Healthcare Reform

The Opioid Funding Controversy: A Portent of the Upcoming Bipartisan Healthcare Reform Debate

August 23, 2017 4:56 pm

According to the American Society of Addiction Medicine, in 2015, 2 million Americans 12 or older had a substance use disorder involving opioids, and according to a recent New York Times article, about 1.35 million of them were low-income Americans. a

Richard Frank, PhD, a Harvard professor of health economics, and Sherry Glied, dean of the Wagner School of Public Service at New York University, estimate that approximately 222,000 people with an opioid disorder could lose some or all of their insurance coverage under a repeal of the Affordable Care Act (ACA), as states could cut substance-use disorder care in response to reduced federal funding of Medicaid, relative to the ACA, as specified in Republican healthcare reform proposals. b

The initial version of the Senate Republican leadership’s Better Care Reconciliation Act of 2017 (BCRA), released on June 22, provided $2 billion in federal funding to support substance use disorder treatment for FY18.

In response to a recommendation by Senators Rob Portman (R-Ohio) and Shelley Moore Capito (R-W.Va.), whose states have been particularly affected by the opioid epidemic, the revised version of the BCRA issued on July 13 raised that federal funding to $44.7 billion for FY18 through FY26.

The Shifting Debate

The public debate about the level of opioid funding has departed from the logical and conventional approach of the Congressional Budget Office (CBO), which compares proposed legislation against the ACA.

Advocates for increased opioid treatment funding criticized the BCRA’s proposed level of funding as “a drop in the bucket,” pressed for $183 billion in funding for the next 10 years, and rhapsodized about the “open-ended funding stream that Medicaid provides,” according to the New York Times article.

ACA Medicaid Realities

The same article reports, however, that under the ACA, Medicaid currently treats only 25 percent of low-income Americans with an opioid use disorder, and even in Medicaid expansion states, current levels of treatment are not meeting demand. In addition, total Medicaid expenditures are not open ended. Although according to the CBO’s June 2017 Budget and Economic Outlook, federal spending on Medicaid under current law is slated to grow an average of 5.5 percent per year from 2017 to 2027—far outpacing projected real gross domestic product growth of 2 percent annually—that projection undoubtedly does not include the aforementioned $183 billion requested by opioid treatment advocates. c

The Bipartisan Approach to Health Reform

The opioid funding debate provides a taste of what could happen under the bipartisan approach to healthcare reform that seems be the only path forward in the wake of the Senate’s 49-51 rejection of the Republicans’ so-called “skinny” repeal of the ACA, in the early hours of July 28. A few days earlier, Sen. John McCain (R-Ariz.) delivered an impassioned plea for bipartisan compromise, suggesting a process that would begin with the Senate Committee on Health, Education, Labor and Pensions (HELP) under chairman Lamar Alexander (R-Tenn.) and ranking member Patty Murray (D-Wash.) holding hearings and producing a bill with contributions from both sides. d McCain’s suggestion was applauded by senators from both sides of the aisle.

Such an approach would give a green light to groups like the opioid treatment advocates, who were dissatisfied with certain aspects of the ACA, to revisit past issues, raise subjects not addressed by either the ACA or recent bills, and apply even greater pressure on members of Congress.

Hospitals surely will continue to express concern about possible increases in the uninsured population resulting from a repeal of the individual and/or employer mandates, which could increase uncompensated care. Hospitals also could advocate for changes not included in any Republican healthcare reform proposals to date.

Repeal of the ACA hospital payment cuts. The ACA mandated negative market basket revisions and productivity adjustments to the inpatient prospective payment system (IPPS), which in 2010 were projected to provide $112.6 billion in funding for the ACA for FY10-FY19. e Both the House-passed American Health Care Act of 2017 and the BCRA include repeals of taxes on over-the-counter and prescription medications, medical device makers, and health insurers, but no repeal of the hospital payment cuts.

Enhancement of the ACA healthcare delivery reforms. Unaddressed by the aforementioned proposed healthcare reform bills, but with much bipartisan support in light of the nation’s clear need to bend the healthcare cost curve, hospitals could advocate for certain modifications to the ACA’s value-based care programs, such as accountable care organizations, to make the transition to fee for value more attractive.

Reform of Medicare’s method for evaluating changes in drug prices for the IPPS. According to a study conducted by NORC at the University of Chicago, average annual inpatient drug spending rose by 23.4 percent from 2013 to 2015 and by 38.7 percent on a per-admission basis. More than 90 percent of the surveyed hospitals reported that these price increases had a moderate or severe effect on their ability to manage costs. Delays in refreshing the Bureau of Labor Statistics Producer Price Index, which the Centers for Medicare & Medicaid Services uses to evaluate changes in drug prices to update the IPPS, cause Medicare payment to fall behind rapidly increasing drug prices, adversely affecting hospital finances. f

Given the divided state of the nation in general and the high degree of polarization regarding healthcare reform in particular, not to mention the extreme political diversity of the Senate’s HELP Committee membership, a bipartisan approach to healthcare reform will almost certainly be painfully protracted. However, such an approach is in keeping with our democratic tradition, and it may provide hospitals with opportunities to press for salient, needed reforms.

Ken Perez is vice president of healthcare policy, Omnicell, Inc., Mountain View, Calif., and a member of HFMA’s Northern California Chapter.


a. American Society of Addiction Medicine, “Opioid Addiction: 2016 Facts & Figures,” 2016; Goodnough, A., “$45 Billion to Fight Opioid Abuse? That’s Much Too Little, Experts Say,” The New York Times, June 30, 2017.

b. Pugh, T., “Obamacare Repeal Would Gut Opioid Treatment Gains, Study Finds,” McClatchy DC Bureau, Feb. 14, 2017.

c. Congressional Budget Office, “An Update to the Budget and Economic Outlook: 2017 to 2027,” June 2017.

d. Farrington, D. “Watch: Sen. McCain Calls For Compromise In Return To Senate Floor,” NPR, July 25, 2017.

e. Foster, R.S., “Estimated Financial Effects of the ‘Patient Protection and Affordable Care Act,’ as Amended,” April 22, 2010.

f. NORC at the University of Chicago, “Trends in Hospital Inpatient Drug Costs: Issues and Challenges,” Oct. 11, 2016.


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