Medicare’s costs for outpatient prescription drugs are rising quickly, and there is a growing sense that part of the problem lies in the incentives structure that Medicare Part D creates. Last week, the Trump Administration announced plans for a new, voluntary Part D payment model intended to lower Medicare expenditures on prescription drugs. The model’s basic idea is to increase plans’ liability for the part of the program where costs are rising the most, changing their incentives. These changes are a move in the right direction, but any benefits will likely be limited. More sweeping changes to the program’s structure, such as what AAF’s Team Health has proposed in the past, are needed to contain costs.
For decades, we’ve talked and talked and talked about the high cost of American health care. But we haven’t done anything about it. As the above chart shows, the problem has gotten so bad that, today, hospital spending reduces the average family’s take-home pay more than do federal taxes.
Overall, as a country, Americans spent $1.2 trillion on hospital care in 2018. That’s over $3,600 for every man, woman, and child in the U.S. The Centers for Medicare and Medicaid Services project that, by 2026, hospital spending will rise to $1.8 trillion: over $5,300 per person.
Consider what the average American thinks they hear about “Medicare for All.” They probably think everyone would get the same Medicare coverage currently going to their parents and grandparents. Not so. Despite the clever branding, the Medicare for All plan that Harris has supported is actually a universal coverage plan that covers more services than Medicare while eliminating deductibles, co-insurance, and co-pays. Indeed, once more Americans hear about Medicare for All, they might start wondering how total healthcare spending would be the same or ever less under such a regime.
Academic justifications for 70% marginal tax rates, such as Peter Diamond and Emmanuel Saez’s, are nothing more than a veneer intended to deceive a wider audience that doesn’t know better. Diamond and Saez’s original argument for a 70% tax rate—that it would enhance both tax revenue and social welfare—ignores the long-term consequences of high tax rates on growth. They assume that taxing, redistributing, and consuming income that taxpayers would otherwise invest doesn’t reduce investment. While admitting that taxes discourage work, they similarly assume that a reduced supply of properly trained talent has no effect on the willingness of investors and entrepreneurs to take risks that grow the economy.
Report Highlights:
- Regional associations launched 71 percent of new AHPs
- Vast majority of new regional associations are chamber of commerce-based
- 4 out of 5 new AHPs are insured through a third-party insurance company as opposed to self-funded
- Maximum savings claims average higher for self-funded plans than fully-insured plans, though both are in double digits
- Half of new AHPs offer medical savings account options such as a HSA
- Multi-state professional association health plans in planning but taking longer to reach market
- Half of new AHPs are limited to companies of 2-50 employees
- 43 percent of new AHPs are available to sole proprietors and the self-employed
- Benefit information trends toward comprehensive health coverage that includes items such as mental health benefits and prescription drug coverage alongside mandated benefits such as maternity
At a town hall event, Sen. Kamala Harris (D-Ca.), who recently launched her presidential campaign, said she wants to eliminate private insurance entirely, which would mean that about 177 million people would lose their existing plan.
After noting that the Sanders-sponsored Medicare for All legislation that Harris supports would totally eliminate all private insurance, moderator Jake Tapper asked, “So for people out there who like their insurance—they don’t get to keep it?”
Harris responded with a somewhat winding answer that amounts to a yes.
“The idea,” she said, “is that everyone gets access to medical care and you don’t have to go through the process of going through an insurance company, having them give you approval, going through all the paperwork, all of the delay that may require. Who of us have not had that situation where you have to wait for approval and the doctor says, ‘I don’t know if your insurance company is going to cover this.’ Let’s eliminate all of that. Let’s move on.”
The shrill criticism of the Arkansas’s Medicaid work requirements is not supported by facts. Health policy analysts have long been puzzled that millions of uninsured people snub the government’s offer of free health benefits. The reason so many Medicaid recipients failed to comply with the Arkansas work requirement may be as simple as this: They didn’t consider the benefits worth the effort. Yet, a study by the Buckeye Institute found that people who favorably respond to work requirements will earn far more—in some cases nearly $1 million more—over the course of a lifetime than those who remain on Medicaid and don’t increase their work efforts.
The Trump administration is rolling out the policy specifics for a central promise in its plan to lower drug prices—taking on the system’s middlemen. Health and Human Services Secretary Alex Azar has long had his eye on pharmacy benefit managers (PBMs) and the rebates that are their bread and butter. The proposal HHS unveiled yesterday would essentially ban those rebates in Medicare and Medicaid, forcing PBMs to collect a flat fee for their work.