This Week in Healthcare Reform: January 8th, 2021

Big Pharma rings in the New Year by jacking up prices on hundreds of drugs – price increases that could result in the deaths of over a million Medicare beneficiaries; Medicaid expansion has been a lifeline for hospitals in the wake of coronavirus; and, a new study highlights how Medicare Advantage plans achieve better health outcomes than traditional Medicare.

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Week in Review

Rx Price Hikes: As they’ve done in previous years, pharmaceutical manufacturers welcomed the New Year by raising prices on nearly 600 drugs.  Those increases continued drugmakers’ annual tradition of price hikes executed each January (and, again, every summer).  While nearly all the increases were under 10 percent, the median price hike was still 4.8 percent.  Fully half of the price increases came from manufacturers like Pfizer, GlaxoSmithKline, and Sanofi.  Drugmakers have felt the impact of COVID-19, which saw doctor visits decrease, along with the demand for some drugs.  However, stakeholders are quick to remind everyone that, despite Big Pharma’s claims to the contrary, these price hikes aren’t connected to any improvements – in fact, according to at least one study, what they’re actually connected to is out-of-pocket costs going up, which, in turn, leads to an increase in cost-related non-adherence and worsening outcomes.

Medicare Deaths: On that note, a recent study projected that more than 1.1 million Medicare beneficiaries could die over the next decade as a result of no longer being able to afford their prescription medications.  According to the analysis, should the current trend in drug pricing continue, cost-related non-adherence to prescription drug treatments will result in 112,000 premature deaths of Medicare beneficiaries per year, making it the leading cause of death in the US – ahead of diabetes, influenza, and kidney disease.  Additionally, out-of-control drug prices will lead to worsening medical conditions, posing added expenses to the Medicare program of $18 billion a year, or more than $177 billion by 2030.  As researchers explain, patients failing to take their prescribed medicines is one of the biggest contributors to poor health and higher health care costs.  And, cost-related non-adherence is the direct result of runaway drug prices.

Medicaid Expansion: The initial disruption to health care utilization caused by the spread of coronavirus was particularly hard on providers, especially hospitals.  However, newly-published evidence suggests that that lost revenue might be more easily recovered for hospitals in states that have expanded their Medicaid programs.  According to researchers from the Urban Institute, uncompensated care costs as a share of total expenses declined by nearly 2 percentage points between 2013 and 2017 in expansion states.  For hospitals in non-expansion states, those costs actually went up half a percentage point.  To date, 38 states and the District of Columbia have expanded their Medicaid programs.  The findings reinforce data from last summer showing Medicaid expansion to be a key indicator of hospitals’ financial vulnerability.

Open Enrollment Closes: Ahead of open enrollment season, signs pointed to improved coverage options for consumers looking to shop on the Affordable Care Act’s (ACA) insurance exchange marketplaces.  However, despite the benefits of expanded insurance coverage, Americans still struggle with high health care costs, driven largely by trips to out-of-network facilities, such as emergency rooms.  Nevertheless, as open enrollment neared Wednesday’s deadline, the ACA’s popularity continued to climb, an increase perhaps reflected in the daily tally of consumers signing up for coverage, which was running about 14 percent ahead of last year’s pace, despite the lack of marketing and cuts to navigator programs helping steer consumers through their coverage options.

Medicare Advantage: Through an expanded focus on coordinated care, Medicare Advantage (MA) plans are able to connect beneficiaries to an integrated model of care that has proven to be increasingly popular with Medicare beneficiaries, some 35 percent of whom are currently enrolled in MA plans – and, those numbers are growing.  Having shown themselves to be a critical component of our larger response to COVID-19, more consumers chose Medicare Advantage in the most recent Medicare open enrollment period, citing the supplemental benefits offered by MA plans.  Now, a new study shows that Medicare Advantage achieves better health outcomes than Medicare for high-need, high-cost beneficiaries.  In several quality measures, such as preventive screenings and avoiding hospitalizations, MA outperforms traditional Medicare according to new research released by the Better Medicare Alliance last month.   The report goes on to tie key programmatic features of the Medicare Advantage program, like value-based care performance incentives, to MA plans’ ability to offer enhanced care management interventions to better meet the complex care needs of vulnerable beneficiaries in order to pursue more positive health outcomes.


Against the backdrop of the ongoing coronavirus health crisis, the new Congressional session got underway this past Sunday, just ahead of Tuesday’s runoff elections in Georgia, which ultimately determined the party makeup in the Senate.  While the pandemic will undoubtedly shape the legislative landscape for the foreseeable future, lawmakers also bring their own health care priorities to Washington.  Whether or not a path forward on those priorities can be found remains to be seen.  But, experts are quick to point out the health care trends that they believe will continue throughout 2021.

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Happy New Year!