The Senior Citizens League (TSCL) Monthly Washington Update for the end of March 2023
March turned out to be a very busy month for issues Seniors are concerned about. We have reports about Social Security and Medicare solvency, Medicare Advantage payments, insulin prices, and more.
As always, TSCL is monitoring these and other issues that affect Seniors and we will keep up the pressure on Congress as we fight for you to protect and enhance your promised and earned benefits.
New Estimates Released on Medicare Solvency
Each year the Social Security and Medicare Boards of Trustees release a report about the financial health of both Medicare and Social Security. The good news is that Medicare’s hospital insurance trust fund, which helps pay for “Part A” inpatient hospital care, could be able to pay full benefits until 2031, three years later than last year’s projection.
According to the trustees, Medicare gained three extra years of solvency compared to 2022, meaning its funding will run out in 2031.
Once the reserves from Medicare’s Hospital Trust Fund are depleted, it would only be able to cover 89 percent of the expected costs.
As reported by The Hill newspaper in Washington, the board cited the evolving impact of the COVID-19 pandemic as part of this change, and “lower health care utilization through 2032” as one of the largest reasons for this change.
In what can only be seen as a tragedy, it was the fact that older and sicker individuals died during the COVID-19 outbreak, meaning Medicare beneficiaries are expected to be healthier on average and require fewer services to be paid for.
Hospital bills represent only a fraction of total Medicare costs. The report also looked at the projected costs for covering doctors’ visits and prescription drugs.
The expected effects of the drug price negotiation provisions included in the Inflation Reduction Act are expected to contribute to substantially lower projected spending on Medicare Part D.
President Biden proposed to extend the lifetime of Medicare’s Hospital Insurance fund into the 2050s as part of his budget rollout earlier last month. The plan included proposals to lower costs for beneficiaries and impose a higher tax rate on high earners.
Unfortunately, the report on Social Security was not as good. According to the trustees, Social Security’s finances continue to deteriorate. The recent surge in inflation worsened Social Security’s finances relative to the 2022 report, leading insolvency to occur a year earlier.
Social Security is 11 years from insolvency. If it reaches that point Social Security will not be able to pay full benefits to most current retirees under the law. The Trustees project the Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2033.
Including Social Security Disability Insurance (SSDI), the theoretically combined trust funds will be insolvent by 2034, when today’s 56-year-olds reach the full retirement age and today’s youngest retirees turn 73. Upon insolvency, all beneficiaries will face a 20 percent across-the-board benefit cut.
With insolvency looming, refusal to touch Social Security is an endorsement by our elected officials in Washington of a sudden 20 percent across-the-board benefit cut imposed on beneficiaries of all ages and incomes.
TSCL strongly believes that instead of playing political games and demagoguing efforts to save Social Security and Medicare, policymakers should come together and negotiate legislation that will save Social Security and Medicare. Congress must keep the promises about those programs that were made to America’s seniors and TSCL will keep fighting to make sure that happens.
Controversy over Medicare Advantage Overpayments Continues
In our February update, we told you that according to federal audits, eight of the ten biggest Medicare Advantage insurers — representing more than two-thirds of the market — have deliberately overcharged Medicare for the services they have provided.
What is more, four of the five largest players — UnitedHealth, Humana, Elevance, and Kaiser — have faced federal lawsuits alleging that efforts to over-diagnose their customers crossed the line into fraud.
In fact, Medicare-managed care plans will take in a projected $27 billion in excess payments this year because they spend roughly 6% more to care for beneficiaries than it would cost in the traditional, fee-for-service program, according to a newly released congressional report.
Obviously, this is very troubling in light of the looming financial crisis facing Medicare in the relatively near future.
But the insurance industry and Republicans have been using the debt ceiling fight and President Biden’s vows not to cut Medicare to oppose changes to private Medicare Advantage plans, which would help improve Medicare’s financial outlook.
The insurance companies have launched a multi-million dollar ad campaign and lobbying effort to oppose the rate change. You may have seen them on TV.
The Better Medicare Alliance—backed by insurers such as Aetna Inc., Humana Inc., and UnitedHealth Group Inc.—has spent $12.5 million since late December on an ad campaign warning of “cuts” to Medicare Advantage, and urging people to call the White House in opposition.
Lawmakers have joined the action too: Vern Buchanan (R-Fla.), a member of the House Ways and Means Committee, led a letter from 13 Republicans calling for HHS to reverse course on the rate change.
Jason Smith (R-Mo.), chairman of the House Ways and Means Committee, said he sees the rate notice as a cut for insurers and warned it could result in slashed benefits for those on Medicare Advantage plans.
Health and Human Services (HHS) Secretary Xavier Becerra pushed back on the claim, saying insurers would get an increase in payments and any benefit changes would be “those insurance companies doing it.”
“There is nothing that we’re doing that would require any insurance company to cut any benefits,” he said.
Bacerra has told lawmakers some insurers in Medicare Advantage are “gaming the system” and the government is spending too much on managed care.
“It’s hard to believe the amount of money being spent lobbying and doing commercials trying to prevent us” from overseeing the program, Becerra said recently at a hearing of the House Appropriations subcommittee that oversees HHS funding and vowed the government would continue its oversight.
Last week the Biden Administration announced that the Centers for Medicare & Medicaid Services will increase payments to Medicare Advantage plans, on average, by $13.8 billion, or 3.32% from 2023 to 2024. The original rate notice proposal, set to begin Jan. 1, 2024, was expected to increase plan payments by an average of roughly 1%, or $4 billion.
“This year’s update strengthens Medicare for our seniors and Americans with disabilities,” said a statement from Health and Human Services Secretary Xavier Becerra. “We are committed to ensuring private companies are holding up their end of the deal to provide quality care to beneficiaries and that payments to these companies.
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Senate Commerce Committee Approves Bill to Combat Rising Prescription Drug Prices
The Senate Committee on Commerce, Science, and Transportation has recently passed the bipartisan Pharmacy Benefit Manager Transparency Act to increase transparency in prescription drug pricing and hold pharmacy benefit managers (PBMs) accountable for deceptive and unfair practices that drive up prescription drug costs. The bill was approved 18-9 and now heads to the full Senate for a final vote.
According to a preliminary estimate by the Congressional Budget Office, the legislation would reduce the deficit by $740 million over the next 10 years.
While pharmacy benefit managers (PBMs) were initially formed to process claims and negotiate lower drug prices with drug makers, today they administer prescription drug plans for hundreds of millions of Americans and three PBMs control nearly 80 percent of the prescription drug market.
They serve as middlemen, managing every aspect of the prescription drug benefits process for health insurance companies, self-insured employers, unions, and government programs. They operate out of the view of regulators and consumers — setting prescription costs, deciding what drugs are covered by insurance plans and how they are dispensed – pocketing unknown sums that might otherwise be passed along as savings to consumers, and undercutting local independent pharmacies.
This lack of transparency makes it impossible to fully understand if and how PBMs might be manipulating the prescription drug market to increase profits and drive-up drug costs for consumers.
This new legislation generally prohibits PBMs from engaging in certain practices when managing the prescription drug benefits under a health insurance plan, including charging the plan a different amount than the PBM reimburses the pharmacy.
The bill also prohibits PBMs from arbitrarily, unfairly, or deceptively (1) clawing back reimbursement payments, or (2) increasing fees or lowering reimbursements to pharmacies to offset changes to federally funded health plans.
Further, PBMs must report annually to the Federal Trade Commission (FTC) certain information about payments received from health plans and fees charged to pharmacies.
TSCL strongly supports this legislation and we want it to be passed by the full Senate very soon. This is one of the few bi-partisan pieces of legislation that Congress could pass this year and we will do all we can to see that it succeeds.
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Major Drug Companies Announce Lower Insulin Prices
As people in the United States struggle to access affordable insulin, the big three drug corporations that manufacture insulin have repeatedly and sharply raised prices and aggressively sought to extend lucrative product monopolies, resulting in many billions of dollars in excessive spending.
Since the 1990s, insulin manufacturers have raised prices many times over for U.S. patients, as much as 1100%, despite their products remaining largely unchanged, and low production costs. Abusive pricing of insulin, which the very same corporations who sell insulin here sell for a fraction of the price in other wealthy countries, has led to immense profits for these corporations at the cost of preventable suffering and death of people who need insulin, in addition to billions of dollars drained from government coffers and consumers’ bank accounts.
But last month the drug maker Eli Lilly announced it is cutting the list prices for its most popular insulin products by 70 percent and capping out-of-pocket costs at $35 per month.
Less than two weeks later the drug company Novo Nordisk announced price cuts to their insulin products.
That move was followed by drug maker Sanofi which said it will cut the price of its most widely prescribed insulin in the U.S. by 78% and place a $35 cap on out-of-pocket costs for commercially insured patients who take the treatment, which is called Lantus. The moves will go into effect on Jan. 1, 2024.
This was good news and we hope drug companies will continue to reduce their prices so that more Americans can afford the prescription drugs they need.
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For progress updates, or for more information about these and other bills that would strengthen Social Security and Medicare programs, visit our website at www.SeniorsLeague.org or follow TSCL Facebook or on Twitter.