KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Viewpoints: Health Spending Ready To Start Climbing Again; Cruz’s ‘Nightmare’ Comes True

The New York Times: Acceleration Is Forecast For Spending On Health
Standing before a roomful of economists, policy makers and health care experts earlier this month, Amitabh Chandra, director of Health Policy Research at Harvard’s Kennedy School of Government, closed a presentation about the slowdown in health care spending over the last decade by citing an article in The New York Times. "Changes in the way doctors and hospitals are paid — how much and by whom — have begun to curb the steady rise of health care costs in the New York region," the article declared. "Costs are still going up faster than overall inflation, but the annual rate of increase is the lowest in 21 years." Then came the punch line. The article, written by my now-retired colleague Milt Freudenheim, was published in December 1993, when the so-called managed care revolution promised for a few hopeful years to change the way doctors practiced medicine and curb the breakneck rise in health care costs (Eduardo Porter, 4/22). 

Politico: Ted Cruz's Worst Nightmare Is Coming True. Obamacare Is Working.
"President Obama wants to get as many Americans addicted to the subsidies because he knows that in modern times, no major entitlement has ever been implemented and then unwound," [Sen. Ted Cruz, R-Texas] said. The worry, according to Cruz, was that once the ACA went into effect, we'd all be "addicted to the sugar." Then, it would be too late to roll it back. Cruz's nightmare, and the left's long-held dream, has come true. Finally, after years of failed reform efforts, the U.S. government is actually trying to provide affordable health coverage for all. And it’s working, despite Republicans’ relentless attempts to deep-six the law. As a result, the politics of Obamacare will never be the same (Richard Kirsch, 4/22).

Bloomberg: Pharma Mergers Make Sense
A wave of big mergers in the pharmaceutical industry is turning into a tsunami, with more than $100 billion in deals either announced or rumored this week. Oddly, this may be one of the rare cases where merger frenzy actually makes sense. ... One aim of the mergers is to prepare for leaner years. Producing new hits is harder because of increased regulatory scrutiny. It's also costlier: The average cost of developing and launching a new drug has been estimated at $5 billion in 2013, compared with $1.1 billion in the late 1990s. At the same time, expiring patents are driving the industry's revenue down (Leonid Bershidsky, 4/22).

Bloomberg: Pharma Mergers Aren't A Miracle Cure
The pharmaceutical industry, once a reliable source of large profits, is finding it harder and harder to make profitable new drugs. ... Focusing more intently on oncology drugs isn't going to help much if you don’t have promising targets, and if regulators and insurers are pummeling you for lower prices on whatever you do manage to produce. But no one really knows what to do about those problems. Merging and de-merging at least gives a worried management something to do with its time -- other than polishing up the old resume and finally getting serious about nursing school (Megan McArdle, 4/22).

Bloomberg: Sometimes Brand-Name Drugs Really Are Better
When you go to the pharmacy for aspirin, do you buy Bayer or the private-label generic alternative offered by chains such as CVS? The price for Bayer's version is more than twice that of CVS's, yet the active ingredient is exactly the same. The choice may seem trivial, but it provides insight into larger economic and health questions. Research by Matthew Gentzkow of the University of Chicago -- who last week won the prestigious John Bates Clark prize for the best young economist in the U.S. -- and co-authors studied exactly this question. They estimate that U.S. consumers would save $32 billion a year by switching to generic labels for goods (not just aspirin) that are equivalent to their brand-name alternatives (Peter R. Orszag, 4/22).

Detroit News: Michiganians Can't Afford Deep Medicare Cuts
It seems the federal government is often looking to cut spending, a goal many Americans could support. However, sometimes cuts can do more harm than good, or even lead to higher spending instead. One area that lawmakers may look for savings is our country’s health care system in particular is reimbursement for Medicare Part B drugs. But cuts to this essential program, however, will reduce seniors’ access to Part B medications, especially in rural communities (Dr. Amar Majjoo, 4/23).

Reuters: Why Not A War On Child Poverty?
Since 1969, the proportion of children and youth in poverty rose by 56 percent, even as the economic fortunes of the elderly improved under programs like Medicare and Social Security. Today, 32 million American children and youth are confronting poverty — including 7 million suffering utter destitution, another 9 million living in serious poverty and 16 million more in low-income households struggling just above poverty lines (Mike Males, 4/22).

JAMA Pediatrics: Children's Health Care and the Patient Protection And Affordable Care Act: What's At Stake?
The ACA's "essential health benefits" establish a benefits framework for products sold through the exchanges. Because children in low-income families eligible for federal subsidies constitute a new and potentially growing population under this new framework, it will be important to track its effect on children's health care. Notably, the ACA bars Medicaid from acting as a secondary payer to supplement subsidized coverage through the exchanges .... While ACOs are currently focused on achieving short-term cost savings from chronically ill adults, innovators must now pursue the challenging but critical work of forming pediatric ACOs, with children’s hospitals at the helm (Eileen K. Fry-Bowers, William Nicholas and Neal Halfon,, 4/21).

JAMA Internal Medicine: Overcoming Barriers To Discussing Out-of-Pocket Costs With Patients
Increased cost sharing, in the forms of higher copayments, deductibles, and yearly maximums, has been advocated to encourage patients to become smarter consumers and thus to reduce the overall cost of medical care. In our view, physicians have an ethical duty, at a minimum, to discuss out-of-pocket costs with patients in the same way that they would discuss the adverse effects of a treatment. But when physicians actually begin to consider out-of-pocket costs as part of clinical decision making, the challenges can seem over whelming (Drs. Kevin R. Riggs and Peter A. Ubel, 4/21). 

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.