Thursday, January 06, 2011

Health Care Reform and Pharmacy Benefit Premiums

I recently got around to reading the newest Managed Care Digest Series reports. These useful—but overly dense—reports compile tons of interesting data about pharmaceuticals, prescriptions, and benefit design.

One intriguing chart caught my eye. As you can see below, pharmacy premiums rose by 72% in Massachusetts after the state’s health care reform plan was launched in 2006. Meanwhile, premiums rose by only 27% in the rest of the country over the same period.

Harbinger of the U.S. future or just another foolish Bay State tradition, like rooting for the New England Patriots? (Hey, I live in Philadelphia...)

THE DATA

All four Managed Care Digest Series reports can be downloaded for free from this page. I personally find the reports to be less useful than they should be because every single page is busily crammed with charts, tables, and text. Nonetheless, I recommend the series as a valuable reference resource.

The HMO-PPO Rx Digest will be the most interesting report for most Drug Channels readers. It provides an overview of data on health maintenance organizations (HMOs), point-of-service (POS) plans, preferred provider organizations (PPOs), and pharmacy benefit managers (PBMs). The second half of the report (starting on page 36) looks at pharmacy benefits, drugs costs, and utilization.

THE MASSACHUSETTS EXAMPLE

The HMO-PPO Rx Digest (page 40) includes the chart below under the heading "Comprehensive Reform in Massachusetts May Predict the Nation’s Path.” (PMPM=Per Member, Per Month)

Here’s what the report said:
“The Massachusetts Health Care Reform Plan, legislation for which began taking effect at the end of 2006, represented the first statewide implementation of a universal health care mandate. The plan required that all adults have health insurance, and that all employers provide insurance for their workers. In addition, Medicaid enrollment eligibility was expanded for children. By May 2007, more than 100,000 previously uninsured residents had secured health coverage. As a consequence, individual pharmacy premiums rose sharply over this period. Whether this trend holds true in the wake of national health care reform remains to be seen.”
House Republicans have set January 12 as the date for a vote on repealing the Patient Protection and Affordable Care Act (PPACA). Expect more examples like this chart to pop up during the debate.

4 comments:

  1. So a lot more people get coverage that someone else pays for and we expect something other than costs to go up? This chart will likely kill Mitt Romney's chances for the GOP presidential nomination as well.

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  2. Are we intended to infer from this graph and report langauge that adverse selection (adding 100,000 previously uninsured and expanding children's access to Medicaid)is driving a cost increase of this magnitude?

    Although this is a likely component, it seems unreasonable to that the overall health status and utilization of drugs in the previously uninsured are differ significantly enough to drive a difference of this magnitude.

    The only other alternatives that seem reasonable are:

    1. That Massachusetts law and regulations cause the pharmacy benefit to be adminsitered in a more generous or less administratively tight fashion.

    2. That rate increases vs. cost increases drive this difference; Massachusetts insurers raised - and continue to raise rates - at levels that exceed the other 49 states.

    3. There is a disconnect in the data reported causing this data not to be comparable.

    ReplyDelete
  3. Yeah, that chart about premiums after “reform” in MA is scary, and is indeed what lots of folks are worried about. Good luck with Mr. Vick and company

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  4. "Although this is a likely component, it seems unreasonable to that the overall health status and utilization of drugs in the previously uninsured are differ significantly enough to drive a difference of this magnitude."

    Because maintenance drugs don't control overall drug cost? Then therapy management programs are useless. New patients that were formerly not receiving an Rx benefit can certainly run up costs getting "caught up."

    "Massachusetts law and regulations cause the pharmacy benefit to be adminsitered in a more generous or less administratively tight fashion."

    This is what happens when the "evil" profit motive is removed from the equation.

    "Rate increases vs. cost increases drive this difference; Massachusetts insurers raised - and continue to raise rates - at levels that exceed the other 49 states."

    As they were presumably forced to cover pre-existing illnesses and new indigent patients. Costs, as usual, that are offset by passing them along to paying customers.

    ReplyDelete

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