Affordable Health Care for Baby-Boomers: At What Price?

On May 13, 2011, the Medicare Trustees Report was released showing that while Medicare remains solvent longer than expected prior to passage of the Affordable Care Act, challenges remain for securing the long term financial health of the Medicare program. Medicare’s Hospital Insurance (HI) Trust Fund is now projected to remain solvent until 2024. The trustees state in their report that without the reforms in the Affordable Care Act, the Medicare HI Trust Fund would expire in just five years – in 2016. Their report shows these reforms added eight years of solvency.

The Medicare Trustees are Treasury Secretary and Managing Trustee Timothy F. Geithner, Health and Human Services Secretary Kathleen Sebelius, Labor Secretary Hilda L. Solis, and Social Security Commissioner Michael J. Astrue. The two public representatives appointed by the President and confirmed by the Senate, are Charles P. Blahous III and Robert D. Reischauer began serving on September 17, 2010. CMS Administrator Berwick is designated as Secretary of the Board.

Baby-Boomers Delaying Retirement

Meanwhile, according to a new study released by the Bankers Life and Casualty Company Center for a Secure RetirementSM (CSR), a majority (73 percent) of our country’s middle-income Baby Boomers are rethinking their retirement timing due to the recent economic crisis and of those, 79 percent are delaying their retirement by an average of five years.

The study cites several factors contributing to this shift in retirement age and timing for the middle-income Baby Boom generation. According to the study, 71 percent worry about outliving their money once they retire, 68 percent have experienced a decline in the value of their retirement accounts within the past three years and more than half (55 percent) have saved less than $100,000.

Baby-Boomers Are Living Longer

Due in part to advances in health care treatment technology, Baby-Boomers are living longer. The newly released 2011 Medco Drug Trend Report projects that expensive new cancer drugs treating increasing numbers of patients could drive cancer drug spending by as much as 15 percent a year through 2013. While the incidence of some types of cancers may be decreasing, with better detection the overall numbers of cancers reported in an aging population has increased significantly. Due to advanced treatment, the number of U.S. cancer survivors is expected to increase by more than 30 percent – from 13.8 million in 2010 to 18 million by 2020.

Oncology drugs will likely rise to the second or third largest trend-driving category by 2015, following only diabetes and central nervous system (CNS) treatments, according to the newly released 2011 Medco Drug Trend Report. With the use of many newly introduced specialty drugs reaching market in recent years, oncology drug price inflation surged to 11.5 percent during 2010. More than 90 percent of anti-cancer drugs approved since 2004 cost more than $20,000 for a 12-week course of therapy, according to the Journal of the National Cancer Institute.

Rapid advancement in the area of treatment particularly in oncology has had the effect of dampening, if not completely defeating, the opportunity for generic substitute drugs to help offset these rising costs. “New cancer drugs reaching the market are expected to double during the next several years,” said Dr. Glen Stettin, Medco’s chief medical officer. “Early diagnosis, evidence-based treatment and enhanced coordinated care have essentially turned some forms of the condition into chronic illnesses that can be managed longer-term. Continued innovation, including companion diagnostic or pharmacogenomic testing, can help ensure the right person is getting the right drug at the proper dose and reduce waste.”

Many of these newer treatments are oral medications or can be self administered, changing the dynamic of cancer care delivery toward the home, rather than in physician’s office or infusion center. This dynamic shows no signs of abating.

Factors Leading to Treatment Abandonment

Concurrently, another study based on an analysis conducted by Avalere Health LLC using pharmacy transaction data over a two-year period from 2007 to 2009, found that ten percent of cancer patients failed to fill their initial prescriptions for oral anti-cancer drugs because of high cost-sharing and higher prescription activity. “Our study shows that many cancer patients are abandoning the medicine they need,” said Lauren Barnes, vice president, Avalere Health. “With 45.5 percent of Medicare patients in our sample facing cost-sharing greater than $500 for their first anti-cancer drug, this is a Medicare quality issue of the first order.”

“Cost-sharing clearly has an impact on whether a patient initiates his or her oral anti-cancer medicine, with the abandonment rate rising as the cost-sharing increases,” said Michael Johnsrud, PhD, one of the study authors and a senior vice president at Avalere Health. “Importantly, claims for cost-sharing over $500 have more than four times higher an abandonment rate than claims of cost-sharing with less than $100. This demonstrates that patients are confronted with potential barriers in accessing anti-cancer medications.”

The number of concurrent prescriptions also had an impact on abandonment of an oncolytic. Patients with more than five claims for non-cancer medicines in the previous month had an abandonment rate of 12 percent, as compared to nine percent for patients with no claims in the previous month.

Insurers Under Scrutiny

The Department of Health and Human Services (HHS) issued a final rule which requires independent experts to scrutinize any proposed increase of 10-percent for most individual and small group health insurance plans. This final regulation comes at a time when health insurance companies have reported some of their highest profits in years. One cause for these profits according to the HHS release is that actual medical costs are growing more slowly than what insurance companies projected when they set their 2011 rates last year, but many of the rates consumers and small employers pay today don’t reflect these lower costs.

States will have the primary responsibility for reviewing rate increases. While most states will take on this responsibility, HHS will serve in a backup role in states that don’t have the resources or authority to review rates. HHS has awarded $44 million in Affordable Care Act grants to states to help strengthen their oversight capabilities.

It is the opinion of HHS that combined with other important protections from the Affordable Care Act, these new rules will help lower insurance costs by moderating premium hikes and provide consumers with greater value for their premium dollar.

Translating the Rhetoric

What does all this mean for the Baby-Boomer? It means that Medicare is still going to run out of funds by 2024, based on current optimistic projections. It means that Baby-Boomers will be delaying retirement which is fortunate because they are living longer. In addition, medical advancements have enabled them to live longer, thus becoming more likely to contract debilitating diseases that will result in treatment costs that are escalating at a rate far exceeding the rate of inflation. It means that to manage the increased scrutiny of rate increases, the insurers who provide medical coverage (including Medicare) are implementing cost-sharing strategies which are ultimately driving more patients to abandon treatment.

The bottom line? There is NO FREE LUNCH! You cannot increase the number of people for whom treatment costs will be covered, while at the same time lowering total costs when those people live longer and contract diseases they never would have contracted except for the fact that they are now living long enough to get them. At what point do you recognize that health care is an individual responsibility, not a birth right?

About Larry

In 1986, Lawrence “Larry” R. Coutts recognized the need for physicians to learn the principles of running a successful practice and with his wife and business partner, Linda L. Coutts, co-founded Nephrology News & Issues, Inc., a Pennsylvania corporation, to publish a monthly news journal, Nephrology News & Issues, for the “business of nephrology.” This company later became NN&I, Inc., an Arizona corporation and a wholly-owned subsidiary of Medical News & Issues, Inc., another Arizona corporation which the Coutts’ established. Their stated mission was “to provide the best professional resources for the exchange of news and ideas in health care.” In November 2001, that mission was expanded into hematology and oncology with the establishment of HON&I, Inc., to publish the business news journal, Hematology & Oncology News & Issues. IN 2002, with the support of corporate sponsors and partners, the Initiative for HOPE (Hematology and Oncology Practice Excellence) was launched to help recognize community-based cancer clinics that exhibited standards of practice excellence. In 2008, the two publications were sold as Coutts decided to devote his energies and the resources of Medical News & Issues, Inc. to addressing the problems facing his generation of health care consumers. He has a BS from Carroll University in Waukesha, Wisconsin, and an MBA from the University of Wisconsin-Milwaukee. He has served on the Patients Advocacy Task Force of the American Kidney Fund, and served on the Publisher’s Advisory Council of BPA International, Inc., an independent circulation audit bureau for publishers. He has been invited frequently to speak at regional and national conferences on his favorite healthcare topics.
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One Response to Affordable Health Care for Baby-Boomers: At What Price?

  1. Larry says:

    Thanks for the feedback. At present there is no plan to do a newsletter, only to attempt to keep this space current and to invite comments to this site.

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