Ediror's Note:
The following clipping is illustrative of one of the most damaging characteristics of the heavy reliance on market forces in the American health care system. This dispute over money involving two of the largest healthcare entities in Maine is sometimes characterized by some as being an example of "market failure". I disagree. I believe it is illustrative of how markets in health care work. The only unusual factor in this instance of conflict among these two powerful "stakeholders" is that it was unusually public - so much so that it drew the Governor and Legislature into the fight. It was a rare glimpse of the market at work - this time the "stakeholders" (Anthem and Maine Health), getting caught using patients (another "stakeholder" in the perverse world of the use of market ideology in health care as bargaining chips.
It makes me wonder what the benefits using markets in healthcare bring to the table that justify the use of markets and competition among hospitals and insurance companies to control costs, improve access and quality to health care - the stated objectives of market theology are.
I can't think of any.
We need to replace our market-based system of choice among competing entities with one based on patient welfare and cooperation instead.
- SPC
MaineHealth and Anthem settle long-running contract dispute
by Joe Lawlor - Portland Press Herald - August 17, 2022
Maine’s two health care heavyweights, MaineHealth and Anthem, have settled a long-running contract dispute that threatened to upend health markets in the state.
Patients with Anthem health insurance will continue to receive in-network care at Maine Medical Center in Portland after the state’s biggest insurer and largest hospital network signed a two-year contract, according to statements released Wednesday evening by both parties. Had the agreement not been signed, Maine Med would have been out-of-network for Anthem patients starting in January, forcing tens of thousands of Mainers to pay higher fees to the hospital or find other medical providers.
“MaineHealth has an unwavering focus on our patients and their families in order to deliver on our vision of working together so our communities are the healthiest in America,” Dr. Andy Mueller, CEO of MaineHealth, said in a written statement. “Our agreement with Anthem provides both of us with the opportunity to reaffirm our relationship as we work to improve the health and well-being of our communities.”
MaineHealth had threatened to remove Maine Med from Anthem’s network, starting in January, over financial disagreements. Maine Med is the largest hospital in MaineHealth’s statewide network.
Anthem is the largest insurer in Maine, with 300,000 members statewide, representing 54 percent of Maine’s health insurance market. Anthem’s parent company, Indianapolis-based Elevance Health, is one of the nation’s largest health insurance companies, providing Anthem Blue Cross and Blue Shield plans in 14 states, including Maine.
About 150,000 Maine Med patients have used Anthem insurance in recent years. If Maine Med had no longer been in-network for Anthem members, it could have caused major disruptions in the health care market in the state. Some patients would have had to seek services at other hospitals, or been socked with expensive out-of-network charges to receive care at the Portland hospital.
PUBLIC NATURE OF DISPUTE UNUSUAL
“The agreement is a good thing for the people of Maine because it means (Anthem members) will continue to have all the varied and qualified experts available to them at Maine Med,” said Mitchell Stein, an independent health policy consultant.
“But it is unfortunate that it took this public back-and-forth. I know people were concerned they would have to switch providers or insurance. All these things can be very disruptive and disrupt care, so at the end of the day it’s very positive that they’ve reached an agreement.”
Stein said the public nature of the negotiations between MaineHealth and Anthem was unusual and highlight what is usually a behind-the-scenes process. “While this directly only impacts the Anthem network, it is reflective of the whole healthcare marketplace that these negotiations are always taking place between insurance companies and provider groups,” he said. “The constant back-and-forth with all this does mean networks aren’t constant and things can end up changing for people all the time.”
In the case of Anthem and MaineHealth, the dispute was over money: MaineHealth says Anthem has been denying full payments for services from MaineHealth’s providers, while Anthem said the health care organization is overcharging, particularly for medications.
MaineHealth accused Anthem of shortchanging its health care providers by denying payments for services rendered. Anthem said MaineHealth routinely overcharges for medications. Both sides provided examples, such as Maine Med charging $136 for a $2 bag of saline solution, and Anthem only agreeing to pay for one of two heart stent procedures performed on the same patient in the same day.
MaineHealth announced the contract impasse in April, and the two sides traded barbs over the spring and summer, but there were signs that negotiations were bearing fruit in early August.
Gov. Janet Mills, who had encouraged the sides to come to terms, welcomed the announcement that an agreement had been reached.
“I am pleased that both parties were able to resolve their differences, as I urged, to avert such a drastic and damaging move,” Mills said in an email Wednesday night.
SOME FALLOUT
Contract disputes between hospital networks and Elevance Health have played out in Indiana, Georgia, California, Virginia, Colorado, New York, Nevada, Ohio and Connecticut in recent years.
While disputes like the one between Anthem and MaineHealth are fairly common, only a handful have resulted in a major hospital actually withdrawing from an insurer’s network. And in most cases where that did happen, the disputes were typically settled fairly quickly and the insurers retroactively classified the hospitals as in-network so patients didn’t have to pay higher out-of-network fees for care they received during the dispute.
However, there has been some fallout from disputes with Anthem in Maine. Fore River Urology in South Portland announced in May that it was leaving the Anthem insurance network starting on Aug. 1. The move affects about 10,000 patients who have an Anthem plan, Fore River said. The independent health care provider said in its letter that Anthem has proposed reimbursement rates that would not cover the cost of providing care.
https://www.pressherald.com/2022/08/17/mainehealth-and-anthem-settle-contract-dispute/
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For Older Americans, Health Bill Will Bring Savings and ‘Peace of Mind’Starting in 2025, Medicare recipients with prescription drug coverage will not have to pay more than $2,000 annually for medications, a significant savings for some. by Sheryl Gay Stolberg and Noah Weiland - NYT - August 10, 2022 WASHINGTON — After Pete Spring was diagnosed with dementia in 2016, he and his wife emptied their checking account in part to pay for his prescription drugs, then ran through $60,000 in pension payments before resorting to a charge card to help make sure Mr. Spring had the heart and Alzheimer’s medications he needed to survive — just two of the 11 drugs he took. Mr. Spring, of Marietta, Ga., died in April, before the unveiling of the tax, climate and health bill that the Senate passed over the weekend. The measure aims to lower the cost of prescription drugs for people on Medicare, like him; his wife, Gretchen Van Zile, has been left to look back on what felt like an outrageous injustice. “Here seniors are in their golden years,” said Ms. Van Zile, 74, “and the only people seeing gold are the pharmaceutical companies.” Nearly 49 million people, most of them older Americans, get prescription drug coverage through Medicare, yet many find that it does not go very far. Low-income people qualify for government subsidies, so those in the middle class — people like Mr. Spring and Ms. Van Zile — are hit hardest by high drug costs. The Senate bill, which the House is expected to pass on Friday, then send to President Biden’s desk, could save many Medicare beneficiaries hundreds, if not thousands of dollars a year. Its best-known provision would empower Medicare to negotiate prices with drug makers with the goal of driving down costs — a move the pharmaceutical industry has fought for years, and one that experts said would help lower costs for beneficiaries. But the legislation would also take more direct steps to keep money in people’s pocketbooks, though they would be phased in over time. Beginning next year, insulin co-payments for Medicare recipients would be capped at $35 a month. As of 2024, those with costs high enough to qualify for the program’s “catastrophic coverage” benefit would no longer have to pick up 5 percent of the cost of every prescription. And starting in 2025, out-of-pocket costs for prescription medicines would be capped at $2,000 annually. “This is a huge policy change and one that has been a long time coming,” said Dr. Stacie Dusetzina, an associate professor of health policy at Vanderbilt University. “For people needing high-cost drugs, this will provide significant financial relief.” Perhaps no drug has been talked about as much as insulin, the diabetes medication that is more than 100 years old. Prices for insulin and its analogues have risen so fast that many diabetes patients who rely on the drug put themselves at risk by taking less than is prescribed to cut costs. A 2020 commentary in the medical journal Mayo Clinic Proceedings reported that one vial of Humalog, a commonly prescribed insulin analogue, cost $21 in 1999 and $332 in 2019 — an increase of well over 1,000 percent. (Amid congressional scrutiny, the drug’s maker, Eli Lilly, promised in 2019 to market a lower-cost generic.) More than three million Medicare beneficiaries take one of the 42 different types of insulin that are covered by Medicare, according to an estimate by the Kaiser Family Foundation, which found that the average out-of-pocket cost is $54 a month. But for some people, the costs are much higher. Evelyn Polay, 82, of Merrick, N.Y., spends more than $1,200 every three months on four different diabetes medicines, including Humalog and another type of injectable insulin, which she has been taking for about 30 years. She still works as a part-time bookkeeper and counts herself as fortunate. “It’s not a question of do I eat or do I take my medicine,” she said. But she worries about other people, including her own grandchildren, three of whom also have diabetes. Democrats tried to apply the bill’s proposed $35 co-payment to all insulin prescriptions, including those covered by private insurers. But Republican senators forced the removal of that language — even though seven of them wanted to keep it in the bill. To hear the voices of older Americans who confront high drug costs month in and month out is to hear fear and worry, anger and stress. Many say they are figuring out how to get by, skipping vacations and other niceties for which they saved. For Kim Armbruster, 65, who recently retired after a 40-year nursing career, keeping down the costs of her medications for diabetes, psoriatic arthritis and Graves’ disease, an autoimmune disorder affecting the thyroid, has been a scramble since she started on Medicare in March. Ms. Armbruster, of Cary, Ill., said she had saved extra insulin from prescriptions filled when she had commercial insurance, enough to keep costs down before a monthly cap kicks in. But her other conditions have caused immense financial strain. By June, she had reached Medicare’s threshold for catastrophic coverage after paying more than $7,000 for Enbrel, a drug she takes for the arthritis; Synthroid, which she takes for Graves’ disease; Eliquis, for atrial fibrillation, insulin and her insulin pump. “It’s all about thinking ahead, looking for alternatives and strategizing the home budget to be able to take the necessary meds,” she said. Learning to keep up with costs, she added, had been like “baptism by fire, to learn everything I can possibly learn about it to maneuver drug costs and stay healthy without complications.” The carousel of medications taken by Mr. Spring, the dementia patient who died in April, included eye-popping price tags for drugs including Eliquis, for a heart condition, and Namenda, an Alzheimer’s drug. Mr. Spring also took an antidepressant and medications to dull the side effects from Namenda. Those drugs ran the couple around $1,000 a month. Had the $2,000 annual out-of-pocket cap been in place when her husband was alive, Ms. Van Zile said, they would have reached it by March every year. Ms. Van Zile retired from her job working for Fulton County in Georgia so that she could take care of her husband, further cramping their savings. “His sense of humor put a smile on my face every day,” she said. “The bitter aspect of it was the financial stress.” Democrats have been promising for years to lower the cost of prescription drugs. So have some Republicans, including former President Donald J. Trump. But the Senate bill passed along party lines, without any Republican votes. In the 50-50 Senate, Vice President Kamala Harris broke the tie vote. Republicans, and the pharmaceutical industry, insist that the measure will stifle innovation and reverse progress on therapies and treatments, including those for cancer care — a high priority for Mr. Biden. The industry’s main trade group, PhRMA, says the bill, which imposes stiff penalties on companies that refuse to negotiate, amounts to government price setting — not negotiation. At a media briefing last month, Stephen J. Ubl, the chief executive of PhRMA, warned that Democrats were “about to make a historic mistake that will devastate patients desperate for new cures.” But backers of the measure say new treatments are meaningless if patients can’t afford them. The promise of Medicare, enacted in 1965, has always been that it would take care of older Americans. The prescription drug benefit was not added until 2003. It includes the provision for catastrophic coverage, in which the government picks up the full cost of medicines — except for 5 percent, paid by the patient — after an individual spends $7,050 a year out of pocket. The Kaiser Family Foundation says that 1.3 million Medicare beneficiaries hit the catastrophic threshold each year; 1.4 million have out-of-pocket costs of $2,000 or more. “You rarely hear people complain about turning age 65 and going on Medicare; it’s often a relief,” said Larry Levitt, the foundation’s executive vice president for health policy. “But the way Medicare now works, there can be some nasty surprises for people with very high drug expenses, and this bill will provide a lot of relief.” A study conducted by Dr. Dusetzina highlighted how the middle class gets squeezed. She examined 17,076 new prescriptions issued between 2012 and 2018 for Part D beneficiaries, and found that those receiving subsidies were nearly twice as likely to obtain the prescribed drug within 90 days as those without subsidies. Among those who did not qualify for subsidies, 30 percent of all prescriptions for cancer drugs went unfilled, as did more than 50 percent of prescriptions to treat immune system disorders or high cholesterol. Patti Kellerhouse, a 64-year-old in Henderson, Nev., was diagnosed with metastatic breast cancer in 2017 that had spread to her liver. On long-term disability through her employer, she had paid $10 a month out of pocket for the oral cancer treatment she needed. But when she transitioned to a Medicare Advantage plan, the medication cost more than $3,100 for the first month. While she has been able to afford the price jump, it has stressed her financial planning. She is saving money for a new car, among other things. She said she has daughters and grandchildren whom she would like to continue supporting. Many Americans make tough choices about whether to continue taking drugs they need. Bob Miller, a 71 year-old multiple sclerosis patient in Prior Lake, Minn., is among them. Every other day for 12 years, Mr. Miller took Betaseron, a brand-name prescription drug that can delay the progression of his disease by staving off flare-ups of numbness, muscle stiffness and other symptoms that can leave patients worse off than they were before. But the drug was expensive; even with his Medicare insurance, it cost more than $10,000 a year. So he quit taking the drug in 2016 after consulting with his doctors, who told him he could “roll the dice” and survive without it — at least for the time being. Since then, he has lived with the unsettling worry that he is gambling with his own health. “In the background, you don’t know what’s going on,” Mr. Miller said. “There might still be some damage being done to my nerve fibers.” When a neurologist recently told him it might help to go back on a disease-modifying drug, Mr. Miller told him he would like to, if not for the prohibitive cost. The new legislation, he said, will deliver something he has been longing for: “Peace of mind.” Sheryl Gay Stolberg is a Washington Correspondent covering health policy. In more than two decades at The Times, she has also covered the White House, Congress and national politics. Previously, at The Los Angeles Times, she shared in two Pulitzer Prizes won by that newspaper’s Metro staff. @SherylNYT Noah Weiland is a health reporter in the Washington bureau. He was part of a team that won a Pulitzer Prize for its coverage of Covid-19 in 2020. A version of this article appears in print on Aug. 10, 2022, Section A, Page 1 of the New York edition with the headline: In Health Bill’s Drug Provisions, ‘Peace of Mind’ for Older People. https://www.nytimes.com/2022/08/10/us/politics/prescription-drugs-medicare-health-bill.html
Big Pharma's Get-Out-of-Jail-Free CardThe Inflation Reduction Act is being hailed for getting tough on drug companies. In fact, they'll make out just fine by raising prices on everyone outside Medicareby Merrill Goozner - Washington Monthly - August 10, 2022
Big Pharma just got a big boost from Senate Republicans. By refusing to extend the drug price controls in the Inflation Reduction Act to the private insurance market—or allow a cap on insulin prices for people not on Medicare—they levied a $300 billion–plus tax on private employers and the 180 million people they insure. Sure, Medicare under the Democratic-passed bill will save that much money over the next decade. And those taxpayer savings, which come mostly from Medicare negotiating prices for a handful of costly drugs and limiting its payments to insurers and pharmacy benefit managers, will help battle climate change, maintain the subsidies for Obamacare policies sold on the individual market, and limit seniors’ out-of-pocket drug expenses to $2,000 a year. But by refusing to overturn the parliamentarian’s ruling that the bill doesn’t extend drug price controls to the private market, which covers workers and their families under age 65, the Senate allowed drugmakers to shift costs. When government programs pay less, the private market pays more—often a lot more. “Since the measures will now apply to Medicare only, the legislation would actually increase prices for those with commercial coverage,” the Purchaser Business Group on Health and a coalition of employer-sponsored plans said shortly after the Senate vote. This would be “above the unsustainably high prices they’re already paying, as costs are shifted from Medicare to employer plans.” The widening spread between public and private health care prices, which stands at close to three to one for many hospital and physician services, will be extended to the prescription drug market, where the annual cost of the latest medicines has soared above six figures. How long will it be before many employers look longingly at Medicare and say, to borrow a line from When Harry Met Sally, “I want what they’re having”? Despite the likelihood that private employers will absorb huge price increases by Big Pharma, congressional Democrats and President Joe Biden hailed the legislation. Meanwhile, the Pharmaceutical Research and Manufacturers of America stuck to its bankrupt position that “sweeping government price-setting policies will threaten patient access and future innovations.” At the same time, the Biotechnology Innovation Organization declared that the legislation would send the U.S. “back into the dark ages of biomedical research.” Big Pharma’s hysterical rhetoric flies in the face of a recent study by the Congressional Budget Office that dismissed that risk, even after assuming that government price controls would reduce industry revenue. The CBO concluded that a reduction in drug industry revenue three times the size of the one in the legislation would cut the number of new drugs by just two over the next decade, which is a decline of one-half of 1 percent. The FDA approves, on average, about 40 new drugs a year. But even that scenario is unlikely, given the legislation’s failure to extend its price controls to the private sector. In a recent article in JAMA, the researchers Rena Conti, Richard Frank, and Len Nichols raised the alarm that the “passage of a Medicare-only policy will cause pharmaceutical companies to increase the prices of drugs paid by commercial insurers and their beneficiaries.” In other words, they would engage in cost shifting to protect their revenue stream. The researchers debunked the standard economic model that suggests Big Pharma already maximizes profits for private-sector demand. So even if prices fall in the government market, demand in the private market will remain unchanged, and thus the price will remain the same. Still, that ignores that most drugs subject to Medicare price negotiations starting in 2026 will be patent-protected monopolies, with few or no therapeutic alternatives. Most will also be administered in clinicians’ offices, where patients don’t make purchasing decisions, and insurers are reluctant to limit physician choices. “Demand will remain strong for these products, even if prices go up,” the researchers argued. “Consequently, commercial plans will continue to face a seller with monopoly pricing power for many drugs.” The good news for the seven million Americans requiring insulin daily is that they will soon have an alternative that’s as good or better than the $35 monthly cap on out-of-pocket insulin expenses for Medicare recipients. CivicaRx, a nonprofit drug company launched by a consortium of health systems and insurers, is on track to introduce low-cost competition for the three branded insulin products in 2024. Its work is backed by the Juvenile Diabetes Research Foundation and other advocacy groups. CivicaRx aims to price its generic alternatives at $30 per vial, or about a tenth of the price of branded products. (Depending on the severity of their disease and their insulin resistance, diabetics use from two to six vials of insulin per month.) “The bill does not impact those who are commercially insured, under-insured, or uninsured,” a spokesperson said via email. “Our projections [for sales] remain to be determined, but our focus is on having a market impact.”
Editor's Note - This short video from the NYT is well worth the 5 minutes it takes to watch it. Where's the outrage?? - SPC Big Changes Are Coming for Health Care Costsby Larry Levitt - NYT - August 13, 2022Mr. Levitt is the executive vice president for health policy at Kaiser Family Foundation (KFF). Even in their pared-down form passed by Congress, the changes to the U.S. health care system in the Inflation Reduction Act are momentous, politically and for the many patients struggling with drug costs. The Inflation Reduction Act is the biggest health reform initiative since passage of the Affordable Care Act, also known as Obamacare, more than a decade ago. And the fact that this new legislation passed despite the opposition of the drug industry — which, along with most insurance companies and hospitals, largely supported the A.C.A. — makes it, in a sense, even more of a statement about what’s politically possible in reforming the health system. Until now, the United States stood alone among high-income countries with no government control (outside of Medicaid and the Veterans Health Administration) over drug prices. That’s why prices in this country are roughly triple what other nations pay for the same brand name drugs. Allowing Medicare to negotiate drug prices is the culmination of an effort that began decades ago. As far back as 1993, President Bill Clinton proposed adding a drug benefit to Medicare as part of his ill-fated Health Security Act, including having the government negotiate prices using its purchasing leverage. Democrats have been very successful at expanding health coverage but less effective at controlling costs. The political power of the pharmaceutical industry has historically prevented the United States from controlling drug prices. The plan is not the sweeping drug-pricing measure originally envisioned by Democrats, but it is the single biggest political loss the drug industry has sustained. Big Pharma is no longer invincible, which could embolden future efforts to expand the scope of the drug-pricing restraints. The legislation also tackles inflation head-on with respect to drug prices. From 2019 to 2020, the prices of half of the drugs covered by Medicare increased faster than inflation. Starting next year, if drug makers raise prices for Medicare-covered drugs more than inflation, they will have to pay a penalty. This will help put the brakes on price hikes and lower the federal budget deficit if drug companies increase prices. It will directly help many who have to pay a percentage of a medication’s list price, known as coinsurance. These drug-pricing restraints give Democratic candidates potent talking points heading into the midterm elections this fall. For example, after hearing arguments for and against giving the government the authority to negotiate drug prices, 83 percent of adults said they support it, including 71 percent of Republicans, according to a Kaiser Family Foundation tracking poll. It’s rare to find an issue that has such bipartisan appeal. In Congress the legislation passed with no votes from Republicans. Because the Inflation Reduction Act ended up less sweeping than originally envisioned, some political challenges remain for Democrats. Government-negotiated drug prices will not take effect until 2026, so the tangible benefits will require some patience. It’s conceivable that, depending on the outcome of the next presidential election, there could be efforts to roll back the plan or slow it down, as there have been with Obamacare. These price negotiations will not apply to all drugs — just 10 medications in the first year, 15 more the following year and ultimately 20 additional drugs each year. So people cannot expect lower prices every time they walk up to the pharmacy counter to fill prescriptions. And perhaps most important, the government will not negotiate drug prices for people with private insurance or no insurance. Seniors who rely on Medicare use a lot of health care and are an important voting bloc, but over 200 million people will still be paying unconstrained drug prices. For example, the new law provides for a cap on insulin co-pays at $35 per month, which is welcome news for people who need it to stay alive. But again, that provision applies only to the 3.3 million insulin users in Medicare, not to the millions of others who are uninsured or privately covered. Democratic candidates may try to use this exclusion to their political advantage. The bill they proposed in the Senate included an insulin co-pay cap for people with private insurance. But because the Senate parliamentarian determined that the provision did not comply with budget rules, Republicans challenged it and voted it down. One of the most tangible provisions of the law would reduce drug costs for Medicare beneficiaries with especially high medication expenses. Out-of-pocket drug costs would be capped at $2,000 per year, savings thousands of dollars for some patients with expensive illnesses like cancer. Over one million Medicare beneficiaries would benefit from this cap each year, though the vast majority of enrollees do not have drug expenses high enough to qualify in any given year. The other big health care provision in the legislation would extend enhanced A.C.A. premium assistance for three years, through 2025. These subsidies, which were added as part of the American Rescue Plan in 2021 and are saving A.C.A. enrollees an average of over $700 annually on their premiums, were set to expire at the end of this year. If Congress had not acted, premiums would have skyrocketed by 53 percent, with notices going out to consumers right before the elections. Though Democrats will not be able to promise even lower premiums, they can say they prevented a huge premium hike — and a resulting political headache. Having passed the Inflation Reduction Act, Democrats go into the midterm campaigns with a strong message to voters about relief from health care costs. Yet, as popular as their platform will be, its reach has limits. Drug-pricing restraints will not apply immediately or to everyone, and drugs account for less than 10 percent of health spending.As always, the outcomes of elections have consequences. In fact, with the effects of drug price negotiation delayed until 2026 and enhanced A.C.A. premium assistance expiring that year, these elections and the ones in 2024 could well determine the shape of health care affordability into the future. https://www.nytimes.com/2022/08/13/opinion/ira-health-care-costs.html
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