Talking Points: 23 October 2023

A quick roundup of the issues driving the healthcare reform conversation.

Item of the Week


MEDICARE ADVANTAGE Medicare Advantage reaches a new milestone ahead of open enrollment season.

Quick takeaway: With the annual enrollment period for enrollees to select their Medicare plan now underway, the Medicare Advantage (MA) program now covers more than half of all eligible beneficiaries.

Digging deeper: Enrollment in MA plans now stands at just over 31 million seniors and individuals with disabilities. 

One need only look at the growing body of research to get a sense of how comprehensively the MA program continues to distinguish itself from traditional Fee-for-Service (FFS) Medicare.  For instance, according to a recent white paper:

  • MA enrollees have more than 50 percent fewer inpatient hospital stays than FFS enrollees
  • MA enrollees visited emergency departments 22 percent fewer times than FFS enrollees
  • MA enrollees saw stable utilization in the first two years of the analysis compared to a 35 percent increase in utilization for FFS enrollees

What it means: Given the improved outcomes, it’s no wonder MA also enjoys extremely high satisfaction rates among beneficiaries, helped by the program’s ability to also save enrollees – and, the government – money.

HEALTHCARE COSTS The average cost of employer-sponsored healthcare coverage jumped 7 percent this year.

Quick takeaway: After a few years of relatively flat growth, inflation drove a steady uptick in healthcare prices in 2023, resulting in premiums for family coverage through an employer reaching nearly $24,000.

Digging deeper: According to the breakdown, workers on average contributed $6,575 towards the cost of covering their families, while employers kicked in $17,393. 

By comparison, wages grew 5.2 percent on average, while inflation rose 5.8 percent.

What it means: While inflation and labor costs are partly to blame for the increase, experts point to the impact of consolidation on overall healthcare costs – specifically, hospital mergers creating larger health systems with greater market power to extract higher prices in their negotiations with insurers.

HOSPITAL FINANCES Hospitals’ post-COVID finances continue to improve.

Quick takeaway: Rising revenue has helped stabilize the hospital industry’s financial performance and kept operating margins in positive territory.

Digging deeper: With patient care returning to pre-pandemic levels, hospitals’ fortunes continue to improve, helped along by improving labor expenses.

The data builds on six consecutive months of positive financial results, all pointing to a hospital sector well on the road to recovery.

What it means: Against this backdrop, a recent study further questions the necessity of COVID relief funding for the industry. 

According to that analysis, during the first two years of the coronavirus pandemic 3 out of 4 hospitals included in the nationwide study reported net positive operating incomes, with COVID relief funds playing a role in helping hospitals’ net operating margins achieve all-time highs. 

Additionally, although many hospitals received relief funds, only 16 percent of facilities experienced financial distress during the pandemic, leading researchers to believe that those funds “may not have been necessary.”

Rx VALUE Combatting high drug prices requires all the tools in stakeholders’ toolboxes.

Quick takeaway: Performance-based payment is an important tool used by pharmacy benefit managers (PBMs) to get better value from Big Pharma on behalf of consumers and employers.

Digging deeper: With Congress considering proposals that would limit the contracting tools employers depend on their PBMs leveraging in their negotiations with drug manufacturers, experts are cautioning lawmakers that such an approach would, in fact, lead to higher costs.

“Policies that eliminate performance-based payment move the PBM market back towards a fee-for-service system, increasing costs across the healthcare system,” writes policy expert, Joe Grogan.


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