HHS's ideas for rearranging Medicare would raise costs for seniors

HHS's ideas for rearranging Medicare would raise costs for seniors
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Eight in 10 Americans believe prescription drug costs are too high, according to a Kaiser Family Foundation poll. Given this widespread frustration, it's easy to see why the Trump administration has made reducing the cost of medicines a top priority.

HHS officials claim to have a solution — changing which parts of the Medicare program pay for certain drugs. It’s a change for the worse.

Medicare Part B currently covers all medications taken under a doctor's supervision, such as infusible treatments for multiple sclerosis or advanced cancer drugs administered via IV drip.

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Under the envisioned reform, some of these medicines would instead be covered through Part D, the portion of Medicare that helps people afford prescriptions at the pharmacy.

HHS's reasoning is simple. Part D pays less for drugs, on average, than Part B. So, the more drugs covered under Part D, the less the government will spend. According to a recent study in JAMA Internal Medicine, this reform could reduce Medicare drug spending by up to 18 percent.

But there's a catch: This change would only affect what the government pays. Patients wouldn’t save a dime. In fact, patients could see their out-of-pocket costs skyrocket — a particularly nasty unintended consequence.

This new arrangement would particularly hurt 25 percent of traditional Medicare enrollees who purchase supplemental "Medigap" policies that cover out-of-pocket costs for Part B treatments. Many people with Medigap policies currently pay little or nothing out-of-pocket.

If Part B drugs were shifted to Part D, Medigap beneficiaries bills' would skyrocket. The median Medigap beneficiary who already has Part D coverage would face $1,460 in additional out-of-pocket expenses each year. Folks with Medigap policies who don't enroll in the optional Part D program would pay nearly $2,000 more per year out-of-pocket.

Even for people without Medigap policies, out-of-pocket costs are often higher in Part D than Part B. According to Avalere Health, in 2016, out-of-pocket costs for new cancer drugs were 33 percent higher in Part D.

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No wonder shifting more drugs to Part D would save the government money. Officials would just be sticking patients with the difference. No thank you, Uncle Sam.

This reform would make it harder for Medicare beneficiaries to afford their medications. Faced with higher out-of-pocket costs, patients tend to stop taking their prescriptions. Seniors on fixed incomes would be especially vulnerable. A study by the RAND Corporation estimates that doubling a copay can cause rates of drug adherence to drop by as much as 45 percent.

That could have serious health consequences. Drug non-adherence causes 125,000 deaths each year and is responsible for 10 percent of hospitalizations.

The most vulnerable patients would bear the brunt of this change. There's no predicting when diseases like cancer will strike. Nearly seven in 10 Americans have less than $1,000 saved to cover a medical emergency — so dramatically higher out-of-pocket costs could imperil patients' ability to afford lifesaving treatments.

HHS hasn't yet unveiled a formal proposal — officials are still just contemplating the changes. For the sake of America's sickest seniors, let's hope they ultimately scrap the idea.

Peter J. Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest.