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Health Affairs This Week places listeners at the center of health policy’s proverbial water cooler. Join host Jeff Byers, editors from Health Affairs Publishing, and guests as they discuss health policy’s most pressing news and trends.
Hello and welcome to Health Affairs This Week. I'm your host Jeff Beyers. We are recording on 04/02/2026. Another quick insider plug. On April 20, we have an event titled The Evolution of Medicare Advantage and the Market Implications.
Jeff Byers:Speakers include Grace McElbee and David Myers, and the event will be moderated by Sachin Jain. It will be a good one. Please join Insider, and you'll get access to that event and trend reports, policy cheat sheets, newsletters, and more. And then today on the program to discuss recent news in health policy, we have Kathleen Haddad. Kathleen, welcome back to the program.
Kathleen Haddad:Hi, Jeff. How are you doing?
Jeff Byers:I'm doing good. I'm doing good. We're here to discuss some health policy news that's been going on recently. So first up, we have a supreme court case on conversion therapy. Is is that right?
Kathleen Haddad:Yeah. This case, Childs versus Salazar, Colorado therapist, Kaylee Childs, argued that the state's law banning doctors and therapists from trying to change sexual orientation or gender identity violated her free speech rights. Eight justices agreed with her, including two of the three liberal justices. The majority opinion focused on protection of free speech. But liberal justice Ketanji Brown Jackson dissented, and she read her 35 page dissent from the bench.
Kathleen Haddad:She argued that the majority opinion could be, quote, ushering in an era of unprofessional and unsafe medical care administered by effectively unsupervised health care providers. She said she did not try to convert clients but just help them obtain their stated goals of eliminating unwanted sexual attractions or behaviors. On the other hand, Colorado argued that the ban targets conduct or medical treatment, and speech is only incidental to conducting medical treatment. Justice Gorsuch wrote the majority opinion, and he said speech is speech even in the conduct of medical treatment. Jackson essentially said that the talk therapy is medical conduct, which states can and do regulate.
Kathleen Haddad:She said child is simply being held to the same standard of care that all licensed professionals must follow. I have, my own sense on this case is that mental health talk therapy is inherently conducted by way of speech. There's no other way to do it, and it uses many evidence based protocols. I can give you some acronyms, CBT, DBT. I could go on,
Jeff Byers:but, that's the case. And we'll get into the implications from a policy perspective in a second. But just from a, like, the nuts and bolts of what this case is centered on. So, Kathleen, would you be able to tell me I I think it's kinda clear in here, but just, like, what is this case really trying? So, like, we're talking about free speech and, mental health, but, like, really, what is being talked about here?
Kathleen Haddad:I think this case got to the court because of the political effort to undo some of the legal protections for the LGBTQ plus community. And I think that probably I'm not a lawyer. So but I could probably see how the free speech argument could be very convincing to these judge justices. On the other hand, I think that maybe they don't understand certain certain parts of health care, for instance, talk therapy, mental health care. So, you know, it's not the worst decision in my view, but no one asked my view.
Kathleen Haddad:However, it's it's concerning for reasons that Jackson said.
Jeff Byers:So, Kathleen, what's the implication from a policy perspective with this case?
Kathleen Haddad:Yeah, Jeff. 25 other states have banned conversion therapy, and this decision could serve as a precedent to reverse those laws. Among the speech related treatment restrictions that the federal government already regulates, the feds or states, prohibition of discussion of abortion by federally funded health providers under the Hyde Amendment. I believe the Hyde Amendment is still applicable. 27 states have passed laws restricting evidence based gender affirming care for minors, and some of these laws restrict psychological counseling that supports clients' gender expression.
Kathleen Haddad:So perhaps this will be litigated back up the federal judiciary based on the child's decision.
Jeff Byers:And so moving on, it seems like ACA reform is, like the McRib back on the menu, which I was very proud of myself when I when I wrote that joke out. So what is the deal here?
Kathleen Haddad:Okay. So Democratic senators are signaling they want to use the funding cuts to Medicaid and the ACA exchange plan subsidies as a springboard for another round of health care reform. This effort is led by senator Wyden of Oregon, the ranking Democrat on senate finance. He was a player to health care reform rounds ago in the nineteen nineties when various reform plan offerings resulted in the Clinton health plan. In this, the Clinton Health Plan included it was much maligned, but it included purchasing pools to community rate commercial insurance and standardized benefits in the small group and individual insurance markets.
Kathleen Haddad:So whatever folks say about it, they were the precursor for the ACA state health care exchanges. Anyway, this time around, Wyden and a dozen senate democrats are taking up a broad broad reform proposals. They want democrats to discuss and agree on something, and their goal is to introduce a reform bill if democrats regain control of congress. What they did is send out a dear colleague letter. They outlined three goals, affordability, simplicity, and reining in insurer profits.
Kathleen Haddad:So Medicare is a major building block for this effort. They, the senators, are looking to either expand the pool of people who can participate in Medicare or make it available for all. Another approach they're talking about is access to the expanding access to the ACA exchange plans.
Jeff Byers:Yeah. So this, much maligned Clinton plan, I feel like I continually hear about it despite it never happening. Are we destined to you know, in fifty years, will we still be talking about the Clinton health care reform plan?
Kathleen Haddad:Well, Jeff, it's hard to know. We may be talking about reform plans, whatever they're labeled. I consider this deja vu all over again, as Yogi Berra would say, and I say that the double deja vu is warranted when it comes to health care reform. The supporters are talking about access strengthening the exchange plans, Medicare for all, standardized benefits, outlawing limited duration health plans that they call junk plans. And, you know, the ACA was intended to take care of these issues, and these issues have been part of reform efforts stemming from at least the nineteen eighties.
Kathleen Haddad:The one interesting element here is that this time around, the exchange plans are a new element in the mix, and I'm wondering whether or not these new reform efforts, if they take hold, will end up focusing on expanding access to the exchange plans if a bill would ever make it to the floor. You know, that that brings us back to that element of the Clinton health plan, the purchasing pools. This is kind of the nut of it.
Jeff Byers:Let me jump in real quick. We're talking about the Clinton health plan in today or, like, you know, with the backdrop of the Clinton health plan. Is it like and we keep revisiting these ideas. Is that correct to say? I would say so.
Jeff Byers:Okay. So what has changed in the political landscape where it's like that meme where it's like, you know, but this time it's gonna work. You know?
Kathleen Haddad:You know, it's interesting. The Dems say this time they don't want, incremental reform, and we, that's what they've said in the past. And they take a bold step, and then the courts or more the courts than congress, but some of the elements become restricted, which is why we're talking about them again like standardized benefits. But, you know, one could say the arc of history moves forward. Didn't really say that right, but so we we make steps perhaps in the political landscape right now with the concern about affordability, and, you know, it's possible the Dems could take control of congress and this this could move forward.
Jeff Byers:So it's involving health care. So I'm gonna assume no. But is this bipartisan?
Kathleen Haddad:Well, that's a good assumption because, Republicans, by nature, conservative party, don't favor bold reforms. But I will say one of the signers, Elizabeth Warren, of this dear colleague letter has joined, Republican senator Josh Hawley on a bill that was introduced in February to limit the, health plan's efforts to buy up providers, pharmacy benefit managers, and other parts of health care that give them more more market and price control. So there are concerns on the Republican side about some parts of this. Republicans held a few hearings this year on health care costs. I believe one in January in which they pressed CEOs on costs.
Kathleen Haddad:So what
Jeff Byers:you're saying is maybe this time it'll work. If people are talking about affordability, we're gonna come together into the middle of the aisle and make some decisions to to get these costs down. Is that what I'm hearing?
Kathleen Haddad:Well, Jeff, you you said it.
Jeff Byers:Uh-huh.
Kathleen Haddad:I think everyone hopes that costs can come down in terms of, doing some of the other things needed to make health care work better. That's anyone's guess. And, I would say that the current political environment is very unusual, and anything could happen.
Jeff Byers:Okay. Sounds good. It just might work this time. And so finally, MedPAC released its report in March on Medicare payments. This is a large document.
Jeff Byers:People look forward to this every year. What are the highlights from this year's document?
Kathleen Haddad:So this the March report puts forth MedPAC's recommendations for payment updates for providers. They recommended that physicians in Medicare fee for service their pay be increased a half percent. They recommended no increase for dialysis services and hospice services. This is for 2027. Inpatient rehab and skilled nursing home payments would be reduced somewhat.
Kathleen Haddad:And hospitals, they would stick with the current update that the payment formula calls for. MedPAC says hospitals are doing okay. Their their margins or profits are lower than their costs for Medicare patients, but the margins from all payers continue to be in positive territory. They do, increase payment for safety net hospitals by 1,000,000,000 based on the Medicare safety net index.
Jeff Byers:Yeah. And is there anything, on Medicare Advantage that's included with this?
Kathleen Haddad:Well, yeah, there's some interesting new information that new data has enabled, med MedPAC to report. In 2026, the average beneficiary will have a choice of 39 plans to choose from. However, some counties offer no plans. CMS will pay an average of 16,000 plus per beneficiary to MA plans. Just by way of background, MA plans, they get their payments by bidding against a benchmark that CMS sets in in in each county per patient, and they get to keep the remainder, under the benchmark is a rebate.
Kathleen Haddad:It's called a rebate, and the law requires them to use their rebates to either lower Part b premiums for beneficiaries or offer additional benefits not offered in fee for service. So the rebate for 2026 averages $2,600. And for the first time, MedPAC has access to new data on the amount plans spend on supplemental benefits. That 24,000,000,000 they calculate for the year 2023, the latest year data is available. You might ask why MA plans have these extra funds.
Kathleen Haddad:You wanna ask that, Jeff?
Jeff Byers:Sure. So why do these MA plans have these extra funds?
Kathleen Haddad:MEDDPAC says that favorable selection of healthier beneficiaries into MA plans for 2026 will increase MA payment by about by 11% over what fee for service payment would be for the same beneficiaries. More intensive coding by MA plans raises their payment by an additional 4%. So with rounding error, I would say this amounts to MedTax says 14% more for MA plans or 76,000,000,000 taxpayer dollars. So this shift of money to MA also increases beneficiary fee for service beneficiary premiums. The last thing I could, can mention is that this, amount is is an improvement over what MEDDPAC projected for 2025 of 20% more for MA plans.
Kathleen Haddad:MedPAC attributes the improvement to CMS's new risk adjustment model V '28. Phased in finally fully to 2026, and it reduces the impact of the intensive coding by MA plans relative to fee for service payment. So that's what I have for you, Jeff.
Jeff Byers:Yeah. We'll put a link into the show notes if you want to dive into the med pack report yourself. There's a lot of information in there. And we are recording, as I said, on April 2. This will be released on April 10.
Jeff Byers:We are waiting with bated breath for the Medicare Advantage payment increase final reg rule to come out. I think CMS said it should be published by April 6, so maybe we might have published an emergency pod. By the time you hear this, maybe we'll talk about it next week. You know, the future is unwritten, but this podcast has already been recorded. So with that, Kathleen, thanks again for joining us today on Health Affairs This Week.
Jeff Byers:If you, the listener, enjoyed this episode, please send it to the Nostradamus in your life, and we will see you next week.