How the Inflation Reduction Act Might Affect Your Health Care

How the Inflation Reduction Act Could Lower Your Drug Costs | TimeSource: The Washington Post, by Rachel Roubein

Congressional Democrats are on the verge of passing their most significant health-care legislation in more than a decade, delivering a major victory to President Biden, who has made tackling the high price of care a key plank of his domestic agenda.

If signed into law, the party’s long-stalled economic package would prevent huge spikes in the cost of health insurance for roughly 13 million Americans. It would limit seniors’ drugs costs at $2,000 a year. And it would place a cap of $35 a month on how much diabetics enrolled in Medicare would pay for insulin, a lifesaving medication.

After more than a year of fraught negotiations, the economic package won the support of all Senate Democrats on Sunday, and heads to the House, where it’s expected to advance this week. The bill doesn’t make changes to the health-care system as sweeping as the party originally envisioned, and some policies will take years to be implemented. But, three months before the midterm elections, Democrats are already gearing up to tout the measures on the campaign trail.

“There’s a whole range of things that are really game-changing for ordinary folks. Now, some of it is not going to kick in for a little bit, but it’s all good,” Biden told reporters Monday. “When you sit down at that kitchen table at the end of the month, you’re going to be able to pay a whole hell of a lot more bills because you’re paying less in medical bills.”

Will Americans pay less for drugs?

There are several key parts to that question. The first involves Medicare being able to negotiate the price of drugs.

 

It isn’t clear yet how robust the savings for seniors will be because of Medicare’s ability to negotiate prices. But health experts believe there will be lower costs.

 

Allowing drug negotiation in Medicare — the federal health insurance program for older Americans and those with disabilities — has long been backed by Democrats, who believe it will help make medicines more affordable. But the pharmaceutical industry’s multimillion dollar lobbying machine has blasted that notion and fought tooth-and-nail against the proposal.

The provisions included in Democrats’ health and climate bill are smaller in scale than many in the party wanted, meaning the impact won’t be as far-reaching. The government would begin negotiating the price of 10 drugs by 2026, with that number growing to up to 20 drugs by 2029.

But the number of Americans with Medicare coverage who will see lower out-of-pocket costs on drugs — and how much will they save — will depend on which drugs are subject to negotiations and the price reductions the government secures, according to the Kaiser Family Foundation.

 

“It’s difficult to say with certainty which drugs will be negotiated or what the level of savings will be for patients who take those drugs,” said Tricia Neuman, a senior vice president at the Kaiser Family Foundation. “But for patients who do take those drugs, there will be savings that come into being starting in 2026.”

As for annual out-of-pocket costs for medicines, the legislation passed Sunday caps costs at $2,000 per year for Medicare beneficiaries. Roughly 1.4 million enrollees in the program’s voluntary prescription drug benefit spent $2,000 or more in 2020 on medications. But it’s likely that even more seniors will save money as a result of the new limit on drug costs, because the estimate from the Kaiser Family Foundation didn’t account for expected hikes in average annual out-of-pocket costs in more recent and in future years.

Older adults who take pricey medications for conditions such as cancer or multiple sclerosis are especially likely to benefit. For instance, some on Medicare with the diseases spent between $4,100 and $6,200 a year to manage the disease.

Democrats had sought to impose a $35 monthly price cap on the cost of insulin for patients on Medicare and those with private health plans.

But Republican lawmakers blocked the part of the policy that would have extended the cap to millions of Americans with private insurance who use the drug, which diabetics use to manage blood sugar levels. The measure will still benefit Americans who have Medicare coverage.

The number of Americans with Medicare using insulin doubled from 1.6 million in 2007 to 3.3 million people in 2020. Many seniors spend an average of $54 per prescription across all insulin products, which means Democrats’ cap will lower costs.

Does the legislation lower health insurance costs? And if so, for whom?

The spending package includes a three-year extension of enhanced financial aid for roughly 13 million Americans who buy health coverage through the Affordable Care Act’s exchanges.

 

Last year, Democrats passed the beefed up tax credits in their coronavirus aid bill, but such subsidies are slated to expire at the end of this year. The economic package poised for final passage this week extends the aid through 2025.

Without that assistance, health-care costs would spike substantially. Roughly 3 million people who receive health coverage through the ACA’s insurance exchanges could be priced out of the market and potentially become uninsured. Nearly 9 million people could lose hundreds of dollars in financial help per year if the assistance wasn’t extended, and an estimated 1.5 million may have lost their tax credits entirely, though remain insured, according to a March report from the Department of Health and Human Services.

Who won’t benefit from the legislation?

Under the ACA, states were required to expand Medicaid to people earning up to 133 percent of the federal poverty level. But the Supreme Court made doing so optional for states, and Republican officials in a dozen states have refused to expand the program.

Previous versions of the bill had crafted a federal solution, circumventing recalcitrant GOP officials and expanding safety net coverage to roughly 2.2 million low-income adults. But the legislation the Senate passed Sunday excluded that provision.

The legislation also excluded provisions aimed at new mothers and vulnerable children. The policies left out of the Senate’s bill would have permanently funded coverage for low-income children and expanded Medicaid benefits in all states to new mothers for a year after giving birth.

Senate Dems Reach Draft Deal To Extend ACA Premiums, Lower Drug Costs

Democrats race to prevent spike in health premiums amid record inflation -  The Washington PostSource: Healthcare Dive, by Sydney Halleman

Dive Brief:

  • * Late Wednesday, Sen. Joe Manchin, D-W.Va., announced he reached a deal with Senate Democrats to pass a bill that would extend boosted premiums granted by the American Rescue Act into 2025.
  • * The bill, a slimmed-down version of President Joe Biden’s Build Back Better package, also allows Medicare to negotiate select prescription drug prices beginning in 2026 and caps Medicare Part D out-of-pocket costs in 2025.
  • * The premium extension and Medicare negotiations are part of a more than $300 billion package that includes funding for climate and energy programs and a tax hike for corporations.

Dive Insight:

Roughly 13 million people with healthcare plans under the Affordable Care Act have avoided an anticipated premium increase after enhanced premiums, which attracted a record 14.5 million marketplace enrollees, were set to expire at the end of this year.

Manchin, who previously blocked efforts to pass the bill, said late Wednesday that he had reached an agreement with Democratic Majority Leader Chuck Schumer, D-N.Y., to pass the now-rebranded Inflation Reduction Act of 2022.

“Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination,” Manchin said in a statement.

Also included in the Inflation Reduction Act — a bid to lower drug prices. Medicare will be allowed to negotiate the prices of some 10 pharmaceutical drugs in 2026, 15 more drugs in 2027 and 2028 and 20 more in 2029. In addition to price negotiation, the bill also imposes penalizing rebates on pharmaceutical manufacturers who hike drug costs above the rate of inflation starting next year.

In more cost reliefs, Medicare Part D out-of-pocket spending will be capped at $2,000 in 2025. The bill also aims to broaden Part D low-income subsidies eligibility in 2024 and do away with the 5% Part D catastrophic threshold coinsurance requirement. The Kaiser Family Foundation estimates that 1.3 million Part D enrollees without low-income subsidies exceeded the roughly $6,000 catastrophic coverage threshold in 2020.

To pass the bill, Democrats are now relying on a fast-track maneuver dubbed budget reconciliation that enables highly prioritized fiscal bills to advance with a simple majority instead of 60 filibuster-breaking votes.

FDA Mulls Drug Importation With States

Import Offices and Ports of Entry | FDASource: Axios, by Adriel Bettelheim

The FDA has started discussions with states over creating a way to import drugs from Canada — a policy the Biden and Trump administrations both embraced to bring down health costs but which experts regard as having limited impact.

The big picture: With President Biden’s drug pricing agenda stalled, importation could allow states to take advantage of lower drug prices abroad without the need for direct action to limit prices in the U.S.

  • Under one pathway, states, wholesalers and pharmacies submit importation proposals to HHS, which would be subject to safety and cost conditions.

Driving the news: The FDA last week held its first meeting with five states — Florida, Colorado, Vermont, Maine and New Mexico — that have submitted reimportation plans or are thinking about doing so, Politico first reported.

  • Biden’s executive order on promoting competition directed the FDA to work with states and Native American tribes on safely importing prescription drugs from Canada.
  • “The FDA is committed to working with states and Indian tribes that propose to develop … importation programs to reduce the cost of products to the American consumer while still protecting public health and safety,” an agency spokesman told Axios.

Yes, but: The Pharmaceutical Research and Manufacturers of America sued to block a 2020 federal rule that would facilitate importation, citing patient safety and other concerns.

  • Canada also said it has no plans to participate and has told drugmakers not to take steps that could lead to drug shortages there.

Cowen analyst Rick Weissenstein notes the Biden administration has been inconsistent on reimportation, supporting the idea in theory while arguing that it won’t work in legal briefs filed in response to the drug industry trade group’s legal challenge.

Our thought bubble: With Canadians officials adamant they won’t participate in the process, any importation plan is unlikely to actually bring down drug prices. The issue still could be politically appealing as the campaign season heats up.

Term Health Insurance Grows in Popularity

As a large percentage of enrollees express dissatisfaction with their Obamacare coverage, AgileHealthInsurance.com is seeing growing interest in term health insurance plans. For millions of people, term health insurance plans are more affordable than Obamacare or can work as a bridge to this year’s Obamacare enrollment period.

According to a recent study from the Deloitte, only 30% of Obamacare exchange enrollees are satisfied with their plans. This satisfaction level is significantly lower than what it is among enrollees in employer health plans as well as Medicare and Medicaid. Thirty-five percent of dissatisfied Obamacare marketplace enrollees say they are paying too much for their plan. In addition to making premium payments, enrollees in Obamacare plans also pay high deductibles unless they qualify for cost-sharing subsidies or pay for a high-end gold or platinum plan.

Consumers also complain that their Obamacare plans don’t include broad enough provider networks. A study by Avalere recently revealed that Obamacare plans offered on exchanges have 34% fewer providers than do commercial plans outside the exchanges. If consumers’ preferred doctors or hospitals are out of network, they face the possibility of paying full price to see them.

In response to Obamacare dissatisfaction, some consumers are turning to term health insurance plans. Term health insurance premiums for 30-year-olds are 70% less expensive, on average, than premiums for unsubsidized Obamacare Bronze plans. Moreover, term health plans are known for very wide provider networks. Enrollment can be done throughout the year, as opposed to predefined enrollment periods.

Bruce Telkamp, CEO of AgileHealthInsurance.com said, “We have seen a steady rise in consumers shopping for term health insurance plans. The popularity is increasing as consumer awareness of its cost advantages becomes better known.” It is important for consumers to know that term health insurance is a distinct category of health insurance. Depending on their health status (including pre-existing conditions), consumers can be rejected. Additionally, with term health insurance, consumers may still be subject to the Obamacare Tax. There are exemptions to the tax, however. Even if consumers  have to pay it, they may still save money with term health insurance.

House Passes Medicare Advantage Bill


On June 17th, the House of Representatives passed The Strengthening Medicare Advantage through Innovation and Transparency for Seniors Act of 2015 (H.R. 2570. The bill would establish a demonstration project allowing Medicare Advantage plans to use Value-Based Insurance Design (V-BID). The concept comes from Univ. of Michigan research. Researchers found that reducing out-of-pocket costs for some high-value medical services for certain patients can improve health outcomes and reduce disparities. It may also slow the growth of health care costs. If the bill becomes law, it would allow Medicare Advantage plans to lower co-payments and coinsurance for beneficiaries, encouraging the use of high-value, evidence-based medical services to manage chronic conditions. It prevents plans from increasing beneficiary cost sharing on any service.

The legislation was originally introduced by U.S. Reps. Diane Black (R-TN), Earl Blumenauer (D-OR) and Cathy McMorris Rodgers (R-WA). The bipartisan companion bill, the Value-Based Insurance Design Seniors Copayment Reduction Act of 2015 (S.1396), was introduced to the Senate on May 20th by U.S. Senators Debbie Stabenow (D-MI) and John Thune (R-SD). In addition to the Capitol Hill activity, V-BID was included in a recent Centers for Medicare and Medicaid Services (CMS) Request for Information to Innovate Medicare. Numerous private and public payers have implemented V-BID programs.

Best wellness practices can lower health care spending, report says

Employee wellness programs using evidence-based best practices may reduce health care costs, according to the Health Enhancement Research Organization’s Employee Health Management Best Practices Scorecard. The report found wellness programs with high scores saw about a 1.6% inflation-adjusted reduction in health care costs over three years, compared with lower-scoring plans that had stable costs. BeckersHospitalReview.com (3/10)

Premiums Are Lower When There Are More Hospitals

More competitive hospital markets had more than 8% reductions in premiums. That translates into savings of more than $20 a month for consumers in markets with less hospital concentration, according to a report commissioned by America’s Health Insurance Plans (AHIP). The report, authored by Scott Thompson, Ph.D. and published in the Antitrust Health Care Chronicle, finds that hospital systems with strong market influence can often negotiate higher rates for their services. Each additional effective hospital competitor is associated with a 1.5% drop in the cost of insurance premiums. Consumers in more competitive markets, such as Los Angeles, saw average monthly savings of $32.90 in reduced premiums when compared to consumers purchasing coverage in San Francisco, a market with fewer hospital competitors.

AHIP president and CEO Karen Ignagni said, “Consumers and employers benefit from competitive markets that promote affordability and choice. More needs to be done to encourage competition among providers. Hospital consolidation comes with a price that consumers and employers simply cannot afford.”

Shopping for Care Can Lower Out-of-Pocket Costs

Out-of-pocket spending for common health care procedures can vary from $10 to nearly $1,000 depending on the procedure. With out-of-pocket spending rising, there are real opportunities for consumers to save on health care if they have price information to make better decisions, according to a study by the Health Care Cost Institute (HCCI).

The HCCI report is based on data from actual amounts paid for health care services. The report looks at per capita out-of-pocket spending for five common medical procedures. It looks at average differences in consumer payments nationally and in nine states: Ariz., Colo., Fla., Ga., Md., N.J., Ohio, Texas, and Wisconsin.

In 2013, consumer payments for a new doctor visit varied by $19 nationally, $10 in Arizona, $12 in Colorado, and $35 in Wisconsin. However, variations were much higher for surgical procedures. Consumer out-of-pocket payments for cataract removal varied by $444 nationally. Variations were larger within states. Consumer payments varied by $989 in Wisconsin and $490 in Georgia. The variation in consumer out-of-pocket payments for a lower leg MRI was $342 nationally. Payments varied by more than $410 in several states including Ohio, Texas, and Wisconsin.

In 2013, an adult consumer with employer-sponsored insurance paid more than 15% of their medical bills out-of-pocket for about $700 a year. That’s up 6.9% from $662 in 2012.

HCCI executive director David Newman said, “The lack of transparency of medical prices is a growing problem since consumers are financing a larger and larger proportion of their care. Although the savings for a physician visit may be minimal, for other procedures like cataract removal or an MRI, the potential savings could be a substantial benefit to many households.” HCCI is launching a transparency tool that will provide national, state, and local information to help consumers shop. The first version of that tool is slated to go live in early 2015

Kaiser Is the Only Exchange Plan to Lower its Rates

The Los Angeles times reports that Kaiser is lowering its rates for Obamacare coverage in California by 1.4% next year.California’s health insurance exchange recently announced that premiums were rising 4.2%, on average, statewide for 2015 policies. A new analysis by Citigroup healthcare analyst Carl McDonald offers new details on what consumers can expect by company. Kaiser was among the most expensive health plans in 2014 and staggered to a fourth-place finish in exchange enrollment. Anthem Blue Cross was the leader statewide, followed by Blue Shield of California and Health Net Inc. Kaiser doesn’t seem particularly happy with its exchange market share, as it is the only company reducing exchange premiums in 2015, McDonald told the LA Times.

Rates for Anthem Blue Cross, a unit of industry giant WellPoint Inc., are going up 4.6%, on average, according to Citigroup.Blue Shield’s increases are 6% statewide and Health Net is raising premiums by 4.9%. Despite those 2015 rates going in different directions, McDonald and other industry analysts are skeptical that Kaiser will gain much ground on its rivals. Even with the slight decrease, Kaiser’s HMO remains one of the more expensive options.

Next year, Health Net’s HMO remains the cheapest coverage on the silver tier in L.A. at $231 a month for a 40-year-old, up $7 from this year’s premium. Those low rates made Health Net the market leader in L.A. with 33% market share, beating out Blue Shield and Anthem.

Those three insurers and Kaiser together accounted for 94% of Covered California’s initial enrollment of 1.4 million people under the Affordable Care Act. About 1.2 million actually completed the sign-up process and started paying their premiums, according to state estimates.

These rates are still subject to review by regulators before open enrollment for 2015 starts Nov. 15. The changes in premiums for each company also vary by region and the type of health plan. Among the smaller, regional health plans, L.A. Care is boosting its HMO premiums by 11.3%, according to Citigroup research. That’s the biggest percentage change for any insurer in the state.

Study looks at initial rate filings for 2015 plan year

A review of initial rate filings in nine states with public health insurance exchanges found that premiums for “silver” plans will likely rise from $324 to $350 on average. The expected rate changes vary by state, but are overall less than some observers warned. The Hill (6/18)

Last Updated 08/10/2022

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