Weekend update

Congress is in session this week on Capitol Hill.  The FEHBlog’s attention was drawn to a Hill newspaper article headlined “Congress takes the sting out of Obamacare.”  In the FEHBlog’s view, Congress started to take the sting out of the law by repealing the individual mandate but it has a long way to go still. Way too much stick and not enough carrot in that law.

For example, the FEHBlog pointed out a few weeks ago a December 2017 HHS report on 2016 medical loss ratio (“MLR) results.  The HHS report notes that “In 2016, the average MLR was 92.9 percent in the individual market, 86.1 percent in the small group market, and 90.3 percent in the large group market.”  The statutory MLR is 80% for the individual and small group markets and 85% for the large group market which includes the FEHBP. So you would think that the MLR rebates would have been small in 2016, but they totalled hundreds of millions of dollars because those refunds are determined using state-level MLRs for each insurer.

FEHBP insurers are in double jeopardy because they are subject to this state-level MLR and OPM’s contract level MLR. It’s no wonder that you don’t see new carriers joining the FEHBP.  In any event, all MLR penalties / rebates should be based on the insurer’s aggregate MLR per market with no state or contract breakdown.

Health Payer Intelligence points out a recent AMA report finding that the ACA reduced consumer out of pocket spending by 11.9% but increased consumer spending on health insurance premiums by 12.1% over the period 2012-2015. There has to be a better, less complex, way. The FEHBlog continues to like his idea of giving all high earners, not just small business owners, a 50% tax exclusion on health insurance premiums. Give all middle income people, not just employees, a full exclusion and repeal the ACA taxes on providers and health plans. The low income people would continue to have ACA subsidies. That would be a good, equitable start.

In prescription drug news, Wired has an interesting report on the state of CRISPR gene editing research.

[Last] week the National Institutes of Health announced it will be awarding $190 million in research grants over the next six years, in part to push gene editing technologies into the mainstream. “The focus of the Somatic Cell Genome Editing program is to dramatically accelerate the translation of these technologies to the clinic for treatment of as many genetic diseases as possible,” NIH Director Francis Collins said in a statement Tuesday. Which could encourage some of the more exotic, experimental delivery systems out in the research world—strategies like Crispr-covered gold beads, yarn-like ball structures called DNA nanoclews, and shape-shifting polymers to get the editor where it needs to go.

Let’s go.  Also, the Wall Street Journal yesterday offered a fascinating interview with  economist David Ridley.  Prof. Ridley came up with idea of having the Food and Drug Administrative give drugs that treat rare diseases an express lane pass for a future new drug application. What’s more the express lane pass can be sold to another drug manufacturer for “between $67.5 million and $350 million, though the price last year settled in the range of $125 million to $150 million.” The applicant must pay a $2.7 million fee to use the express lane. Congress enacted the idea in 2007. At the first the express lane pass was awarded for infectious tropical disease treatments, and in 2012 the initiative was extended to rare pediatric diseases. Last year, the FDA issued “five [passes or more formally expedited review vouchers] for drugs to treat rare pediatric diseases and one for the tropical Chagas parasite, which afflicts more than six million people world-wide.” Cool.