An affordability czar comes too late for midterms, but could help plot a course
There was a clear sign recently that the Trump administration is worried about the impact of the lack of healthcare affordability. It created a top-level healthcare position that will be a de facto affordability czar. Health and Human Services Secretary Robert F. Kennedy, Jr. has named Casey Mulligan as chief economist and chief regulatory officer of the agency. He’ll advise Kennedy and other agency leaders on affordability issues. Mulligan was on the Council of Economic Advisers during the first Trump administration and was most recently the U.S. Small Business Administration’s chief counsel for advocacy.
That same week, healthcare policy group KFF issued a briefer on Americans’ views of healthcare. Just under half of U.S. adults say it is difficult to afford healthcare costs, and about three in ten say they or a family member in their household had problems paying for healthcare in the past 12 months. Further, 36% of adults say that they have skipped or postponed getting healthcare they needed because of cost. About 75% of uninsured adults under age 65 say they went without needed care because of cost.
A KFF employer survey finds that the cost of family coverage for an employer has reached almost $27,000 per year — $26,993. Further, families cover almost $7,000 of that amount for premium contributions — $6,850. Individual coverage is now $9,325 per year. Deductibles for single coverage ranged from $1,670 at large firms and $2,671 at small ones, with an average of $1,886. And due to costs, about one-third of those covered by employer coverage are now in high-deductible plans.
A new Purchaser Business Group on Health survey finds that more and more employers are considering switching insurance or pharmacy benefits managers (PBMs) as a result of rising costs. About 37% of members have issued request for proposals (RFP) for medical benefits, meaning they’re shopping between insurance providers. About 23% are conducting an RFP for their pharmacy benefits. About 27% are using non-traditional or transparent PBMs.
Affordability has been a broad concern for decades in America. But it has taken on even more concern of late coming out of the COVID pandemic. Utilization has grown tremendously. We have seen 6% to 9% growth consistently throughout various lines of business. Small businesses and individuals on the Exchanges have seen numbers that far exceed those. Researchers from Rice University and Baylor College of Medicine looked at worker contributions to employer coverage over time. It found average worker contributions toward family insurance premiums grew by 308% between 1999 and 2024. Total premiums increased 342%, while average worker earnings increased by 119% and inflation increased by 64%.
Democrats of course blame more recent events, such as the sunset of enhanced Exchange subsidies. But that is a small part of a much larger issue. Technology and new drug launches in healthcare have become prolific, driving demand considerably. Price hikes, especially in the hospital sector, continue to outstrip gross domestic product (GDP) and personal income growth. This creates a larger and larger affordability gap each year. Meanwhile, most businesses, which admirably have sheltered employees from a great deal of a cost-shift, can no longer do so. May have dropped coverage altogether, while others have skinnied down benefits and begun shifting more and more costs to employees. This creates the potential for more uninsured but certainly more underinsured – the latter where someone has coverage but cannot afford to use it.
While affordability issues have been years in the making, little is being proposed to truly tackle the core issues. Government program coverage is held hostage to political squabbles. Value-based-care pilots, some light regulatory reforms on site neutrality, and pharmacy benefits manager (PBM) reform are ongoing, but too little is being done on the medical service side to stem annual price hikes. More aggressive action is needed, much like Trump’s decisiveness on drug prices. (There was some welcome news on Capitol Hill this week when hospitals seemed to open up just a little bit to site neutral policy implementation.) Even less attention is paid to the plight of independent physicians and primary care. The takeover of physicians by hospitals, insurers, and private equity firms has deprioritized primary care in favor of driving corporate bottom lines and changing practice patterns to more expensive settings and use cases.
The appointment of the affordability czar comes too late for Republicans and the midterm elections. A new Fox News poll found Democrats have the edge over Republicans on economic issues for the first time since 2010 – 52% to 48%. Democrats hold a 6-percentage point advantage on the generic congressional ballot, leading Republicans 50 percent to 44 percent in a survey of the 36 districts most likely to determine the outcome of the November midterms. Kalshi says Democrats have an 83% chance of taking the House and a 49% chance of taking the Senate. Polymarket says Democrats have an 85% chance of taking the House and a 52% chance in the Senate.
The czar is likely to focus more and more on alternatives to traditional insurance, further value-based care reforms, competition, and the role of technology. Fair enough, but look to coverage, price, and primary care as well.
#healthcare #healthcarereform #insurance #innovation #affordability
— Marc S. Ryan
