS administrator Seema Verma, who helped craft a similar program for the state of Indiana before joining the Trump administration. Among states granted waiver authority to impose work requirements, only Arkansas ever fully implemented the policy, before the legality of the waivers was challenged successfully in lower courts.
The Biden administration’s recission of work requirements is part of a broader reversal of Trump-era healthcare policies. This week the Justice Department notified the Supreme Court that it was switching sides in the closely watched case questioning the constitutionality of the Affordable Care Act (ACA), although the court has already heard the case and is expected to rule this spring. Starting Monday, the Biden team will also reopen the federal insurance marketplace for a special enrollment period, bolstering funding for outreach to ensure those eligible are aware of coverage options. And as part of its proposed COVID relief legislation, the administration plans to increase subsidies to help individuals buy coverage on the exchanges, and to increase funding to support state Medicaid programs—policies that got a boost this week from a broad coalition of healthcare industry groups, including health plans, doctors, and hospitals. As the administration rounds out its health policy team, we’d expect a continued focus on strengthening the core pillars of the ACA, along with a greater focus on ensuring health equity and addressing disparities. Meanwhile, two key positions remain unfilled: CMS administrator and commissioner of the Food and Drug Administration (FDA). These slots will likely remain open until the looming confirmation battle over Biden’s nominee for Secretary of Health and Human Services (HHS), California Attorney General Xavier Becerra, has been settled.
Oscar is going public
Health insurance startup Oscar Health filed for its IPO at the end of last week. One of the earliest of a crop of new entrants in the insurance market, Oscar has raised a total of $1.6B since its debut in 2012. The insurer currently serves 529,000 members—almost double the number it served in 2019—primarily in the individual and small group markets across 18 states, with its largest presence in Florida, Texas, and California. (Membership in New York, where the company got its start, declined from 51K to 39K members in 2020.) Oscar started selling Medicare Advantage (MA) plans last year, but has captured fewer than 2,000 lives, demonstrating how difficult it is for newcomers to break into the competitive MA market, and raising questions about how well the Oscar value proposition, built on a technology-driven member experience, translates to the senior population. According to the filing, Oscar plans to expand into additional markets and segments, and to establish partnerships to monetize its consumer-friendly technology and administrative services and care management platform. In addition to supporting the insurance business, Oscar seems to be betting that its tech platform will be leveraged by a variety of partners—which currently include Cleveland Clinic, Montefiore Health System, Cigna, and Health First. It’s unclear whether future profitability will come from Oscar’s data and technology platform, or its core insurance business: despite consistent growth and impressive technology, Oscar has yet to turn a profit, losing $407M in 2020, a year when many insurers saw record profits.
Large health systems band together on data research
Fourteen of the nation’s largest health systems announced this week that they have joined together to form a new, for-profit data company aimed at aggregating and mining their clinical data. Called Truveta, the company will draw on the de-identified health records of millions of patients from thousands of care sites across 40 states, allowing researchers, physicians, biopharma companies, and others to draw insights aimed at “improving the lives of those they serve.” Health system participants include the multi-state Catholic systems CommonSpirit Health, Trinity Health, Providence, and Bon Secours Mercy, the for-profit system Tenet Healthcare, and a number of regional systems. The new company will be led by former Microsoft executive Terry Myerson, who has been working on the project since March of last year. As large technology companies like Amazon and Google continue to build out healthcare offerings, and national insurers like UnitedHealth Group and Aetna continue to grow their analytical capabilities based on physician, hospital, and pharmacy encounters, it’s surprising that hospital systems are only now mobilizing in a concerted way to monetize the clinical data they generate. Like Civica, an earlier health system collaboration around pharmaceutical manufacturing, Truveta’s launch signals that large national and regional systems are waking up to the value of scale they’ve amassed over time, moving beyond pricing leverage to capture other benefits from the size of their clinical operations—and exploring non-merger partnerships to create value from collaboration. There will inevitably be questions about how patient data is used by Truveta and its eventual customers, but we believe the venture holds real promise for harnessing the power of massive clinical datasets to drive improvement in how care is delivered.