If repeated attempts by President Donald Trump’s administration to undermine or replace the Affordable Care Act aren’t thwarted, consequences in Rhode Island could be dramatic, panelists at Providence Business News’ April 4 Spring Health Care Summit agreed.
Trump’s proposed changes in regulations for accountable care organizations and the cost of prescription drugs were also on the minds of members of the event’s second panel. They included Dr. Marylou Buyse, chief medical officer of Neighborhood Health Plan of Rhode Island; Dr. James E. Fanale, CEO of Care New England Health System; Chris Ferraro, chief financial officer at Coastal Medical Inc.; Marie L. Ganim, Rhode Island’s health insurance commissioner; Zachary W. Sherman, director of HealthSource RI; and Stephen Kogut, professor of pharmacy practice at the University of Rhode Island.
But protecting the ACA and the gains Rhode Island has made because of it was top of mind for several panelists.
Rhode Island will be hurt if the Trump administration succeeds in replacing the ACA and scrapping premium-free plans, Ganim said.
“We would suffer significantly from the economic impact,” she said. “Those dollars are not only dollars that help people stay well … they also help our provider community to stay vibrant,” she said of federal Medicaid spending. “It’s very serious, we’re looking at it very carefully,” she said, citing potential elimination of money for expansion of the Medicaid program and a substantial decrease or loss of subsidies to families with low incomes, Ganim said.
Replacement of the ACA could also destabilize insurance markets in Rhode Island, where 96% of residents and 98% of children are now insured, she added.
Those numbers are so high in part because of the ACA, Sherman said.
HealthSource RI, the state’s insurance marketplace, which offers access to Medicaid and federally subsidized rates for some, saw a 6% increase in enrollment this year, and 11% growth from the previous year.
National figures, down by 4% last year and 9% in the last two years, do not mirror the state’s growth, Sherman said, in part because of changes the Trump administration has already succeeded in making to the ACA.
By allowing extended use of short-term health plans (which were not approved for sale in R.I.), repealing a tax penalty for those without coverage and cutting millions in federal advertising dollars, the administration has shrunk the number of insured people across the country.
About 89% of Rhode Island’s population was insured prior to the implementation of the ACA and HealthSource RI, Sherman noted.
“I have no doubt that undermining efforts starting two years ago to the ACA will come to bear here” in the state, he said. “I think our ability to push back on those changes has enabled us to hold that off for longer, but I worry that if we don’t take action at the state level we’ll see the uninsured rate here go up and we’ll see premium prices go up as well, and we’ll be in a place where other states are today.”
While the president’s proposed $854 billion in cuts over a decade to Medicare seem unlikely to pass due to fierce opposition from Democrats, a separate proposal for nationwide work requirements and larger copayments for Medicaid are worthy of more attention, Buyse said.
Although a federal judge recently struck down work requirements in Arkansas and Kentucky, eight other states have added them, and seven others seem likely to, she said, predicting that the issue will wind up in the U.S. Supreme Court.
Still, in Rhode Island, where at least one person in 61% of families on Medicaid is working, effects of the proposed change will likely be minimal, Buyse said.
“Rhode Island is already at or beyond the national average,” she said.
The president’s take on accountable care organizations is another issue to keep an eye on, panelists said.
Trump contends that ACOs are falling short of savings targets and wants to implement a new rule ordering such groups to begin repaying Medicare within two years, rather than the six years now required.
A second proposal would extend contracts from three to five years and includes a suggested program that could help ACOs avoid large losses.
Fanale and Ferraro, both heads of groups that operate as ACOs, disagree with the president’s stance.
“You’ve read that ACOs have fallen short, but in Rhode Island they’ve been successful,” Fanale said.
Programs such as one designed to minimize hospital stays for chronically ill people are central to CNE’s efforts to keep costs down.
Now, Fanale said, it’s time to reimagine an approach for people who are not sick in an effort to keep them from needing expensive care down the line.
“It’s all the healthy folks, how to keep them healthy,” he said.
Coastal Medical, a Providence-based ACO formed in 2012, isn’t losing money, but many groups aren’t profitable until they’ve learned how to navigate a business model that can be difficult at first, Ferraro said.
A number of groups report losses during their first years, only to rebound and begin making profits, he pointed out.
About 60% of ACOs nationwide saved money in 2017, and 34% received shared savings, while 67% improved their quality scores from 2016 to 2017, he said, citing Medicare Shared Savings Program figures.
“The key here is they were able to drive down costs but also they were able to impact quality,” Ferraro said.
Coastal Medical, with about 20 offices statewide, has managed $2 billion in care costs over the past five years, and decreased costs by $74 million. Of that amount, the company was able to keep $32 million in shared savings payments.
“Without having shared savings dollars, and without having very good partners with these contracts, we wouldn’t be able to afford to provide these services to our patients,” Ferraro said. “Of these dollars, 85% go back into the reinvestment of our programs.”
High-priced prescription drugs have grabbed national headlines as well, but Stephen Kogut, professor of pharmacy practice at URI, pointed out that most standard drugs used to treat chronic diseases are usually affordable.
“About 95% of medications dispensed are generic, and that has helped to offset prescription drug prices, which were rising 10-15% per year in the 1990s,” he said.
Current spikes in drug prices are often connected with name-brand medicines formulated to treat very specific or rare conditions.
“Oftentimes they are really revolutionary in the treatment of diseases, particularly rare diseases, and really play an important role for patients with conditions where other options have not been available for a long time,” Kogut said.
‘We would suffer significantly from the economic impact [of replacing the ACA].’
MARIE L. GANIM, R.I. health insurance commissioner
The drawback is the price tag, which can exceed $100,000 a year. Drugs that are very costly to develop and only used by a relatively small number of people can be unaffordable, or expose patients to “financial toxicity,” Kogut said.
Still, more people may be finding themselves faced with a huge pharmaceutical bill as medical research and care continues to evolve.
“The tricky thing is these rare diseases aren’t so rare when you think about the number of people who have a condition that may qualify them for one of these types of therapies,” Kogut said. “It could be that 5-10% of Americans have a rare disease that one of these medications could be used for, and so it’s causing strain in the system.”
Overall, though, average spending at pharmacies has remained steady, according to figures that show the purchase of prescription drugs accounting for about 10% of $3.5 trillion in medical costs in 2017, he said.
Health care demands roughly parallel what patients spend on drugs, according to data Kogut compiled from 1970 to 2017.
“That’s been pretty static for the last decade or more,” he said. “What we spend for prescription drugs has been 10 cents on the dollar for health expenditure.”
Elizabeth Graham is a PBN staff writer. Contact her at Graham@PBN.com.
