Midweek Miscellany

The President’s Council of Economic Advisers issued its 2018 report this week.  Public health issues are covered from pages 279-321.  The report provides a useful perspective on major public health issues that concern OPM — opioids, obesity, and tobacco use.  The opioid discussion raises a point (p. 293) that the FEHBlog noted last month when discussed Sam Quinones’ excellent book Dreamland.

The opioid epidemic evolved with three successive waves of rising deaths due to different types of opioids, with each wave building on the earlier one (Ciccarone 2017). In the late 1990s, in response to claims that pain was under- treated and assurances from manufacturers that new opioid formulations were safe, the number of opioid prescriptions skyrocketed (CDC 2017b). What followed was an increase in the misuse of and deaths related to these prescriptions (figure 6-2). As providers became aware of the abuse potential and addictive nature of these drugs, prescription rates fell, after peaking in 2011. Deaths involving prescription opioids leveled off, but were followed by a rise in deaths from illicit opioids: heroin and fentanyl. Heroin deaths rose first, followed by a rise in deaths involving fentanyl—a synthetic opioid that is 30 to 50 times more potent than heroin and has legitimate medical uses but is increasingly being illicitly produced abroad (primarily in Mexico and China) and distributed in the U.S., alone or mixed with heroin. In 2015, males age 25 to 44 (a core group of the prime-age workers whose ages range from 25 to 54) had the highest heroin death rate, 13 per 100,000. Fentanyl-related deaths surpassed other opioid- related deaths in 2016. 

Emphasis added. Very sad. The government should have placed more focus on this issue years ago.

The Wall Street Journal reports that the new budget law will require high earning seniors to pay more for their Medicare coverage.

Starting in 2019, individuals with incomes of $500,000 or more and couples earning $750,000 or more will be broken out of the current top bracket and required to pay 85% of the cost of their Medicare parts B and D benefits, up from 80% now. (In contrast, Medicare beneficiaries with incomes of $85,000 or less—or $170,000 or less for couples—pay only 25% of the cost of their benefits.) 

For higher-income beneficiaries, this increased premium surcharge comes on the heels of a separate increase that went into effect on Jan. 1. Under that increase, Medicare beneficiaries with incomes of $133,501 to $160,000 (or $267,001 to $320,000 for couples) now must pay 65% of the cost of their parts B and D benefits, up from 50% before Jan 1. And beneficiaries with incomes between $160,001 and $214,000 (or $320,001 and $428,000 for couples) were shifted from a 65% surcharge into the highest income group that currently pays 80% of the cost of their benefits.

Higher Medicare Part B premiums discourage Medicare eligible federal annuitants from picking up Medicare Part B. Granted federal annuitants typically don’t fall into these income levels. The problem as the FEHBlog sees it is that the income levels in the second paragraph might encompass a cadre of  federal annuitants in the early years of retirement. If you don’t pick up Medicare Part B promptly following retirement, you will be penalized for late enrollment. (That’s the approach that the ACA should have used.)

The article also points out that

The [budget] law also closes the Medicare Part D coverage gap, known as the doughnut hole, in 2019—one year sooner than planned. Part D prescription drug plans typically cover 75% of the cost of medication, leaving the participant to pick up 25%. But after the total cost of a participant’s drugs reaches a set amount per year—$3,750 in 2018—he or she falls into the doughnut hole. Once there, the participant is currently on the hook for 35% of the cost of his or her brand-name medications, up to $5,000 in total out-of-pocket costs, said Ms. [Juliette] Cubanski [, an associate director of the Henry J. Kaiser Family Foundation’s program on Medicare policy].  At that point, catastrophic coverage kicks in, limiting participants’ outlays, typically to 5%. Next year, when the doughnut hole disappears, Part D beneficiaries will pay 25% of their total costs until the catastrophic coverage kicks-in. 

This really frosts the FEHBlog’s cake because OPM does not permit FEHB plans to integrate their prescription drug benefits with Medicare Part D prescription drug plan coverage through an employer group waiver plan even though the Medicare law expressly permits FEHB plans to take this step. EGWPs would lower the cost curve for FEHB plans which is why the Postal Service wants them in the Postal Service Health Plans contemplated by the postal reform law (HR 756).

Finally, in an article that the FEHBlog finds uplifting, plansponsor.com tells us that

ConnectYourCare’s 2018 report on consumer-driven health care account trends finds 44.9% of respondents chose to enroll in a health savings account (HSA) as a savings vehicle for future health care needs, over more immediate benefits like tax savings and lower premiums, up from 40.5% in its 2017 report. 

The majority of HSA account holders are spenders, both by their self-evaluation and backed up by spending and balance data. However, 44% of account holders saved at least half of their contributions in 2017, which may indicate a future shift in saver/spender trends. 

Twenty-two percent of respondents overall say that paying for health care in retirement is the health care issue that concerns them most. However, when segmented by age, this rises to the top issue causing concern for those ages 55 to 64 (37.4%) and those age 65 and older (30.9%). Those younger than 25 are most concerned about unanticipated health care expenses and those ages 25 to 54 are most concerned about increasing insurance premiums.

The FEHBlog started out as an HSA spender but now is an HSA saver while he can still contribute. Your ability to contribute to an HSA cuts off when you start to receive Medicare. You can delay Medicare coverage beyond age 65 if you are still working. Here’s a handy CMS worksheet. For most employers, including the federal government, the employer sponsored coverage remains primary to Medicare past age 65 until retirement. However, in the FEHBlog’s case, his business has less than 20 employees, so Medicare will be his primary coverage when he turns 65.  The health insurance savings from switching to Medicare outweigh the value of the additional HSA contributions that the FEHBlog could have made by delaying Medicare. But he can spend the HSA account funds past age 65 tax free on medical expenses including Part B premiums.