I love this time of year, it feels nostalgic. All sorts of changes are going on with students graduating or changing schools with the hum of music and the whiff of sunscreen ever present in the background. Or maybe I just long for simpler times?

Caught my Eye

Waiting Game. This week the Department of Health and Human Services (HHS) submitted 340B rebate guidance for review to the Office of Management and Budget. No legal deadline so just hang back and wait. This guidance ties back to the proposal by some pharmaceutical companies to provide rebates on 340b purchases after the covered entities provide data rather than a prospective 340B purchase price.

Chicken or Egg. A study in Health Affairs Scholar (one of the authors is Bill Sarraille!) looks into the growth drivers for the 340B program. Some believe that the primary driver of the 340B program growth is increasing drug prices and others say it is utilization. The study found that at least 80% of the program’s growth between 2018 and 2024 was due to utilization.

Would you like a Salary Increase with that? Way back in the day (~2003), I worked in benefits and managed the premium payments for managed care plans. The family premium for Kaiser, the least expensive plan, was $495 (total). This week the Milliman released their Medical Index and annual coverage for a family of 4 is over $35k a year compared to just over $12k in 2005. The cost of healthcare has outpaced wages by about double. Employers are still covering the bulk of costs (58%) but as the $ grows, so does the employee’s amount owed and if wages aren’t keeping pace, affordability goes with it.

Healthy Margins. The Michigan Health Purchasers Coalition put out a series of reports finding that, depending on the drug and the geography, some hospitals charge more than 18x the Average Sales Price (ASP) for some specialty drugs.

Reviewing the Fundamentals – Affordable Care Act Marketplace Subsidies

This NYT article got me thinking and I wanted to share some background on the Affordable Care Act (ACA) subsidies. The ACA, often known as Obamacare, introduced significant reforms to the U.S. healthcare system, including mechanisms to make health insurance more affordable. A key component of this affordability were premium tax credits (PTCs) (subsidies).

Original ACA Premium Subsidies

When the ACA was enacted in 2010, PTCs to help individuals and families with lower and moderate incomes afford health insurance purchased through the Health Insurance Marketplaces.

• Eligibility: Originally, these subsidies were available to households with incomes between 100% and 400% of the Federal Poverty Level (FPL.)
• “Subsidy Cliff”: A significant feature of the original law was the “subsidy cliff.” If a household’s income exceeded 400% of the FPL by even a small amount, they would lose all eligibility for premium tax credits, potentially facing very high full-cost premiums.
• Cost-Sharing Reductions (CSRs): In addition to premium subsidies, the ACA also established CSRs for eligible individuals. These subsidies reduce out-of-pocket costs like deductibles, copayments, and co-insurance for those with incomes up to 250% of the FPL.

Expanded Subsidies (American Rescue Plan Act & Inflation Reduction Act)

In response to the COVID-19 pandemic and economic challenges, Congress expanded the subsidies until the end of 2025. These expansions:

• Elimination of the “Subsidy Cliff”: The most significant change was the elimination of the 400% FPL income cap for subsidy eligibility. This meant that even individuals and families with incomes above 400% of the FPL could qualify for subsidies if their benchmark plan premiums would exceed a certain percentage of their income. This was crucial for middle-income individuals who were previously ineligible for any assistance.
• Increased Subsidy Amounts for All Eligible Individuals:
  • For those with incomes between 100% and 150% of the FPL, premiums for the benchmark silver plan were reduced to $0.
  • No one was required to pay more than 8.5% of their household income towards the premium of a benchmark silver plan, regardless of their income level.

These expanded subsidies DOUBLED enrollment in Marketplace Exchange plans to just over 24 million, making coverage significantly more affordable for millions of Americans, particularly those with lower and middle incomes.

Expiration of Expanded Subsidies in 2025

The enhanced premium tax credits provided by the ARPA and extended by the IRA are set to expire at the end of 2025.If they aren’t extended, the “subsidy cliff” will return and the maximum percentage of income that individuals are expected to contribute to benchmark plans will increase. If these expire, it is projected that nearly 4 million people would become uninsured. The Congressional Budget Office says that number increases to almost 6 million by 2034.

For the Files

Jon Blum writes about what the future of the Centers for Medicare & Medicaid could look like. A wonky-ish dive into the role of CMS but, if anyone knows this stuff, it is Jon. In the Biden Administration he was principal deputy administrator and chief operating officer at CMS and, during the Obama Administration deputy administrator and director of the Center of Medicare. Jon and Chiquita patiently taught me the basics of Medicaid way back when.