For seniors, big changes coming with federal health coverage plans

cardmedicare-300x194Editor’s note: The blog will shift in ’23 to more episodic publication.

Just a reminder: 2023 will begin what could be consequential changes in aspects of older Americans, notably those age 65-plus and covered by Medicare.

As part of law of the Inflation Reduction Act passed by Democrats in the Congress and pushed by the Biden Administration, diabetics on original Medicare will see their cost for lifesaving insulin capped at $35-a-month under Part-D prescription drug plans. As the official Medicare site reports:

“Plans can’t charge you more than $35 for a one-month supply of each Medicare Part D-covered insulin you take and can’t charge you a deductible for insulin. Because this is a brand-new benefit, the new $35 cap may not be reflected in your estimated total costs when you review and compare plans. Your costs can’t be more than $35 for each month’s supply of each covered insulin. For example, if you get a 60-day supply of a Part D-covered insulin, you’ll generally pay no more than $70. Starting July 1, 2023, similar caps on costs will apply for insulin used in traditional insulin pumps (covered by Medicare Part B).”

The savings that the insulin-reliant will pocket will be significant, the nonpartisan, independent Kaiser Family Foundation has found, reporting:

“Aggregate out-of-pocket spending by people with Medicare Part D for insulin products quadrupled between 2007 to 2020, increasing from $236 million to $1.03 billion. The number of Medicare Part D enrollees using insulin doubled over these years, from 1.6 million to 3.3 million beneficiaries … Among Medicare Part D insulin users who do not receive low-income subsidies, average out-of-pocket costs per prescription across all insulin products was $54 in 2020 – over 50% more than the proposed $35 monthly copay cap for insulin. The $54 per-prescription average in 2020 is an increase of 39% since 2007 … Some Part D insulin users spent considerably more than the average in 2020. For example, 10% of … insulin users [not receiving low-income subsidies] spent more than $1,300 on insulin in 2020 and 1% spent more than $2,300. Higher-than-average out-of-pocket spending is due to a greater number of prescription fills for insulin products and higher out-of-pocket costs per insulin prescription. In other words, taking more than one insulin product and taking more expensive formulations leads to higher out-of-pocket costs.”

Though lawmakers considered Democratic proposals to cap insulin costs for all users, not just those on Medicare, Republicans killed those plans, maintaining the GOP’s almost theocratic opposition to federal roles in U.S. health care.

The battle to constrain Big Pharma’s rapacious cost increases turned in 2022 to ferocious arguments over insulin. Its users have besieged lawmakers, complaining that high prices force them to forgo or ration a lifesaving medication they must take. Patients say that affording insulin can mean they must skimp on other basic, necessary expenses. The drug’s soaring costs, critics argued, are indefensible as the basic product has changed little, though Big Pharma keeps making tweaks so as to extend intellectual property protections and jack up prices on insulin. As NPR reported:

“Leading manufacturers have increased [insulin] prices by more than 600% over the last 20 years.”

The sky-high cost of insulin especially outrages patients, their loved ones, doctors, and public policy advocates because the medical scientists who originally discovered the drug and its giant benefits for diabetics declined to benefit financially from their pioneering research, arguing that the drug should be made as widely available as possible at negligible cost to help as many people as possible.

More cost savings ahead for older Americans

Insulin, of course, was not the only high and dubious health care cost that congressional Democrats and the administration took on in 2022:

  • Big Pharma already is waging fierce behind-the-scenes combat over a part of the inflation act that allows Medicare officials for the first time to deploy the enormous clout of the federal government to negotiate the cost of a handful of prescription medications, with the number of drugs affected to increase over time. This is supposed to begin in 2024. Advocates say giving Medicare this bargaining power will result in significant savings for taxpayers and those who take the potentially cheaper meds. Critics say this also could drive down drug costs for many more consumers beyond those covered by Medicare. Big Pharma hates this concept, saying it will stymie innovation and could treat the industry unfairly. Republicans also sought to kill this plan.
  • In 2024, the government also will cap altogether the sums that Medicare-covered seniors will pay for prescription medications. As the Kaiser Family Foundation explains: “The Inflation Reduction Act amends the design of the Part D benefit. For 2024, the law eliminates the 5% beneficiary coinsurance requirement above the catastrophic coverage threshold, effectively capping out-of-pocket costs at approximately $3,250 that year. Beginning in 2025, the legislation adds a hard cap on out-of-pocket spending of $2,000, indexed in future years to the rate of increase in per capita Part D costs.”

The saving to seniors of these changes also will be sizable, KFF reports:

“Based on our analysis, 1.4 million Part D enrollees incurred annual out-of-pocket costs for their medications above $2,000 in 2020, averaging $3,355 per person. This estimate includes 1.3 million enrollees who had spending above the catastrophic coverage threshold (which equaled roughly $2,700 in out-of-pocket costs that year for brand-name drugs alone). These estimates are a conservative measure of how many beneficiaries will be helped … Based on their average out-of-pocket spending, these 1.4 million Part D enrollees would have saved $1,355, or 40% of their annual out-of-pocket costs, on average, if a $2,000 cap had been in place in 2020.

“Part D enrollees with higher-than-average out-of-pocket costs will save substantial amounts with a $2,000 out-of-pocket spending cap. For example, the top 10% of beneficiaries (145,000 enrollees) with average out-of-pocket costs for their medications above $2,000 in 2020 – who spent at least $5,567 – would have saved $3,567 (64%) in out-of-pocket costs with a $2,000 cap. Capping out-of-pocket drug spending under Medicare Part D will be especially helpful for beneficiaries who take high-priced drugs for conditions such as cancer or multiple sclerosis. For example, in 2020, among Part D enrollees without low-income subsidies, average annual out-of-pocket spending for the cancer drug Revlimid was $6,200 (used by 33,000 beneficiaries); $5,700 for the cancer drug Imbruvica (used by 21,000 beneficiaries); and $4,100 for the MS drug Avonex (used by 2,000 beneficiaries).”

Those familiar with public insurance programs for seniors will know that different varieties of Medicare Advantage deal with prescription drug coverage differently that does “original” Medicare, and much of the discussion about medication savings may not affect participants in the increasingly popular, newer programs.

A crackdown on Medicare Advantage plans

Consumer complaints about the advantage programs have increased significantly and the Centers for Medicare and Medicaid Services (CMS) announced late in ’22 a planned crackdown in response. As the New York Times reported:

“Federal health officials are proposing an extensive set of tougher rules governing private Medicare Advantage health plans, in response to wide-scale complaints that too many patients’ medical claims have been wrongly denied and that marketing of the plans is deceptive. Medicare Advantage is the private-sector alternative to the federal program covering those 65 and over and the disabled. By next year, more than half of Medicare recipients are expected to be enrolled in private plans. These policies are often less expensive than traditional Medicare and sometimes offer attractive, additional benefits like dental care. Despite their popularity, the plans have been the subject of considerable scrutiny and criticism lately. A recent report by the inspector general of the U.S. Department of Health and Human Services found that several plans might be inappropriately denying care to patients. And nearly every large insurance company in the program, including UnitedHealth Group, Elevance Health, Kaiser Permanente and Cigna, has been sued by the Justice Department for fraudulently overcharging the government. The period leading up to this year’s enrollment deadline, Dec. 7, amplified widespread criticism about the deceptive tactics some brokers and insurers had used to entice people to switch plans. In November, Senate Democrats issued a scathing report detailing some of the worst practices, including ads that appeared to represent federal agencies and ubiquitous television commercials featuring celebrities.”

In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to access and afford safe, efficient, and excellent health care. This has become an ordeal due to the skyrocketing cost, complexity, and uncertainty of treatments and prescription medications, too many of which turn out to be dangerous drugs.

We’ll need to see the outcomes of proposed federal action on insulin costs, seniors’ overall prescription drug expenses, Medicare’s medication negotiations with Big Pharma, and tougher oversight of Medicare Advantage programs. Further changes may be needed. But credit is due to lawmakers who heed the outcry from their constituents and pass bills that aim to make regular folks’ lives better and more affordable. Voters need to keep this mind as the country rumbles inevitably toward the next presidential campaign and tussling over control of the House, Senate, and statehouses from coast to coast.

We have much work to do to ensure that, in the wealthiest nation on the planet, health care is a right, not a privilege for a wealthy few. Many more Americans beyond our vulnerable seniors need more protection from Big Pharma profiteering and we need to see Congress and the White House provide this.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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