Caught my Eye
Make Believe. This week we were wondering if the Administration would put out information on what the Most Favored Nation (MFN) would be for drugs; that is what is the best price for each drug in a set of country’s that have a GDP at least 60% of ours. But there have been no real parameters set — the list of countries has not been officially defined (it matters what data you use), what price metric to use hasn’t been defined, etc. I mean that is a ton of work to have to do in 30 days on information that is hard to pin down. But the Administration seems to be leaning into the “Why don’t you tell me what movie you want to see?” Kramer-ness of it all and saying that they don’t need to tell you, manufacturers already have this info. I mean well-played. Of course that also means the Administration doesn’t know what the MFN price is either but if there are no sticks in the Executive Order, what does it matter?
Big, Faster, Stronger. This week the Food and Drug Administration outlined its priorities in JAMA. It included addressing financial toxicity through faster approval for generics and streamlining approval for biosimilars. The focus overall will be on more nimble processes – including some aspects of the review and updated use of AI and big data.
MAAA (Make America Affordable Again?). Nice article from Larry Levitt of KFF on the need to focus on affordability. Changing the narrative on healthcare costs to be about affordability is a passion of mine. We can lower prices by half, but half of a lot might still be too much.
In the Eye of the Beholder. We’re in a waiting game to see what happens in the Senate version of the Big Beautiful Bill but here is a run-down from Health Affairs Forefront of what the health impact is in the House version. Long story short, the bill saves money by cutting a lot of people from Medicaid.
Bye. Bye. Bye. This week the Secretary of Health and Human Services, RFK Jr., dismissed all members of the Advisory Committee on Immunization Practices and brought in 8 new members. This is the group that decides on what vaccines the Centers for Disease Control should recommend. Some of the new members are anti-vaccine. Moving beyond, you know, science – the issue is that this is another example of where the Administration is rattling the norms and creating uncertainty for the future. And not just for vaccines but really any executive branch activity. Process can just change overnight. See MFN story above.
Reviewing the Fundamentals – Medicaid
If it feels like Medicaid was there but not front and center when you learned about healthcare, you might not be wrong. I thought we could do a dive in and do a catch-up.
As of January 2025, Medicaid has about 71.17 million enrollees. Children constitute nearly half of all beneficiaries. Other major groups include pregnant women, individuals with disabilities, and seniors who often rely on Medicaid for long-term care services. Prescription drug coverage, while federally optional, is a universal benefit provided by all states. States manage this through formularies, ensuring broad access to necessary medications, and benefit from the Medicaid Drug Rebate Program, which secures favorable pricing from pharmaceutical manufacturers. For individuals dually eligible for Medicare and Medicaid, Medicare Part D typically covers their prescriptions.
Unlike Medicare, which is primarily a federal program, Medicaid is a federal-state initiative, with the federal government setting overarching guidelines while individual states administer their distinct programs. This allows for state-level flexibility in determining eligibility and benefits, resulting in notable variations across the nation. Over the past 15 years, Medicaid has evolved from a welfare-based program to a major driver of health coverage.
The Affordable Care Act, enacted in 2010, introduced the most significant expansion of Medicaid since it began in 1965. It allowed states to extend eligibility to nearly all non-elderly adults with incomes up to 138% of the Federal Poverty Level. This was a change from prior Medicaid rules, which primarily limited coverage to specific “categorically eligible” groups, such as low-income children, pregnant women, and individuals with disabilities, leaving a significant gap for other low-income adults.
A 2012 Supreme Court ruling made this expansion optional but, as of early 2025, 40 states and the District of Columbia have embraced it. This has dramatically reduced uninsured rates in expanding states, improving access to care and health outcomes for millions. The federal government provides a significantly enhanced matching rate for this expansion population, initially covering 100% of the costs and gradually phasing down to 90% in 2020 and beyond, offering a financial incentive for states to expand.
The federal share, known as the Federal Medical Assistance Percentage (FMAP), is an “open-ended entitlement,” meaning there’s no cap on the total federal funds a state can receive as long as it adheres to federal guidelines. The FMAP rate varies by state, determined by a formula that considers each state’s per capita income relative to the national average. States with lower per capita incomes receive a higher federal match, reflecting their differing abilities to fund their programs. By law, the base FMAP for traditional Medicaid populations cannot fall below 50% or exceed 83%. The exception being that the expansion population currently gets a 90% match. States primarily finance their share of Medicaid through general revenues, including taxes, though local governments and other sources like provider taxes and pharmaceutical rebates also contribute. In fiscal year 2023, for instance, Medicaid expenditures totaled approximately $894 billion, with the federal government covering about 69% of that total.
For the Files
If you’re digging in Medicare Advantage, keep this analysis from JAMA around. It looks at premium givebacks in Medicare Advantage. Not surprisingly, premium givebacks are associated with higher enrollment.
