How Congress is preventing a Medicare bankruptcy during COVID-19
The novel coronavirus continues to spread throughout the country and is showing no signs of cessation. That’s bad news for seniors, and in more ways than one. Everyone knows of the disproportionate health risks the nation’s elderly face from this virus, but the threat it poses to Medicare – the federal health insurance program that those over the age of 65 rely upon for their medical needs – has received far less attention.
It shouldn’t come as a surprise that COVID is running the government program dry. It was already in dire straits before the pandemic. A 2020 trustee report found that parts of it will run out of money as early as 2023 and become insolvent by 2026. However, with Medicare Part B now covering all coronavirus testing costs, and the Centers for Medicare & Medicaid Services (CMS) also waving Medicare participation conditions, the system could come to a breaking point in a matter of years.
Over 61 million Americans – 18-percent of the population – depend on Medicare for their health needs. Even with Medicare’s assistance, approximately 7.5 million seniors still can’t afford the out-of-pocket costs of their drugs. Put simply, the nation can’t afford to let the system buckle. Congress must come to terms with a solution that ensures this pandemic does not jeopardize the program’s solvency. Thankfully, representatives from both sides of the aisle recently crafted a solution that will eliminate a sizable chunk of the added pandemic-induced strains.
This month, Sens. John Cornyn (R-Texas) and Michael Bennet (D-Colo.) introduced the Increasing Access to Biosimilars Act (IABA). This bipartisan bill, previously introduced in the House by Reps. Richard Hudson (R-N.C.), Angie Craig (D-Minn.), and Brian Fitzpatrick (R-Pa.), will create a pilot program that incentivizes providers to use low-cost biosimilar drugs in the Medicare program whenever possible.
The benefit that providers making greater use of biosimilars will provide to preserving Medicare’s finances is unquestioned. These drugs, developed to be similar to already-existing FDA medicines, cost up to 30 percent less than brand-names, and a 2017 RAND study estimated that they could save the U.S. health care system as much as $150 million over a 10-year period.
In the past, public policy analysts have questioned how the government can encourage doctors and hospitals, which often reflexively prescribe brand-names, to change course. That’s where the beauty of IABA comes in. The bill puts that concern to bed by implementing a shared-savings program to make the use of biosimilars just as beneficial to providers as it is for the Medicare program itself.
The bill’s focus on extending collective benefits should provide doctors and hospitals with every incentive they need to participate in the legislation’s pilot program. These care centers have always actively looked for ways to cut costs to make up for underpayments from Medicare, but the COVID crisis has increased their budget consciousness tremendously – and for good reason. According to one estimate, the pandemic has already brought them $202 billion in revenue losses over the last four months. It has caused a significant number of hospital closures this year already, while plenty of other care centers are operating on margins and hanging on by a thread. Providers and facilities would be foolish not to take part in IABA when it can amount to the difference between life or death of their businesses and practices.
Beyond the intuitive sense that this shared-savings program makes for both Medicare and hospitals is the historical evidence that these types of government initiatives work. For example, not long ago, CMS created a Medicare Shared Savings Program for providers who participate in Accountable Care Organizations (ACO). It saved ACO participants almost $740 million in 2018 and $1.84 billion from 2013-2015. Given these dramatic results, it’s no wonder why both Democrats and Republicans are so eager to extend the benefits to seniors and providers that operate outside of ACOs.
In this time of great need and great political division, Congress deserves commendation for formulating a solution to this issue of great public importance for our nation’s seniors. IABA will benefit the U.S. health care system not only during this pandemic, but in the years beyond it as well. House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.) should leverage this rare sign of legislative branch unity to their advantage by calling this important bill for a vote now when it would matter most.
James L. Martin is president of the 60 Plus Association, which represents 5 million seniors nationwide.
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