Happy Memorial Day!

The FEHBlog wishes his readers a Happy Memorial Day.

Congress is out of town this coming week.  The Hill identifies five important agenda items facing the Congressional leadership before the August recess.

It’s a big week for FEHBP carriers as their 2018 benefit and rate proposals must be submitted to OPM no later than Wednesday May 31.

The Wall Street Journal offered two interesting analyses this weekend:

  • This first reports that rural areas of the country are now worse off than inner cities — a flip flop from the 1980s.  “[T]he total rural population—accounting for births, deaths and migration—has declined for five straight years.”  “And even after adjusting for the aging population, rural areas have become markedly less healthy than America’s cities. In 1980, they had lower rates of heart disease and cancer. By 2014, the opposite was true.”  That’s not all. 

Consolidation has shut down many rural hospitals, which have struggled from a shortage of patients with employer-sponsored insurance. At least 79 rural hospitals have closed since 2010, according to the University of North Carolina at Chapel Hill.

Rural residents say irregular care and long drives for treatment left them sicker, a shift made worse by high rates of rural obesity and smoking. “Once you have a cancer diagnosis…your probability of survival is much lower in rural areas,” said Gopal K. Singh, a senior federal health agency research analyst who has studied mortality differences. 

The opioid epidemic—and a lack of access to treatment—have compounded the damage. In Hardin County, prosecutor Brad Bailey said drug cases, which accounted for less than 20% of his criminal cases a decade ago, have surged to 80%.

  • The second reports on the growing financial burden that Medicare Part D plan coverage imposes on its beneficiaries, particularly seriously ill people.   

Medicare’s drug program, which began in 2006, is unique among Medicare benefits for being administered entirely by private insurers. Lawmakers have praised the program for its popularity with seniors and for keeping spending well below initial estimates.

But spending on the drug program has soared in recent years, growing faster than all other areas of Medicare per enrollee basis, a trend that is expected to continue through 2025, according to projections by the trustees. The uptick in spending has caused concern among government officials and analysts about Part D’s sustainability and the financial burden that higher drug prices are putting on patients.

The Journal’s report is based on its review of data from the Medicare Part D claims warehouse.  

The median out-of-pocket cost for a drug purchased through Part D was $117 in 2015, up nearly half from $79 in 2011, in inflation-adjusted dollars, the Journal’s analysis found. The analysis excluded low-income patients whose copays are paid primarily by the government.

Some 220 Part D drugs had annual out-of-pocket costs of $1,000 or more in 2015, up 86% from 118 drugs in 2011. 

Factors driving the trend include sharply rising drug prices, which grew by an average 14% a year from 2011 to 2015, and the introduction of new medicines with prices that commonly exceed $50,000 annually, according to the Journal’s analysis. In addition, the complicated design of Part D requires patients to pay a percentage of their drugs’ total retail price, a particular burden for those who use expensive medicines. 


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