TGIF

The first full workweek following the holidays has been a busy one for the FEHBlog. The FEHBlog hopes that this partial government shutdown will end soon. Here's link to an ABC News article on the impact that the shutdown has on furloughed employees from a federal employee benefits perspective.

Regarding the Texas v. U.S decision holding the Affordable Care Act ("ACA") unconstitutional based on Congress’s decision to zero out the individual mandate as of January 1, 2019, I listened earlier this week a 20 minute long podcast by law professor Richard Epstein.    Professor Epstein believes that the zeroing out of the individual mandate penalty removed a constitution defect in the ACA that the Chief Justice John Roberts had avoided in 2012 by upholding the statute under Congress’s taxing authority. The constitutional defect is that the law required people to purchase a product so that Congress could regulate it. Now that people are buying the product voluntarily the defect  is gone and the ACA stands.

The FEHBlog had not heard this argument before, but he agrees with the Professor. The case is now pending for the U.S. Court of Appeals for the Fifth Circuit based on appeals noticed by the defendant Justice Department (which want the Court to declare unconstitutional a few provisions related to the individual mandate) and the intervening State defendants (who want the Court to declare unconstitutional the zeroing out of the individual mandate because it brought down the law). Professor Epstein’s approach knocks out the appeal while also reversing the district court decision entirely. The 5th Circuit will arrive at its decision later this year.

In other developments, Modern Healthcare reports on the closing days of the JP Morgan healthcare conference.

Baylor Scott & White leaders explained their pending merger with Memorial Hermann will land the system in Houston, one of the fastest-growing areas of Texas. CEO Jim Hinton told Modern Healthcare the added scale will create efficiencies that drive down costs. That's what happened when his health system was created through a 2013 merger, he said. Since then, Baylor Scott & White has saved about $740 million, 128% of its original goal. "This notion that these mergers always result in higher costs—that may be true for other mergers, but that's not been our experience, nor is that our intent," Hinton said.

In the FEHBlog's opinion that's a red herring argument. The issue is not whether mergers lower costs (they do), rather the issue is whether they lower prices reflecting lower costs. As the FEHBlog has noted cost and price are independent variables. You can lower costs without lowering prices if the market permits.

Relevant Studies and Predictions--

• Because the FEHBP covers a lot of folks with Medicare coverage, it's worth taking a look at this Fierce Healthcare article about a three year long study reported in January's Health Affairs finding that Persistently high-cost Medicare patients tend to be younger, members of racial or ethnic minority groups, dual-eligible Medicaid patients or suffering from end-stage renal disease (ESRD),   
• The January issue of Health Affairs also discusses five key healthcare trends for this year. In the same vein, the American Medical Association reports on how blockchain technology is poised to change the healthcare industry. 
• Revcycle Intelligence discusses a new follow-up study to the landmark 2003 article titled “It’s the Prices, Stupid” which finds not surprisingly that "prices are still the primary reason why healthcare spending in the US more than doubled from 2000 to 2016,"  The article's discussion of Medicare cost shifting to the private sector illustrates how the medical profession would be killing the golden goose by supporting Medicare for All.