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This Week in Health Care Reform - October 21st, 2016

Health spending ticks up; drug price increases hit stakeholders across the board; and a new coalition focused on highlighting Medicaid managed care launches.

Week in Review

Health Spending: In its latest Health Sector Economic Indicators brief, the Altarum Institute’s health research center estimates that national health spending in August of this year was 5.5 percent higher than it was in August of 2015 (an annual rate of $3.4 trillion).  As background, these briefs are released monthly, analyzing economic data as a way of deriving insights and establishing trends in macro-level health spending.  While their analysis points to a variety of variables driving up that spending, growth in two principal price components – hospitals and physicians – was seen to be remarkably slow: .9 percent and .1 percent, respectively.  However, at 6.3 percent, growth in prescription drug prices was at its highest level in almost two years, while spending on those drugs grew 4.3 percent year-over-year.
Rx Price Impact:
According to recently polling, nearly eight out of ten Americans believe that prescription drug prices have become unreasonable.  No surprise, really, given that we seem to have reached a saturation point, such that you’d be hard-pressed to find any stakeholder group that’s yet to be impacted by the issue of escalating drug prices.  Case in point: Medicare’s Part D prescription drug program.  With approximately 38 million beneficiaries enrolled in Part D, Medicare covered $121.4 billion worth of medicines in 2014.  Perhaps most tellingly, of the most expensive drugs covered by the program – those totaling more than $1 billion in spending – seven saw price increases of at least 17 percent from the previous year.  And, while those figures alone are enough to give an actuary indigestion, other stakeholders also find themselves in danger of being overwhelmed by skyrocketing drug prices.  A new study from the country’s biggest hospital lobbying groups found that, between 2013 and 2015, annual inpatient drug spending had gone up by an average of 23.4 percent.  Pointedly, the study’s authors determined that spikes in costs were the primary drivers in spending, rather than increased utilization.  Additionally, a third of the hospital administrators polled reported that these higher drug prices have had a severe impact on their budgets.  As if to underline the issue, earlier this week, the Bureau of Labor Statistics released their latest inflation numbers.  While the cost of consumer goods has gone up about 1.5 percent over the past year, prescription drugs have seen a 7 percent increase over the same period – the highest annual increase in nearly a quarter of a century.
Modern Medicaid:
With 73 million Americans enrolled in Medicaid, it stands to reason that increased focus would be directed to how the program is not just funded but administered, as well.  As states struggle to control their budgets, a new report examines some of the tactics that they’re using to contain rising costs.  Compiled by the Kaiser Family Foundation and released last week, the 50-state Medicaid budget survey sought to shed light on how the program is evolving across the country.  Amongst the reported findings, states are increasingly turning to private managed care companies to deliver services to enrollees.  In fact, the report found that 39 states now use private plans to manage care for Medicaid beneficiaries.  Further, of those states, 28 of them reported that at least three-quarters of their enrollees were in a managed care plan.  By way of coincidence, a new coalition was also launched last week organized around the idea of highlighting the innovations and cost-savings currently underway in the Medicaid managed care space.  The Modern Medicaid Alliance, comprised of more than two dozen health industry stakeholders, held its unveiling in Washington last Thursday bringing together speakers from leading organizations in the Medicaid space to touch on the need to evolve the conversation surrounding this critical program to meet the diversifying needs of the growing population that depends on it.  The Health Action Network live-tweeted from the event – be sure to check out highlights here.

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Looking Ahead

On the eve of open enrollment for health coverage in 2017, experts dig deeper as to why 27 million Americans are still without insurance in this post-Affordable Care Act world.  And, with Election Day less than three weeks away, here’s a quick topographical scan of the electoral landscape to help voters get their bearings.

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