• Curve Ball

Things Start To Change

“The world is changed. I feel it in the water. I feel it in the earth. I smell it in the air.”

-Galadriel

In 2023, United Healthcare, CVS, and Humana were finalizing their plans to rule the healthcare world. None of this would have been possible without the critical 2010 Supreme Court ruling on Citizens United, which allowed corporations to make unlimited political expenditures as long as the money did not go directly to a politician’s campaign. 

In 15 years of policy management, these private insurers built an untouchable world. For a politician to oppose policies wanted by these big donors risked the loss of millions of dollars of support or, worse, millions of dollars in marketing against them. It would take a lot of guts to stand up against them.

It took guts to place new individuals in key government positions. Accepting these positions took guts because, if the world doesn’t change, their stance against corporate desires could greatly hinder their ability to get a job after their positions ended. 

Yet, things were changing. The government had finally placed enough people and research in crucial administration areas to start turning this huge insurance and pharma political juggernaut. What are some of the policies that are beginning to squeak out the door and put a dent in this massive wall of legislation and corporate consolidation the private insurers have bought?

The Birth of Drug Price Controls in Medicare

It has been decades of effort to allow Medicare to negotiate drug prices with pharmaceutical companies. In August 2022, the Inflation Reduction Act was signed. The law focuses on many things, but the part important to Medicare is the focus on drug pricing. 

The law isn’t the first time Medicare prescription benefits have been modified. In 2003, President Bush signed the “Medicare Prescription Drug, Improvement, and Modernization Act“ expanding prescription drug benefits. Expanding prescription drug benefits without price controls has created a windfall for pharmaceutical companies. 

“In 2022, U.S. prices across all drugs (brands and generics) were nearly 2.78 times as high as prices in the comparison countries. U.S. prices for brand drugs were at least 3.22 times as high as prices in the comparison countries. “

For those of us who live along the Canada and Mexico border, crossing borders to fill prescription drugs is not a new idea. Medications can be as little as 1/10th the cost of the same medication in the United States.

In the United States, drugs have different prices depending on where or how they are purchased. I remember my mother buying a small tube of Clobetasol Propionate, which is used for itchy skin. Without insurance, the pharmacy wanted over $300 for the generic. 

Clobetasol propionate was patented in 1968 and first used in medicine in 1978. In 2013, a tube of generic clobetasol propionate cost $10. In 2014, the prices of generic drugs soared, and the same tube of generic clobetasol propionate cost over $300. 

Ozempic is a new drug that has gained the spotlight due to its $970 to $1,300 monthly costs. A recent study in Jama Open Network found the cost to manufacture a monthly supply of Ozempic could be as low as $0.89 to $4.73.

The Inflation Reduction Act initiates the discussion on cost containment while enhancing prescription coverage for the member. For the first time, Medicare has authority to negotiate drug prices with pharmaceutical companies. If pharmaceutical companies increase their cost over inflation, the pharmaceutical company needs to cover the excess increase with rebates. It caps insulin prices and caps total prescription drug payouts by the member to $2,000 a year, a little over a 30% cut on the current cap.   

Need More Policy Change?

Some individuals think these policy changes need to go further. They do. This is the first step and the start. If we compare this step to steps by private insurers, one of the first steps private insurers fought for was a reduction in competition. 

I talk about the landmark legislation, Citizens United, passed in 2010 because it allowed corporations to spend relentlessly on political marketing campaigns. As soon as the Affordable Care Act passed in 2010, these private insurers worked together to get legislation that benefited the insurance companies. The corporations used money to market the correct message through the news and social media, pressured politicians through Political Action Committees, and lobbied through their unfettered access to our politicians.  

In 2013, when Congress refused to fund the Affordable Care Act payments to private insurers, the small insurers went under. I was surprised to see which private insurers were unaffected by Congress’ vote. Congress’ vote didn’t impact them because, somehow, they had the foresight to have only a few people insured under the Affordable Care Act. 

United, Regence, and Kaiser had little financial impact. These large, politically active insurers came out ahead. The refusal by Congress to make the transfer payments helped solidify their hold in the market by reducing the competition. 

Small steps can have big impacts. 

Clearing the Hurdles: New Policies Tackle Prior Authorization Overload in Medicare Advantage

“While prior authorization can help ensure medical care is necessary and appropriate, it can sometimes be an obstacle to necessary patient care when providers must navigate complex and widely varying payer requirements or face long waits for prior authorization decisions.”

In my article “The Quiet Revolution: How Private Insurers Rewrote the Rules of Medicare Advantage “, the section on prior authorizations documents how Medicare Advantage plans use prior authorizations as an obstacle to care.

New legislation introduced in 2023 will require changes to prior authorizations.

“Beginning primarily in 2026, impacted payers [Medicare Advantage private insurers] will be required to send prior authorization decisions within 72 hours for expedited (i.e., urgent) requests and seven calendar days for standard (i.e., non-urgent) requests for medical items and services…The rule also requires all impacted payers to include a specific reason for denying a prior authorization request, which will help facilitate resubmission of the request or an appeal when needed. Finally, impacted payers will be required to report prior authorization metrics publicly. “

I think about this rule. It adds a lot more administration to Medicare Advantage providers. Here is the thing: this would never have happened if these insurers had been acting reasonably. And it got me thinking. The only reason we have so much government administration is that players with too much authority in the market have abused their positions. 

What got United Healthcare to bring its Change Healthcare software system back online for providers and facilities? The Federal government threatening an investigation.

How did we get the banking sector to stop its run on crashing the economy in early 2023? The Federal government agreed to bail them out with the caveat that each institute that took a dime of the bailout money would be audited. If the audit found the bank policies were complicit in crashing the bank, the CEOs would get their compensation pulled back. Suddenly, all the banks got together and cleaned everything up in about a month.

I get it that we don’t want a lot of government oversight. But let’s be real about who is getting us there. 

Reduction In Payments Tumble Medicare Advantage Stocks

I still don’t completely understand how the payments work on the Medicare Advantage plans. Yet, I wondered if the Federal government transfers money to private insurers for Medicare Advantage members. The short answer is, “yes”. 

In 2019, the federal government paid Medicare Advantage plans a set rate per person, per year (around $12,000 in 2019, not including Part D–related expenses) under what’s known as a risk-based contract.  In addition to this set rate, the plans can receive additional monies based things called adjustments and bonuses. The adjustments and bonuses are based on the health risk of the members.

“Older and more recent studies alike have largely found that Medicare Advantage plans cost the government and taxpayers more than traditional Medicare on a per beneficiary basis. In 2023, that additional cost was about 6 percent, down from a peak of 17 percent in 2009.“

The risk adjustment payments are blamed for Medicare Advantage plans costing the government and taxpayers more than the government-funded Medicare plan. These adjustments are significant enough to get the three national Medicare Advantage private insurers to bet on the Medicare Advantage plans. 

So, when the Centers for Medicare and Medicaid Services finalized their payment updates for Medicare Advantage plans to 3.7% increase, the stock price of the three national private insurers: United Healthcare, CVS, and Humana, took a tumble. They had wanted over a 4% increase.

What Does All This Mean?

Last year, the news was about United Healthcare, CVS, and Humana making significant moves to focus more on the Medicare Advantage world. For a corporation to turn their focus on anything means they had found more nickles in that dumpster than the dumpsters they had been feeding in. It was the article in Yahoo News on share price tumbling for United Healthcare, Humana, and CVS that pushed me to try and figure out what was going on with the Medicare Advantage programs and was the foundation for this article and “The Quiet Revolution: How Private Insurers Rewrote the Rules of Medicare Advantage “.

“The Quiet Revolution: How Private Insurers Rewrote the Rules of Medicare Advantage” outlines how we got into this mess. If nothing had changed in government, these insurers would be stomping on their merry way into more consolidations, more insurance policies and procedures making it more impossible for you to use your benefits, terrorizing the last remaining independent facilities in the United States, and using their ill-gotten gains to control the political narrative in the news and on social media while paying their senior executives outlandish salaries. 

O.k., o.k., that didn’t sound very objective. I know. I couldn’t help myself. After completing all this research and getting a small handle on what has happened, it’s pretty hard not to be pissed off. It’s not just Medicare Advantage. These large insurers are terrorizing all the healthcare markets with aggressive and unethical business practices. 

The new policies mean that more of the premiums paid by the member and the Federal government will go to the member’s healthcare. It’s also starting to address the fundamental problem the fall in stock prices highlighted – why would a program funded by our tax dollars be the most profitable product for a private corporation. What kind of new greed-flation was this? Whose senior executive salary was finding more self-serving ways to squeeze more nickles out of the average consumer who was having trouble making ends meet? 

UGH! Right! But that is what got me here.

So, these policies are a start in trying to address the tremendous imbalance in power delivered by the 2010 Supreme Court ruling on Citizens United. It’s a dangerous game as these corporations will sit like a spider in the corner waiting for politicians to accidentally get caught in their web.  

Lina Khan, the head of the FTC since 2021, has been making huge waves. Her willingness to step up and address the mega-mergers and consolidations that have eliminated free markets in the United States is refreshing. Its not that we don’t have anti-trust law. Its that no one has been enforcing it since 2010. 

In 2023, Humana and Cigna were in merger talks. It is rumored that part of the reason these talks failed was they wouldn’t be able to get the merger past the FTC. 

The CMS has had an impact on the Medicare Advantage program. In 2021 Chiquita Brooks-LaSure was placed in charge of the CMS. Under her direction, the CMS created these new regulations to reign in the misuse of the Medicare Advantage program by private insurers and pharmaceutical companies. The CMS has been making waves in the Medicare Advantage programs, from the implementation of the ability to address drug costs in 2022 to the new regulations on prior authorizations in 2024.

These policy changes came pretty fast for the government and rode on a tidal wave of public disgust with the insurance companies’ abuse of power. Couple that with the FTC filing an anti-trust suit against United Healthcare for anti-competitive business practices, and the insurance companies are rocking back on their heels right now. 

I expect that to last only a short time. I imagine the private insurance mega corporations are planning and plotting the purchase of their next key politician to get things back on their side while restrategizing their marketing campaigns to convince us with #fakenews these policies are bad for us. 

FYI the PAN Foundation offers grants for your out of pocket Medicare Part D