Report: Proposed Medicare Changes Mean Higher Premiums

The administration wants to change Medicare’s drug benefit, but a conservative economist predicts higher premiums

Lipitor(atorvastain calcium) tablets made by Pfizer and distributed by Parke-Davis are seen November 30, 2011 in Washington, DC. Pfizer's patent on the best-selling drug of all-time, the cholesterol-lowering medication Lipitor, expired on November 30, 2011, opening the path to generic competitors for America's most popular medication. Lipitor came on the market in 1997, and has raked in some $100 billion for Pfizer even in a crowded market that includes various other cholesterol-lowering statins, many of which have already gone generic. In the United States, anti-cholesterol drugs account for 255 million prescriptions a year, and about nine million people are taking Lipitor. 
National Journal
Sam Baker
Feb. 6, 2014, midnight

Pro­posed changes to Medi­care’s pre­scrip­tion drug cov­er­age could cause seni­ors to lose their plans or face high­er premi­ums, a con­ser­vat­ive think tank says in a new re­port.

The Amer­ic­an Ac­tion For­um, led by former Con­gres­sion­al Budget Of­fice Dir­ect­or Douglas Holtz-Eakin, cri­ti­cized changes the Medi­care agency wants to make to the ne­go­ti­ations among phar­ma­cies and in­sur­ance com­pan­ies.

“If [the changes are] im­ple­men­ted, the tax­pay­er will face high­er budget costs, mil­lions of seni­ors will lose their pre­ferred plans, be­ne­fits will di­min­ish, and premi­ums will rise,” AAF said in a re­port on the Part D pro­gram.

The fed­er­al Medi­care agency, CMS, pro­posed new rules earli­er this year that would change the way plans es­tab­lish net­works of pre­ferred phar­ma­cies. Plans and phar­ma­cies could no longer reach ex­clus­ive ar­range­ments; any phar­macy would be able to de­cide wheth­er it wants to be part of a plan’s pre­ferred net­work.

AAF says that will mean few­er pre­ferred net­works, dis­rupt­ing cov­er­age and rais­ing prices for seni­ors who rely on nar­row­er phar­macy net­works.

“This is the en­ti­tle­ment that works, why are they break­ing it?” Holtz-Eakin said in an in­ter­view.

A CMS of­fi­cial dis­puted the re­port’s con­clu­sion. There’s lim­ited evid­ence that ex­clus­ive con­tracts ac­tu­ally save money — either for seni­ors or the gov­ern­ment, the of­fi­cial said, and the new pro­pos­al would give seni­ors more ac­cess to any dis­counts by mak­ing them avail­able from more phar­ma­cies.

The of­fi­cial ac­know­ledged that nar­row net­works have the po­ten­tial to save money, but said the pro­posed reg­u­la­tions will re­quire plans and phar­ma­cies to prove that they provide real value.

“The pro­posed policies “¦ will en­sure that Medi­care be­ne­fi­ciar­ies have ac­cess to af­ford­able health and pre­scrip­tion drug plans while mak­ing cer­tain that plans provide value to Medi­care and tax­pay­ers,” a CMS spokes­man said.

A “non-in­ter­fer­ence” clause has kept Medi­care out of the ne­go­ti­ations among phar­ma­cies, drug com­pan­ies and Part D plans, but CMS is now re­in­ter­pret­ing the clause in a way that would al­low the gov­ern­ment to get in­volved in ne­go­ti­ations between plans and phar­ma­cies.

Holtz-Eakin said the change in non-in­ter­fer­ence rep­res­ents a fun­da­ment­al change in the way Part D works.

“It’s a pretty in­vas­ive and mi­cro­man­aging ap­proach,” he said.

Part D is gen­er­ally con­sidered a suc­cess — its premi­ums have stayed nearly flat for years, and its cost to the fed­er­al gov­ern­ment has been lower than ex­pec­ted.

Con­ser­vat­ives see the pro­gram as a mod­el for the over­all health care sys­tem, ar­guing that com­pet­i­tion among private Part D plans is what keeps the pro­gram’s costs in check. Holtz-Eakin said changes to Part D’s net­works could have elec­tion-year con­sequences.

“I find it stun­ning that the ad­min­is­tra­tion would pick an­oth­er health care fight, par­tic­u­larly with seni­ors, in this way in an elec­tion year. This sup­posed to be a polit­ic­ally savvy group, but this is nuts,” Holtz-Eakin said.

{{ BIZOBJ (video: 4716) }}

What We're Following See More »
‘PULLING A TRUMP’
GOP Budget Chiefs Won’t Invite Administration to Testify
1 days ago
THE DETAILS

The administration will release its 2017 budget blueprint tomorrow, but the House and Senate budget committees won’t be inviting anyone from the White House to come talk about it. “The chairmen of the House and Senate Budget committees released a joint statement saying it simply wasn’t worth their time” to hear from OMB Director Shaun Donovan. Accusing the members of pulling a “Donald Trump,” White House spokesman Josh Earnest said the move “raises some questions about how confident they are about the kinds of arguments that they could make.”

Source:
A DARK CLOUD OVER TRUMP?
Snowstorm Could Impact Primary Turnout
1 days ago
THE LATEST

A snowstorm is supposed to hit New Hampshire today and “linger into Primary Tuesday.” GOP consultant Ron Kaufman said lower turnout should help candidates who have spent a lot of time in the state tending to retail politicking. Donald Trump “has acknowledged that he needs to step up his ground-game, and a heavy snowfall could depress his figures relative to more organized candidates.”

Source:
IN CASE OF EMERGENCY
A Shake-Up in the Offing in the Clinton Camp?
1 days ago
THE DETAILS

Anticipating a primary loss in New Hampshire on Tuesday, Hillary and Bill Clinton “are considering staffing and strategy changes” to their campaign. Sources tell Politico that the Clintons are likely to layer over top officials with experienced talent, rather than fire their staff en masse.

Source:
THE LAST ROUND OF NEW HAMPSHIRE POLLS
Trump Is Still Ahead, but Who’s in Second?
14 hours ago
THE LATEST

We may not be talking about New Hampshire primary polls for another three-and-a-half years, so here goes:

  • American Research Group’s tracking poll has Donald Trump in the lead with 30% support, followed by Marco Rubio and John Kasich tying for second place at 16%. On the Democratic side, Bernie Sanders leads Hillary Clinton 53%-41%.
  • The 7 News/UMass Lowell tracking poll has Trump way out front with 34%, followed by Rubio and Ted Cruz with 13% apiece. Among the Democrats, Sanders is in front 56%-40%.
  • A Gravis poll puts Trump ahead with 28%, followed by Kasich with 17% and Rubio with 15%.
IT’S ALL ABOUT SECOND PLACE
CNN Calls the Primary for Sanders and Trump
1 hours ago
THE LATEST

Well that didn’t take long. CNN has already declared Bernie Sanders and Donald Trump the winners of the New Hampshire primary, leaving the rest of the candidates to fight for the scraps. Five minutes later, the Associated Press echoed CNN’s call.

Source:
×