Today, the U.S. Department of Health and Human Services (HHS) announced more than $558 million in funding to improve maternal health, building on the Biden-Harris Administration’s commitment to reducing the nation’s high maternal mortality rate through the White House Blueprint for Addressing the Maternal Health Crisis. The Health Resources and Services Administration (HRSA), an agency of HHS, is awarding more than $440 million in funding to expand voluntary, evidence-based maternal, infant, and early childhood home visiting services for eligible families across the country. In addition, the Centers for Disease Control and Prevention (CDC) announced a new investment of $118.5 million, over five years, to 46 states, six territories, and freely associated states to continue building the public health infrastructure to better identify and prevent pregnancy-related deaths.

In 2022, President Biden signed bipartisan legislation that doubles funding for the Maternal, Infant, and Early Childhood Home Visiting program over five years – the first expansion of the federal home visiting program in nearly 10 years. Through this program, local organizations can provide home visits from nurses, social workers, and other trained health workers who work with families on early and ongoing engagement in prenatal care and postpartum support. They provide support on breastfeeding, safe sleep for babies, learning and communications practices that promote early language development, developmental screening, getting children ready to succeed in school, and connecting with key services and resources in the community – like affordable childcare or job and educational opportunities. The awards announced today reflect the first opportunity for states and jurisdictions to receive federal matching funds in addition to their base grants. Every single state and U.S. territory has seen an increase in funding to their home visiting program since the start of the Biden-Harris Administration.

“As someone who has spent my entire career fighting for the health and wellbeing of women and children, I am committed to addressing a maternal health crisis in which women across America are dying before, during, and after childbirth at higher rates than in any other developed nation. That is why I called on states to extend Medicaid postpartum coverage from two months to 12 months and announced the launch of the White House Blueprint for Addressing the Maternal Health Crisis, an unprecedented whole-of-government strategy to improving maternal care,” said Vice President Kamala Harris. “Today, we are building on this lifesaving work by awarding more than $558 million to improve maternal health across America. This includes a critical $440 million to support pregnant women, new mothers, and their children through home visiting programs that will improve health outcomes, child development, and access to resources for years to come.”

“Bringing home a baby can be stressful. Many new parents face additional challenges such as housing, or income insecurity, which can make the whole situation even more daunting. But we know from decades of research that home visits work – from helping with school readiness and achievement for children to improving health for women,” said HHS Secretary Xavier Becerra. “President Biden and Vice President Harris know how important it is to support children in their most crucial years of development so they can grow up to be healthy, happy adults. We will continue to make resources and support available, and elevate maternal health issues so that more women and families know that help is available.”

“At the Health Resources and Services Administration, we are deeply committed to removing barriers to care for expectant and new moms and babies who face too many hurdles getting the support that they need,” said HRSA Administrator Carole Johnson. “That’s why – thanks to the leadership of the President and Vice President – we were able to work closely with bipartisan leaders in Congress to grow the home visiting program to give more moms and babies a trusted home visiting partner to help their families in ways large and small to be healthy, feel supported, access health care services, nurture their child’s development, and give families every opportunity to thrive.”

HRSA Administrator Johnson announced the awards in conjunction with HRSA’s Enhancing Maternal Health Initiative convening at Wayne State University, in Detroit, Michigan. The Initiative is bringing together moms and babies served by HRSA programs with maternal and infant health community leaders, health officials, HRSA-supported community providers, and others to advance the goals of the White House Blueprint to Address the Maternal Health Crisis.

The home visiting program funds states, jurisdictions, and tribal entities to develop and implement evidence-based, voluntary programs that best meet the needs of their communities. Families choose to participate in home visiting programs from pregnancy up to kindergarten and partner with health, social services, and child development professionals who provide resources, support, and skills to help families and children be physically, socially, and emotionally healthy. The program has demonstrated significant benefits, including improved school readiness and achievement of children, improved health for women, increased health insurance coverage, and prevented child injuries, abuse, and neglect.

For a complete list of Maternal, Infant, and Early Childhood Home Visiting Program awardees, visit https://mchb.hrsa.gov/programs-impact/programs/home-visiting/maternal-infant-early-childhood-home-visiting-miechv-program/fy24-awards.

The CDC’s new $118.5 million five-year investment will continue building the public health infrastructure to better identify and prevent pregnancy-related deaths. This new investment expands support to Maternal Mortality Review Committees (MMRCs) from 46 to 52 states and U.S. territories and freely associated states. MRCs are state- and territory-based multidisciplinary groups that review deaths that have occurred within 1 year of the end of a pregnancy, determine if those pregnancy-related deaths were preventable, and recommend ways to prevent them in the future. This new investment in the Enhancing Reviews and Surveillance to Eliminate Maternal Mortality (ERASE MM) program also advances progress on implementing the White House Blueprint for Addressing the Maternal Health Crisis - PDF. CDC began the ERASE MM program in 2019 to invest in MMRCs and to strengthen and standardize their efforts to review deaths.

“Every pregnancy-related death is a tragedy for the family and the community,” said Wanda Barfield, MD, MPH, director of CDC’s Division of Reproductive Health. “Thanks to MMRCs, we know more about the causes and circumstances around pregnancy-related deaths, and we have actionable recommendations to prevent future deaths. This investment will support more jurisdictions in their critical work to save mothers’ lives.”

Together, these efforts build on both HHS’ and the broader Administration’s efforts to implement the White House Blueprint to Address the Maternal Health Crisis as described in the following Fact Sheet: https://www.whitehouse.gov/briefing-room/statements-releases/2024/07/10/the-white-house-blueprint-for-addressing-the-maternal-health-crisis-two-years-of-progress/.

Michelle Cubbon had her first child, a boy, at St. Catherine of Siena Hospital in Smithtown, New York, a town of more than 100,000 in the middle of Long Island, where the median household income is $143,789 and many residents commute to white-collar jobs in Manhattan. She and her husband, who was also born at St. Catherine, are planning now for a second child. But when she tried to schedule an appointment with her obstetrician, she discovered that the hospital’s maternity unit — a cornerstone of their town for more than a half a century — was shutting down in February 2024.

“I’m back to square one,” said Cubbon.

The reason? High costs of running the maternity care unit and a nationwide staffing shortage left the hospital unable to hire obstetricians. Such closures have hit hardest in rural parts of the US, and are now menacing in politically conservative red states that are wrestling with abortion restrictions. But Cubbon’s experience shows how maternity ward closures can reach into other communities, even in comparatively wealthy, densely populated towns and suburbs outside major cities.

“If we don’t work to fix this broken system, we’re going to continue to see hospital and OB unit closures, which will have disastrous effects,” said Ndidiamaka Amutah-Onukagha, founder of the Center for Black Maternal Health and Reproductive Justice at Tufts University School of Medicine. “Limiting access to care and pushing people further out of their home communities are direct contributors to maternal morbidity. It’s that simple.”

The danger is well known in far-flung communities: 57% of rural hospitals don’t have maternity wards, and many more are in danger of losing their maternal care units. That translates into longer travel times for expectant mothers, who are likely to be 40 or more minutes away from labor and delivery services. In urban areas, by contrast, patients are typically able to get to reach care within 20 minutes.

But the overall proximity advantage enjoyed by city dwellers isn’t the whole story, as urban hospitals that predominantly serve women of color have been disproportionately affected by maternity ward closures. Amutah-Onukagha’s center found that not only are Black communities more likely to lose obstetric units, the racial makeup of patients at a hospital is an even larger determinant of closures than the number of low-income patients insured by Medicaid. The closures are one contributor to the much higher rates of maternal morbidity and mortality that Black women face.

"My hometown of Trenton, New Jersey, is a maternity care desert. The hospital where I and my siblings were born — there are no OB units there to service the residents,” said Amutah-Onukagha. “How is this possible? You can’t give birth in the capital city of one of the wealthiest states in the US?”

Rushing Delivery

A host of challenges, including staffing, costs and declining births, is putting access increasingly at risk. Obstetric units in suburban Cincinnati, Milwaukee and San Diego have already closed in 2024, according to Becker’s Hospital Review, an industry trade magazine. Many women were redirected to hospitals 30 minutes away. Studies have shown that having a drive of more than 30 minutes reduces prenatal visits, while increasing planned cesarean section rates and births that occur en route to the hospital.

While some laboring women, especially those having their first child, may have enough time to make the journey, extended travel can increase the risk, said Holly Meduri, a nurse who helped deliver babies at St. Catherine’s for 22 years before the unit shuttered in February.

“We all have our idealized version of how our labor and delivery is going to go, and then all of a sudden there are problems,” she said. “If you are bleeding or you’re having a real obstetric emergency like the baby’s cord prolapses, those are things that, within minutes, you need to be delivered.”

Prior to closing the maternity ward, the system that owns St. Catherine of Siena, Catholic Health, assessed the impact on medically underserved groups and worked to ensure care wouldn’t be compromised, a spokesperson said.

No Standards

It’s difficult to pinpoint the size of the problem or determine how quickly it’s growing. States don’t have a standard method to disclose changes, and US government data is often incomplete or inaccurate, said Harold Miller, chief executive officer for the Center for Healthcare Quality and Payment Reform, a nonprofit health policy organization.

“If there were a good source of information about labor and delivery service closures, we would be using it rather than trying to assemble the information ourselves,” Miller said. “It’s not even easy to find accurate information about which hospitals have labor and delivery services.”

Most of the available research, including from Miller’s group, focuses on rural areas. But less formal reporting, and a groundswell of attention on social media, shows a broader lens may be needed.

In the first five months of 2024, 19 US hospitals closed or paused their labor and delivery services, according to a list maintained by Becker’s Hospital Review. That compares with 29 for all of 2023. Nearly half of the 2024 closures were in non-rural areas, and six were in communities with household incomes that surpassed the nationwide median.

Maternity Ward Closures Ripple Beyond Rural Areas

The most recent data available, from the March of Dimes, found the loss of obstetric units led to decreased maternity care access in nearly one in 10 counties across the country between 2018 and 2022. There were 2,826 obstetric units in hospitals in 2020, according to research underway from Peiyin Hung at the University of South Carolina, and even those dated numbers may be inaccurate.

Staffing Shortages

Chief among the causes is the shortage of obstetricians and gynecologists, the doctors who focus on the reproductive health of women.

There were about 50,000 OB-GYNs in the US in 2018, about 1,000 fewer than needed, and the total has declined since then, according to the US Department of Health and Human Services. The agency projects the deficit will increase to 5,000 by 2030 as retirements pick up among the nation’s aging physician workforce.

New doctors are unlikely to fill the gap since the number of residency spots funded by the federal government has been largely frozen since 1997. That’s creating a bottleneck in addressing the shortage, said Atul Grover, executive director of the American Association of Medical Colleges Research and Action Institute.

The number of residency applications dipped temporarily after the Supreme Court’s Dobbs v. Jackson decision in June 2022, which rolled back federal abortion protections, Grover said. The ruling creates potential legal ramifications for doctors who perform the procedure on women in medical distress, which can require delicate decisions about when lives are on the line.

And yet the demand for these accredited specialists are among the highest for all physicians, according to AMN Healthcare, one of the nation’s largest health staffing agencies. More pregnancies are occurring in high-risk women, including those who are over age 35, obese or have hypertension, requiring greater expertise.

“Recruitment and retention of this highly trained, skilled workforce is further complicated as many rural and underserved areas do not present as an attractive option,” Amutah-Onukagha said in an email. “Conversely, major cities push talent away with exorbitant cost of living and astronomical insurance rates.”

High Costs

Just keeping the doctors can be difficult — and expensive. At St. Catherine’s, negotiations broke down between the hospital and the obstetricians who used to practice there, and the hospital wasn’t able to hire replacements.

“Despite our best efforts to find alternative options for coverage, as of February 1, there will be no OB-GYN physicians at St. Catherine of Siena to provide maternity services,” a spokesperson said.

Delivering babies is often a money loser, putting them at the top of the list for cuts when hospitals are struggling financially, said Erik Swanson, senior vice president of data and analytics at Kaufman Hall, a health care consulting firm that tracks hospital profit margins. Malpractice insurance rates alone can top $150,000 a year for a single OB-GYN, higher than most surgical specialties.

Maternity wards require specialists, including anesthesiologists and labor-and-delivery nurses, and must be staffed around the clock. Ideally, there should be a one-to-one nursing ratio, said Anne Banfield, a fellow at the American College of Obstetricians and Gynecologists.

The Supreme Court Dobbs decision on abortion can also give hospitals a different cost to weigh, raising legal, moral and ethical questions for doctors who have taken the Hippocratic Oath pledging to do no harm.

There are tight restrictions on the procedure in 14 states currently, and the question of whether it can be performed to protect the health of the woman has been hotly contested. The nation’s top court allowed Idaho to enforce its near-total ban even for women in medical distress for five months in early 2024, until issuing an about-face in June.

Declining Births

Spreading out those fixed costs is getting more difficult. There were 72,000 fewer births in 2023 than a year earlier, according to the Centers for Disease Control and Prevention, even as the number of women aged 15 to 44 grows.

The situation is exacerbated in areas where many patients have Medicaid, the US insurance program for the poor that covers about 40% of births nationwide. It typically only pays a fraction of the cost of care, Grover said.

“When hospitals look at the bottom line, if they’re talking about replacing joints versus delivering babies, they’re going to choose replacing joints all day long,” Banfield said.

Still, some communities have managed to rescue their imperiled obstetric units. In Troy, New York, for example, staffers and community members banded together to save the only maternity ward in Rensselaer County, just east of the capital Albany. Participants in the “Save Burdett Birth Center” campaign organized rallies, issued a community impact survey, and testified at a hearing with the New York Attorney General. As front yards in the region filled with pink lawn signs in support of the facility, the campaign gained the attention of the New York State Assembly, which allocated $5 million to keep the birth center open for another five years.

Nationwide, state and federal officials are taking proactive steps to help make labor and delivery wards viable. In the US Senate, a group of Democratic lawmakers introduced legislation to increase Medicaid reimbursement rates for births in rural hospitals, while California and Virginia have allocated state funds to create new OB-GYN residency spots.

When maternity wards close down, the effects aren’t limited to the communities nearby. Health care workers are forced to adjust, too. Meduri, the St. Catherine’s nurse, retrained to work in the operating room, but it’s not the same.

“I’ve gone from being an expert to the novice,” she said. “It’s a grieving process.”

With premiums for health maintenance organizations climbing faster than those for preferred provider organizations, employers are beginning to wonder what happened to the “management” in managed care.

While HMOs may still be less expensive than PPOs or indemnity plans, if they are doing their job in managing costs, why are their prices going up so much?

Industry observers blame three developments.

First, consumer backlash has forced plans to eliminate gatekeepers and specialist referrals and open drug formularies to include more choices-all once thought to be vital to controlling utilization and therefore costs.

Second, many plans are now for-profit entities that must respond to shareholder demands, which also is contributing to cost pressures.

And last but certainly not least, providers are becoming more aggressive in their negotiations with plans, scoffing at capitation and risk-sharing, and demanding more money and autonomy (see story, page 10).

Despite these setbacks, benefit consultants and employers believe managed care is still the best way to rein in health care costs. It’ll just have to do so a little bit differently in the future, they say.

“There is less management” in managed care as a result of “rebellion from both providers and employees,” observed Rich Ostuw, global health care practice director at Watson Wyatt Worldwide in Stamford, Conn.

“But, in many situations, even though the rate of increase in managed care is higher, nobody would say we want to go back to an indemnity system,” he said.

“What managed care has done best is in the areas of preventive care and reducing the cost and risk of unnecessary surgical procedures,” Mr. Ostuw pointed out.

“In many locations, and for many populations, there still is an important place for managed care plans,” he insisted. “We shouldn’t abandon it in the areas where it’s working.”

HMOs, once thought to be the panacea for rising health care costs, are beginning to look a lot more like PPOs, which many employers had hoped to use as steppingstones to move employees into the more-restrictive managed care plans.

“As you look at the distinction between (HMOs and PPOs), the differences are starting to blend,” said Brad Fluegel, health sector market leader for Tillinghast-Towers Perrin in New York.

HMOs have eliminated or curbed specialist referral requirements, expanded their drug formularies and are doing less capitation in their contracts with providers, industry observers say.

HMOs also experienced significant financial losses over the past few years and are now playing catch-up.

“The rate increases in prior years were well below medical trends,” Mr. Fluegel said. “Plans were more growth-oriented than profit-oriented and were aggressive on price in order to get the business.”

But that approach backfired. Lower premiums, coupled with higher prescription drug costs and less management, have put many HMOs in the hole, he said, and now they have to raise rates substantially to return to their former levels of profitability.

Furthermore, now the majority of plans are for-profit and have shareholders to answer to, said Blaine Bos, principal at William M. Mercer Inc. in Chicago.

As health plans consolidate and become publicly traded, “shareholders are demanding that more attention be paid to the bottom line,” Mr. Bos said. “Shareholders want better returns on their investment, so HMOs have to raise prices to improve profitability.”

Increased provider clout also is making it harder for HMOs to negotiate good discounts, which also is adding to the plans’ overhead, consultants point out, and the more they have to pay their doctors, the more they have to charge in premiums.

“The doctors are more sophisticated in how they negotiate contracts,” Mr. Bos said. “They’ve discovered how much power they have.”

But while managed care may be hitting some obstacles today, it did have a significant impact on health care costs over the past 10 years, almost everyone agrees.

“It has delivered on the cost promise,” said Ken Sperling, health care practice leader at Hewitt Associates L.L.C. in Norwalk, Conn.

“The discounts are real. It’s still cheaper to deliver care in an HMO with a $5 copayment than in an indemnity plan with a $400 deductible,” Mr. Sperling said.

“I think what happened is when companies changed to managed care plans, they had a one-time decline in their costs because of the discounts they were getting and case management and everything these managed care plans were doing to control costs,” said Mike Pikelny, corporate actuary and employee benefits consultant at Hartmarx Corp. in Chicago.

“But now that all those programs are in place, I think the increases for all the plans are going up at the same rate,” Mr. Pikelny said.

“It’s just that management care plans started from a lower level, and that one-time savings is gone,” he said.

Despite these trends, managed care plans will always cost less than indemnity plans will, Mr. Pikelny and others say.

“HMOs squeezed a lot of fat out of the system,” agreed Mr. Bos. “They’ve gotten rid of a lot of administrative inefficiencies, and now it’s getting hard.”

To survive, managed care will have to shift its focus, many say.

For example, rather than just offering discounts, plans will tout quality, use evidence-based medicine and institute new technology and procedures to eliminate medical errors, all of which have been shown to reduce cost over the long run, Mr. Bos said.

“But that’s a more-expensive and difficult proposition,” he acknowledged.

This is where the newest trend, the so-called “consumer-driven health care model,” will likely come into play, observers say.

“They say the way to focus on quality is to get the consumer involved,” Mr. Bos said. “But that’s a tough proposition too, because it means educating employees so they look at health care in a new way.”

And, “the return on investment will be much, much lower than in the beginning of managed care,” Mr. Bos predicted. He added that “the employer and the employee are going to pay for the transition.”

“I expect to see some pretty healthy increases for the next two to three years, as plans rebuild reserves and reinvent themselves,” Mr. Fluegel said.

And “there will be higher levels of cost-sharing with employees,” he said.

But “we’re certainly not going to go back to a world of fee-for-service medicine,” Mr. Fluegel said.

“It’s kind of like the stock market in a way,” he said. “We’ve been in a bull market for several years, and people have forgotten that the market goes up and it goes down-it vacillates. The same holds for health care premiums.”

“There used to be a five-year cycle, but that’s been moderated somewhat because of the advent of managed care,” Mr. Fluegel said. “But the underlying issues haven’t gone away.”

“Managed care in its current form has hit the wall,” said Hewitt’s Mr. Sperling.

“We’ve changed the intercept,” he said, “but not the slope.”

We’ve worked on Medicaid policy and/or public opinion research for three decades now and have observed its growing importance as the backbone of our health care system – now covering approximately 80 million people — as well as its centrality to voters. Medicare and Social Security are often described as the third rail of politics and had many mentions at last week’s Democratic convention; Medicaid gets less attention; yet it consistently polls almost as well as Medicare.

As a very consequential election approaches, Medicaid should be added to the long list of issues whose future may hang in the balance. Medicaid remains squarely on the Republican agenda for caps and large cuts, including the Project 2025 plan, as Edwin Park has blogged about numerous times. Indeed, given candidate Trump’s promise not to cut Medicare, Social Security and the defense budget, Medicaid and the Affordable Care Act Marketplace subsidies are the two most likely single program major targets for severe cuts. Medicaid is now a household name like Medicare and Social Security, so if the winning candidate has plans for it, don’t voters deserve the opportunity to hear about those plans before they cast their votes?

First, a look at history. There have been four major attempts to cap Medicaid in the past forty years starting with former President Reagan’s push for a block grant in 1981, the former Speaker of the House Newt Gingrich’s budget bill in 1995 (which was vetoed by former President Clinton), a quickly abandoned effort in the early years of President George W. Bush, and the near-successful attempt to repeal the Affordable Care Act at the beginning of the Trump Presidency in 2017 when Republicans decided to cap Medicaid while they were in the neighborhood.

Medicaid is Popular with Voters

Two-thirds of Americans say they have a personal connection to Medicaid and most of these (59%) have actually been enrolled or had a family member or close friend covered by Medicaid at some point. Medicaid engenders positive views among the public across parties with higher favorability ratings for Democrats but a clear majority across parties. Interestingly, Republicans with a personal connection to the program value it more. The numbers of people with a personal connection to Medicaid is growing; Medicaid covers approximately half of all children, including a larger share of children of color, pays for 40-50 percent of births depending on the state, is the largest payer for behavioral health care services and long term services and supports, helps make Medicare affordable for low-income seniors, and covers many low-income parents and other adults.

A recent KFF poll found that seven in ten voters want Medicaid to largely continue as it is today, while only three in ten support changing Medicaid to cap federal funding and give states greater flexibility in designing their programs. While large shares of Democratic and independent voters prefer to keep Medicaid as it is today, Republican voters are evenly divided, with about half preferring to keep Medicaid as is and half supporting a cap on federal spending.

When thinking about voter concerns today as the election approaches, we thought it would be informative to look at key points that have been coming up in focus groups with voters. Here’s what’s on voters’ minds:

• The unaffordability of heath care and health coverage in the US is increasing the value people place on Medicaid coverage in focus groups. This is the major change we have observed in recent years. There is real anger over health care costs that continue to rise along with food and other necessities. The ever-increasing costs of health care is making Medicaid desired health coverage. People want Medicaid coverage because it is an affordable option (and often the only affordable option) for lots of people.
• Medicaid enrollees are the only group we speak to these days who are NOT skipping or delaying health care in order to avoid big costs. We are hearing about wide-scale avoidance of health care because it is just not affordable, and people are afraid of medical debt. Medicaid enrollees are the exception.
• Those with Medicaid know it works and want to keep it. Those who lost Medicaid due to the “unwinding” want it back! More than 1 in 5 Americans have Medicaid and know its value. The testimonials we hear from Medicaid enrollees are overwhelmingly positive.
• There is more intensity among those who have Medicaid – or had it in the past. They want to keep Medicaid coverage. They know the difference it makes in their lives. They do not take this program for granted.
• Medicaid is particularly important during times of inflation and economic uncertainty. Medicaid protects families from medical debt and bankruptcy. It allows them to pay other bills and to save. It improves the emotional and mental health of those enrolled because they are less worried about falling behind on bills and going deeper into debt. This is what we hear from people with Medicaid.
• Those in non-expansion states want to expand the program. KFF found 66% of adults in these states want the program expanded. Once again – the American public is clear about this – only a handful of politicians in a handful of states are stopping this from happening. Ballot initiatives in red states to enact expansion have won repeatedly.

At a time when the high cost of living is a key concern for many voters, Medicaid’s role is more important than ever. Medicaid has always been a popular program with the American public but it has never been more popular. There is ideological opposition to Medicaid among some politicians, but the American public has never been conflicted about Medicaid.

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The Federal Trade Commission’s (FTC) vote to ban noncompete agreements is set to have an outsized impact on the health care sector, empowering clinicians and raising anxiety among private practices who worry it will compound staffing problems.

The FTC voted 3-2 last month to ban all current and future agreements preventing workers from going to competitors or starting a competing business after they leave a job. The rule is set to go into effect on Sep. 4, though the U.S. Chamber of Commerce has already sued to stop it.

Shortly before the rule came out, FTC Chair Lina Khan told reporters that of the 26,000 comments her agency received on the proposed rule, “a pretty significant chunk were from health care workers in particular.”

“Even for workers who, you know, make a decent living, their view was that at the point of signing these contracts, they did not actually have bargaining power,” she said.

In its announcement, the FTC said eliminating noncompete clauses is expected to lower health care costs by $194 billion over the next 10 years.

Lisa Stand, director of policy and regulatory advocacy at the American Nurses Association, said her group was pleased with the rule and surprised by “how strong it is.”

“It absolutely will make job mobility easier,” Stand said. “We’re nurses, and we think that ultimately this is good for patients as well, as there is more sort of robust competition for clinical talent and an expanded access to more choices of provider and provider setting.”

But some private practices worry not enough thought has been put into how a change like this will affect the care they provide to patients.

Jack Feltz is a practicing OB-GYN as well as president and CEO of Lifeline Medical Associates, a practice of roughly 200 physicians providing care to patients in New Jersey and Delaware.

Employees at Feltz’s practice, including himself, are asked to sign noncompete agreements. He acknowledges that noncompetes can be onerous on workers but argues that private practices will be less capable of competing with larger hospital systems without them.

“It truly unbalances the ability of those organizations, especially private practices which are already under siege and being decimated by hospital employment, for them to be able to maintain and be able to compete with hospitals that have no restriction on noncompetes,” said Feltz.

He warned that large health systems will soon be more able to poach not only physicians, but their private practice patients as well.

According to the American Medical Association, 37 percent to 45 percent of physicians are under noncompete agreements. While they are common, Feltz noted noncompete agreements aren’t always enforced. He said his own practice has let former employees out of their agreements due to external issues.

Lynn Rapsilber is co-founder and CEO of the National Nurse Practitioner Entrepreneur Network, a nonprofit that helps nurse practitioners start their own businesses. According to Rapsilber, everyone from large health systems to small practices is “competing for that patient” who she believes is the main beneficiary of this rule.

From a business perspective, Rapsilber agrees there is value in contractual agreements that former employees won’t take patients or mailing lists from a practice. The main “problematic” issue she sees in enforcing noncompete agreements is the geographic stipulations they place on health care workers, limiting where they can practice after leaving a job.

“For the consumer, this is great news because there’s going to be more opportunities for choice in their health care provider if there’s more opportunity for people to open up their own practices and to be able to serve the community,” she said. “That’s going to enhance competition, which will actually in the long run lower prices and increase quality.”

Labor experts argue that getting rid of noncompetes will also relieve physicians of an additional challenge amid an increasingly monopolized industry.

According to John August, director of health care and partner programs at Cornell University’s Scheinman Institute, noncompetes have become “a big issue” in health care as physicians’ practices are being taken over by large health systems.

“A lot of physicians are thinking of leaving their practices that they’ve spent many years building and then only to see them taken over by larger and larger corporations and feeling very, very dissatisfied in their employment situation and wanting to leave and finding these noncompete clauses,” August said.

The new rule would allow many of these physicians to leave after their practice is absorbed — with some caveats depending on what type of entity it is.

Some larger hospital systems may gain an advantage by being excluded from this rule. The FTC has limited jurisdiction over nonprofits, and about half of all community hospitals in the U.S. are nonprofits, according to the American Hospital Association.

As Fierce Healthcare recently reported, FTC Commissioner Rebecca Slaughter acknowledged there would be health care workers the rule would “struggle to reach” due to their employment at nonprofit hospitals.

Climate change is bound to majorly impact every health plan on the planet, but payers don’t have to be left stranded. Getting an early start on climate change planning before it gravely threatens health plans is the best option for insurance businesses to not be left high and dry.

“The climate crisis is a health care crisis,” says Baylis Beard, director of sustainability for Blue Shield of California., “As insurers, we are part of the healthcare industry, which means we have a responsibility to decrease our emissions and use our voice to lead the way to a more sustainable, healthier future.”

Climate change will impact payers in three key ways: high utilization, high costs, and weather-related events that will affect healthcare workers.

HIGH UTILIZATION

Creating a Plan

Payers should develop climate change response plans to focus on their high-risk areas, the areas that will eventually cost them the most to cover. That might include implementing digital care and telehealth solutions. Payers can create ways for consumers to educate themselves about high-risk areas, possible health effects, precautions to take, and resources available to them if they are located in a high-risk area. By leveraging care-management platforms, payers can provide information like inclement weather alerts and educational content to allow their members to stay informed in an accessible way.

Keeping track of member health will play a greater role as climate change advances, particularly with seniors and the Medicare Advantage population. Studies show that seniors in particular will be greatly affected: “Among other alarming facts, heat-related mortality for people above age 65 has increased by more than 50% in just the past 20 years,” according to a report from the Patient Safety Network.

Research

High-risk areas might not always be easily identifiable, and this may take some research to create an accurate response plan.

For example, California experiences frequent wildfires, and long-term exposure to smoke inhalation kills thousands each year. However, according to one study , only about 1,700 of the 6,300 deaths that occurred each year from smoke inhalation between 2006 to 2018 occurred in the West. This study shows that wildfire smoke had the most prevalent effects in the East because of how fast the smoke traveled. The point: don’t make assumptions without looking at all the data.

“Much of the research on the effects of climate change on health has been done with clinical data to understand health outcomes,” said Blue Shield of California’s director of sustainability Baylis Beard, “but the impact on healthcare utilization and costs is less understood.”

In order to uncover the true cost of climate change for health insurance, payers should focus on using science and evidence-based strategies. An article by the Patient Safety Network states: “Evidence-based strategies are required to accelerate healthcare decarbonization and avert the worst predicted harms to health and healthcare systems.”

Further, insurers can collaborate with climate change researchers and weather institutions to create comprehensive plans that take into account a vast array of climate data.This avenue can ensure the most accurate results can be reflected when payers analyze the financial impacts.

HIGH COSTS

Perhaps the biggest and most obvious effect of climate change will be higher costs. High utilization leads to high costs for payers, but what will also step into the spotlight? Supply chain malfunctions.

The United States’ healthcare sector emits about a quarter of total global healthcare emissions. In other words, the U.S. healthcare industry uses a lot of energy, and transports a lot of supplies. Climate change will bring about disasters that are very difficult to prepare for in this sector.

For example, a tornado that ripped through a Pfizer drug warehouse in North Carolina in July of 2023 destroyed medications as well as pharmaceutical raw materials, exacerbating the shortage of drugs used in surgery and cancer treatment.

Payers can work with outside organizations to create communication plans on how they will handle these events. But they must make sure the select the right partners. “We play a role in creating the right incentives in the value chain and choosing sustainable partners,” said Beard.

CLIMATE CHANGE AFFECTING HEALTHCARE WORKERS

The biggest issue in healthcare is the labor shortage. Climate change will worsen this. Extreme heat and weather will affect certain occupations more than others.

For example, studies show that climate change will have a big effect on emergency response workers. The Journal of Emergency Medical Services published an article stating: “Prolonged heat waves strain EMS staff and resources, emphasizing the need for strategic planning and collaboration with other agencies.”

Payers should collaborate with their health systems to ensure there are resources for these workers when they feel strained. Along with EMS workers, doctors and nurses facing intense burnout from high volumes of patients after weather-related events will also increase. Implementing AI and automation to cover tedious tasks and mitigate stress is one tactic that can help.

VIRTUAL CARE

Virtual care is going to play an even bigger role as the climate crisis worsens. The healthcare industry has already gotten a jumpstart on this type of care because of the COVID-19 pandemic. Telehealth and virtual care have been shown to decrease emissions as well as water use. While virtual care can have its limitations, including broadband issues and limited access to technology, it can provide care when physical access to a health system is just not possible. Payers should look at updating their virtual care models and implementing new forms of virtual care. For example, Blue Shield of California has implemented a new virtual care platform that connects members with virtual primary care services for patients to access providers via mobile phone, tablet, or personal computer.

“This virtual care platform also helped provide critical health care services to a town badly damaged by the Camp Fire where many residents were forced to drive long distances to see a doctor,” Beard said.

THE OPPORTUNITY TO LEAD

Health insurers can take the lead on climate change in several ways.

For instance, the Boston Consulting Group suggests that “Insurers should collaborate with climate research and university institutions and should assist governmental and academic institutions in climate-health policymaking discussions.”

Health plans can look to create new insurance products and specified insurance models to address climate change health effects. Payers can explore implementing wider disease coverage and climate specific products. Looking to other countries may also help in generating new ideas. For example, Japan has implemented heatstroke insurance in response to climate change, costing members roughly 70 cents a day; in a single day they sold about 7,000 policies in June 2022.

Payers should also focus on underserved populations, as these groups often experience the worse climate change effects while contributing the least to pollution and carbon emissions. Collaborating with other institutions and agencies could be beneficial in this implementation.

Payers can also look to generate new opportunities by establishing health services that go beyond insurance. Climate change is already having an impact on payers’ portfolios, and this is a great way to diversify. Partnering with private equity firms to expand care delivery and creating tools for optimizing emergency-room triage and resource allocation are a couple of options that payers can explore.

In 2023, publicly traded health insurance companies in the US experienced continued growth, with total GAAP revenue increasing by 10.4% to $1.07 trillion. However, a new report from AM Best suggests that future profitability may face challenges as government programme returns to normal levels.

Titled “Revenue Grows but Margins Are Pressured for US Publicly Traded Health Insurers,” the report highlights that half of the 10 insurers studied reported double-digit premium growth in 2023, led by Oscar Health, Inc. with a 46.9% increase.

The overall population also saw a 28.5% rise in investment income. Net income reached $45.3 billion, marking a 6.8% increase from 2022, following a 12.5% surge the previous year.

The report attributes pressure on Medicare Advantage (MA) earnings to reduced reimbursement rates from the Centers for Medicare & Medicaid Services, alongside increased medical claims and utilisation. Medicaid managed care business is experiencing a significant decline in enrolment, potentially leading to a worsening risk pool as eligibility redeterminations are finalised.

Kaitlin Piasecki, Industry Research Analyst, AM Best, noted: “With medical costs continue to rise across the United States, insurers have been raising premium rates and are likely to continue doing so in 2024 to maintain favourable earnings.”

“Overall earnings for companies solely operating government programmes could be challenged in 2024, but these companies should remain profitable,” commented Jason Hopper, Associate Director, Industry Research and Analytics, AM Best.

“Medical management of those with chronic conditions, as well as quality programmes and related bonus payments, will be extremely important for sustained earnings for these health plans. For plans operating in all business segments, commercial business margins will become a greater focus given the likely earning declines in Medicare Advantage and Medicaid managed care,” further added Hopper.

Drugmaker price hikes that have occurred in tandem with ongoing drug shortages have not only created headaches for both hospitals and providers — but also jeopardized patient access to care, according to an analysis published May 22 by the American Hospital Association.

Inflation has not been the sole factor driving up prices, either. Between January 2022 and January 2023, the prices for about 2,000 drugs "increased faster than the rate of general inflation, with an average price hike of 15.2%," the report states.

The combination of drug shortages and price increases that outpace inflation led to around 85% of hospitals reporting to the AHA that their hospital has been critically or moderately affected, with 99% reporting that their hospital experienced a drug shortage in 2023.

In 2023, hospitals saw the highest number of drugs in shortages in 23 years, another report found.

Responding to the changing pharmaceutical supply landscape and either acquiring alternative medications, renegotiating contracts or identifying new suppliers raises what hospitals typically spend on drugs by about 20%, the AHA found.

"Though the problem of high drug prices is not a new issue for hospitals and health systems, the rate at which drug prices are increasing combined with the problem of drug shortages is becoming unsustainable for the field and having a direct impact on patient outcomes," the report reads. "Higher drug prices and increasing drug shortages mean more costs for hospitals and health systems to bear, further stretching their limited resources and ultimately jeopardizing patients' access to needed care."

Here are three more notable findings from the AHA:

• Generic drugs account for around 83% of drug shortages.

• The median annual price for new drugs went up 35% from the year before to $300,000 in 2023.

• The 15.2% average increase in drug prices in 2023 was equivalent to an average increase of $590 per drug.

Breaking Up Health Care Monopolies: Examining the Budgetary Effects of Health Care Consolidation

View the video here: https://budget.house.gov/hearing/breaking-up-health-care-monopolies-examining-the-budgetary-effects-of-health-care-consolidation