5 Things Washington: Re-insurance bill, #JPM2018, Stephen Rose

The session is underway, men named Michael are meeting in San Francisco, and last week’s State of Reform event seems like it was a month ago.  If you joined us last week in SeaTac, thank you!  It means a tremendous amount to have your support and engagement with us.

But, without further adieu, here are 5 Things We’re Watching in health care in January, 2018.

DJ 5 Things Signature





1.  What you missed: 2018 State of Reform Health Policy Conference

We had a tremendous crowd last week at our 2018 Washington State of Reform Health Policy Conference with 650 attendees throughout the day. It was far and away the largest, most diverse convening of senior health care executives and health policy leaders in the state.

If you were with us, thank you.  I appreciate your participation more than you might know.

If we missed you, take a look at the highlight video from this year’s event. I expect you’ll see some familiar faces!  We also have two keynote sessions ready for your review: one on “Navigating Uncertainty in Health Care Today” and one on “Forming New Partnerships and Affiliations in Health Care.”

2. Reinsurance bill to move quickly in session

Commissioner Kreidler’s office is pushing a re-insurance bill (HB 2355) that would support the state’s commercial carriers by covering high costs for care beyond a floor of $75,000 per episode (meaning the actual amount is TBD but will be at least that amount). Reinsurance programs have shown success in some other states, notably Alaska. There, premiums fell considerably following the implementation of a reinsurance bill.

Two things stand out about this bill.  First, it deals with a symptom of high prices (costly insurance), not the cause (costly care delivery).  And, every dollar spent to subsidize that care delivery is a dollar that will drive prices higher over time.  And, second, it includes an OIC effort to begin regulating TPAs in addition to carriers. That’s a significant expansion of the OIC’s authority that’s not-so-subtlely part of this bill.

It has a hearing this morning in the House, and is scheduled for Executive Session on Jan. 12th.

3.  Video: Stephen Rose of Hall Render

Stephen Rose, Managing Partner at Hall, Render, Killian, Heath & Lyman, has more than 30 years of experience representing clients in Medicare and Medicaid reimbursement and defending providers. Rose joined us for this edition of “What They’re Watching” to discuss differing reactions among providers in these times of uncertainty.

“Traditionally, health care providers, when you have uncertainty, especially the type of uncertainty we have now with respect to funding mechanisms in the federal government, you end up with the health care providers really contracting, hunkering down, because they don’t know what next year is going to look like…. you’ll see a number of providers across the United States health systems where they’re cutting back on staff, they’re cutting back on everything they can cut back on to try to get themselves in the best position to react to whatever the next system is that comes into being. On the other hand, we have other providers who see this as a great opportunity.”

4. JP Morgan underway, out of sync

JP Morgan’s conference for investors in health care is taking place this week.  There are about 10,000 attendees that will be in or “around” the event.

This chart is a good summary of where the money goes in health care. Shockingly for non-scientists, one “panel on gene therapy acknowledged that reimbursement might just be the trickiest part of these innovative therapies (see the next item).”  The disruptive threat from Amazon is a primary driver of increasing M&A activity, not efficiency. US life expectancy per dollar spent is far behind other countries, and getting worse due to opioids.

However, sadly, there are more CEOs named Michael presenting than all of the women presenters combined.

5.  First FDA approved gene therapy costs $850k

Some investors are saying the $850,000 price tag for the first FDA approved gene therapy is a deal. It will help cure blindness in patients, and many thought the course of treatment would be closer to $1m.  While this first treatment might might be for a narrow disease state, as the FDA approves other treatments, there will be a range of gene therapies available to meet demand. Today, it’s one treatment for $850k.  Tomorrow, it’s 25 more, each at a similar price point.

Premiums will soon skyrocket in order to cover these treatments.  At a price point that high, it will only take a handful of procedures to begin to drive up premiums for everyone in a community.  These are likely to be true miracle treatments. And, simply put, our current care financing model (insurance, both public and private) may not be ready to handle an influx of these new gene therapies.