Responding to popular anxiety over prescription drug prices, the Senate Finance Committee last month approved a bill to restructure the Medicare prescription drug benefit.
The bill is part of broader congressional and administration efforts to address rising health care costs, one in which lawmakers are laying aside partisan differences to seek constructive solutions.
The committee is proposing amendments to the Medicare Part D program, which was created in 2003 and requires modifications to address the changing nature of the prescription drug marketplace.
The Prescription Drug Pricing Reduction Act contains a mix of good and bad ideas for amending the program, which relies on choice and competition to provide prescription drug coverage to 47 million seniors. Medicare Part D is widely popular with beneficiaries and has cost taxpayers far less than initially estimated.
The bill’s good ideas include reworking how the program pays for the costliest drugs, relieving taxpayers of some of these costs, and requiring private prescription drug plans and pharmaceutical companies to assume a greater burden.
The worst idea is one that would introduce federal price regulation into the Medicare Part D program. More on that in a bit. First a look at how the bill proposes to restructure Medicare Part D benefits.
Medicare buy-in is seen as a moderate proposal, but it would set off a domino effect of cost shifting that would leave few people untouched. It would mean that services for more people would be covered by insurance that reimburses providers at below-cost Medicare rates, placing more pressure on providers to negotiate higher rates with private insurers to offset the loss in income. Such a shift would place upward pressure on individual market premiums. Providers would also try to limit the number of Medicare patients they see, making it more difficult for today’s seniors as well as the buy-in populations to access care.
Medicare for All’s sponsors claim it would reduce administrative costs and produce huge savings. “Private insurance companies in this country spend between 12 and 18% on administration costs,” says Sen. Bernie Sanders (I-VT). “The cost of administering the Medicare program … is 2%. We can save approximately $500 billion a year just in administration costs.”Not so fast. Glenn Kessler, a fact-checker for the Washington Post warned backers of Medicare for All to be “cautious” in relying on “the administrative cost saving” as a talking point, and PolitiFact rated Sanders’ statement as “half true” […at best.]
Surprise out-of-network billing and related patients’ costs are increasing among inpatient admissions and emergency department visits to in-network hospitals, according to a study published in JAMA Internal Medicine. Stanford University researchers found that from 2010 through 2016, 39% of 13.6 million trips to the ED at an in-network hospital by privately insured patients resulted in an out-of-network bill. That figure increased during the study period from about a third of ED visits nationwide in 2010 to 42.8% in 2016. [This shows the ineffectiveness of patchwork legislative solutions since Obamacare contained provisions to stop surprise bills when it passed in 2010.]
As advocates of free markets and members of the business community, we can debate which proposals to prevent surprise billing are more appropriate, but if we enshrine current rates with an arbitration scheme, or if we fail to advance solutions on surprise billing, we only play into the hands of single-payer advocates. It’s time to end secret pricing and save our health care market from the corrupt practice of surprise billing once and for all.
| Republicans undermine their own long-term interests by supporting elimination of the Cadillac Tax. The GOP opposes government-imposed cost controls, and supposedly favors market-driven discipline as an alternative. Most GOP members in Congress fail to understand that the Cadillac tax is a market-driven reform. Currently, federal tax law confers an open-ended benefit on employer-paid premiums, which are exempt from income and payroll taxes. The more a company spends on health benefits, the greater the tax subsidy. The result is higher-costs than would exist if the tax subsidy were limited, as the Cadillac tax does. |
Last year, the Trump rule on short-term health plans went into effect, which not only allowed plans to last 364 days, it lets people renew them for up to 36 months. “Sabotage!” the health care experts cried. They said this new rule would allow junk insurance that would rip consumers off and would force Obamacare premiums through the roof. But the results so far strongly suggest that the “experts” had it exactly wrong when they predicted doom and gloom by giving consumers more choice. States that opened their markets up to new choices and more competition are seeing smaller rate hikes than those that decided to “protect” their consumers by forcing them into government-mandated Obamacare plans.
Badger has updated an important paper from last year showing that some states are succeeding in lowering premiums and increasing enrollment in health insurance by doing a better job of targeting existing resources. Obamacare established a regime of subsidies, mandates, regulations, and tax penalties that resulted in substantial increases in premiums for individual insurance coverage. But seven states obtained waivers to target subsidies for high-cost patients, and they saw premiums fall by nearly 7.5%, while premiums in the other states rose by more than 3%. He examines estimated premiums in five additional states that have applied for risk-mitigation waivers for 2020. Premiums for benchmark plans rose in all five states in 2019, but actuarial analyses forecast that premiums will decline in all five states if the federal government approves their waiver applications.
Health insurance enrollment has declined among people who do not qualify for financial help under Obamacare, new federal data show. The data released by the Centers for Medicare and Medicaid Services on Monday show that enrollment declined by 1.2 million people, or 24%, between 2017 and 2018 among people with incomes too high to qualify for Obamacare subsidies and who therefore face the full brunt of premium cost increases. In contrast, in the same period, enrollment ticked up among those with subsidized coverage by 300,000 people.
Obamacare wasn’t supposed to give free health insurance to everybody. The Affordable Care Act’s authors expected the poor would enroll in Medicaid, while those with higher incomes would buy coverage through the new insurance exchanges, with subsidies that decrease as income rises. It isn’t working that way. A study published this week by the National Bureau of Economic Research shows that ObamaCare has turned out to be a giant welfare program, with millions of working- and middle-class Americans improperly receiving Medicaid—a reflection of the unpopularity of the exchange policies and incompetence of government oversight.