A Make America Healthy Again (MAHA) roundtable was hosted at the White House on March 11, where Health and Human Services (HHS) Secretary Bobby Kennedy gathered experts – specifically “MAHA Moms” – as part of his MAHA Commission work initiated by President Trump’s Executive Order that established the commission with reportable findings and recommendations on the chronic disease crisis. Other cabinet members participating included Agriculture Secretary Brooke Rollins and Education Secretary Linda McMahon, along with White House Press Secretary Karoline Leavitt. SBE Council president & CEO Karen Kerrigan attended the event.

Secretary Kennedy provided an overview of his initial work to address chronic disease and roundtable participants discussed the scope of America’s health and mental health challenges, including:

● Six in ten Americans have at least one chronic disease, and four in ten have two or more chronic diseases.

● An estimated one in five United States adults lives with a mental illness.

● Across 204 countries and territories, the United States had the highest age-standardized incidence rate of cancer in 2021, nearly double the next-highest rate. From 1990-2021, the United States experienced an 88 percent increase in cancer, the largest percentage increase of any country evaluated.

● In 2021, asthma was more than twice as common in the United States than most of Europe, Asia, or Africa.

● 40 percent of school age children have one chronic disease.

In terms of how the U.S. is currently dealing with the crisis, Secretary Kennedy said, “We have sick care, not health care.”

Much of the conversation focused on the food Americans are eating, along with their lack of movement. During the roundtable, Secretary Kennedy announced that he was directing the Food and Drug Administration (FDA) commissioner to start the process of changing the rules to eliminate the self-affirmed “Generally Regarded as Safe” (GRAS) pathway for new food ingredients. He is also directing an improvement to post-market assessments of GRAS chemicals currently in food to “rapidly identify the compounds that are making Americans so sick, and so that American consumers and regulators can make informed decisions.” Secretary Kennedy noted that there are 10,000+ ingredients in USA food, while Europe has 400. He added that former President Biden’s new dietary guidelines are 452 pages. Secretary Kennedy is aiming for 3 pages.

Kerrigan catches up with Secretary Kennedy on the MAHA agenda and the important role of entrepreneurs in the health, wellness and fitness sectors.

Secretary Rollins said that much of the change – getting American healthy and moving again – can and should happen at the local level with leadership from Washington. Smart policy reforms, education and promotion at the national level, and reinforcement through activities and outreach at the community level are vital to making this happen.

Small businesses in the health, wellness, fitness and mental health space can play a big role in this transformative change, as many SBE Council members have been working to do just that for some time. SBE Council will continue to engage with Secretary Kennedy and the MAHA Commission on this important initiative, as entrepreneurs and small businesses are key conduits to influence the lifestyle and policy changes that are needed to Make America Healthy Again.

SBE Council Policy Priority Spotlight: Expanding Health Savings Accounts (HSAs): An important part of SBE Council’s MAHA agenda is strengthening HSAs to bring more choice, price sensitivity, competition and common sense to the health care market. HSA expansion and improvement will help to boost preventative care, and by expanding eligible uses can help to move the needle on the crisis-care model that is driving up costs and keeping people unhealthy.

In a new Small Business Insider blog post, SBE Council chief economist Ray Keating looks at the data and economics of HSAs, and legislative efforts to expand access to – and the power of – HSAs.

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by Raymond J. Keating –

If you’re concerned about health care spending, innovation in medical treatments, and overall quality of care, then you shouldn’t be arguing for more government involvement in health care, such as via expanded government spending or government-imposed price controls on medicines. Instead, constructive and imperative policy reforms need to be focused on expanding consumer control and choice, and competition. That means, for example, expanding access to tax-free health savings accounts (HSAs).

Price Sensitivity Missing in Healthcare

Consider that, based on 2023 data from the Center for Medicare and Medicaid Services, only 11 percent of national health consumption expenditures were paid for out of pocket. That means third-party payments covered the other 89 percent of these expenditures. That included 32 percent from private health insurance, and another 5.5 percent from other private sources. That leaves approximately 52 percent covered by government, such as via Medicare, Medicaid, CHIP, and other programs.

Third-party payments mean that someone else other than the consumer is picking up the tab. And of course, medical insurance is supposed to do that, in particular, protecting individuals and families against large, unforeseen medical expenses. But third-party payments go far beyond that today in terms of covering regular, foreseeable, smaller costs.

For good measure, when government is the third-party payer, the ills of government spending come into the equation. So, while costs and utilization rise with third-party payments in general, they expand more rapidly with government funding, as those in government have few incentives to control costs as they are spending other people’s – i.e., taxpayers’ – money.

In effect, with third-party payments, again, especially with government as the third-party payer, the market relationship between buyer and seller, or consumer and supplier, breaks down. Costs mount as a result.

So, we are left to disentangle the “good” and the “bad” in increased health care spending. That is, how much is from improved care and investments in life-saving and life-enhancing treatments, and how much is from poor or absent incentives regarding costs?

While government is bound to play some part in the funding of health care – such as for low-income earners – the policy emphasis should be on limiting governmental incentives and opportunities for waste, while expanding consumer sovereignty and bolstering the market transaction between consumer and supplier.

The Role of Health Savings Accounts and Strengthening their Impact

HSAs are vital for consumer sovereignty in health care. An HSA is a tax-free savings accounts tied to enrollment in a high-deductible health plan (HDHP). HSAs offer a triple tax advantage in that HSA contributions are fully tax deductible, returns (e.g., interest earned) on HSA deposits aren’t taxed, and withdrawals made for qualified medical expenses are tax free.

Over the past two decades, HSAs have become a vital part of the health care marketplace. This is made clear in the following two charts from the latest KFF Annual Employer Health Benefits Survey, with HSA-qualified HDHPs rising from seven percent of businesses offering health coverage in 2007, for example, to 22 percent in 2024, and the percentage of covered workers with HSA-qualified HDHPs going from 3 percent to 21 percent.

Also, in its third annual Devenir & HSA Council Demographic Survey, Devenir and the American Bankers Association’s Health Savings Account Council found that the 35.5 million health savings accounts existed at the end of 2022, and they helped cover almost 72 million Americans.

In laying out SBE Council’s policy agenda for the new Congress and Trump administration, President and CEO Karen Kerrigan included the following point:

“Expensive health coverage costs and limited options continue to frustrate small business owners and weigh down the competitiveness and growth of their firms. SBE Council will push forward with efforts to strengthen and improve health savings accounts (HSAs), encourage and expand telehealth, reform and improve the small business health tax credit, and revive progress during the first Trump administration that reduced barriers to small business pooling and transition coverage options for new entrepreneurs and the self-employed.”

Legislative Solutions and Proposals

Regarding HSAs, Kerrigan highlighted the HSA Modernization Act. The legislation was introduced by Congresswoman Beth Van Duyne (TX) and Congressmen Dan Meuser (PA) and Dan Crenshaw (TX) in 2025.  Rep. Van Duyne noted that the act “will cut unnecessary regulations, modernize health savings accounts, and expand HSA eligibility for disabled veterans, working seniors, and Native Americans while offering Americans more control over their care.” The act would allow spouses to provide “catch up” payments in the same HSA, and increase contribution limits.

Among other proposed legislation to improve HSAs, the Personalized Care Act, introduced by Senator Ted Cruz (TX) and Rep. Chip Roy (TX) would, among other measures, decouple HSAs from high-deductible health plans, expand access to HSAs, and increase annual contributions.  A broad coalition exists for expanding HSAs via decoupling – from business associations, to taxpayer groups, health care organizations and more. A February 26 Open Letter to Congress, for example (signed by SBE Council), focuses on the importance of this approach and using the reconciliation package to advance the reform.

For good measure, price transparency in health care is vital so that consumers can make informed choices. As Kerrigan noted in a recent statement supporting President Trump’s “Making America Healthy Again by Empowering Patients With Clear, Accurate, and Actionable Healthcare Pricing Information” Executive Order:

“Small businesses and their employees stand to benefit from universal transparency through lower costs and more choices. Entrepreneurs and innovative startups will have clearer information and data that can help them launch new enterprises to positively disrupt this sector.”

On the legislative front, for example, the Health Care Prices Revealed and Information to Consumers Explained Transparency Act, or the Health Care PRICE Transparency Act, introduced in the previous Congress by Rep. Warren Davidson (OH), would provide “statutory authority for requirements for hospitals and health insurance plans to disclose certain information about the costs for items and services,” including publishing “in their list of standard charges certain rates negotiated with insurers, discounts for cash payments, and billing codes,” as well as publishing “the standard charges for the services provided by the hospital that may be scheduled in advance.” As for insurance plans, they would need to “publish the in-network and out-of-network charges for covered items and services and the negotiated prices for covered prescription drugs.”

In the end, price controls on medicines undermine the incentives for developing new and improved medicines.

Price controls, for example, attack the “good” part of increased health care spending, if you will. More government funding of health care expands the “bad” part of spending, as incentives are lacking to control costs and waste. Meanwhile, HSAs address the problem of third-party payments, by re-establishing the market buyer-seller relationship and boosting consumer sovereignty.

Turning away from more government controls and programs, and instead, boosting access to HSAs – including for entrepreneurs, small businesses and their employees – would be good news in terms of health care policymaking.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of “The Weekly Economist” book series, and 10 Points from Walt Disney on Entrepreneurship.

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Centers for Medicare and Medicaid Services

U.S. Department of Health and Human Services

Attention: CMS-4208-P

To Whom it May Concern:

The Small Business & Entrepreneurship Council (SBE Council) appreciates the opportunity to submit comments on the proposed rule to expand Medicare and Medicaid patients’ access to anti-obesity drugs such as GLP-1s. For more than 30 years, SBE Council has worked on a range of policy and private-sector initiatives to improve the climate for business creation and competitiveness, including solutions that result in affordable health care access and coverage. Entrepreneurs want to provide their employees with quality and results-oriented solutions that promote their health and wellbeing. The rule (CMS-4208-P) being proposed by the Centers for Medicare and Medicaid Services (CMS) is an important solution to that end.

A report published by GlobalData ( Assessing the Economic Impact of Obesity and Overweight on Employers, February 2024) found that that annual costs associated with obesity total $347.5 billion for employers, including:

● $146.5 billion in higher medical costs for employees and their dependents

● $82.3 billion in higher absenteeism (missed workdays)

● $160.3 billion in higher presenteeism (reduced productivity due to illness)

● $31.1 billion in higher disability costs $5.2 billion in higher Workers’ Compensation Program costs

The report found that the annual per-worker cost is $6,472, including:

● $1,514 higher medical costs

● $664 higher disability costs

● $122 higher injury worker compensation

● $1,755 higher absenteeism costs

● $2,427 higher presenteeism costs

High health care and health coverage costs have been an enduring challenge for small business owners and the self-employed. And the significant costs and conditions associated with obesity have a downstream negative effect on small businesses, both in terms of health coverage costs and lost productivity in the workplace.

As expressed time and again by small business owners and the self-employed, affordability is the top barrier to purchasing or providing coverage. In one survey among many conducted by SBE Council over the years on health care issues, it was found that small business owners are highly dedicated to their employees’ health. When asked to identify the biggest benefits of offering health insurance benefits, the wellbeing of employees tops the list, followed by competitiveness:

Four in five small business owners agree that giving workers access to health coverage is business critical (79%).

Bringing costs down is central to the universal coverage and access goal that many Administrations, lawmakers, and policy leaders have sought over the past 30 years or more. Covering anti-obesity medicines is an important step to help bring costs down.

New research published in December 2024 found that modest weight loss can help cut health care spending costs for both employers and the government. The research, published in JAMA, revealed that modest to moderate weight loss would produce cost-saving results for individuals with employer-sponsored coverage.

● A 5% weight loss reduced health care spending by $670 or 8% per person annually.

● A 25% weight loss reduced spending by $2,849 annually or 34%.

● For weight loss of 5-20%, individuals with the following comorbidities would realize the greatest reductions in annual health care spending:

-Obesity and diabetes: $1,840-$5,821

-Obesity and arthritis: $1,917-$6,143

-Obesity and chronic back problems: $1,422-$4,729

Medicare stands to save even more:

● A 5% weight loss reduced spending by $1,262 (7%) per person annually.

● A 25% weight loss reduced spending by $5,442 (31%) per person annually.

Covering anti-obesity medicines to help improve the health and lives of people, reduce spending costs, and make the U.S. a healthier and more productive nation is a smart and sensible action.  SBE Council strongly supports coverage of these anti-obesity drugs.

Thank you again for the opportunity to express our views, and please do not hesitate to contact SBE Council for further questions.

Sincerely,

Karen Kerrigan. President & CEO

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In a September 23 DC Journal Op-Ed, SBE Council president & CEO Karen Kerrigan addresses the Inflation Reduction Act (IRA) and its goals and outcomes in lowering drug costs. She reviews the damaging effects and predictable approach of the path taken – price controls –  and the other option not taken: reforming the Pharmacy Benefits Manager (PBM) system. Kerrigan writes:

That was the road not taken. Instead, the IRA empowers Medicare officials to “negotiate” lower prices from drug makers — in reality, to impose price controls. 

This path is now threatening the lifeblood of American medical innovation — our small biotech firms. Unless Congress changes priorities, we can give up hope for a new generation of breakthrough treatments in areas from cancer to Alzheimer’s.

The IRA’s price controls are a blunt instrument. While large corporations with diverse drug portfolios might weather this storm, small biotechs responsible for the lion’s share of innovation — often staking their future on a single promising molecule — could face a catastrophic disruption to the early-stage funding on which they depend.

Indeed, a University of Chicago study predicts that the IRA will significantly reduce investment in drug research and development. This could result in dozens of potential therapies never seeing daylight.

Kerrigan reviews another option, meaningful PBM reform, and urges Congress to take action. Read the full Op-Ed here.

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The Honorable Anne Milgram
Administrator
United States Drug Enforcement Administration
8701 Morrissette Drive
Springfield, VA 22152

Dear Administrator Milgram:

Thank you for your leadership and engagement in public listening sessions last fall related to telemedicine flexibilities and for your actions to ensure continued patient access to care delivered through telemedicine in advance of final telemedicine regulations this year.

Now that the first quarter of 2024 has passed, we write to request that DEA expedite the release of a revised proposed rule to permit and regulate the prescribing of controlled substances through telehealth. This rule is crucial for access to mental health, substance use disorder, and other telehealth care. As you know, the current flexibilities for telehealth expire at the end of this year; we request the updated rules be proposed immediately for the following reasons:

• Given the complexity of these issues and the significant stakeholder interest (as demonstrated through more than 38,000 public comments received by DEA on proposed rules), DEA must plan to ensure stakeholders have adequate time to provide feedback on any policy proposal.

• If DEA were to create a special registration process for telehealth prescribers, as proposed by both DEA and many stakeholders, significant operational lead time would be needed for DEA, practitioners, pharmacies, and other related service providers to implement the new special registration process and comply with other potential operational requirements and guardrails.

• Given widespread provider shortages, particularly in the mental health and substance use disorder treatment spaces, a rulemaking late in the year that makes significant policy changes would affect the ability of patients and clinicians to make appointments and ensure consistent access to care. While we hope the final rulemaking preserves patient access, any policy change that requires patients to seek in-person care would be extremely disruptive due to long scheduling lead times and in-office wait times.

• In addition to operational and implementation challenges for clinicians, there will be significant operational and staff training needs for pharmacies and other parts of the healthcare delivery system to ensure patients uninterrupted access to needed medical treatments offered through telehealth.

• Finally, DEA’s national leadership is needed to set a clear path forward for the nation and to encourage more consistent definitions and aligned requirements from state regulatory bodies. Alignment of requirements is needed to simplify compliance for healthcare providers and encourage telehealth
providers to offer care in our nations most underserved areas – without geographic barriers such as state lines limiting access to care.

Thank you for your consideration of this request. We looking forward to working with you to ensure continued
access to needed telehealth services for all Americans while protecting against diversion and inappropriate use.

Sincerely,

A Mind Affair LLC
Access TeleCare, LLC
Ace Mentality
ACHIEVE Psychiatric Wellness Center
Advanced Practice Psychiatry, LLC
AGMP Telehealth
Alliance for Connected Care
Alliance Mental Health
Alliance of Community Health Plans (ACHP)
Allina Health
ALS Association
Amazon
American Academy of Hospice and Palliative Medicine
American Academy of Neurology
American Academy of PAs
American Association of Nurse Practitioners
American Association of Psychiatric Pharmacists
American Health Care Association/National Center for Assisted Living
American Psychological Association Services
American Telemedicine Association
American TelePhysicians
American Urological Association
AmplifyMD
Anderson Mental Health Services LLC
Anxiety and Depression Association of America
Array Behavioral Care
Aspire Mental Health
Association for Behavioral Health and Wellness
At Your Service Psychiatry, PLLC
ATA Action
Baylor Scott and White Health
Ben Archer Health Center
Bicycle Health
Big Cities Health Coaltion
Broad Mountain Holistic Mental Health Services
Caregility
Casel Mental Health and MetRX
Center for Freedom and Prosperity
Centerstone
Chesapeake Psychological Associates

Choptank community Health
Cincinnati Children’s
Circle Medical
Clinical Social Work Association
Coalition for Headache and Migraine Patients (CHAMP)
Collective Energy for Nurturing Training in Reproductive and Sexual Health (CENTRS Health)
College of Healthcare Information Management Executives (CHIME)
Columbia University Irving Medical Center
CommonSpirit Health
Compass Psychiatric Wellness
Compassion & Choices
Complete Behavioral Health
Connected Health Initiative
CONQUER ADDICTION PLLC
Consumer Technology Association
Corewell Health
CurieDx
Department of Psychiatry, University of Maryland School of Medicine
Digital Medicine Society (DiMe)
Dogtown Media / NeurCare
DoseSpot
Doxy.me Inc.
DreamCloud Psychiatry
Driscoll Health System
Eagle Telemedicine, LLC
Eleanor Health
Elite Medical Partners
Embrace Health
Encounter Telehealth
Epilepsy Foundation
Essential Grace Mental Health Care Services LLC
Estrella Cognitive Care
ExamMed
Facilitation Health PLLC
Fig Tree Behavioral Wellness, LLC
Firefly Health
FOLX Health
FreedomWorks
Funner Mental Health, LLC
Gender Wellness Center, Bassett Healthcare Network
Ghaly Healing and Wellness Center
GRIN2B Foundation
Guide to Wellness PA
Half Full Psychiatry
HardemanCounty Community Health Center

Harmony & Unity Mental Health
Harmony mental health
Hawkins Group
HealthQuarters Inc dba HealthQ
HER Psychiatric Services
Hims & Hers Health, Inc.
HIMSS
Hopeful Mind Mental Health, PLLC
Hopscotch Health
Human Vitality
Hydrocephalus Association
Impact Carolina Services, Inc
IMPOWER
In-Tuitt Behavioral Health Services
Indiana University Health, Inc.
Integrated Telehealth Partners
International Foundation for Autoimmune & Autoinflammatory Arthritis (AiArthritis)
Iye CollaborativeLLC
Johns Hopkins University and Medicine
Karis Holdings, LLC
KeyCare, Inc & KeyCare Medical Group
Kinspire Inc
Kohnlinq Inc.
LeadingAge
Lifepoint Health
LMA Mental Health Services
Logan Wellness Advanced Nursing Practice Corp.

Loma Linda University Health
LT Telehealth/LocumTenens.com
Marsha’s Tea Room
Marshfield Clinic Health System
Mass General Brigham
Massachusetts Health Data Consortium
Maternal Mental Health Leadership Alliance
Meadowlark Psychiatric Services
Medical Group Management Association
Meds.com
Mend VIP, Inc.
Mental Health America
Mentavi, Inc.
Miles for Migraine
Mind body behavioral health
Mind Revive Psychiatry
Mindful Intentions, LLC
Minnesota Hospital Association
Mobile Primary Care
National Association for Home Care & Hospice
National Association of Pediatric Nurse Practitioners
National Disability Rights Network (NDRN)
National League for Nursing
Nest Collaborative
New Jersey Association of Mental Health and Addiction Agencies, Inc.
NextGen Healthcare
NIM Longevity
Noma Therapy
Ophelia
Oshi Health
OY Nursing Corporation

Ophelia
Oshi Health
OY Nursing Corporation
Pandemic Patients
Paragon Behavioral Health
Partnership for Employer-Sponsored Coverage (P4ESC)
Partnership to Advance Virtual Care
PAs in Virtual Medicine and Telemedicine
Patient Access Network (PAN) Foundation
Perinatal Mental Heath & Wellness
Planned Parenthood California Central Coast
Policy Center for Maternal Mental Health
Population Health Analytics Association Incorporated
Premier Inc.
Pro-Mental Health Connection
Psychboston
Psychiatric Medical Care
Psychiatric Medical Practitioners, Inc.
QMed, LLC
Quartet Health
QueerDoc
Red Cedar Counseling
Red Clover Wellness
Reproductive Health Access Project
Resolve Psychiatric Services
Revive Mental Health Solutions LLC
Riverview Practice
Ro
RxHomeTest
Sandpiper Wellness
Sanford Health
Satori Mental Health LLC
Seasons of Wellness
Serenity Health Care, PLLC
Shadow Mountain Mental Health

Shrewsbury Wellness Center
Small Business & Entrepreneurship Council
Society for Participatory Medicine
SohoMD
Southern Comfort Psychiatric Services, LLC
Spectrum: The Other Clinic
Stanford Health Care
Stony Brook University Medical Center
STXBP1 Foundation
Sunrise Mental Health
Swing Care
Synchronous Mental Health
Synergy Family Psychiatric Services LLC
Talkiatry
TECHMEDO
TeleMed2U
Texas Health Resources
Texas Tech University Health Sciences Center
The Global Telemedicine Group
The Process Psychiatry and Wellness
The Trevor Project
TheraTec, Inc
Thirty Madison / KMG Medical Group
Transgender Health & Wellness Center
Transhealth
True U Clinic
University of Pittsburgh Medical Center (UPMC) Health System
URAC
UVA Health
VerifiNow inc
Vesta Healthcare
WeKonnect,LLC.
Welcome Home Health, Inc.

Wellcore, Inc
Welliti
WellTrust Medical
Willow Behavioral Health
Workit Health
Yale New Haven Health

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by Karen Kerrigan –

The Centers for Medicare and Medicaid Services (CMS) is advancing a proposal that would significantly alter the marketing and broker compensation structures of Medicare Advantage (MA) plans. The change threatens the livelihood of small businesses and brokers, and risks stifling competition within the healthcare industry. Moreover, the proposal would drive the United States healthcare system towards a more socialized structure.

Understanding the consequences of the proposed rule on key stakeholders is important for CMS and lawmakers to understand – from the small firms that play a critical role in the healthcare market to the consumers who rely on them for guidance and support.

The proposal aims to target the promotion of objective plan assessments by brokers. But in doing so exposes the system to far-reaching negative consequences that would disrupt the coverage framework that seniors highly enjoy.  So why is CMS doing this, and do they understand the downstream impact on seniors and small businesses?

The Medicare Advantage Success Story

Medicare Advantage is a bipartisan success story. In fact, 95% of seniors identifying as Democrats and 93% as Republicans said they are satisfied with their Medicare Advantage coverage in 2022.

Medicare Advantage plans have consistently offered seniors and other eligible beneficiaries access to quality care, innovative services, and affordable options. This success is supported by a dynamic ecosystem of brokers, small firms, and competition that drives continuous improvement and adaptation in the sector.

A Successful Model is Threatened

The proposed CMS rule threatens to dismantle this successful model. By redefining compensation structures and marketing guidelines, the rule would disproportionately affect small firms and independent brokers – paving the way for large firms to eat up market share.

These smaller entities are an essential part of the Medicare Advantage market, ensuring consumers have access to personalized, knowledgeable advice when navigating the complex landscape of Medicare. Their marginalization would not only reduce the diversity of options available to beneficiaries, but also limit the quality of service and support that has been instrumental in achieving high satisfaction rates among Medicare Advantage plan members.

Moreover, the rule would significantly reduce competition in the healthcare industry. By making it harder for small firms and brokers to operate, the remaining market would likely consolidate around larger entities with the resources to navigate the new regulatory environment. The reduction in competition would lead to higher costs, less innovation, and a decrease in the quality of care available to beneficiaries.

Of equal concern, the proposal pushes the U.S. healthcare system further down a socialized path. By centralizing the functions that were previously distributed among a diverse network of brokers and small businesses, the rule paves the way for a healthcare system that is more controlled by the federal government and less by dynamic and responsive market forces. This shift would have profound implications for the quality, accessibility, and affordability of healthcare in the United States.

A Regulatory Shift That is Not Warranted

The proposed CMS rule represents a worrisome shift for Medicare Advantage and the broader healthcare market. Legislators and policymakers must fully understand the potential negative effects of this rule on small firms, competition, seniors, and the healthcare system as a whole.

If lawmakers want a Medicare Advantage system that works for seniors, they must stand firm and oppose the rule change. CMS must fully analyze the effects of the proposed rule and acknowledge the concerns of small business owners, brokers, and beneficiaries. By listening and collaborating with the stakeholders most affected by this proposed rule change, any alterations to Medicare Advantage would strive to strengthen rather than undermine the program.

America’s healthcare system must values choice, competition, and quality and reject government-directed moves that lead us toward a less effective and more socialized healthcare model.

Karen Kerrigan is president and CEO of the Small Business & Entrepreneurship Council

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by Raymond J. Keating – 

If someone else is footing the bill, then what incentive do you, as a consumer, have to find out how much something costs?

Third-party payments are the reality of much of health care funding in the U.S., and it’s reflected regarding cost awareness, of lack thereof, among Americans according to a Gallup poll.

Gallup found that 79 percent of American adults do not know the costs of health care products and services before receiving those products and services. Meanwhile, 17 percent said that they did know.

As for requiring transparency – i.e., that healthcare organizations should be required to tell you how much a product or service will cost before you receive it – 95 percent of Americans agreed.

Consider that, based on 2022 data from the Center for Medicare and Medicaid Services, only 11 percent of national health consumption expenditures were paid for out of pocket. That means third-party payments covered the other 89 percent of these expenditures. That included 30 percent from private health insurance, and another 5 percent from other private sources. That leaves approximately 53 percent covered by government, such as via Medicare, Medicaid, CHIP, and other programs.

Price transparency in any market is vital. However, given that over half of health care services are covered by government, and another 30 percent by health insurance, for example, the power of price transparency is limited. Add in the fact that when government is the third-party payer, there’s little incentives in government to care about costs – after all, those in government are spending other people’s (i.e., the taxpayers’) money.

Eventually, when someone in government does get focused on costs, as we’ve seen, their solutions usually make matters even worse, such as resorting to price controls. Price controls, such as on prescription drugs, mean diminished investment and innovation, and therefore, fewer life-enhancing and life-saving treatments. In general, price controls mean diminished quality – not exactly what anyone should be shooting for in health care.

There has been movement in a positive direction with the expansion of health savings accounts (HSAs) coupled with high-deductible health plans (HDHP). According to KFF’s “Employer Health Benefits: 2023 Annual Survey,” among covered workers, the share with HSA-qualified HDHP have increased from 3 percent in 2007 to 24 percent in 2023. For HSAs and other out-of-pocket payments, price transparency is, in fact, essential.

Now, we just need an expansion of private HSA plans coupled with a rolling back of government involvement in health care to rein in the portion of higher costs that has nothing to do with innovation in and the quality of care.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.

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In a January 24 Townhall Op-Ed, SBE Council president & CEO Karen Kerrigan writes that President Biden is undermining his Cancer Moonshot Initiative – announced with great fanfare recently, along with a commitment of $300 million in taxpayer dollars – through “the damage currently being inflicted on private-sector investment in pharmaceutical research as a result of the Inflation Reduction Act (IRA).” The IRA provides the federal government with price-control setting powers over some drugs it purchases for Medicare. As Kerrigan notes in the piece:

Small molecule drugs, typically pills or tablets, receive just nine years of exemption after FDA approval before price controls can kick in. Biologics – drugs typically administered by IV or injection in a clinical setting – receive four additional years. 

That discrepancy threatens to gut an entire class of new cancer medications – and the many innovative firms and small businesses at the forefront of developing them.

It cost a lot of money and patience to bring a drug to market. Less than 10% of new drugs entering clinical trials ever make it to market, and countless more candidates never even make it to trials. As Kerrigan notes:

Investors need to know that when a drug they back succeeds it will not only make a return on its own development costs, but also cover the cost of the inevitable failures.

Price controls not only hurt investment in new drugs, which ultimately harms health consumers and cancer patients, but the small innovative firms that dominate the bio-pharmaceutical sector:

Small molecule drugs represent around 90% of all drugs on the market and accounted for more than 75% of all FDA approvals between 2010 and 2020. Small and mid-size biotechs, meanwhile, are responsible for over 75% of drugs currently in development. For many smaller biotechs, research into small molecules makes up their entire portfolio…Nearly half of all oncology drugs originated in small biotechs throughout the 2010s. The 2020s should be building on that record. 

These firms count on capital and investors to bring their life-saving innovations to patients, and Congress needs to fix this by extending the price-control exemption period for small molecules to match the 13 years for biologics, Kerrigan writes, or better still, get rid of price controls altogether.

Read the Op-Ed in its entirety here.

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SMALL BUSINESS INSIDER

by Raymond J. Keating –

The ills of government price controls are straightforward from an economics perspective. That is, price controls limit actual and potential returns, reduce resources available for investment, and diminish entrepreneurship, investment, innovation, supply and quality.

When such ills are applied to the pharmaceuticals, biotechnology and medical device sectors, for example, which are all endeavors rich in risk, uncertainty and considerable costs, the results mean fewer new and improved medical treatments. In turn, the costs don’t just include lost businesses, investment and jobs, but also lost lives and diminished health.

Two recent studies have estimated assorted ills from recent efforts to inflict price controls on biopharmaceuticals.

On June 1, 2023, Vital Transformation released a study estimating assorted costs of the Inflation Reduction Act (IRA). In a statement, it was noted: “Vital Transformation’s data shows that, even when using the most optimistic scenarios under Medicare’s guidance for negotiations, patients will lose access to 40% of medicines that would have otherwise been developed over the next 10 years because of the IRA’s price controls. And this estimate is on the conservative side – it assumes Medicare will set negotiated prices at the IRA’s ceiling price, but Medicare is likely to be more aggressive.”

Among key findings in the study – which “modeled and estimated the impacts of the Inflation Reduction Act’s (IRA) pricing provisions for a cohort of the top 200 Part B and D drugs by CMS spend, resulting in 92 drugs impacted by IRA in the next 10 years, which are produced, collectively, by 41 biopharmaceutical companies” – were:

● “Had the IRA been in place beginning in 2014, we estimate the reductions in revenue on the impacted drugs to be up to 40%. Because of this, between 24 and 49 therapies currently available today would most likely not have come to market and therefore not available for patients and their providers.”

● “Looking forward, we estimate that because of the IRA pricing provisions, the substantial reduction in revenue will significantly narrow investment opportunities. Conservatively, as many as 139 drugs over the next 10 years are at risk of not being developed at all.”

● “…we estimate a loss of between 66,800 – 135,900 direct and 342,000 – 676,000 indirect jobs in the U.S. biopharma ecosystem.”

In addition, Vital Transformation released another study on June 15, 2023, that estimated the costs of proposed expansions of government-mandated drug pricing policies, specifically, “drug pricing provisions of President Biden’s 2024 Budget, now proposed by Senator Baldwin as the ‘Smart Prices Act (SPA)’, which would impose government price setting for selected Medicare drugs at only 5 years after initial FDA approval.”

Among the grim estimates were the following:

● “Had the drug pricing provisions of the SPA been in place prior to the development of today’s top-selling medicines, we estimate that 82 of the 121 therapies we identified as selected for price setting would likely have not been developed.”

● “Looking forward, we estimate that the expanded government price setting could result in roughly 230 fewer FDA approvals of new medicines over a ten-year period, once the impacts are fully reflected in the pipeline.” It also was pointed out, “Impacts will be felt most heavily in many areas of unmet need, including in rare disease, oncology, neurology, and infectious disease.”

● “We estimate a loss of between 146,000 – 223,000 direct biopharmaceutical industry jobs and a total of 730,000 – 1,100,000 U.S. jobs across the economy if the proposed IRA expansion were to be implemented.”

The following graphic from Vital Transformation sums up the ills of price controls as found in each of these recent studies.

Finally, it must be noted that the biopharmaceutical sector overwhelmingly is populated by small to mid-size, entrepreneurial firms. Among employer firms in the pharmaceutical and medicine manufacturing industry, based on the latest U.S. Census Bureau data (2020):

● 61.6% of employer firms had fewer than 20 employees

● 80% had fewer than 100 employees

● 91.9% had fewer than 500 employees

For all of the political talk about so-called “Big Pharma,” this sector of our economy very much is about small, entrepreneurial enterprises. Whether firms are big or small, price controls mean less investment, less innovation, and fewer live-saving and life-enhancing treatments.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.

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In a December 12 Washington Times Op-ed, SBE Council president & CEO Karen Kerrigan writes that legislators who drafted the Inflation Reduction Act (IRA) “had some idea that their bill was going to hurt small biotech companies.” The legislation, signed by President Biden in mid-August 2022, imposes price controls on some drugs purchased by Medicare starting in 2026.

As Kerrigan notes in the piece, the non-partisan Congressional Budget Office, various economists at the University of Chicago (among others) predicted these intrusive price controls “will reduce investment into drug research, and as a result, cut the number of new medicines coming to market.” The legislation sort-of attempts to protect small bio-tech companies – which happen to dominate the bio-pharmaceutical industry – but the criteria in the legislation will actually exempt very few and vastly harm innovation and U.S. leadership in drug breakthroughs, as well as the health consumers who benefit from new drugs.

According to Kerrigan:

“The exemption suggests some wish by lawmakers not to drive biotechnology companies out of business. Yet it is so narrow as to seem like an afterthought, providing almost no help at all.  The problem is that few companies will be able to meet the criteria for exemption.”

Read more on the details of the IRA’s harmful effect on small U.S. biotech here.

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