|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Obamacare enrollment is down, and (thankfully) boring
For most Americans, tomorrow is the last day to get coverage for 2019 on the health insurance exchanges established by the Affordable Care Act (ACA). Open enrollment began on November 1st, and will end on Saturday, December 15th, except in the handful of states which have elected to keep their marketplaces open longer—New York, Rhode Island and DC (12/31), Colorado (1/12), Minnesota (1/13), California (1/15) and Massachusetts (1/23). Although final enrollment data won’t be available until next year, weekly updates from the Centers for Medicare & Medicaid Services (CMS) indicate that as of last week, signups were down by about 500,000 people compared to last year, with about 4.1M people buying coverage by last Saturday. Enrollment typically spikes during the last week of marketplace activity, but many analysts expect a lower total number of signups overall, pointing to several factors. 2019 will be the first year Americans will not be subject to a penalty for lacking coverage, thanks to the repeal of the individual mandate last year. Unemployment has continued to decline, meaning more Americans may be getting insurance through their employers. And in some states, slower signups may reflect an increase in Medicaid enrollment—as in Virginia, which expanded Medicaid this fall. Critics of the Trump administration also point to decreased funding for advertising and “navigators” to assist consumers with enrollment as possible explanations for the slowdown in ACA signups.
Whatever the explanation, and regardless of the final tally of Americans signing up for marketplace coverage, it’s clear that as each year passes the “Obamacare” exchanges have become less controversial, and more enmeshed in the fabric of American healthcare. Indeed, one reason for slower signups this year may be that there’s been much less media reporting on the topic than in years past, as the existence of the ACA exchanges is no longer in immediate jeopardy from “repeal and replace”. We’ve long talked about the healthcare “entitlement programs” as encompassing Medicare and Medicaid; to that, it’s probably now safe to add a third—Obamacare subsidies. Eight years on from passage of the ACA, and five years since the exchanges first opened, enrollment on the individual marketplaces now seems to have become a boring annual ritual, rather than a yearly political catfight. That stability is a good thing for all involved: consumers, insurers and providers. Look for the debate in future years to revolve more around fiscal issues (subsidy levels, marketplace funding) than political ones (mandates, eligibility). That is, unless the pending court case in Texas challenging the constitutionality of the ACA itself delivers yet another dose of uncertainty to the healthcare industry.
Dealing a big antitrust blow to Blues plans
A major antitrust case that’s been slowly moving through the courts for the past six years took another dramatic turn this week, as the United States Court of Appeals for the 11th Circuit rejected an appeal by Blue Cross and Blue Shield (BCBS) insurers to an earlier District Court ruling. The case combines two separate lawsuits on behalf of providers and small businesses that claim that BCBS plans unfairly restrict competition, resulting in lower prices being paid to providers and higher premiums being paid by customers. By agreeing amongst themselves to cover exclusive territories as part of their participation in the national BCBS Association, the insurers are engaging in a violation of the Sherman Antitrust Act, according to plaintiffs. In April, a US District Court judge in Alabama held that the exclusivity agreements among the 36 Blues plans constituted a “per se violation” of the Sherman Act—meaning that the agreement itself violates antitrust law, whether or not it causes economic harm.
This week’s ruling rejected the BCBS plans’ appeal of that finding, making it much harder for the insurers to defend the practice. The Blues plans describe the arrangement as being simply a trademark licensing deal, not intended to create monopoly power. Notwithstanding that, several Blues plans (including BCBS of Alabama, where the suit originated) enjoy dominant market positions in their exclusive territories. The case is expected to drag on for some time, with an eventual trial to be held in Alabama. Meanwhile, individual Blues plans are continuing to find themselves in court accused of anti-competitive behavior, including in Florida, where insurance start-up Oscar Health recently sued Florida Blue for attempting to cut off its access to insurance brokers. We hear a lot about providers exercising market power to raise prices and limit competition, and rightly so—but there are plenty of questions to be asked of insurers as well. We’ve long thought that the state-level Blues plans, regardless of their nonprofit status, exert outsized power in the healthcare marketplace, limiting competition and retarding innovation. We’ll be tracking this case closely as it wends its way through the legal system.
Kroger launches a prescription discount membership
The Kroger Co., the nation’s largest dedicated grocery chain, announced this week that it is launching a prescription drug membership program aimed at reducing drug costs for customers. A one-year membership in the company’s Rx Savings Club will cost $36 for individuals, or $72 for a family of up to six members, and will lower the monthly price on over 1,000 common drugs to $6 or less. Over 100 common generic drugs will be free. While members will have the option to use their insurance and pay the designated copay, Kroger pharmacists, freed this fall from the gag clause that prevented them from notifying customers when paying the cash price would be cheaper than using their insurance, can alert customers to the lowest price. While Kroger estimates that the average family can save over $1,000 per year, patients who take high-cost, brand-name specialty drugs are unlikely to see their costs decrease significantly. The membership is a partnership with California-based start-up GoodRx, a company that tracks drug prices nationwide and makes them available through their app, helping consumers get coupons from pharmacies and pharmacy benefits managers (PBMs). GoodRx helped Kroger set prices and will be assisting with program administration.
Operating more than 2,000 pharmacies, Kroger follows Walmart, Costco, Walgreens and other pharmacy chains in offering discounted drug prices through memberships or direct discounts. Rx Savings Club and similar programs will likely benefit both commercial and Medicare patients; a recent study found that Walmart’s $4 generic drug discount program was significantly cheaper for common cardiovascular medications than many Medicare Part D plans. As consumerism takes hold, Kroger, which also operates in-store retail clinics through its The Little Clinic subsidiary, brings a different lens to consumer-focused healthcare. By combining consumer prescription and food purchase data with their grocery and pharmacy loyalty programs, the company could offer coupons and incentives to encourage healthy food purchases and medication adherence—creating a tighter connection to consumers than traditional providers have today.