Last Week in Healthcare Reform: 26 September 2022

A new analysis takes a comprehensive look at how hospital and provider consolidation is driving up
healthcare costs; Medicare spending on cancer drugs more than doubles in just four years; Medicare
Advantage is found to cost less than traditional Medicare; and, employer-provided health coverage
delivers critical mental health support.

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Item of the Week

Week in Review

Hospital Consolidation: It’s no secret that the excessive cost of healthcare in this country is driven primarily by the fact that we pay much higher prices for that care than people do in other countries.  As these prices have only gotten worse in recent years, there’s mounting evidence that healthcare consolidation – particularly among hospitals – is largely to blame.  As hospitals and large health systems have gobbled up smaller providers and independent physician practices, healthy competition, for all intents and purposes, has decreased with a corresponding uptick in monopolistic pricing.  A new report from Families USA digs deeper into how hospitals’ current business model – namely, generating profits by buying up smaller practices – has led to increased healthcare prices.  These higher prices result in more than $240 billion of waste annually and account for over one-quarter of overall wasteful spending generated by the U.S. healthcare system every year ($900 billion).  Not only are employers, families, and consumers left to bear the brunt of these price hikes, but the care they’re now paying increasingly more for isn’t leading to improved health outcomes.  In fact, despite hospitals and physician care accounting for half of all healthcare spending in this country, that care fails to provide the kinds of timely and effective interventions that save lives.  A separate poll underscores how the rising cost of care is affecting health, with nearly one-in-five Americans saying they’ve skipped a medical appointment or held off on filling a prescription during the past six months as a result of cost.

Medicare Rx Spending: A new study takes a look at the impact that rising prescription drug prices are having on patients.  Published in JAMA Network, researchers evaluated cancer drug spending in Medicare between 2016 and 2020 and found that the median annual oncology drug spend per Medicare patient more than doubled over that period.  Drilling further into the analysis, per-patient spending for Medicare Part B beneficiaries went from $9,325 in 2016 to $18,761 in 2020.  And, for beneficiaries enrolled in the Medicare Part D prescription drug program, per-patient spending jumped from $27,761 in 2016 to $52,016 in 2020.  Additionally, the proportion of Part B spending on oncology drugs skyrocketed during those years from 34 percent to 43 percent despite the proportion of Part B beneficiaries receiving oncology drugs remaining unchanged.

Medicare Advantage: As recently highlighted, with more than 29 million beneficiaries now enrolled in the program, Medicare Advantage (MA) is on pace to eclipse enrollment in traditional Fee-for-Service (FFS) Medicare in the next year.  A new study released last week points to the program’s ability to deliver better value for patients, consumers, and taxpayers as to why MA continues to be such an attractive option for eligible beneficiaries.  According to the analysis conducted by Wakely Consulting Group and AHIP, average spending in MA in 2019 was actually 7 percent less than FFS spending, even accounting for the additional benefits and services the program provides.  This translates into billions of dollars of savings for Americans.  Stakeholders seized upon the findings as further proof of how MA plans are able to deliver better services, better access to care, and better value.  For example, the MA program covers more racially diverse populations than FFS (32 percent compared to 21 percent).  Also, 40 percent of MA enrollees earn less than $25,000 a year.  And, beneficiaries enrolled in MA plans report higher rates of satisfaction than FFS enrollees.

Employer-Provided Coverage: Apart from exacting a heavy toll on overall well-being, the ongoing COVID public health crisis has drawn attention to the urgent and growing importance of connecting people to critical mental health supports.  In fact, a recent survey found that, nationwide, nearly one-third of adults in this country reported symptoms of anxiety or depression, up from 11 percent in 2019.  With more than half of all Americans currently receiving coverage through their jobs, employer-provided health plans have proven to be a vital lifeline.  And, more to the point, according to a recent analysis, 41 million people received mental health support through their employer-provided coverage as recently as 2020.  Additionally, by working with their health insurance plans, employers are able to provide access to additional services, such as the four-in-five employers offering employee assistance programs (EAP) as a benefit to support mental health, as well as assist with non-medical issues impacting their employees’ home and work lives.  

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