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Troubling: Medicare from Funding to Medications

Posted By Administration, Tuesday, June 12, 2018

With the significant number of insurance professionals retiring, this is an important issue to the industry. A report issued by its trustees says the Medicare Trust Fund will be depleted by 2026. That’s three-years earlier than the Medicare Trustees Report issued last year.

The report said, “The Trustees recommend that Congress and the executive branch work closely together with a sense of urgency to address the depletion of the [trust fund] and the projected growth [in spending]. Consideration of further reforms should occur in the near future. The sooner solutions are enacted, the more flexible and gradual they can be.”

The trust fund — as you know — covers Medicare Part A. Part B takes care of doctor visits and it is a separate fund. The trustees say it should be solvent until 2034.

The Trump administration does not agree. Treasury Secretary Steven Mnuchin said both Medicare and Social security are secure though he did say there are long-term challenges. “Lackluster economic growth in previous years, coupled with an aging population, has contributed to the projected shortages for both Social Security and Medicare,” Mnuchin said in a statement.

He believes the tax reforms passed last year and more regulatory reform will lead to the economic growth needed to make both programs more secure.

Juliette Cubanski is a Medicare expert at the Kaiser Family Foundation. She noticed the report and said, “It's now getting to the point where we're less than 10 years away from this date and I think that certainly does increase pressure on policymakers.”

The question is will they act?

Cubanski said critics are saying the report means the trust fund will be totally broke. She noted the depletion of the fund just means Medicare will not be able to pay 100% of its costs. It will have funds available for 91%.

President Trump — during the campaign — said he would not support cuts in Medicare or Social Security. House Speaker Paul Ryan has called for the overhauling of Medicare to save money. 

He calls it — as most do — an entitlement.

Democrats immediately went on the attack. Oregon Sen. Ron Wyden — who is the ranking member of the Senate Finance Committee — said, “This report should eliminate any doubt that Trump's tax law yanked Medicare closer to insolvency. Between reviving junk insurance plans, sending premiums into the stratosphere, and doing serious damage to Medicare's finances, the president's rap sheet on health care gets worse by the day.”

On the House side of things, Minority Leader Nancy Pelosi said, “The staggering costs in the lives of seniors from the Republicans' brazen corporate and special interest agenda become clearer every day. The GOP tax scam's massive, unpaid-for giveaways to the wealthiest 1 percent and big corporations have gravely undermined the future of Medicare and Social Security, and now Republicans want America's seniors to pay the bill.”

Senate Finance Committee Chairman Sen. Orrin Hatch of Utah — along with other Republicans — said the report brings out some important truths.

“As today's reports show, the nation's Medicare program will be in the red in less than a decade — by 2026 — and the Social Security combined disability and retirement trust funds will be exhausted in 2034. With Social Security facing more than $34 billion of unfunded future liabilities, we must not turn a blind eye. We should keep our attention focused on reforming these programs so that they can truly benefit future generations,” he said.

Part of Medicare’s problems is the high cost of medicine. President Trump has made overtures about Medicare drug purchasing policies. He has publicly said the pharmaceuticals are ripping off seniors and consumers in general with really high drug prices. “The drug lobby is making an absolute fortune at the expense of American consumers... We are putting American patients first,” he said.

A month or so ago Trump put out a pharmaceutical policy he’d like to see implemented:

  Stricter policing of delaying tactics that drug companies use to prevent less expensive generic drugs from reaching market

  Exploring whether to require companies to list drug prices in television ads

  Cracking down on gag clauses that prevent information from getting to consumers at the pharmacy counter

  Going after pharmacy benefit managers (PBM), so-called “middlemen” who negotiate prices and who drug companies point the finger at over costs

  Calls for more competition in Medicare Part B, which covers drugs administered in doctors' offices


There is definitely a need. A report from the Department of Health and Human Services (HHS) said Medicare recipient spending jumped 62% from 2011 to 2015. Medicare Part D spending rose from $49 billion to $80 billion.

However, the number of filled prescriptions dropped 17%. It is drug prices and not drug use that caused the increase.

David Mitchell of the advocacy group Patients for Affordable Drugs said, “Today’s report from the HHS Inspector General makes it clear that list price increases on brand drugs are hurting patients. I heard this weekend from a California woman who reports she pays $500 — nearly half of her $1,200 per month income — to cover two maintenance drugs. We need action to lower pharma list prices now.”


The HHS report also notes:

  Unit costs for drugs rose 29% from 2011 to 2015

  That’s six-times faster than inflation

  The average out-of-pocket costs per brand name drug rose from $161 to $225 in the same time period

  That is a rise of 40%


Trump’s push to lower the cost of drugs to seniors has gained traction in the Senate. A bill sponsored by Sen. Chuck Grassley of Iowa — who chairs the Senate Judiciary Committee — is called the Creates Act. It aims at stopping drug companies from using delaying tactics to keep cheaper, generic drugs off the market.

It has been stalled for months and perhaps because of Trump’s attacks, it is getting some traction. There will be a vote on the bill this week.

Criticism has come from all quarters over the Trump push and over Grassley’s bill. Sen. Wyden said, “They're breathing a sigh of relief in pharmaceutical board rooms across the country. Today’s announcement is a far cry from what Trump called for when he said the drug companies were 'getting away with murder.' It's still open season for drug companies to set astronomical prices that families can't afford.”

Health Care America now also opposes Trump’s ideas. In a statement it said, “President Trump's speech was full of bluster, grand claims and empty promises that won't add up to a thing. His plan will do nothing to lower prices or help seniors and millions of others who are struggling to afford the prescriptions they need to stay healthy.”

Steve Ubl is the CEO of the Pharmaceutical Research and Manufactures of America. He was critical of the Trump plan. “These far-reaching proposals could fundamentally change how patients access medicines and realign incentives across the entire prescription drug supply chain. While some of these proposals could help make medicines more affordable for patients, others would disrupt coverage and limit patients' access to innovative treatments,” he said.

The American Medical Association (AMA) did like what it heard. “The AMA is pleased the Trump administration is moving forward with its effort to address seemingly arbitrary pricing for prescription drugs… No one can understand the logic behind the high and fluctuating prices. We hope the administration can bring some transparency — and relief — to patients.”


Source links: The Hill — link 1, link 2, link 3, link 4, link 5, link 6

Tags:  Insurance Content  Insurance Industry  Insurance News  Troubling: Medicare from Funding to Medications  Weekly Industry News 

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