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Brainstorm Health: Short Term Health Plans, Cigna Express Scripts Drama, Psychotropic Drugs at the Border

Good afternoon and happy hump day, readers. This is Sy.

The Trump administration is taking yet another step that could wind up further undermining individual health insurance plans available in Obamacare’s marketplaces—this time, by green lighting the availability of so-called “short-term” health coverage that doesn’t have to comply with the Affordable Care Act’s (aka the ACA’s) various consumer protections and mandates.

Under the final rule published by the Centers for Medicare & Medicaid Services (CMS) Wednesday, far more individual health policies (i.e., ones that are meant for people who don’t already receive coverage via their employers or public programs like Medicare or Medicaid, as the vast majority of Americans do) that are available on a short term and on a limited basis would be available for purchase. Currently, this kind of coverage is available for a duration of less than three months; the new guidelines would mean that they could last for an initial period of less than 12 months and be renewed for up to about three years beginning this fall.

The Department of Health and Human Services (HHS) painted the decision as one meant to expand consumer choice and lower premiums, since the ACA’s coverage mandates could result in higher premiums for some. “Under the Affordable Care Act, Americans have seen insurance premiums rise and choices dwindle,” said HHS Secretary Alex Azar in a statement. “President Trump is bringing more affordable insurance options back to the market, including through allowing the renewal of short-term plans. These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”

But some health care experts, including the nonpartisan Kaiser Family Foundation think tank’s Larry Levitt, pointed out that the rules may ultimately undermine the landmark health law by creating a “parallel” marketplace resembling the Wild West of individual insurance prior to the ACA’s passage, wherein consumers had few protections and access to far skimpier benefits.

“The short-term plans the Trump administration is expanding can deny coverage to people with pre-existing conditions, do not have to cover the ACA’s essential benefits, and can cap coverage on an annual basis,” wrote Levitt in a tweet. “The Trump administration cannot eliminate the ACA’s insurance rules. Instead, they are using short-term insurance plans to create a parallel market of insurance plans that do not have to follow any of the ACA’s rules,” he continued.

Such a policy could also have considerable downstream effects, especially when coupled with the repeal of Obamacare’s individual insurance mandate passed as part of last year’s GOP tax cut law. Since temporary, skimpy plans would appeal primarily to younger and healthier consumers, Obamacare’s marketplaces would likely be left with a sicker, costlier, and older pool of beneficiaries, consequently raising premiums for that entire pool.

And while lower-income people would mostly be shielded from those consequences since their federal premium subsidies would rise in tandem with their costs, medically needy middle class people who don’t qualify for said tax credits would have to bear the brunt of the increases.

Read on for the day’s news.

Sy Mukherjee
@the_sy_guy
sayak.mukherjee@fortune.com

DIGITAL HEALTH

Ancestry, 23andMe accept new third party data-sharing guidelines. Genetic testing upstarts Ancestry and 23andMe have reportedly agreed to new guidelines that would make them more explicitly inform customers about third party data sharing. The guidelines call for “separate express consent” before providing genetic information to other parties, such as health care providers and drug makers (pharma giant GlaxoSmithKline recently penned a massive drug discovery deal with 23andMe). Furthermore, the firms are pledging to provide “detailed transparency about how Genetic Data is collected, used, shared, and retained including a high-level summary of key privacy protections posted publicly and made easily accessible to consumers,” and “access, correction, and deletion rights.” (Fortune)

INDICATIONS

Cigna stock spikes on reports of Carl Icahn stake, opposition to Express Scripts deal. Shares of health insurer Cigna rose anywhere from 2% to nearly 4% in Wednesday trading after reports emerged that billionaire activist investor Carl Icahn had purchased a significant (about 5%) stake in the company and is planning to lead a vote against the firm’s planned $54 billion deal to buy pharmacy benefits manager Express Scripts. The Cigna-Scripts deal is one several blockbuster health care deals announced in the past year and seen as one response to CVS’ blockbuster arrangement to purchase insurer Aetna (and part of a continuing trend of cross-sector consolidation in the medical sector). (The Street)

More drugmakers prepare for possible Brexit fallout. France’s Sanofi and Swiss drug giant Novartis are joining a parade of major biopharma companies stockpiling medicines to prepare for the possibility of a “no-deal” Brexit that could leave such products in short supply in Britain, potentially harming patients. What’s more, the European Medicines Agency (EMA)—essentially the EU’s version of the Food and Drug Administration (FDA)—announced that it would have to implement larger-than-expected layoffs as it moves its headquarters from London to Amsterdam in Brexit’s wake. (Reuters)

THE BIG PICTURE

Judge rules that parents must consent to use of psychotropic drugs in children at the border. A Los Angeles federal judge this week ruled that the Trump administration must acquire parental consent or a court order to administer psychotropic drugs to migrant children detained at the border. The drugs have reportedly been administered on a wide scale to children at the Shiloh Residential Treatment Center in Texas, and some of the affected individuals have said they were given injections under the guise of receiving multivitamins. (Fortune)

REQUIRED READING

Executive Order: What Corporate America Looked Like in the 1970s, by Kacy Burdette

Why Tesla Is Investing $5 Billion in a New China Factoryby Grace Dobush

Trump Administration Claims Fuel Efficiency Puts Drivers’ Lives at Riskby Alice Tozer

How to Innovate at Flatiron Health? It Starts With a Hackathonby Andrew Nusca

Produced by Sy Mukherjee
@the_sy_guy
sayak.mukherjee@fortune.com

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