A Terrible Week for Obamacare, and a New Plan to Replace It

Last year, as part of a contract deal with the teachers’ union, Mayor Bill de Blasio announced that he and the city’s unions had agreed to cut $3.4 billion in worker health-care costs over four years. Even with these “savings,” though, Gotham’s health-insurance spending is projected to grow 6 percent annually through 2018–totaling a whopping $6.2 billion that year. According to the Citizens Budget Commission, more than 90 percent of city employees are enrolled in plans that require no premium contributions from workers. Most other city governments require employees to pay something toward their health-care costs. In the private sector, such contributions are standard.

The massive cost of paying full freight for nearly half a million employees’ health care is one reason why the city budget will run a $1.4 billion deficit in 2018, according to de Blasio administration projections. Even without the looming Cadillac Tax, the city’s budgetary status quo is unsustainable. Making these expensive benefits even more costly is a recipe for fiscal disaster.

The ACA imposes a 40 percent excise tax on the value of health insurance costing $10,200 or more for individual plans and $27,500 or more for family plans. And because the tax is indexed to the general rate of inflation rather than to faster-growing health-care inflation, it will hit more plans each year. Researchers from the Johns Hopkins School of Public Health estimate that the tax will affect 75 percent of employer-provided plans within a decade of its implementation. It likely won’t take that long for the tax to hit New York’s typical HMO coverage plans for city workers. In 2013, one plan offered to workers cost $6,600 annually for individual coverage. Assuming that these premiums grow at the same rate as overall costs for the city’s health insurance, such a plan would cost over $9,000 annually by 2018. In just a few years, these plans would cross the Cadillac Tax threshold. Who will bear the burden? With no required contributions from city employees, local taxpayers will be on the hook.

About 13 percent of people who signed up for health insurance coverage in 2015 under the Affordable Care Act have fallen off the rolls, many because they failed to pay their share of premiums, the Obama administration said Tuesday.

The administration announced in March that 11.7 million people had signed up for coverage through federal and state marketplaces. On Tuesday, federal officials disclosed that enrollment stood at 10.2 million as of March 31.

Sylvia Mathews Burwell, the secretary of health and human services, issued the new enrollment report and highlighted data indicating that 6.4 million people were receiving federal subsidies to buy insurance in states where the marketplace, or exchange, was run by the federal government.

Those federal subsidies could be halted if the Supreme Court rules in favor of critics of the Affordable Care Act, who contend that the law authorized subsidies only in states that established their own exchanges. A ruling is expected in the next four weeks.

Nationwide, the administration said, the federal government is paying insurance subsidies in the form of tax credits to 8.7 million people, including 2.3 million in states that run their own exchanges. The average tax credit for those who qualified for financial assistance was $272 a month, the administration said.

The insurance marketplaces got off to a rocky start in October 2013, and President Obama paid a hefty political price as millions of consumers were frustrated trying to buy insurance. But the administration recovered, after making urgent repairs to HealthCare.gov, and by May 2014 the White House was celebrating the fact that eight million people had signed up for insurance in the first open enrollment period.

Federal officials on Tuesday disclosed that enrollment was substantially lower at the end of the year. About 6.3 million consumers were enrolled in health coverage through the marketplaces and had paid their premiums as of Dec. 31, 2014, they said.

In Texas, hundreds of employers offer Teladoc’s services to more than 2 million employees, [Jason] Gorevic[, CEO of Teladoc] says.

But new rules from the Texas Medical Board could make it a lot harder for people like Broyles to get antibiotics that way. In response to the board’s restrictions, Teladoc has filed a lawsuit that accuses the medical board of artificially limiting supply and increasing prices.

“The rules, as they’re written today, only allow a physician who has seen a patient in person to interact with them remotely,” Gorevic says. “That’s basically saying you can’t go shop anywhere else.”

The rules do allow for certain exceptions that would permit a physician to diagnose or prescribe medications via phone or video. It would be OK, for example, if the patient were at a medical clinic, or another health care worker were with the patient and could do a sort of surrogate exam. There’s also an exemption for remote mental health visits.

Mari Robinson, executive director of the Texas Medical Board, says the rules aren’t meant to stifle competition. They’re meant to ensure patient safety.

“How can a physician make an accurate diagnosis when they have no objective diagnostic data?” Robinson asks. “All they have is what the patient has told them.”

And that’s not enough information, she says.

“No one would think if they showed up at their doctor’s office they would go back to a room, have the doctor stand on one side of the door, they would stand on the other, they would tell the doctor their symptoms and the doctor would slip a prescription out from under the door. No one would think that was good care,” says Robinson. “That is exactly the same as doing it over the telephone or over some system where a physician can’t get objective diagnostic information.”

But Dallas health care attorney Brenda Tso says that if you peek behind the curtain, the strict rules aren’t just about patient safety.

“Doctors are trying to protect their practice from telemedicine, basically,” she says.

The California Senate voted Tuesday to allow undocumented workers living in the state to obtain medical insurance through its Obamacare health exchange.

Senate Bill 4 also would allow those in the country illegally who are 18 years of age or younger and reside in California to enroll in Medi-Cal, the state’s insurance program for the poor, the Sacramento Bee reported. In order to obtain coverage under the Affordable Care Act, the state would need to file a federal waver, and those immigrants who applied would not be eligible for federal subsidies.

“Ensuring that every child in California grows up healthy and with an opportunity to thrive and succeed is simply the right thing to do,” Democratic Senator Ricardo Lara, who authored the bill, told the Bee.

The measure, which passed by a 28–11 [vote] in the Senate, now heads to the state assembly. Citing concern over the cost of expanding coverage for undocumented immigrants, Governor Jerry Brown has not said whether he will sign the bill.

The fate of the measure is dependent on available funding, and will require that legislators vote to add money to the budget to pay for it. The senate’s own analysis found that extending Medi-Cal benefits to 786,600 immigrants would cost the state $690 million annually, and while those who obtained health insurance through the Covered California exchange would pay for their own insurance coverage, there would be further costs involved.

“If 20% of undocumented immigrants who are not income eligible for Medi-Cal enroll through Covered California, the administrative costs and fees collected to pay those costs would be about $25 million per year,” a report by the Senate Health Committee concluded.

“If this bill were to be signed into law, it would only serve to exacerbate the problem and not fix it,” Republican Senator Jeff Stone told the Bee. “This bill would only add hundreds of thousands of more patients to the roll with no one to care for them.”

Over the past 18 months, the emergence of Harvoni and its predecessor, Sovaldi, has given tens of millions of hepatitis C patients around the world hope that they can be permanently rid of a debilitating illness. Not since the introduction of HIV/AIDS drug cocktails almost two decades ago has the appearance of a therapy spurred such demand. Unlike drugs for HIV, which control infection and must be taken for the rest of a patient’s life, Harvoni and Sovaldi typically eliminate the virus they target and do so quickly. (Sovaldi is taken with interferon or a third drug; Harvoni combines Sovaldi with another Gilead compound into one pill and eliminates the need for interferon.)

The promise of a cure, however, doesn’t come cheap. After Sovaldi received approval from the U.S. Food and Drug Administration in December 2013, Gilead announced the drug would cost $84,000 for a 12-week course, or exactly $1,000 a pill. That’s more than double what Pharmasset, the biotech company that developed an early experimental version of the drug, initially said it planned to charge–until Gilead bought Pharmasset in 2011. For 2014, Sovaldi generated $10.3 billion in sales, making it one of the most lucrative pharmaceutical launches ever. In just the final three months of 2014, Harvoni added $2.1 billion. Gilead’s market capitalization has soared from $29 billion to $167 billion in five years. The net worth of its chief executive officer, John Martin, exceeds $1 billion.

Because of the blockbuster sales of Gilead’s two hepatitis C drugs, the company has become the focus of a backlash against the costs of expensive “specialty” drugs that target chronic diseases such as hepatitis, cancer, and multiple sclerosis. Drug spending in the U.S. totaled $330 billion in 2013, according to Anthem. By 2020, spending on specialty drugs alone could reach $400 billion. Patients who receive these treatments almost never see the total cost, but their insurers do. More than two dozen state Medicaid programs for low-income patients, as well as for-profit insurers such as Anthem, have restricted coverage for Sovaldi to those with severe liver damage. “Never before have drugs been priced so high to treat such a large population,” says Steve Miller, chief medical officer at Express Scripts, the country’s largest manager of drug benefits for employers and insurers. In December, Express Scripts announced it would reject coverage for one-pill-a-day Harvoni and instead steer patients to a less pricey rival drug that requires four to six pills a day.