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Medicare’s Hospital Insurance Fund Is Projected to Run Out by 2026

May 10, 2019

The Medicare Board of Trustees in its 2019 annual report projects that Medicare’s hospital insurance trust (which funds Part A payments) is projected to run out by 2026, the same time frame the board pointed to in last year’s report. Unlike the Part A fund, Parts B and D do not face this issue, as premium income and other forms of revenue are reset each year to ensure all costs are covered, and that some income is held in reserve. The largest source of expenditures in Part A is inpatient hospital services, with payments to private health plans coming in second.

by Carina Belles

The Medicare Board of Trustees in its 2019 annual report projects that Medicare’s hospital insurance trust (which funds Part A payments) is projected to run out by 2026, the same time frame the board pointed to in last year’s report. Unlike the Part A fund, Parts B and D do not face this issue, as premium income and other forms of revenue are reset each year to ensure all costs are covered, and that some income is held in reserve. The largest source of expenditures in Part A is inpatient hospital services, with payments to private health plans coming in second (see the full breakdown below). The board estimates 37% of combined funding for Part A and B goes to private health plans, and projected costs will continue to climb as more beneficiaries choose to enroll in Medicare Advantage plans. The trustees said they expect MA penetration to rise to about 40% in 2028.

SOURCE: CMS’s 2019 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust funds. Visit https://go.cms.gov/2KZdxIP.

Three Major PBMs Log Low Commercial Drug Trend

May 3, 2019

CVS Health Corp.’s 2018 drug trend report shows a 3.3% trend for its commercial clients last year, driven by utilization increases and adherence improvements. Overall, the company cited savings of more than $141 billion on pharmacy spend from 2016 to 2018. Earlier this year, PBM giant Express Scripts, now a part of Cigna Corp., reported a record low drug trend of 0.4% across its commmercial clients (RDB 2/14/19, p. 4). Commercial clients of another leading PBM, Prime Therapeutics, saw a 3.3% trend in 2018 (RDB 3/28/19, p. 4).

by Jinghong Chen

CVS Health Corp.’s 2018 drug trend report shows a 3.3% trend for its commercial clients last year, driven by utilization increases and adherence improvements. Overall, the company cited savings of more than $141 billion on pharmacy spend from 2016 to 2018. Earlier this year, PBM giant Express Scripts, now a part of Cigna Corp., reported a record low drug trend of 0.4% across its commmercial clients (RDB 2/14/19, p. 4). Commercial clients of another leading PBM, Prime Therapeutics, saw a 3.3% trend in 2018 (RDB 3/28/19, p. 4). As the rising costs of diabetes treatments have been a major concern, these PBMs applied formulary strategies to keep insulin affordable. CVS Health reported a -1.7% trend for antidiabetic drugs, despite increasing utilization and 5.6% average wholesale price inflation for brand drugs.

NOTES: CVS Health’s 2018 Drug Trend Report only cited year-over-year drug trend for its commercial clients. PMPY refers to per member per year. PMPM refers to per member per month.

SOURCES: CVS Health 2018 Drug Trend Report (https://bit.ly/2viXj2B), Express Scripts 2018 Drug Trend Report (https://bit.ly/2TIV1ED), Prime Therapeutics Annual Drug Trend Results (https://bit.ly/2CDXU2Q).

Small-Group Market Offers More Plan Choices with Lower Premiums Than Individual Market

April 26, 2019

The small-group health insurance market had, on average, more plan choices and lower premiums in 2018 compared to the individual market, according to a new Health Affairs study. The study shows that 39 states provided enrollees with access to both an HMO/Exclusive Provider Organization (EPO) plan and a PPO/Point-of-Service (POS) plan in their small-group markets, yet only 17 states offer such choices on their individual marketplaces.

by Jinghong Chen

The small-group health insurance market had, on average, more plan choices and lower premiums in 2018 compared to the individual market, according to a new Health Affairs study. The study shows that 39 states provided enrollees with access to both an HMO/Exclusive Provider Organization (EPO) plan and a PPO/Point-of-Service (POS) plan in their small-group markets, yet only 17 states offer such choices on their individual marketplaces. Average premiums across the nation were 38% higher on the Affordable Care Act (ACA) exchanges than in the small-group market. In addition, the study found that the small-group market had greater access to platinum plans, with 45 states and the District of Columbia offering such plans in 2018. Only 14 states provided platinum plans to ACA marketplace enrollees in 2018, while platinum plans were available off-marketplace in 18 states.

NOTES: A state-market has a given plan type if at least 70% of its enrollees, weighted by billable member-months, has access to the given plan type. Tennessee did not have any plan type broadly available to at least 70% of enrollees in its on- or off-exchange markets. The District of Columbia and Vermont merged their on- and off-exchange markets. Data for Wyoming was missing for the off-exchange and small-group markets. Hawaii does not have silver plans in its small-group market.

SOURCE: Health Affairs 38, No. 4 (2019): 675-683. “Plan Choice And Affordability In The Individual And Small-Group Markets: Policy And Performance — Past and Present.” Visit https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05401.

Cost Burden of Employer-Sponsored Plans Keeps Rising

April 19, 2019

The financial burden of employer-sponsored insurance premiums rose across the country between 2010 and 2016, according to a new analysis by the University of Pennsylvania’s Leonard David Institute of Health Economics and United States of Care. Nationally, the average premium for a family plan accounted for 30% of median household income in 2016, up from 28% in 2010. Only Minnesota, Tennessee, Texas and the District of Columbia saw a decreasing cost burden over the period. Researchers estimated the health care cost burden in each state by dividing adjusted median income by the average family premium for employer-sponsored insurance.

by Jinghong Chen

The financial burden of employer-sponsored insurance premiums rose across the country between 2010 and 2016, according to a new analysis by the University of Pennsylvania’s Leonard David Institute of Health Economics and United States of Care. Nationally, the average premium for a family plan accounted for 30% of median household income in 2016, up from 28% in 2010. Only Minnesota, Tennessee, Texas and the District of Columbia saw a decreasing cost burden over the period. Researchers estimated the health care cost burden in each state by dividing adjusted median income by the average family premium for employer-sponsored insurance.

SOURCE: University of Pennsylvania’s Leonard Davis Institute of Health Economics and United States of Care. Visit https://bit.ly/2Kr1QdL.

Some Branded Drugs Get Better Placement, Fewer Controls in Part D

April 12, 2019

A new report in JAMA Internal Medicine examined the 57 different formularies across all stand-alone Prescription Drug Plans offered in November 2016 to find out how often brand-name drugs were given preferential status in Medicare Part D formularies. Researchers focused on multisource products, or drugs that have both generic and branded versions available, and found that 72% of formularies placed at least one branded drug on a lower cost-sharing tier than its generic version, and 30% of formularies placed fewer utilization restrictions on at least one brand-name product. See other results of the study below.

by Carina Belles

A new report in JAMA Internal Medicine examined the 57 different formularies across all stand-alone Prescription Drug Plans offered in November 2016 to find out how often brand-name drugs were given preferential status in Medicare Part D formularies. Researchers focused on multisource products, or drugs that have both generic and branded versions available, and found that 72% of formularies placed at least one branded drug on a lower cost-sharing tier than its generic version, and 30% of formularies placed fewer utilization restrictions on at least one brand-name product. See other results of the study below.

*Of the 222 multisource drugs covered in all 57 Part D formularies where both the branded and generic product were covered in at least one formulary.

SOURCE: Socal MP, Bai G, Anderson GF, Favorable Formulary Placement of Branded Drugs in Medicare Prescription Drug Plans When Generics Are Available, JAMA Intern Med., March 18, 2019. Visit https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2728446?guestAccessKey=30e0d084-20a2-42c9-b24d-f63584ce7963.