With millions sickened by COVID-19 and a national economic slowdown damaging state budgets and household finances, health care affordability has become a central concern for families, employers and taxpayers.
President-Elect Joe Biden has pledged to address some of the key drivers of high costs — prescription drug prices, for example — but a sharply divided Senate may stand in the way of more aggressive reforms.
State policymakers, meanwhile, are pressing forward with measures to make health care more affordable and accessible — but they too may face barriers amid state budgetary pressures and the demands of a sweeping pandemic response.
As we kick off 2021, here are the five health care policies that the Arnold Ventures health care team is keeping an eye on in a year pivotal to health care reform.
#1 Lowering Drug Prices
Despite bipartisan support for reforms that lower the price of prescription drugs, Congress was gridlocked on a legislative solution.
Democrats have rallied behind a bill that would give Medicare the ability to negotiate drug prices — which has successfully slashed drug prices in other nations — while the Trump administration finalized a policy often referred to as “most favored nation” that would tie the price of certain expensive prescription drugs to the lower prices paid abroad in other high-income countries. The Trump rule was recently challenged and implementation has been blocked by the courts.
This year, we are paying attention to whether legislative bipartisan solutions stalled last year can pass the new Congress, including redesigning the Medicare Part D program to cap out-of-pocket spending for beneficiaries and shift more responsibility for high drug costs from taxpayers to drug manufacturers and Part D plans, for example. Analysis has shown that Medicare’s complex cost-sharing and manufacturer discounts has tilted the scales in favor of expensive, specialty drugs over lower-cost generics, a distortion that explains in part why Medicare drug spending continues to increase.
We’re also watching attempts to implement an inflation rebate that penalizes pharmaceutical manufacturers for list prices that grow faster than the national inflation rate. It’s an idea that has been embraced both by Democrats and Republicans, and we’re hopeful that it will get resurfaced in 2021 as lawmakers get serious about lowering drug prices.
There is tremendous potential for savings with an inflation rebate in Medicare Parts B and D for drugs. Between 2006 and 2017, list prices for more than 100 chronic-use, brand-name drugs increased cumulatively by 214 percent relative to the inflation rate in the U.S. economy. An inflation rebate in Medicare could generate $82 billion in savings over 10 years, according to a 2020 analysis by the Congressional Budget Office.
#2 Medicare Sustainability
Prior to the pandemic, the Medicare hospital trust fund was headed toward insolvency by 2026 — however, that insolvency date has been hastened to 2024 largely because of declines in payroll tax revenue as millions have lost their jobs or had their hours reduced.
Congress must take action soon to shore up the trust fund.
Potential ideas include reducing excessive Medicare payments — such as for post-acute and Medicare Advantage plans — and raising additional revenue to put the Medicare program on a more sustainable fiscal path.
#3 Public Option
President-Elect Biden has vocally supported allowing people to opt into a newly created “public option” health plan that could constrain costs and expand coverage. However, he’ll need the approval of a Congressional majority, which could prove difficult given Democrat’s slim Senate majority.
However, several states are pursuing public options or have expressed interest in the concept, which the Biden Administration could encourage using their administrative waiver authority. Washington State, the first state to offer a public option, hosted its first open enrollment in fall 2020. Other states are considering similar policies, such as Colorado, Connecticut, and New Mexico.
#4 Integrated Care for Dual-Eligibles
Among those hardest hit by COVID-19 than dual-eligible beneficiaries, the 12 million people across the United States who qualify for both Medicaid and Medicare and tend to have some of the most complex care needs.
Even before 2020, people who are dual-eligible faced challenges navigating the health care system and obtaining needed care, and as a result, they tended to experience poorer health and worse outcomes than the Medicare-only population. The pandemic only deepened these inequities.
In response, policymakers, researchers, and advocates are seeking solutions to better care for dual-eligible individuals and improve their outcomes. The body of evidence is still growing, but one potential solution calls for integrating care between federally run Medicare and state-operated Medicaid.
These two programs do not always work together, and as a result, people who are dually enrolled in both are forced to navigate between two coverage systems while providers must work through two separate bureaucracies to receive services.
In order to fix this disjointed system and misaligned incentive structure, policymakers should increase the degree of integration between the two programs, increase enrollment in integrated coverage options and ensure that dual-eligible individuals are getting the mix of services that maximizes their health and makes the best use of limited public dollars.
#5 Tackling Anticompetitive Behavior
From pharmaceutical patent abuses to monopolistic business practices by some large hospital systems, consumers’ health care costs have been increased by a range of anti-competitive behaviors across the sector that have made health care less affordable and less accessible.
For example, generic drugs have been shown to put significant downward pressure on prescription drug prices, yet brand-name pharmaceutical manufacturers frequently – and fervently — work to block them from coming to market.
To thwart competition and maintain high prices for brand-name drugs, pharmaceutical companies have deployed a number of tactics, including “evergreening” — artificially sustaining a monopoly for years by extending patent protection — suing generic competitors and offering them incentives to drop their patent challenges and delay market entry; and filing frivolous citizen’s petitions.
Congress and the administration have several avenues to reform the system and inject more competition, including imposing restrictions on the number of patents drug manufacturers can defend in court, limiting the patentability of low-value patents that are not innovative, and implementing new rules at the Patent and Trademark Office to restore and improve the administrative review process for patent approvals.
Meanwhile, federal and state regulators and policymakers have indicated a growing interest in more closely scrutinizing anticompetitive practices in the nation’s hospital industry amid a rash of mergers and acquisitions that has reshaped the health landscape into a more consolidated and expensive system.
Interest in tackling anticompetitive hospital business practices has only increased further in the aftermath of California’s landmark case against Sutter Health System, which agreed to settle accusations that it wielded its market dominance to drive up the prices people pay for health care. The California Attorney General Xavier Becerra who was among the group that brought the case against Sutter has been tapped by Biden to serve as the next Health and Human Services Secretary.
As states eye ways to slow health care cost growth, we will also be paying attention to policies that give state regulators more authority to evaluate and act on transactions that would reduce the competitiveness of health care markets.