Work travel is usually a nice change of pace. And then I found myself on a Wednesday afternoon on the NJ Turnpike in torrential rain with other cars facing the wrong direction. Super fun! Two good things – 1) the pharma team I gave the talk to was awesome and 2) made it home safe and maybe a 3) listened to a podcast on Google. Can’t stop, won’t stop learning.

If you’ve been hanging out with me, you should be well prepared for the headlines you’ll see over the next few weeks —

• Affordable Care Act premiums and how much they will go up without the extension of the subsidies.
• Employer premiums are going way up. I’d say this is also unsustainable, but we’ve been saying that for 20+ years. The can has been kicked so many times. Today’s newsletter has a little history lesson on how we got this employer-based world and why we’re stuck.  

Caught My Eye

Not Dead Yet. Or that’s the word out there about pharmacy benefit manager (PBM) reform.

Not a Fair Trade. This week I published an issue brief on Most Favored Nation and how it likely won’t help patient affordability, and it will likely decrease innovation and U.S. research & development.

To Have and Have Not. More on MFN… a more academic paper on why international reference pricing is a bad idea. Basically, the prices narrow into a small range (+/- 20%) and less affluent countries find themselves priced out of access. And only about 30% of new drugs are available across Europe for all patients.  

Churn it Around. There has been a lot written about the potential changes in Medicaid enrollment due to the One Big Beautiful Bill but I’m not sure I’ve ever heard much about the churn among the 13 million dual eligibles. That is those who are eligible for Medicare and Medicaid and so they get the low-income subsidy and can pay $0 premiums and reduced cost sharing for their prescriptions. JAMA has a great piece about how 8% of dual-eligible beneficiaries lost Medicaid for at least 1 month per year and for those that are newly dual-eligible, 24% lost Medicaid for more than 3 months.  

This cycling in and out of Medicaid is referred to as churn and not only does it have an impact on adherence, but it is also really frustrating for the beneficiary. The article proposes policy solutions like federal legislation for streamlined enrollment and renewal for dual eligibles, state requirements for managed care plans to help Medicaid enrollees with the renewal process and automatic reenrollment without beneficiary participation.

Is it a Step or a Brick Wall? We’re expecting a lot more utilization management in Part D for 2026. To prepare, maybe read this IQVIA report on Medicare Part D utilization management. The average time for approval for patients who received an initial rejection ranged from 14 days (osteoporosis) to 24 days (migraine). Between 25% and 39% of patients experienced a delay of two weeks or longer and 10% to 19% experienced a delay of more than five weeks. And across the therapeutic areas they looked at, 18 – 42% of patients still didn’t get on that treatment or an alternate one after one year.

Payer, May I? A article from the NYT (gift link) with everything you wish your doctor would say about prior authorization for services.

Reviewing the Fundamentals – Employer-Sponsored Insurance

Before World War II, most Americans paid for medical care directly out of pocket. Health insurance existed, but it was primarily limited to income replacement policies for lost wages due to illness, or early hospital-specific plans like Blue Cross.

In 1942, to combat wartime inflation, the government passed the Stabilization Act, which froze wages. This meant employers couldn’t attract or retain workers by offering higher salaries. To get around this restriction, companies began offering generous benefits, including health insurance, as a non-wage incentive. The National War Labor Board solidified this trend by ruling that health insurance benefits were not subject to the wage freeze.

Post World War II, while the U.K. zigged toward universal coverage, we zagged toward employer-sponsored insurance. President Truman tried to pass national health insurance in 1945, but the American Medical Association was against it, and employer plans were fairly well established so there wasn’t a lot of public support (and the new private insurers weren’t thrilled either.)

In 1954, the Internal Revenue Service (IRS) codified that employer contributions to employee health insurance premiums were tax-deductible for businesses and tax-exempt for employees. And it was all sort of over from there.

Medicare and Medicaid were passed in 1965 to cover those that were not covered by the employer-sponsored coverage and, while we’ve had a few more attempts at universal coverage (Nixon, Clinton, Sanders), nothing has stuck.

I attended a talk in 2004 where an economist (Uwe Reinhardt, IFYKYK), said that the growth in employer premiums was impeding on wages and something needed to change – it was unsustainable. 21 years ago, same story. We’re in a half-government, half-market-based system that seems to be limping along.

For the Files

National Health Expenditures data