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Our Take: Supreme Court won’t review ACA case until next fall at the earliest

Jan 27, 2020

Last Tuesday the Supreme Court said it would not expedite a review of the constitutionality of the Affordable Care Act (ACA)’s individual mandate. That means the uncertainty surrounding the fate of the ACA will almost surely continue until after the November election.

The House of Representatives and a group of 21 Democratic state attorneys general (AGs) filed a motion on Jan. 3 asking the Supreme Court to hear the case before the court’s current term is up in June, which would have permitted a ruling later this summer. Several major industry, lobbying, and advocacy organizations, as well as legal scholars, urged the court to agree to the request.

 

The higher court hasn’t said whether it will hear the case at all, in fact, although that decision is expected to be made before the current term is up.

 

Our Take:

If the ongoing battle over the ACA weren’t so important, we wouldn’t keep writing about it. But, we promise to keep this short.

First, a quick recap: Congress zeroed out the individual mandate penalty in 2017. Soon thereafter, a group of 20 Republican state AGs and governors filed a lawsuit in a Texas district court asking that the ACA as a whole be struck down. The plaintiffs argued that eliminating the penalty for not complying with the mandate rendered both the mandate and the law itself unconstitutional. The judge agreed with them in his ruling in December 2018.

 

Naturally, the ruling was appealed. Last December, the appellate court found the individual mandate without the penalty to be unconstitutional, but it sent the case back to the district court to determine whether any of the rest of the law could remain in place without the mandate.

 

What’s next? More briefings will be filed. The Supreme Court will decide if it will hear the case. If it decides not to, then the district court judge will eventually render his second ruling. That ruling could be appealed, and then the appellate court’s decision could wind up before the Supreme Court anyway — years from now.

 

If the higher court does decide to hear the case in its next term, then it becomes a matter of when. The new term begins in October, but given that the ACA will undoubtedly play a leading role in the political campaigns for both (or all?) contenders, we can’t see the court wading into that turbulence. And so insurers and consumers will go through yet another open enrollment period not knowing what lies ahead for Obamacare.

 

We’ll keep you posted.

 

What else you need to know
Kevin Lofton, co-CEO of CommonSpirit Health, will retire effective June 30. Lofton was CEO of Catholic Health Initiatives (CHI) when the health system merged with Dignity Health last year to create Chicago-based CommonSpirit. Lloyd Dean, who was Dignity Health’s CEO, has also served as co-CEO of the combined health system since the merger. Dean will become the sole CEO of CommonSpirit on July 1. To honor his lengthy career and considerable achievements in the health care industry, Lofton will be named CEO Emeritus, according to a press release announcing the retirement. By that time, Lofton will have been with CHI/CommonSpirit for 22 years, 17 of those as CEO.

 

Centene’s $17 billion acquisition of WellCare Health Plans was finalized last Thursday. WellCare is now a wholly owned subsidiary of Centene, and Centene is now the third-largest publicly traded managed care company in the U.S., Healthcare Dive reported. In announcing the news, Centene said it now provides access to health care to more than 24 million members across the country. To address antitrust concerns associated with the merger, Centene agreed to divest its Medicaid and Medicare Advantage (MA) plans in Illinois to CVS Health, and WellCare agreed to divest its Medicaid and MA plans in Missouri and Nebraska to Anthem. Those transactions closed along with the merger.

 

Medicare Advantage (MA) plan beneficiaries spend up to 39% less compared with those in Medicare fee-for-service (FFS) plans, according to research conducted by consulting firm Milliman on UnitedHealth Group’s behalf. Using a 72-year-old beneficiary of average health as an example, the analysis found that the beneficiary’s annual costs are $3,632 with an MA plan versus $5,960 with Medicare FFS and Medigap Plan F coverage, or $5,109 with just Medicare FFS coverage. The MA plan savings extend to prescription drug coverage as well. UnitedHealth said the cost savings result from “enhanced services” offered by MA plans, including lower premiums, reduced cost sharing, care management, and supplemental benefits such as dental, vision, and hearing services.

 

Civica Rx keeps making headlines. On Thursday the nonprofit generic drug company, which was founded in late 2018 by several of the nation’s largest integrated health systems, announced that it was partnering with the Blue Cross Blue Shield Association (BCBSA) and 18 independent BCBS companies to create a Civica Rx subsidiary dedicated to lowering the cost of select “much-needed” generic drugs. BCBSA and the BCBS companies are committing $55 million to help create the subsidiary, according to the announcement. The subsidiary will acquire and develop drugs under Abbreviated New Drug Applications and partner with Civica Rx and manufacturing entities to bring the lower-priced generic drugs to “uncompetitive markets.” If all goes as planned, the first drugs will be available by early 2022.

 

The 340B drug pricing program has a limited effect on overall health care spending, an analysis by the Medicare Payment Advisory Commission (MedPAC) indicates. The program requires drugmakers to provide outpatient prescription drugs to eligible hospitals and other providers at substantial discounts so they can treat large populations of Medicare beneficiaries. In the analysis — which was conducted before the 340B payment cut was implemented in 2018 — the average monthly drug spend for five common types of cancer was compared for 340B hospitals, non-340B hospitals, and physician offices. The results showed that average spending by cancer type at 340B hospitals was 2% to 5% higher than at non-340B hospitals, and from 1% lower to 7% higher than at physician offices.

 

MedPAC’s report stated that the higher spending appeared to be specific to lung and prostate cancer and pointed out that the analysis was “unable to attribute these findings to incentives created by 340B discounts.” The authors also noted that the “[o]verall effect on cost sharing for cancer patients is likely to be small, if any, depending on cancer [type] and the patient’s supplemental coverage.”

 

What we’re reading
Health Trends Report 2020. CVS Health, January 2020
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