HEALTH CARE BRIEFING: Covid-19 Aid Pushed Health Spending to $4T

Health-care spending in the U.S. spiked 9.7% to $4.1 trillion—or $12,530 per person—in 2020, driven by a torrent of cash from new federal Covid-19 programs, the Department of Health and Human Services said yesterday.

The growth rate—more than double the 4.3% increase in 2019—was caused by the 36% boost in federal expenditures for health care in response to the Covid-19 pandemic, the Centers for Medicare & Medicaid Services said in an analysis. The annual report from the Office of the Actuary was published by the journal Health Affairs.

“In particular, there were new federal programs—the Provider Relief Fund, and the Paycheck Protection program loans—that provided supplemental funding to health-care providers to assist them with revenue loss due to lower utilization and increased costs,” CMS statistician Micah Hartman said on a press call.

In addition, there was significantly higher federal public health spending and more spending for Medicaid, Hartman said. If spending for the extra federal programs and federal public health expenditures was excluded, the increase in total health-care spending would be just 1.9% in 2020, he said.

While the 2020 increase is driven by the unusual events of the pandemic, significant shifts in health-care coverage may signal a shift away from employer-provided insurance toward government health plans.

The number of uninsured individuals fell slightly, from 31.8 million in 2019 to 31.2 million, in 2020. There were significant shifts in types of coverage, as 2.3 million fewer people were covered through employer-sponsored insurance. Medicaid enrollment surged by 3.7 million or 5.1%— the largest jump since 2015—and Affordable Care Act marketplace enrollment grew by 600,000. Medicare enrollment growth slowed in 2020 to 2.1% compared with 2.6% in 2019.

Private health insurance spending accounted for 28% of total health-care expenditures at $1.15 trillion, a 1.2% decline, due to pandemic-related reductions in health care use for elective procedures and moratoriums on many procedures. Private health insurance spending per enrollee dropped 0.4% after growth of 2.3% in 2019.

Reduced use of care could result in insurers refunding consumers under the Affordable Care Act’s medical loss ratio provision, which requires insurers to spend at least 80% of premiums on claims. “Premiums were set in advance of the year,” and health-care use was “much lower than was expected” due to the pandemic, Hartman said. Read more from Sara Hansard.

  • Separately a survey released by the American Cancer Society Cancer Action Network yesterday showed 61% of cancer patients and survivors found it “somewhat” or “very difficult” to afford their care. The finding was consistent across individual, employer and public insurance types, including more than half of patients on Medicare, Alex Ruoff reports.

Happening on the Hill

Democrats Weigh Moving Agenda to 2022: Democrats are facing a sour end to the year, with party divisions and Senate rules stalling President Joe Biden’s economic agenda and a late pivot to voting rights threatening to hand the party another defeat before year’s end. The Democrats succeeded in pushing through a $1.9 trillion coronavirus relief package in March and, more recently, a $550 billion infrastructure bill. But after other priorities like gun control, immigration and policing reform fell aside, Biden’s economic package, totaling roughly $2 trillion, was to be their crowning achievement heading into next year’s mid-term elections.

Sen. Joe Manchin (D-W.Va.) is holding up passage of that bill, which requires the backing of all 50 senators who caucus with the Democrats but is immune to a Republican filibuster under special budget rules. Biden has been negotiating directly with Manchin in recent days, but those discussions haven’t yielded any breakthrough. Read more from Steven T. Dennis and Laura Litvan.

Democrats Seek Permanent Health Coverage Tax Credit Extension: Democratic Senators introduced legislation that will permanently extend the Health Coverage Tax Credit for retirees who lost their health care coverage, Kasia Klimasinska reports. The health coverage tax credit is set to expire at the end of this year, and a provision in their party’s domestic spending package to extend it may not win approval in time, as the legislation faces delays.

Sens. Tammy Baldwin (D-Wis.), Sherrod Brown (D-Ohio), Bob Casey (D-Pa.), and Debbie Stabenow (D-Mich.) introduced a bill to make permanent the Health Coverage Tax Credit, a tax credit for 72.5% of health care insurance premiums for retirees between the age of 50 and 65 years of age who lost their health care coverage when their employers either entered into bankruptcy or laid off workers due to foreign trade. The credit expires Jan. 1, 2022. Brown’s office said the senator is looking at every legislative option to extend the credit, Alex Ruoff reports.

The Coronavirus Pandemic

Health Worker Vaccine Mandate Ordered to Resume: The Fifth Circuit yesterday ordered that Biden administration’s mandate for health-care workers to get vaccinated against Covid-19 resume in about half the country, while an appeal moves forward. The U.S. Court of Appeals for the Fifth Circuit denied the administration’s request for a stay on a preliminary injunction as it applies to the 14 states that brought the lawsuit challenging the mandate. But the appeals court granted a stay on the injunction in the rest of the states that it applied to.

A federal court in Louisiana had halted the health agency from enforcing the vaccine mandate Nov. 30 nationwide, except for in 10 states where a court in Missouri already halted the rule. The case posed the question of whether one district court should be able to make a binding judgment for the entire U.S. The Fifth Circuit ruled the lower court “gave little justification for issuing an injunction outside the 14 States that brought this suit.” Read more from Allie Reed and Alexis Kramer.

  • Meanwhile, a federal appeals court in Cincinnati will allow a three-judge panel hear the legal challenge to Biden’s shot-or-test rule for large employers, leaving open the possibility that a Democratic appointee-dominated tribunal rules on the emergency rule. The Sixth Circuit rejected petitions seeking initial review of the measure by the court’s full compliment of active-status judges, which is composed of 11 GOP appointees and five Democratic ones. Read more from Robert Iafolla.

Omicron Seen Surging to 13% of N.Y., N.J. Cases: The omicron variant could make up about 13% of Covid-19 cases in New York and New Jersey, estimates from the Centers for Disease Control and Prevention show. Director Rochelle Walensky said yesterday omicron makes up 3% of cases nationally and a higher share in certain areas. “We expect to see the proportion of omicron cases here in the United States continue to grow in the coming weeks,” Walensky said at a briefing. “Early data suggest that omicron is more transmissible than delta, with a doubling time of about two days.” Read more from Josh Wingrove.

  • Still, existing vaccine booster shots appear to protect against omicron, and there’s no need to create specialized shots to guard against it for now, U.S. health officials say. Anthony Fauci, chief medical adviser to Biden, said studies show strong antibody responses from current boosters, although protections against omicron are weaker with two doses. “Our booster vaccine regimens work against omicron,” said Fauci. Read more from Wingrove.
  • A two-dose course of Pfizer and BioNTech’s Covid-19 shot as well as a previous infection with the disease may give stronger protection against the omicron variant, scientists from the Africa Health Research Institute in South Africa said. Laboratory experiments with blood plasma led them to estimate that there would be 73% protection against symptomatic disease from omicron and 95% against severe infections for those who had been vaccinated and previously infected, the scientists, led by Alex Sigal, said in a preprint released yesterday. Read more from Janice Kew and Antony Sguazzin.

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What Else to Know Today

U.S. to Set Up New Body Against Drug Trade: The U.S. is establishing a new interagency body as part of a wider effort to curb illegal drug trade and cut off crime organizations and their facilitators from the U.S. financial system, the White House said. An executive order by Biden sets up the U.S. Council on Transnational Organized Crime, which will coordinate on countering crime organizations engaged in drug trafficking. Another Biden executive order strengthens U.S. sanctions capabilities to cut off drug traffickers and their facilitators. Read more from Se Young Lee.

Eli Lilly Quietly Invests in Cellular Messaging Tech: For the past three years, Eli Lilly has been quietly watching and investing in technologies that harness the messaging power of cells in hopes that it could lead to new medicines. One-fifth of the company’s pipeline is composed of drug candidates that are based on nucleic acids like RNA or DNA, the information-carrying parts of cells. While consumers have heard much about how mRNA in Covid-19 vaccines is used to prime the body to ward off infection, Eli Lilly wants to use these new technologies to target cardiovascular and brain diseases. Read more from Riley Griffin.

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From the Courts:

To contact the reporter on this story: Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Zachary Sherwood at zsherwood@bgov.com; Giuseppe Macri at gmacri@bgov.com; Michaela Ross at mross@bgov.com

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