Presented by UnitedHealth Group:

Obamacare repeal could be in trouble * Cosgrove speaks * Rand Paul's Obamacare replacement * The bright side of Theranos

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Presented By UnitedHealth Group
By David Nather ·Jan 09, 2017

Good morning, and welcome to the premiere of our brand-new newsletter about the politics and business of health care. The idea is, we're going to help you deal with information overload by bringing you the big stuff — the most urgent, the most interesting, anything that has a shelf life beyond today.

We'll give you what you need and send you on your way, and we'll be adding new features in the coming weeks. The Wall Street Journal has some details of our plans for Axios this morning, and you can read more in Vanity Fair about the DC political veterans (Tim Berry, Evan Ryan) who will be helping us. So, let's do this.

The repeal vote may be in more trouble than we thought

Everyone has focused on how Senate Republicans can only afford to lose three votes on Obamacare repeal. But my colleague Caitlin Owens has found at least seven who are being dodgy — they won't quite say yes or no on voting for repeal without a replacement ready:

  • Susan Collins
  • John McCain
  • Lamar Alexander
  • Rob Portman
  • Ron Johnson
  • Bill Cassidy
  • Tom Cotton

That could be a big problem for the GOP leadership if they can't get these senators on board before the repeal vote takes place later this year. Check out Caitlin's article on what they're saying, and not saying, here.

Cosgrove's next steps for Obamacare, VA

Toby Cosgrove, the chief executive officer of the Cleveland Clinic, isn't going to run the Department of Veterans Affairs under President-elect Trump — but he's still a business adviser to Trump and is perfectly positioned to shape the debate over Obamacare and the VA. Here's what Cosgrove said to me when we talked last week:

  • On the VA: He's a big advocate of giving veterans private health care options — because there just aren't enough VA hospitals to serve everyone. "You just can't really cover the state of Ohio with three hospitals."
  • Where the Trump team may be headed: During his discussions with Trump, Cosgrove said, the focus was on getting rid of the rule that says a veteran can only go to a private hospital if he or she has to wait more than 30 days for an appointment or lives more than 40 miles away from a VA facility.
  • On why he withdrew: It was a "tough decision," he said — but the Cleveland Clinic has already started several billion dollars of construction and new projects, and he wanted to see them through.
  • On the post-Obamacare future: The key to better efficiency, he said, is "how you bring hospitals together to work as systems" — which means hospitals need to be allowed to consolidate.
Those are the quick highlights, but Cosgrove had a lot of thoughtful points about where Obamacare has worked, where it has fallen short, and how Congress could improve it — if they dare. Watch for more from this interview when Axios launches later this month.
Speaking of Obamacare and hospital mergers ...

Cosgrove sees a case of mixed messages. The message of Affordable Care Act, he says, is that "you've got to be more efficient" — but at the same time, the Federal Trade Commission and the Justice Department have been saying "you can't bring too many hospitals into the same system."

There have been a few hospital mergers that have been blocked by the FTC, as my colleague Dan Primack points out — but not exactly an epidemic. Here's a summary by an FTC economist, along with an explanation of what the agency looks for. The big question: Since Obamacare has been driving the incentives for the mergers, what happens if it goes away?

Keep your eye out here and watch Dan's Axios Pro Rata, which also launches today.


A Message From UnitedHealth Group

Solutions for a modern, high-performing, simpler health care system

  1. Expand access to care.
  2. Make health care more affordable.
  3. Support and modernize Medicare.
  4. Reinvest in health.

Learn more about these ideas at

The medical world's anti-vaccine problem

My talk with Cosgrove was on Wednesday — before the Cleveland Clinic had to put out a fire this weekend over a high-ranking doctor who wrote an article peddling discredited theories about vaccines and autism. The article caused an uproar, and the clinic put out a statement disavowing it. We still think Cosgrove's views on Obamacare and the VA are worth a read on their own merits — they took place before the episode and have no connection to it.

But if you read one piece about the anti-vaccine comments, check out Julia Belluz's smart take in Vox. Her takeaway: The problems with anti-vaccine views from credible-sounding doctors go far beyond this case.

Burwell: Obamacare benefits can't be cut

Key point from the speech Health and Human Services Secretary Sylvia Burwell will give to the National Press Club this afternoon: It's not even a good idea to trim the "essential benefits" insurers have to offer under Obamacare. (That's one of the most basic things Republicans and insurers want to fix.)

"Which benefits should we allow insurance plans to drop? Mental health? Maternity coverage? Prescription drugs? ... It might work for the healthy and the wealthy, but it will put needed care out of reach for millions of Americans."
The glass-half-full side of Theranos

Greg Ruben/Axios


Sure, Theranos may have laid off 41 percent of its employees on Friday, but this article by Bloomberg's Caroline Chen — which posted shortly before the layoff news broke — makes it clear that investors are still happy to sink their money into blood-testing startups. Why? Because now they really like the goal — as long as the work is done by someone else.

"On the positive side, Theranos has done a wonderful job of educating the investment community and public of what the world could look like if you had this technology." — Vijit Sabnis, Khosla Ventures
Rand Paul's working on an Obamacare replacement

The senator and former presidential candidate got a lot of attention last week when he wrote that Congress shouldn't repeal Obamacare without voting on a replacement. Now, he says he's working on that replacement. He says his staff is trying to get it written into legislative language, and they're going to try to introduce it this week.

It's not a big mystery what will be in it: more flexibility in benefits, health savings accounts, and letting people buy health insurance through voluntary associations — the ideas he wrote about and repeated to me when we talked on the Hill on Thursday. Paul's bill won't be the official GOP replacement plan, but if he's demanding a quicker vote on replacement, it's a good bet that others will follow.

While you were weekending ...
Brill's predictions: Watch the drug pricing middlemen

Our contributor Steve Brill expects this to be a big year for the business of health care, and not just because of whatever happens with Obamacare. Here are his predictions for 2017:

  • The pharmacy benefits manager's opaque oligopoly business model will finally be dragged out of the shadows, as litigation from insurance companies and general anger over drug prices accelerates.
  • "Seven years later and they still can't figure out a better plan" will become the Democrats' next battle cry when Republicans repeal Obamacare while promising to figure out a replacement in a year or two or three.
  • Price fixing suits brought by state attorney generals, big insurers, and salivating plaintiffs lawyers will be life-threatening to some of the players in the $25 billion generic drug industry.
  • Mergers of big hospital systems will continue, accompanied by accelerated marketing of these local and regional mega-brands, as they try to make themselves must-haves for any insurer's network and/or try to sell their own insurance.
Obama's biggest health care disappointment

Most of what President Obama said in his Friday interview with Vox was predictable, but there was one part, about an hour in, that was more revealing. He said one of his biggest disappointments on health care was how hard it has been to get doctors to use electronic medical records. "I'm optimistic that over time it's inevitable that it's going to get better," he said, but "it's been a lot slower than I would have expected."

He blamed the usual suspects: systems don't talk to each other, doctors have to be retrained. But the real heart of the problem, as this Governing article points out, is pretty simple: Doctors think they're a pain. That's not going to change any time soon.


What we're watching today: Burwell speaks to the National Press Club on Obamacare repeal, 1 p.m. Eastern.

What we're watching this week: Senate votes on the budget resolution that begins Obamacare repeal. Likely Wednesday.

That's it for now. Let me know what you thought, anything I missed, anything we could do better, leaks and tips:


A Message From UnitedHealth Group

Solutions for a modern, high-performing, simpler health care system

  1. Expand access to care.
  2. Make health care more affordable.
  3. Support and modernize Medicare.
  4. Reinvest in health.

Learn more about these ideas at

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