Latest / Becker’s Healthcare Podcast / ACA Subsidies, PBMs, and the Shifting Payer Landscape with Jakob Emerson

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ACA Subsidies, PBMs, and the Shifting Payer Landscape with Jakob Emerson · Becker’s Healthcare Podcast

• 0:00
  This is Scott Becker with the Beckers Healthcare
• 0:03
  Podcast.
• 0:04
  Thrilled today to visit with Jacob Emerson.
• 0:06
  Jacob covers the payer universe better than anybody
• 0:10
  that I know. He shares with us weekly
• 0:12
  some of the key stories he's watching in
• 0:13
  the payer environment.
• 0:15
  Jacob, let me turn it to you
• 0:17
  and tell us what you're watching, what's of
• 0:19
  interest currently.
• 0:21
  Yeah. Hey. Good to talk with you, Scott.
• 0:23
  So I think the story of the week
• 0:25
  and I mean, it's been a story for
• 0:27
  a while, but, it's it's what's gonna be
• 0:29
  happening with the enhanced premium tax credits under
• 0:32
  the Affordable Care Act. The reason I wanted
• 0:34
  to chat about it today is just to
• 0:35
  get a give a good overlook of where
• 0:38
  things currently stand, especially as we head into
• 0:40
  tomorrow where the Democrats and the Republicans,
• 0:43
  in the senate both have competing bills on
• 0:46
  exactly
• 0:47
  where the ACA subsidies will end up, and
• 0:49
  they both got completely different ideas on how
• 0:51
  to handle the ACA moving forward. So that
• 0:54
  would, you know, could talk a little bit
• 0:55
  about that. And then,
• 0:57
  quickly also wanted to mention just an interesting
• 1:00
  story that we had reported,
• 1:02
  last week about Humana's CEO and Mark Cuban.
• 1:06
  They they were together on a panel at
• 1:09
  a conference last week, and they were hinting
• 1:11
  at a new partnership,
• 1:12
  that they might be pursuing together, which is
• 1:15
  interesting just, considering it's one of largest health
• 1:17
  insurers. But then, of course, Humana is a
• 1:19
  very large Medicare Advantage company. So
• 1:23
  a lot of,
• 1:24
  interesting innovation there in terms of how the
• 1:27
  a drug partnership could work for members there.
• 1:29
  So, you know, we'll turn it to you
• 1:30
  in terms of which one you wanna tackle
• 1:32
  first.
• 1:33
  No. I'd love to take a moment on
• 1:35
  the Mark Cuban issue because the the energy
• 1:37
  that he shows, whatever he commits to, seems
• 1:39
  to be,
• 1:41
  insane. And I'd love to understand the perspective
• 1:44
  there and what he's doing because I see
• 1:45
  his,
• 1:46
  you know, I see his name all the
• 1:48
  time, but at,
• 1:50
  you you know, it it just is amazing,
• 1:52
  the energy level he brings to this. And
• 1:54
  it it seems like generally for positivity. I
• 1:56
  I'd love to get your sense of that.
• 1:58
  Yeah. Definitely. And, I mean, it seems like
• 2:00
  this is his his thing that he's dived
• 2:03
  into. He's become an expert on. He's talking
• 2:05
  to everybody who's influential
• 2:07
  within the industry. And I, you know, I
• 2:08
  certainly follow him on social media, and, he's
• 2:11
  very anti PBM,
• 2:13
  or at least traditional, the big PBMs,
• 2:16
  that are under, you know, Optum, CVS,
• 2:19
  Cigna,
• 2:20
  and very much wanting large employers to, you
• 2:23
  know, take a look at their contracts
• 2:25
  with their insurance
• 2:27
  providers or with their drug benefits
• 2:29
  managers,
• 2:30
  and, you know, seeing how that's all working
• 2:32
  out. Because I think from from his perspective,
• 2:34
  it's a very opaque and very,
• 2:37
  I think he would probably describe it as
• 2:38
  a very fraudulent industry in terms of just
• 2:40
  the incentives
• 2:42
  and all the different,
• 2:44
  yeah, different contracts that are in place to
• 2:46
  not necessarily get, trickled down to to get
• 2:49
  people the best price on things. And so
• 2:51
  is when it comes to prescription drugs.
• 2:53
  So
• 2:54
  it's interesting that he's been talking with Humana
• 2:56
  CEO, and and some of this has been
• 2:58
  public. Humana does it does have its own
• 3:00
  PBM, but it's very small in terms of
• 3:02
  national market share. It's not one of the
• 3:04
  big guys, but they are, you know, they're
• 3:06
  a part d company. They offer prescription drug
• 3:07
  benefit plans to, Medicare enrollees. So this
• 3:09
  benefit plans to, Medicare enrollees. So this would
• 3:12
  kind of fit right within their wheelhouse. And
• 3:14
  like I said, they were they were talking
• 3:16
  the the CEO was talking with Mark Cuban
• 3:18
  last week during a conference,
• 3:20
  and said that they're they're specifically talking about
• 3:23
  a partnership with CenterWell, which is kind of
• 3:25
  like Humana's Optum. It's their health services division,
• 3:28
  that does the actual care delivery. It does
• 3:30
  the pharmacy services and all that good stuff.
• 3:32
  Everything that's not the insurance part of the
• 3:34
  business.
• 3:35
  And I I I I suppose I,
• 3:37
  got a little bit ahead of myself, but
• 3:39
  they did not give specifics on exactly what
• 3:41
  they're pursuing.
• 3:42
  But they talked about how they want to
• 3:44
  get rid of the complexity around drug benefits,
• 3:47
  how they wanna simplify these benefits for their
• 3:49
  members.
• 3:50
  So
• 3:51
  and basically just focus on something around a
• 3:53
  direct to employer program that would skip over
• 3:55
  pharmacy benefit
• 3:57
  managers entirely. So the CVS Caremarks, OptumRx, Express
• 4:00
  Scripts.
• 4:01
  What that what that ultimately means,
• 4:04
  who who can say?
• 4:05
  You know, I'm sure they're working out the
• 4:07
  details right now. But I think it's interesting
• 4:08
  too because in years past, we have reported
• 4:11
  on cost plus drugs, Cuban's pharmacy company,
• 4:15
  inking partnerships with insurers. They they had one
• 4:18
  with Capital Blue Cross a few years ago
• 4:21
  where
• 4:22
  the the Capital Blue Cross's,
• 4:25
  member services were directly integrated with cost plus
• 4:27
  drugs for their members.
• 4:29
  Blue Shield of California has, chose them as
• 4:31
  a preferred pharmacy provider,
• 4:33
  within its PBM model over CVS Caremark.
• 4:36
  And then SelectHealth, which is the insurance arm
• 4:38
  of Intermountain,
• 4:40
  also has partnered with them in the last
• 4:41
  few years as well. So they've they've inked
• 4:44
  insurance partnerships with before, and insurers definitely seem
• 4:47
  very interested in going down that route with
• 4:49
  him, if it saves money, because at the
• 4:52
  end of the day, some of these smaller
• 4:53
  plans that don't have a big PBM business,
• 4:56
  You know, they they probably would wanna go
• 4:58
  down this direction if it's at the end
• 5:00
  of the day, it gets rid of some
• 5:00
  of those contracts that just aren't,
• 5:03
  you know, creating those cost savings that I
• 5:05
  think the traditional PBMs would say that they
• 5:08
  create. So it's it's interesting to hear all
• 5:10
  this come out.
• 5:11
  It it is fascinating. It's fascinating to watch.
• 5:13
  I I see Mark on social media, and
• 5:15
  you follow him. You've had a chance to
• 5:16
  visit with him. The the amount of sort
• 5:19
  of
• 5:20
  gumption he takes at the PBM industry is
• 5:22
  is fun to watch. And, obviously, he's got
• 5:24
  a business motive, but he actually sounds right
• 5:26
  in a lot of it too. And so
• 5:28
  it's fascinating to watch. Tell us about the
• 5:30
  house, the Republicans in the senate, and their
• 5:32
  different views of the ACA. I know there's
• 5:34
  a whole lot of Republicans partly just because
• 5:36
  of, for good reasons, bad, but partly just
• 5:39
  because of disdain for president Obama. Wanna see
• 5:41
  the ACA
• 5:42
  fail.
• 5:43
  Other reasons why it may be good for
• 5:45
  it to fail are just the amount of
• 5:46
  subsidies going out seem to just cause health
• 5:48
  care inflation. So there there are good and
• 5:50
  bad reasons around different thoughts in this thing,
• 5:52
  and they know it's very complicated. But it
• 5:54
  seems a lot of the negativity is just,
• 5:57
  aimed at just hating it because president Obama
• 6:00
  was for it. But what is going on
• 6:02
  in the house, you know, Republicans and and
• 6:04
  and Democrats on the ACA?
• 6:07
  Yeah. I mean, I to your point, Scott,
• 6:08
  there's a lot of pros and cons here
• 6:09
  to what both parties
• 6:11
  are pitching. And, you know, I I think
• 6:13
  it is fair to say that just extending
• 6:15
  the premiums is a bit of a Band
• 6:16
  Aid, because it's putting a Band Aid over
• 6:18
  the fact that these health care plans are
• 6:20
  extremely expensive to start with.
• 6:22
  But, yeah, I mean, for anybody who's not
• 6:24
  familiar, just super quickly, the enhanced premium tax
• 6:26
  credits, that have made marketplace coverage so affordable
• 6:30
  over the last few years and have really
• 6:31
  expanded it to
• 6:33
  tens of millions of 25,000,000 people or so,
• 6:36
  that's gonna expire on as of January 1.
• 6:38
  So
• 6:39
  if nothing happens as of right now, premiums
• 6:41
  are gonna skyrocket, double, triple in in some
• 6:44
  markets all over the country.
• 6:46
  And in, really, in red states specifically.
• 6:48
  It's gonna explode the health care costs for
• 6:51
  people who are not getting health coverage from
• 6:53
  their employers. So it is Republicans that are
• 6:55
  gonna feel this this hurt,
• 6:57
  a lot in terms of,
• 6:59
  from their constituents.
• 7:01
  But we've got senate democrats,
• 7:03
  proposing a straightforward
• 7:04
  three year extension of these subsidies, and they've
• 7:07
  scheduled a vote for tomorrow, December 11. And
• 7:10
  they're calling it a last chance last chance
• 7:13
  effort to prevent these these cost spikes.
• 7:15
  The Republicans are proposing,
• 7:17
  a competing bill for the same day in
• 7:19
  terms of a vote, but they're arguing more
• 7:21
  of a populist approach that we've also heard
• 7:23
  the president's really come out with these last
• 7:25
  few months, saying that this this current structure
• 7:28
  just funnels money directly to the insurance companies,
• 7:31
  and it's subsidizing care for people who don't
• 7:33
  need it to have higher incomes, which is
• 7:35
  is partially true,
• 7:37
  on both counts.
• 7:39
  And then they're also pointing to a recent
• 7:40
  federal report just coming out within the last
• 7:42
  few weeks that flagging a lot of fraud
• 7:45
  risks that exist currently in the program, which
• 7:47
  is definitely true, in terms of income verification
• 7:51
  gaps, problems with agent and broker oversight, and
• 7:54
  even AHIP, the insurance industry lobby has acknowledged
• 7:57
  that these are are very real concerns, but
• 7:59
  they're still pushing for a tax credit extension.
• 8:01
  So that's where the insurers are.
• 8:04
  The the republicans and the senate's,
• 8:06
  basically, instead of extending the tax credits, they
• 8:09
  wanna let them expire, and they wanna deposit
• 8:11
  money into health savings accounts
• 8:14
  for people who enroll in bronze or catastrophic
• 8:17
  plans on the exchanges.
• 8:18
  There's, you know, metal tiers on on the
• 8:20
  exchanges of of the the quality of the
• 8:23
  health plans in terms of how high the
• 8:25
  deductible is or high how high the premiums
• 8:27
  are. Bronze is the lowest level. So, basically,
• 8:31
  Republicans want to expand those and have more
• 8:34
  HSAs,
• 8:36
  for people who are in those highest deductible
• 8:38
  plans,
• 8:40
  which, you know, it's more of a skin
• 8:42
  in the game approach and more of a
• 8:44
  consumeristic,
• 8:44
  have people shop for,
• 8:47
  health care services type thing. But I think
• 8:50
  on the flip side there, we we know
• 8:51
  factually that high deductible health plans, especially those
• 8:54
  that get up up there in terms of
• 8:55
  five, six, you know, $8,000
• 8:58
  deductibles before your benefits even kick in, they
• 9:01
  actively make health care worse. They they make
• 9:03
  health outcomes worse because if you're somebody who's
• 9:06
  all ready going towards one of those plans
• 9:08
  to save money overall, then you're probably going
• 9:11
  to avoid care if it means that you
• 9:13
  have to pay $8,000 out of pocket,
• 9:15
  before your benefits even, become usable.
• 9:19
  So we there's been many, many studies that
• 9:21
  we've reported on on ourselves that have found
• 9:24
  that HDHP's,
• 9:25
  they they make health outcomes worse,
• 9:28
  particularly for those with serious or complex conditions
• 9:30
  for people who who have expensive health care.
• 9:33
  And, you know, we had heard,
• 9:35
  Trump reportedly been he had been considering a
• 9:38
  two year extension of the subsidies with some
• 9:40
  more eligibility restrictions, but that got shelved after
• 9:43
  after a lot of GOP pushback.
• 9:45
  So that the GOP just does not wanna
• 9:47
  extend these overall,
• 9:48
  and the administration now seems most interested in
• 9:50
  routing these dollars
• 9:52
  through HSAs.
• 9:53
  So we'll see what happens. The the votes
• 9:55
  are tomorrow. I don't believe any either party
• 9:58
  has enough to pass their proposal.
• 10:00
  But, you know, the the the the subsidies
• 10:03
  are, expiring no matter what. So,
• 10:06
  January 1
• 10:07
  without anything is gonna be a world of
• 10:09
  hurt for a lot of people.
• 10:11
  And what's fascinating is the subsidies have never
• 10:14
  been more popular than they are right now
• 10:17
  given how expensive health insurance has become
• 10:20
  given the threats to the ACA. And so,
• 10:22
  like, take the Republicans have to take that
• 10:23
  into account too.
• 10:25
  All of a sudden, you know, public
• 10:28
  positivity
• 10:29
  towards the ACA and towards the subsidies is
• 10:32
  at an all time high when it's really
• 10:35
  under threat, probably the most threat it's been
• 10:37
  under in the last since 02/1012,
• 10:40
  whatever the year it was that it was
• 10:41
  passed. Fastly to watch. Correct. Yeah. And I
• 10:43
  I I Republicans are definitely in a very
• 10:45
  difficult place politically because you either expand Obamacare,
• 10:48
  the the arch nemesis, or you, let people's
• 10:52
  health care premiums explode that are on the
• 10:54
  exchanges. And I think the other issue is
• 10:56
  that, certainly, what we've seen in polling is
• 10:57
  there's a lot of people on the ground
• 10:58
  that just don't know the difference between the
• 11:00
  ACA and Obamacare or that there isn't a
• 11:02
  difference.
• 11:03
  And so you have Republican constituents not wanting
• 11:06
  to be in favor of Obamacare, but loving
• 11:08
  their ACA coverage. And so I think that's
• 11:10
  a hard one to communicate with people as
• 11:13
  well. No. I think that's exactly right. It
• 11:14
  reminds me of years ago during one of
• 11:16
  the campaigns, people having big posters that said
• 11:19
  get the government out of my Medicare without
• 11:21
  realizing that Medicare is the government. No. And
• 11:24
  I I don't mean that. It just did
• 11:25
  it was just that they found it to
• 11:26
  be you know, people just it's hard to
• 11:29
  understand all these different things going on. And
• 11:31
  with people that are
• 11:33
  there's this really interesting situation because there's a
• 11:35
  huge percentage of people that are not on
• 11:37
  subsidies,
• 11:38
  and they're finding their health care costs exploding
• 11:40
  as well. Yeah. And I don't think some
• 11:42
  people take enough time to recognize whether you're
• 11:45
  on somebody's or not, health care costs are
• 11:47
  just exploding, and nobody seems to have a
• 11:50
  good answer for that. Quite frankly, no one
• 11:51
  seems to be attacking the real problem of
• 11:53
  supply and demand and a lot of other
• 11:54
  things too. So Yeah. To your point, at
• 11:56
  the end of the day, what employers do
• 11:58
  is subsidize health care coverage. I mean, employers
• 12:00
  are the ones taking on the bulk of
• 12:03
  what it costs to purchase a group policy
• 12:05
  from an insurance company.
• 12:06
  And then us as the employer as the
• 12:08
  employee don't actually see the real cost of
• 12:10
  that. So the ACA subsidies are basically just
• 12:13
  a version of of that, of shielding the
• 12:15
  real cost of these very, very expensive
• 12:17
  health care plans. But there was one other
• 12:19
  thing I I wanted to mention here that
• 12:21
  all kind of I think is interesting in
• 12:22
  terms of where it fits in with all
• 12:24
  this is that Florida has a bill moving
• 12:26
  through its legislature right now that would create
• 12:28
  a new kind of state insurance marketplace,
• 12:31
  built around ICRA, those individual coverage health reimbursement
• 12:34
  arrangements that allow the employer to take a
• 12:37
  tax free stipend, give it to the employee
• 12:39
  who can then go purchase the exchange coverage,
• 12:42
  and basically get that premium reimbursed by the
• 12:45
  employer versus purchasing the group policy.
• 12:47
  And the idea there is that employers could
• 12:49
  contribute money for employees to then purchase that
• 12:52
  coverage.
• 12:53
  It'd be voluntary,
• 12:54
  and it would let Medicaid recipients use their
• 12:56
  benefits toward marketplace coverage as well. So
• 12:59
  kind of interesting that we're starting we're seeing
• 13:02
  as as the federal system is having, obviously,
• 13:05
  issues, the states are experimenting with their own
• 13:08
  kinds of marketplaces
• 13:09
  now too.
• 13:11
  No. And to that point, we had on
• 13:12
  the podcast some time ago,
• 13:15
  the CEO founder of a company called Thatch
• 13:17
  that that lives in that market, that ICRA
• 13:20
  market, which, of course, I knew nothing about
• 13:22
  until I had that podcast discussion with him.
• 13:25
  And and fascinating to see that as another
• 13:27
  way to try and fill some of these
• 13:28
  gaps. It's like a a different kind of
• 13:30
  HSA almost. It's at least the,
• 13:33
  you know but but there is tremendous health
• 13:34
  care inflation and and not sure how we're
• 13:36
  going to solve it and and whether it's
• 13:38
  really but these are some of the possible
• 13:40
  answers to it where
• 13:42
  people have control over their health care dollars.
• 13:44
  Fascinating. No. In any event, Jacob, always fantastic
• 13:47
  to speak with you. I always learn more
• 13:48
  than I ever do with anybody else talking
• 13:50
  to, so thank you so much for joining
• 13:51
  us on on the Becker's Health Care podcast.
• 13:54
  To our audience, we hope you find this
• 13:55
  informative and interesting. Thank you so much for
• 13:57
  listening. Thank you, Scott.