Posts Tagged ‘Big Pharma’

Medicare Advantage Premiums to Fall Four Percent in 2012

Tuesday, October 4th, 2011

The Obama administration’s announcement that Medicare Advantage insurance plans premiums will decline in 2012, at a time when enrollment is expected to rise, is good news for the leading health insurers in that segment.  Wall Street analyst Ana Gupte said that the announcement suggests strengthening support in the administration for the privately-run versions of the government’s Medicare program, which covers the elderly and disabled.  Medicare Advantage plans offer basic Medicare coverage with extras like vision or dental coverage oratremiums lower than standard Medicare rates.  Health and Human Services Secretary Kathleen Sebelius said that Medicare Advantage premiums will average four percent less in 2012, and insurers running the plans believe that enrollment will rise by 10 percent.  “Overall, we were very encouraged by the announcement and see this as reinforcing our bullish thesis on the Medicare Advantage and (prescription drug coverage) segments,” according to Gupte.

It’s highly unusual to see healthcare insurance premiums falling. Reduced premiums and growing enrollment are the opposite of what insurers and Republicans predicted would happen to Medicare Advantage after the passage of the Patient Protection and Affordable Care Act (ACA).  The ACA cut payments to fee-for-service Medicare Advantage plans by about $136 billion over the next 10 tears.  Right before the law passed, American’s Health Insurance Plans predicted that “millions of seniors in Medicare Advantage will lose their coverage, and millions more will face higher premiums and reduced benefits.”  So what accounts for the drop?  The decrease in premiums doesn’t have a lot to do with policy decisions made in the ACA.  It’s three outside factors that are putting downward pressure on Medicare.  One is that Medicare costs are growing more slowly.  Both in Medicare and in private insurance, the recession has seen patients using fewer medical services.  This looks to be especially true in Medicare, where seniors might have more limited resources because they tend to live on a fixed income.  The latest S&P Healthcare Economic Indices data indicates that Medicare spending appears to be rising at a slower rate than just a few years ago.

Jonathan Blum, director of the Centers for Medicare and Medicaid Services (CMS) Center for Medicare, said the more affordable costs and growth forecasts demonstrate that companies are still interested in offering such plans despite new consumer protections under the healthcare law and payment caps to insurers.  According to Blum, “We can say with complete accuracy that despite projections in 2010 that the program will decline, the program has grown and will continue to grow.  The plans have made a very strong statement that they intend to commit to the program.  Plans that do a better job serving the needs of their Medicare members should be rewarded and all plans should be encouraged to improve their performance.” 

Healthcare insurers warned that seniors can expect more costs and receive fewer benefits from their Medicare Advantage plans after payment cuts take effect.  They point to projections from the Congressional Budget Office, which predicted Medicare Advantage enrollment would fall to just 7.8 million participants in 2019.  “Medicare Advantage plans remain committed to the program and are doing everything they can to preserve benefits and keep coverage as affordable and possible for beneficiaries,” said Robert Zirkelbach of America’s Health Insurance Plans (AHIP).  “However, as these cuts take effect in the coming years, Medicare Advantage beneficiaries will face higher out-of-pocket costs, reduced benefits, and fewer health care choices.”  The group and its insurer members, who opposed many of the healthcare reforms before they passed, are now committed to implementing the law.

“Many people raised fears that under the Affordable Care Act, beneficiaries would see their Medicare Advantage options shrink and their premiums rise,” Sebelius said.  “Instead, we have seen just the opposite.”

Some in the industry are looking at other ways to bring Medicare costs down.  According to the Fierce Pharma website, “Healthcare industry leaders are poised to make their own deficit-reduction suggestions — including some that might not win them points in a popularity contest.  Uncertain what budget cuts the deficit-reduction committee might propose, the Healthcare Leadership Council has come up with its own proposal that would ask Medicare beneficiaries to endure more belt-tightening themselves.  The group is aiming to put forward an alternative more palatable than across-the-board Medicare cuts mandated by the deficit-reduction bill if the “supercommittee” doesn’t agree on its own plan.  And it’s betting that its proposal will be easier to bear than budget-cutting ideas floated in the past, such as drug re-importation.  The council, which includes Big Pharma executives, hospital companies and insurers, crafted a plan that would raise the Medicare-eligibility age little by little to 67 from 65, beginning in 2014. It would hike co-pays and deductibles.  It would require well-off seniors to pay higher premiums.  And it would add private-sector competition to traditional Medicare coverage, pitting government-subsidized private insurance plans against regular Medicare.  Requiring seniors to pay more might be considered a non-starter; after all, consumer groups, particularly AARP, have vociferously fought against such moves in the past.  But the council figures that provider-based Medicare cuts will end up costing beneficiaries when all is said and done.  ‘This thinking that we’re protecting beneficiaries because we’re only cutting providers — that’s mythical,’ said Mary Grealy, the council’s president.”

Healthcare Lobbyists Busy on Capitol Hill

Thursday, April 7th, 2011

Even though the Patient Protection and Affordable Care Act (ACA) is the law of the land, the healthcare lobby is alive and well. Various federal agencies are working on full implementation of the law in 2014.  And with legislative tweaks and efforts to defund the law underway, lobbying on healthcare is ongoing.  So far, more than 180 groups have registered to continue shaping the law, according to the Sunlight Foundation.

Ever since President Barack Obama began the long journey to reform, healthcare lobbyists went into high gear.  During 2009 and 2010, $1.06 billion was spent on lobbying; more than $500 million was spent lobbying the legislation in each year, according to a report from the Center for Responsive Politics. Lobbyists for 1,251 organizations worked on healthcare reform in 2009 and 2010, according to the Sunlight Foundation.  Individual lobbyists who reported working on health related legislation totaled 3,154 in 2010, with Big Pharma topping the list.  The Pharmaceutical Research and Manufacturers of America spent $22 million and employs 52 lobbyists.  Political donors with ties to the healthcare sector raised $137 million for federal candidates in the 2010 elections.  That is $30 million less than that sector raised during the 2008 presidential race.

Barbara Kennelley, a former Congresswoman and current President and CEO of the National Committee to Preserve Social Security and Medicare, notes that lobbyists tried to raise an alarm among senior citizens about how the law might impact Medicare. “When the Affordable Care Act became law last March, critics predicted doom for the seniors and people with disabilities who rely on Medicare.  They said that coverage would disappear, benefits would be cut, and death panels were on their way – none of which was true.  But these lies scared many seniors about the law before it was explained to them.  Now, one year later, as the implementation of the law moves forward, Medicare is still sound – it’s stronger than it was before the law was passed – and millions of people with Medicare are benefitting from the law.”

Medicare has cracked down hard on waste, fraud, and abuse.  The Obama administration last year recovered $4 billion in Medicare fraud.  Additionally, the Affordable Care Act provides tools to crack down even further, specifically saying that Medicare’s guaranteed benefits – hospital care, doctors’ services, home health services, drug coverage, etc. – are protected.  “Benefits are as good as ever – better, in fact, Kennelly said.  “Prescription drugs are more affordable.  This year the nearly four million beneficiaries who fall into the prescription drug ‘doughnut hole’ will receive discounts on their drugs.  These discounts will increase over the next few years until the doughnut hole is closed.”

It’s now 2011 and the lobbying is still going full steam ahead. So far this year, more than 180 firms have registered to lobby for new clients on healthcare issues, 16 of which disclosed the Affordable Care Act as a specific lobbying interest, according to Sunlight’s Lobbying Registration Tracker.

The Obama administration is frustrated that the battle against healthcare reform hasn’t ended. “There still is a lot of intentional misinformation by opponents that continues to be repeated,” said Kathleen Sebelius, Department of Health and Human Services Secretary.  Agriculture Secretary Tom Vilsack agrees with Sebelius and believes that perceptions of the law are shifting as the benefits are implemented.  Vilsack noted that as farmers and small businesses file their 2010 tax returns, they are seeing a tax credit for small businesses of up to 35 percent for premiums paid on health insurance for employees.  “I think the acceptance of this and the awareness of this is going to grow substantially,” Vilsack said.