Doctors Say New Medicaid Rules \'like Asking People To Work With An Anchor On Their Back\'

By DAN DIAMOND (ddiamond@politico.com; @ddiamond)

WHAT'S IN THE NEW MARKETPLACE RULES — The Trump administration on Monday finalized 2019 rules for Obamacare plans that emphasize greater flexibility for states to design benefits and regulate insurers.

Among the changes identified by POLITICO's Paul Demko:

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1) More exemptions to the individual mandate. For example, individuals living in counties where there is only one insurer selling coverage or where the only affordable plans cover abortion can now apply for an exemption from the penalty. The new exemptions also extend to individuals who can’t access any affordable plans that cover needed specialty treatment. More for Pros.

2) Another year of extensions for 'transitional' health plans. The non-compliant plans were supposed to be eliminated in 2014, but the Obama administration let states extend them and the Trump administration has followed suit. States can

continue to extend the plans through 2019.

3) More authority for states: For instance, the Trump administration will allow several ways for states to set coverage within the ACA requirement for plans to cover 10 essential health benefits. However, that won’t take effect

until 2020.

How the Trump administration is pitching it: CMS said the changes are intended to bring greater stability to exchanges after years of skyrocketing premiums and dwindling competition.

— How health care analysts see it: “Going forward, we expect that the administration will continue to focus on granting flexibilities involving essential health benefits, exchange requirements, and benefit design,” said Avalere’s Kelly Brantley.

** A message from PhRMA: New data from IQVIA show spending on medicines grew just 0.6 percent and prices for brand-name medicines increased just 1.9 percent in 2017. At the same time, several tremendous medical advances last year, including 15 first-in-class treatments and the first cell and gene therapies, were approved in the United States. http://politi.co/2xyzEif **

MEANWHILE: WHAT CBO's NEW NUMBERS MEAN FOR HEALTH CARE — The budget agency's latest projections were posted on Monday, and while most attention focused on ballooning federal deficit projections in the wake of the Republicans' tax cut, CBO analysts flagged two health-related factors that they say will drive up federal spending.

— Driver #1)

The aging of the population. CBO projects that the number of people over age 65 will grow by more than one-third in the next decade. That's the key reason the budget office sees spending on Social Security and major health care programs rising from 10.2 percent of GDP this year to 12.6 percent of GDP in a decade.

— Driver #2) The growth in health care costs. CBO says that it expects health spending to rise faster than the rest of the economy, although it doesn't expect the pace to return to its pre-recession level. (In recent years, health spending has risen around 4 percent per year.)

— $16 trillion. That's how much CBO projects the nation will spend on Medicare and Medicaid alone over the next decade.

See the budget projections.

Conservatives seized on the new CBO numbers as a reason to cut entitlement spending. "Reasonable people can disagree on how to close the future deficits," the Manhattan Institute's Brian Riedl wrote. "But the first step is to accurately diagnose the long-term debt as indisputably driven by the $82 trillion projected cash deficit for Social Security and Medicare." More.

Congressional Republicans like House Speaker Paul Ryan are expected to tout the latest projections as more evidence for why programs like Medicare and Medicaid need to be pared back.

— How health advocacy groups see it: They defended the programs and offered a different way to look at the spending estimates — for example, the government's spending growth isn't as dire as it seems.

“Although health care spending has a significant impact on national expenditures under the CBO estimates, it’s really important to point out that spending is not growing as fast in Medicare and Medicaid than it is in the private-sector," said Frederick Isasi of Families USA.

THIS IS TUESDAY PULSE — Where your author was sorry to say goodbye to Glen's Garden Market in Shaw, a favorite local grocery store that shuttered last night. (The grocery's owner explains why the math just didn't work, especially when trying to offer higher wages and benefits like health care.)

Is D.C. too tough a town for independent chains to thrive? Send thoughts and tips to ddiamond@politico.com or @ddiamond on Twitter.

With help from Renuka Rayasam (@RenuRayasam), Victoria Colliver (@vcolliver) and Jennifer Haberkorn (@JenHab).

ON TAP TODAY

Chamber of Commerce hosts wellness event. The all-day event kicks off at 9 a.m. and looks at the intersection of community and workplace wellness. See agenda.

American Academy of Pediatrics hits the Hill. More than 350 pediatricians and other participants at AAP's legislative conference will be urging Congress members this morning to pass comprehensive gun violence prevention legislation.

Alzheimer's researchers propose new way to diagnose the disease. The effort, a collaboration between the government, the Alzheimer's Association and others, is expected to lead to many more early diagnoses of the brain disease. See the AP's coverage.

IN CONGRESS

Acting VA secretary calls for Congress to pass Choice bill . Robert Wilkie on Monday urged Congress to quickly pass bipartisan Choice legislation that provides expanded private-sector options for veterans who use the VA.

Congress has twice extended the 2014 Choice program, which came in response to the VA scheduling scandal. In March, advocates tried but failed to attach a bipartisan bill to the omnibus legislation that would have added funds and streamlined the program.

Wilkie's echoing Shulkin's position. Former VA Secretary David Shulkin strongly backed the bill before he was fired by President Donald Trump

two weeks ago. More for Pros.

Cory Booker says pharma firms aren't using tax savings to lower drug prices. The New Jersey Democrat posted a report last night, concluding that the largest pharma firms — based on their own public statements — are mostly pocketing the savings from Republicans' tax bill or buying back their stocks, a move that benefits shareholders.

"The pharmaceutical industry needs to get its priorities straight and do more for patients struggling with skyrocketing drug prices,” Booker said. See Booker's report.

Planned Parenthood goes after Wendy Vitter. Planned Parenthood Action Fund is trying to drum up opposition to the district court nominee, who's the wife of former Sen. David Vitter and goes before

the Senate Judiciary Committee for a confirmation hearing Wednesday.

The group is going up with a five-figure digital ad campaign outlining Vitter's opposition to abortion and asking supporters to sign a petition against the nomination. The ad is targeting Planned Parenthood supporters in Alaska, Maine (home to Planned Parenthood supporters Sens. Lisa Murkowski and Susan Collins) and Nevada (home to Sen. Dean Heller, who is expected to face the most difficult re-election of Senate Republican incumbents).

… Vitter is general counsel to the Roman Catholic Archdiocese of New Orleans. Her hometown mayor, Mitch Landrieu, on Monday crossed party lines to back her.

INSIDE THE HUMPHREY BUILDING

HHS official reportedly spread Pizzagate conspiracy theories. Ximena Barreto, who joined HHS as a deputy communications director in December and previously worked on Trump’s campaign, in 2016 publicly encouraged the conspiracy theory that Democrats were using a Washington pizza shop for sex trafficking, Media Matters reports. Barreto also made inflammatory statements like calling African-Americans the "most racist people I ever met.“ More.

An HHS spokesperson told Media Matters that the agency "has no comments on any statements [Barreto] may have made before joining HHS." The liberal media watchdog later reported that HHS placed Barreto on administrative leave “while the matter is reviewed.”

What's Alex Azar's plan on value-based care, exactly? The HHS secretary has given multiple speeches warning the health care industry that big changes are coming to their payments. But health care consultants Billy Wynne and Taylor Cowey look closer at Azar's remarks and see some contradictions.

"Azar’s four-point plan for value-based care appears to be torn between radical transformation and a relaxation of demands on providers and other health care stakeholders," Wynne and Cowey write at the California Health Care Foundation. They note that while Azar's given lip service to the idea of shifting payments and rewarding quality, he's been vague about how HHS plans to do it and which groups will bear the burden. More.

AROUND THE NATION

Louisiana: Governor to tout benefits of Medicaid expansion . Gov. John Bel Edwards is holding a press conference this afternoon to discuss a new report from Louisiana State University about the economic impact of Medicaid expansion.

Edwards, a Democrat, signed an executive order to expand the federal program in Louisiana shortly after he took office in January 2016. Since then nearly 500,000 people have received health coverage through the expansion, according to state statistics.

California: State leads bid to intervene in red states' Obamacare challenge. Attorney General Xavier Becerra on Monday said he filed a motion in in federal district court in Texas to intervene in the lawsuit filed by red states in February.

"We’ve taken this action to protect the health and financial security of millions of people in our country, as well as billions of dollars of federal funds that go to our states to make sure we can afford the health care our families need," Becerra said at press conference in Sacramento, Calif. More for Pros.

California: New bill to create commission already drawing opposition. A bill introduced Monday that would create a commission to set prices for hospital stays, doctor visits and other health care services is already firing up fierce opposition from the same powerful organizations that oppose single payer — along with single-payer supporters, POLITICO's California correspondent Victoria Colliver reports.

The bill, AB 3087, authored by Assembly Member Ash Kalra, is being backed by various groups including the California Labor Federation, SEIU California and Health Access California. Kalra and the bill’s supporters say health costs need to be reined in before they become even more unsustainable. But the concept was swiftly opposed by the hospital lobby, the California Medical Association and the main proponents of the state’s stalled single-payer legislation, the California Nurses Association.

... The California Hospital Association projects that the legislation, which would base prices off of what Medicare pays, would cost the state’s hospitals at least $18 billion a year in revenue and about 175,000 health care workers could lose their jobs. Dietmar Grellmann, a senior vice president with the hospital lobby, described the bill as “dangerous” and “an empty promise.”

... Theodore Mazer, president of the California Medical Association, called it “an unproven policy of inflexible, government-managed price caps across every health care service."

... The nurses’ union views anything short of single payer as a “piecemeal” approach that doesn’t solve the cost problem. From Stephanie Roberson,

director of government relations: “This bill will incur the same wrath as those against single payer, so why not move full steam ahead (with single payer)?"

WHAT WE'RE READING

By Adam Cancryn

Kaiser Permanente will spend $2 million on its own gun violence research, citing the lack of funding and data on the federal level, the Washington Post's William Wan writes. More.

Bloomberg's Zachary Tracer examines the industry forces that prompted UnitedHealth to amass an army of more than 30,000 doctors. More.

For Task & Purpose, Aaron Gell writes about how a missing disability check from the VA drove a Marine Corps veteran to despair. More.

New research suggests the gene that causes ALS could be linked to dementia, the Daily Beast's Tanya Basu writes. More.

A change in the way Texas calculates maternal deaths more than halved the state's tally of women who died from pregnancy complications in 2012, the Texas Tribune's Marissa Evans reports. More.

** A message from PhRMA: Patients share the costs. They should share the savings. More than one-third of a medicine’s list price is often rebated back to middlemen, like insurers and pharmacy benefit managers (PBMs). These discounts and rebates created savings of more than $130 billion last year, but insurers don’t always share these savings with patients

. http://politi.co/2xyzEif

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About The Author

Dan Diamond is the author of "POLITICO Pulse," the must-read morning briefing on health care politics and policy. He's also the creator of PULSE CHECK, the popular podcast that features weekly conversations with politicians like Sen. Susan Collins, leaders like Kaiser Permanente’s Bernard J. Tyson and thinkers like Atul Gawande.

Along with his partner Rachana Pradhan, Diamond’s high-impact reporting resulted in the resignation of HHS Secretary Tom Price. Diamond also has done prize-winning reporting on hospitals’ community obligations and deep investigations into the Trump administration’s health care strategy, including its approach to vulnerable populations.

Before joining POLITICO, Diamond served as the Advisory Board Company’s senior director of news and communications. He also covered health care policy, business, and strategy for FORBES. His work has appeared at Vox, Kaiser Health News and other publications.

Diamond is a graduate of the University of Pennsylvania and has appeared to discuss health care, politics, and policy on NPR's "All Things Considered" and "Fresh Air," the NBC Nightly News, the BBC, CBS, CNN, MSNBC, the Dan Patrick Show, and other programs. Diamond has been a Yale University Poynter fellow and a fellow of the Association of Health Care Journalists.

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