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Becker’s Healthcare Podcast
ACA Subsidies, PBMs, and the Shifting Payer Landscape with Jakob Emerson
00:14:02
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- [00:00]
A
This is Scott Becker with the Becker Healthcare Podcast. Thrilled today to visit with Jacob Emerson. Jacob covers the peer universe better than anybody that I know. He shares with Us Weekly some of the key stories he's watching in the peer environment. Jacob, let me turn it to you and tell us what you're watching, what's of interest currently.
- [00:21]
B
Yeah. Hey, good to talk with you, Scott. So I think the story of the week, and I mean, it's been the story for a while, but it's what's going to be happening with the enhanced premium tax credits under the Affordable Care Act. The reason I wanted to chat about it today is just to get a give a good overlook of where things currently stand, especially as we head into tomorrow, where the Democrats and the Republicans in the Senate both have competing bills on exactly where the ACA subsidies will end up, and they've both got completely different ideas on how to handle the ACA moving forward. So that we, you know, could talk a little bit about that and then quickly. Also wanted to mention just an interesting story that we had reported last week about Humana CEO and Mark Cuban. They, they were together on a panel at a conference last week, and they were hinting at a new partnership that they might be pursuing together, which is interesting just considering it's one of the largest health insurers. But then, of course, Humana is a very large Medicare Advantage company, so a lot of interesting innovation there in terms of how a drug partnership could work for members there. So, you know, we'll turn it to you in terms of which one you want to tackle first.
- [01:33]
A
No, I'd love to take a moment on the Mark Cuban issue because the, the energy that he shows, whatever he commits to seems to be insane. And I'd love to understand the perspective there and what he's doing because I see his, you know, I see his name all the time, but it's, you know, it just is amazing the energy level he brings to this. And it seems like generally for positivity, I'd love to get your sense of that.
- [01:58]
B
Yeah, definitely. And I mean, it seems like this is his, his thing that he's dived into. He's become an exper. He's talking to everybody who's influential within the industry. And I, you know, I certainly follow him on social media and he's very anti PBM, or at least traditional, the big PBMs that are under, you know, Optum, CVS, Cigna, and very much wanting large employers to, you know, take a look at their contracts with their insurance providers or with their drug benefits managers and you know, seeing how that's all working out because I think from, from his perspective it's a very opaque and very, I think he would probably describe it as a very fraudulent industry in terms of just the incentives and all the different, yeah, different contracts that are in place to not necessarily get trickled down to get people the best price on things. And so when it comes to prescription drugs. So it's interesting that he's been talking with Humana CEO and some of this has been public. Humana does, it does have its own pbm, but it's very small in terms of national market share. It's not one of the big guys. They are, you know, they're a part D company. They offer prescription drug benefit plans to Medicare enrollees. So this would kind of fit right within their wheelhouse. And like I said, they were, they were talking, the, the CEO was talking with Mark Cuban last week during a conference and said that they're, they're specifically talking about a partnership with centerwell which is kind of like Humana's Optum. It's their health services division that does the actual care delivery, it does the pharmacy services and all that good stuff, everything that's not the insurance part of the business. And I, I, I, I suppose I got a little bit ahead of myself but they did not give specifics on exactly what they're pursuing. But they talked about how they want to get rid of the complexity around drug benefits, how they want to simplify these benefits for their members. So, and basically just focus on something around a direct to employer program that would skip over pharmacy benefit managers entirely. So the CVS, Caremarks, OptumRx, Express Scripts, what that, what that ultimately means.
- [04:06]
Know, I'm sure they're working out the details right now but I think it's interesting too because in years past we have reported on Cost Plus Drugs, Cuban's pharmacy company inking partnerships with insurers. They, they had one with Capital Blue Cross a few years ago where the, the Capital Blue Cross's member services were directly integrated with Cost Plus Drugs for their members. Blue Shield of California has chose them as a preferred pharmacy provider within its PBM model over CVS Caremark and then sel, which is the insurance arm of Intermountain also has partnered with them in the last few years as well. So they've, they've inked insurance partnerships with before and insurers definitely seem very interested in going down that route with him if it saves money because at the end of the day some of these smaller plans that don't have a big PBM business. You know, they, they probably would want to go down this direction if it's at the end of the day, gets rid of some of those contracts that just aren't, you know, creating those cost savings that I think the traditional PBMs would say that they create. So it's, it's interest to hear all this come out.
- [05:12]
A
It is fascinating. It's fascinating to watch. I see Mark on social media and you follow him, you've had a chance to visit with him. The, the amount of sort of gumption he takes at the PPM industry is, is fun to watch and obviously he's got a business motive, but he actually sounds right in a lot of it too. And so it's fascinating to watch. Tell us about the House, the Republicans in the Senate and their different views of the aca. I know there's a whole lot of Republicans, partly just because of, for good reasons bad, but partly just because of disdain for President Obama, want to see the ACA fail. Other reasons why it may be good for it to fail are just the amount of subsidies going out seem to just cause health care inflation. So there are good and bad reasons around different thoughts in this thing and they know it's very complicated, but it seems a lot of the negativity is just aimed at just hating it because President Obama was for it. But what is going on in the House, you know, Republicans and, and Democrats on the aca.
- [06:07]
B
Yeah. I mean, to your point, Scott, there's a lot of pros and cons here to what both parties are pitching. And you know, I, I think it is fair to say that just extending the premiums is a bit of a band aid because it's putting a band aid over the fact that these health care plans are extremely expensive to start with. But yeah, I mean, for anybody who's not familiar, just super quickly, the enhanced premium tax credits that have made marketplace coverage so affordable over the last few years and have really expanded it to tens of millions of 25 million people or so that's going to expire on as of January 1st. So if nothing happens, as of right now, premiums are going to skyrocket double, triple in in some markets all over the country and really in red states specifically, it's going to explode the health care costs for people who are not getting health coverage from their employers. So it is Republicans that are going to feel this, this hurt a lot in terms of from their constituents. But we've got Senate Democrats proposing a straightforward three year extension of these subsidies. And they've scheduled a vote for tomorrow, December 11th. And they're calling it a last chance, last chance effort to prevent these, these cost spikes. The Republicans are proposing a competing bill for the same day in terms of a vote, but they're arguing more of a populist approach that we've also heard the President really come out with these last few months saying that this, this current structure just funnels money directly to the insur and it's subsidizing care for people who don't need it, who have higher incomes, which is, is partially true on both counts. And then they're also pointing to a recent federal port just coming out within the last few weeks that flagging a lot of fraud risks that exist currently in the program, which is definitely true in terms of income verification gaps, problems with agent and broker oversight. And even ahip, the insurance industry lobby has acknowledged that these are very real concerns. But they're still pushing for a tax credit extension. So that's where the insurer are, the Dem, the Republicans in the Senate basically instead of extending the tax credits, they want to let them expire and they want to deposit money into health savings accounts for people who enroll in bronze or catastrophic plans on the exchanges. There's you know, metal tiers on, on the exchanges of, of the, the quality of the health plans in terms of how high the deductible is or how, how high the premiums are. Bronze is the lowest level. So basically Republicans want to expand those and have more HSAs for people who are in those highest deductible plans, which, you know, it's more of a skin in the game approach and more of a consumeristic have people shop for healthcare services type thing. But I think on the flip side there we know factually that high deductible health plans, especially those that get up, up there in terms of five, six, you know, eight thousand dollar deductibles before your benefits even kick in, they actively make healthcare worse. They make health outcomes worse. Because if you're somebody who' already going towards one of those plans to save money overall, then you're probably going to avoid care if it means that you have to pay $8,000 out of pocket before your benefits even become usable. So we, there's been many, many studies that we've reported on, on ourselves that have found that HDHPs, they make health outcomes worse, particularly for those with serious or complex conditions, for people who, who have expensive health care. And you know, we had heard Trump reportedly been he had been consider your extension of the subsidies with some more eligibility restrictions, but that got shelved after a lot of GOP pushback. So that the GOP just does not want to extend these overall and the administration now seems most interested in routing these dollars through HSAs. So we'll see what happens. The votes are tomorrow. I don't believe any either party has enough to pass their proposal. But you know, the subsidies are expiring no matter what. So January 1st without anything is going to be a world of hurts for a lot of people.
- [10:12]
A
And what's fascinating is the subsidies have never been more popular than they are right now, given how expensive health insurance has become, given the threats to the aca. And so the Republicans have to take that into account too. All of a sudden, you know, public positivity towards the ACA and towards the subsidies is at an all time high when it's really under threat. Probably the most threat it's been under in the last since 2010, 12, whatever the year it was that it was passed. Fascinating to watch, correct?
- [10:43]
B
Yeah. And I, I. Republicans are definitely in a very difficult place politically because you either expand Obamacare, the the arch nemesis or you let people's health care premiums explode that are on the exchanges. And I think the other issue is that certainly what we've seen in polling is there's a lot of people on the ground that just don't know the difference between the ACA and Obamacare or that there isn't a difference. And so.
- [11:04]
A
Right.
- [11:05]
B
Republican constituen wanting to be in favor of Obamacare but loving their ACA coverage. And so I think that's a hard one to communicate with people as well.
- [11:14]
A
No, I think that's exactly right. It reminds me of years ago during one of the campaigns, people having big posters that said get the government out of my Medicare without realizing that Medicare is the government. No, and I don't mean that. It just, it was just they found it to be. You know, people just, it's hard to understand all these different things going on. And with people that are. There's this really interesting situation because there's a huge percentage people that are not on subsidies and they're finding their health care costs exploding as well. And I don't think some people take enough time to recognize whether you're on somebody's or not. Healthcare costs are just exploding and nobody seems to have a good answer for that, quite frankly. No one seems to be attacking the real problem, supply and demand and a lot of other things too.
- [11:55]
B
So yeah, to your point, at the end of the day, what employers do is subsidize healthcare coverage. I mean, employers are the ones taking on the bulk of what it costs to purchase, purchase a group policy from an insurance company. And then us as the employer, as the employee, don't actually see the real costs of that. So the ACA subsidies are basically just a version of that of shielding the real cost of these very, very expensive healthcare plans. But there was one other thing I wanted to mention here that all kind of, I think is interesting in terms of where it fits in with all this, is that Florida has a bill moving through its legislature right now that would create a new kind of state insurance marketplace built around ichras, those individual coverage health reimbursement arrangements that allow the employer to take a tax free stipend, give it to the employee, who can then go purchase the exchange coverage and basically get that premium reimbursed by the employer versus purchasing the group policy. And the idea there is that employers could contribute money for employees to then purchase that coverage. It'd be voluntary and it would let Medicaid recipients use their benefits toward marketplace coverage as well. So kind of interesting that we're starting, we're seeing as, as the federal system is having obviously issues. The states are experimenting with their own kinds of marketplaces now too.
- [13:11]
A
No. And to that point we had on the podcast some time ago the CEO, founder of a company called Thatch that, that lives in that market, that ICRA market, which of course I knew nothing about until I had that podcast discussion with him. And fascinating to see that is another way to try and fill some of these gaps. It's like a different kind of HSA almost. It's at least the, you know, but, but there is tremendous healthcare inflation and not sure how we're going to solve it and whether it's really. These are some of the possible answers to it, where people have control over their health care dollars. Fascinating though. In any event, Jacob, always fantastic to speak with you. I always learn more than I ever do with anybody else talking to. So thank you so much for joining us on the Vectors Healthcare podcast to our audience. We hope you find this informative and interesting. Thank you so much for listening.
- [13:59]
B
Thank you, Scott.