Medicaid Expansion Under the ACA Just Makes Sense

Adam Mitchell

By Adam Mitchell

I am not a proponent of big government or social welfare programs. I did not vote for Obama or support the Affordable Care Act. However, after researching the current Medicaid expansion debate, I am having a hard time supporting the “opt out” point of view. Ultimately, opting out of Medicaid expansion is only going to further disadvantage the poor and keep them from receiving early and preventative care.

Originally the ACA called for a mandatory state Medicaid expansion. If a state refused to expand Medicaid, the federal government could withhold all federal Medicaid funding until the state complied. However, in NFIB v. Sebelius, the Supreme Court struck down this “gun to the head” provision when it held that the federal government could not rescind existing Medicaid funding as a consequence for a state’s failure to expand Medicaid.

In short, Sebelius gave states the choice to opt in or to opt out of the ACA’s Medicaid expansion.  As of June 10, 2014, as shown in this Kaiser Family Foundation graphic, 26 states plus Washington, D.C. have opted in and expanded Medicaid, leaving 3 states considering expansion, and 21 not expanding at the current time:


The states opting out of the expansion have left many uninsured who would otherwise have qualified for Medicaid under the ACA. These “opt out” states cite future costs of expansion as their main objection. They argue that even though the federal government will cover 100% of the expansion costs up front and gradually step it down to 90% by 2022 ,  that even the 10% left to the states will not be financially sustainable. The opt-out states also argue that the government is unreliable and may not be able to fulfill its financial commitment in the future, leaving the states with the bill for the expanded coverage. For example, Florida Gov. Rick Scott has used this argument to defend his decision not to expand Medicaid in Florida. (Scott, of course, subsequently came to favor expansion.)

However, these arguments ignore the reality that medical bills for the uninsured are already being paid by the state and the taxpayer. The counter to the arguments of Rick Scott and other opt-out proponents follow a more logical form of thinking. The uninsured do not receive preventative care or regular check-ups. Furthermore, any ailment is not of concern until it reaches a point where it becomes an emergency room-worthy condition. The uninsured also utilize emergency room services in lieu of a primary care provider. Therefore, insuring these individuals so that they may be treated before they develop an emergency room worthy-condition would be the logical step in reducing health care related costs, not increasing them. This Kaiser Commission on Medicaid and the Uninsured graph analyzing 2011 NHIS data illustrates this point:


On the whole, those with health insurance (private or Medicaid) v.s. the uninsured are significantly more likely to have a usual source of care and significantly less likely to postpone or forgo care due to cost. This equates to the insured seeking and receiving early and preventative care which is far more effective and less expensive than ignoring the problem until emergency care becomes a necessity simply because you are uninsured. Insurance also allows individuals to seek medical care from a primary care provider rather than utilizing emergency room services for conditions that are not emergencies. The old adage, an ounce of prevention is worth a pound of cure, appropriately summarizes this position.

Furthermore, even if opt-out states refuse to change their position, their Medicaid enrollment is likely to grow nonetheless because of other ACA provisions. For example, as a result of the individual mandate, many signing up for health care on a state exchange will find that they are eligible and sign up for Medicaid. Also, Medicaid enrollment will climb due to an increase in part-time positions as a result of employers not wanting to offer health care to full-time workers as required under the ACA. Therefore Medicaid is going to grow from pre-ACA levels regardless of whether states opt in or out. How much it grows and the amount of federal funding for said growth remains the decision of the individual states but currently the smart move is to expand Medicaid.

Adam Mitchell is a Juris Doctorate student at Seton Hall University School of Law. We are very pleased to welcome him to the blog today.


Monday Morning Recap: The Week (8.18.14-8.24.14) in Drug & Device Law & Policy

Picture3Well, another week has flown by and it’s once again time for the Monday Morning Recap, the post where we call out the recent drug and device law and policy developments that caught our eye and made us think.  We  are looking forward to a busy last week of summer on the blog, with posts from yours truly, from Seton Hall Law student Adam Mitchell, and from Tara Adams Ragone. We’ll take a break for Labor Day Weekend and then be back for the fall with lots of timely analysis and commentary from Seton Hall Law’s health law faculty.

1. This past week the ubiquitous ALS ice bucket challenge came to Seton Hall Law, with Professor Mark Alexander (video here) and Dean Patrick Hobbs (video here) taking part. For those interested in how the money raised will be spent, I recommend this post by Carey Goldberg at CommonHealth. Goldberg spoke with “Dr. Lucie Bruijn, chief scientist of the ALS Association that is reaping the ice-bucket windfall” who “describe[d] a field that is forging ahead in multiple directions.” To give just one example,  the Association might direct some of the money towards a clinical trial of “a compound that has been approved for people who have changing emotions in ALS — laughing and crying that’s exaggerated” to see if it might also, as anecdotal evidence suggests, improve swallowing. On a sobering note, Dr. Bruijn notes that “trials can be anywhere up from $25 million plus, just for perspective. So these are not small investments.”

2. This interview, by Geoff Colvin at Fortune, of Kathy Giusti, a former pharmaceutical executive who founded the Multiple Myeloma Research Foundation (MMRF), touches on similar themes. There are currently six drugs approved to treat multiple myeloma, “and the MMRF played a role in advancing all of them, with more in the pipeline. Life expectancy for many patients has doubled.” Giusti credits her foundation’s success to her decision to focus on funding research (to the exclusion of advocacy or public policy or healthcare), and, in particular, to focus on fixing a cancer research system that Giusti describes as “broken.”

3. This week also brought news of a recent development in Depomed’s struggle to protect its drug Gralise, a once-a-day version of gabapentin, from generic challengers.  As Arlene Weintraub reports at FiercePharma, “Judge Joel Pisano of the U.S. District Court in New Jersey ruled that Actavis’s filing for FDA approval of generic Gralise infringes all seven of Depomed’s patents on the product. With this ruling, Depomed’s market exclusivity will be protected until 2024.” Depomed continues to litigate on another front, however. As Weintraub explains: “Simultaneously, Depomed has been in a war with the FDA, which approved Gralise under its Orphan Drug program but did not grant the company the 7 years of market exclusivity that normally goes along with orphan designation. Depomed sued the FDA in September 2012 seeking that exclusivity and is still awaiting a decision from a federal district court judge, according to the company’s latest quarterly filing.

4. Also at FiercePharma, and also by Arlene Weintraub, this article about the Drug Enforcement Administration’s re-classification of “combination drugs containing hydrocodone . . . as Schedule II products, imposing on them the same restrictions that apply to pure hydrocodone, as well as oxycodone and morphine.” As Weintraub explains: “Vicodin and similar products used to be grouped in the less restrictive Schedule III, but recent DEA research showed that the drugs can be as addictive as pure opioids and “may lead to severe psychological or physical dependence,” a statement from the agency says. “Adding nonnarcotic substances like acetaminophen to hydrocodone does not diminish its abuse potential.”

5. Finally, at The Hill, Peter Schroeder reports that the Inspector General for Tax Administration has found a number of problems with the Internal Revenue Service’s implementation of the Affordable Care Act’s device tax. Among other things, “IRS agents were still having a hard time determining exactly which medical device manufacturers were subject to the tax” and “both the returns filed and revenue raised have come in well short of expectations.”


Monday Morning Recap: The Week (8.11.14-8.17.14) in Drug & Device Law & Policy

August 19, 2014 by · Leave a Comment
Filed under: Monday Morning Recap 

Picture3The student’s are back here at Seton Hall Law and the Tuesday Monday Morning Recap is too, after a restful but all-too-brief vacation. Monday Morning Recap is the post where we call out the drug and device law and policy developments that caught our eye and made us think over the previous week.  You can see all of our previous Monday Morning Recap posts here.

1. The high-priced Hepatitis C drug Sovaldi continued to make headlines this past week. At Forbes, Yevginiy Feldman noted that “the UK’s National Institute for Health and Care Excellence (NICE) just approved the drug as being cost-effective, and recommended it for subgroups of patients.” Feldman suggests that, “given that a system with very tight price controls, and what can be described as a true single-payer system, decided to cover Sovaldi for some subgroup of patients, perhaps the mud-slinging against [Sovaldi's manufacturer] Gilead is a bit unwarranted. The evidence appears to be shifting in Sovaldi’s favor.

2. At Kaiser Health News, Jim Burress reported on the barriers that stand in the way of more widespread use of the anti-viral medication Truvada by individuals at risk of, but who do not have, HIV or AIDS. Burress quotes researcher Dr. Melanie Thompson who “says no doctor would refuse to prescribe cholesterol-lowering statins to patients because they’re overweight.  Somehow, the conversation around PrEP is different. ‘So I think it’s a very interesting moralistic attitude that soon will be outdated.  But I do think that this is a barrier for some patients,’ Thompson says. ‘They feel stigmatized. And honestly, health care providers need to step up their game and do better than that.‘”

3. AP Health Writer Matthew Perrone wrote about former AIDS activist Gregg Gonsalves, who “still travels to Washington, but with a different agenda: to defend the FDA.”  Perrone reports that “[s]ince May, three states – Colorado, Louisiana and Missouri – have passed laws designed to allow terminally ill patients to receive experimental drugs that have not been cleared by the FDA. Arizona will vote on its own so-called ‘right to try’ initiative in November and lawmakers in Florida, Oklahoma and Utah are set to introduce similar bills. All of these efforts are driven by lobbyists from the Goldwater Institute, a libertarian think tank. … In closing his talk on Capitol Hill earlier this summer, Gonsalves warned Senate staffers that a political shift to the right in coming elections could ‘change the game’ for drug safety and effectiveness. ‘We will have a different FDA than we have had for the last 30 years.’”

4. Charles Ornstein of Pro Publica broke the news that “[n]ext month, when the federal government releases data about payments to physicians from pharmaceutical and medical device makers, one-third of the records will be withheld because of data inconsistencies, an official told ProPublica. The issue is the latest hurdle for the federal government as it seeks to launch the already-delayed Open Payments database mandated under the Physician Payment Sunshine Act, a provision of the 2010 Affordable Care Act.” The data inconsistencies were uncovered after a physician in Kentucky named David E. Mann complained that some of the payments attributed to him were actually made to a David E. Mann in Florida. Even before he discovered the inconsistencies, Dr. Mann was frustrated. On August 1st, he Tweeted the following: “Just completed the application to view my #sunshine act data on CMS website. Applying for a visa to North Korea would be simpler.

5. Finally, at the Drug and Device Law blog, Jim Beck opines, with his usual entertaining irascibility, about the Alabama Supreme Court’s “re-decision” in Weeks v. Wyeth. In Weeks II, the Court held, as it did the first time around in Weeks I, that a plaintiff who was injured by a generic drug could bring suit against the manufacturer of the drug’s branded equivalent, to the extent that the plaintiff’s physician prescribed the generic drug in reliance on misrepresentations made by the branded manufacturer. Beck’s “[b]ottom line”: “Alabama has more home-grown plaintiff lawyers than pharmaceutical companies – and after Weeks II, it most assuredly always will.” (A video of (among other things) me giving my (contrary) take on Weeks I and innovator liability generally is here.)


Monday Morning Recap: The Week (7.28.14-8.3.14) in Drug & Device Law & Policy

Picture3Here’s this week’s Monday Morning Recap, the post where we call out the drug and device law and policy developments that caught our eye and made us think over the previous week.  You can see all of our previous Monday Morning Recap posts here.

1. This past week, Julie Steenhuysen at Reuters filed a report on “[t]he worst Ebola outbreak in history[.]” The outbreak “is heaping new pressure on U.S. regulators to speed the development of treatments for the deadly virus, which has killed more than 700 people since February. The U.S. Food and Drug Administration on Friday said in an emailed statement the agency ‘stands ready’ to work with companies and investigators working with patients ‘in dire need of treatment.’ . . . FDA’s statement follow calls by doctors fed up by the lack of progress on Ebola treatments, a market deemed too small to gain much attention by large pharmaceutical companies. Earlier this month, the agency put a hold on a Tekmira Pharmaceuticals Corp clinical trial of TKM-Ebola, one of the few Ebola treatments advanced enough to be tested in people. The hold prompted a North Carolina physician with family members in West Africa to say enough. ‘This should be the last Ebola epidemic without a cure,’ said Dr. Ahmed Tejan-Sie, an internist from Burlington.”

2. The FDA announced that it was “notifying Congress of its intention to publish a proposed risk-based oversight framework for laboratory developed tests (LDTs), which are designed, manufactured and used within a single laboratory.” Andrew Pollack at the New York Times explains: “Test systems or kits that are sold to hospitals, laboratories, doctor’s offices and the public have long been regulated as medical devices, giving the agency the opportunity to review them before they are marketed. But tests developed and performed by a single laboratory, with all samples being sent there, have typically not been. The F.D.A. had claimed the legal authority to regulate these so-called laboratory-developed tests, but said it was exercising ‘enforcement discretion’ not to do so. The agency said on Thursday that such discretion must end because circumstances had changed. Lab-developed tests once were fairly simple, often developed by a hospital for tests on its own patients. Now the tests can be complex and are being developed by companies and marketed widely.”

3. Also this past week, BioMarin Pharmaceutical announced that it had sold its rare pediatric disease priority review voucher to Regeneron Pharmaceuticals for $67.5 million. BioMarin was awarded the voucher in February “when it received approval of VIMIZIM®, a new biological product for patients with Mucopolysaccharidosis type IVA, also known as Morquio A syndrome.” Per Ron Winslow and Joseph Walker at the Wall Street Journal: “The voucher was the first to be issued under the pediatric incentive program, and also the first to change hands.” For additional background, see my post here.

4. At Pharmalot, Peter Loftus reported that a group of medical societies and pharmaceutical industry trade groups has written a letter to the Centers for Medicare & Medicaid Services (CMS) expressing concern that when the first Physician Payments Sunshine Act report is released later this month it will not provide the context needed to allow the public to understand the reasons for payments made by drug and device companies to physicians. CMS, Loftus writes, responded that it “does plan to make available the nature of payment for each payment or transfer of value made to a physician or teaching hospital and will also include context on the website.”

5. Finally, at CommonHealth blog Deborah Becker discusses a newly-released report from The New England Comparative Effectiveness Public Advisory Council that “contains some surprising findings about medication maintenance addiction treatment. It says that methadone, long used to treat heroin addiction, may be the most effective and cheapest treatment. The report . . . found that when comparing methadone with suboxone (Buprenorphine) or naltrexone (Vivitrol), more patients stayed in treatment longer if they were taking methadone. In follow-ups with patients three to 12 months after they first started taking medication, 63 percent of methadone patients were still in treatment, compared with 52 percent of those taking suboxone and 28 percent on naltrexone. Methadone also appears to be the cheapest maintenance medication, despite the requirement of having a health care facility daily distribute the drug to patients.”


Monday Morning Recap: The Previous Week (7.21.14-7.27.14) in Drug & Device Law & Policy

July 28, 2014 by · 1 Comment
Filed under: Drugs & Devices, Monday Morning Recap 

Picture3Here’s this week’s Monday Morning Recap, the post where we call out the drug and device law and policy developments that caught our eye and made us think over the previous week.  You can see all of our previous Monday Morning Recap posts here.

1. Last Wednesday, two advocacy groups, the Medicare Rights Center and Social Security Works, released a report calling on Congress to take four concrete steps to reduce the price Medicare pays for prescription drugs: (1) restore the rebates that were lost with the passage of the Medicare Modernization Act; (2) allow Medicare to negotiate drug prices on behalf of Part D enrollees by establishing “Medicare-administered drug plans, with a uniform premium and a vetted benefit design to ensure safety, appropriate use and high value care”; (3) speed up the closure of the Medicare “doughnut hole” by securing additional discounts from drug manufacturers, and (4) “[p]romote cost-effective prescribing for Part B prescription drugs”, which are typically administered in a doctor’s office by injection or infusion, and which tend to be very expensive.

2. As we noted here, concerns have been raised about manufacturers’ use of Risk Evaluation and Mitigation Strategies (REMS) to delay entry of generic drugs. This week the Generic Pharmaceutical Association released a commissioned study that attempts to quantify the impact. The author writes: “This paper estimates lost savings on forty generic small-molecule products whose market entry, according to a survey of generic drug manufacturers, is currently delayed by misuse of REMS or other restricted access programs. Specifically, this paper identifies $5.4 billion in annual pharmaceutical spending that could be saved if generic versions of the forty identified drugs were allowed to come to market.

3. The Second Circuit decided an important case this week involving the Food and Drug Administration’s (lack of) response to the use of antibiotics to help farm animals grow. At Bill of Health, Diana Winters writes: “This issue has enormous public health consequences, but the consequences of this case extend beyond antibiotic use, to agency practice in general.  The opinion sanctions egregious agency delay and a tremendous lacuna in decision making.

4. Reuters reported on a new partnership between Britain’s Medical Research Council and seven leading drug manufacturers, under which academic researchers “will gain access to ‘deprioritized’ pharmaceutical compounds. Often these compounds have been dropped from development because they are not sufficiently effective against a particular condition, but they may still be useful against other diseases with shared biological pathways. . . . While drugmakers have traditionally been reluctant to share their compounds, there is a growing recognition that outside experts may be able to unlock value by taking a different approach, resulting in shared profits between companies and academic institutions.”

5. Finally, I recommend the series of posts Richard Cassin published at The FCPA Blog last week (here, here, and here) on the ways in which in-house lawyers, including in-house lawyers at drug and device companies, are “caught between their duty as advocates on the one hand, and the modern concept of ethics and compliance on the other hand.”


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