Reducing costs a ‘priority’ for Trump, lawmakers
President Donald Trump laid down a marker in this State of the Union address last week, declaring healthcare costs the “next major priority for me.”
He’s not alone.
“If the president focuses on reducing healthcare costs and makes that our target, rather than a seemingly perpetual argument about Obamacare, that will be a big service to the country, because that’s what we’re trying to do,” Sen. Lamar Alexander (R-Tenn.) said.
With cost and transparency dominating the debate, it was a pretty rough week for the industry.
During the State of the Union, Trump put significant heft behind HHS’ proposed reference-price model, declaring it unacceptable that Americans pay higher drug prices than people in other countries. He wants Congress to pass legislation that “takes on the problem of global freeloading and delivers fairness and price transparency.” Senate Finance Committee Chair Chuck Grassley (R-Iowa) welcomed the call to action, but warned that policymakers will “have their work cut out” for them given Big Pharma’s war chest.
While drugmakers are taking the brunt of the hits in Washington, hospitals are not off the hook. In fact, a study released last week suggested that hospital prices are the main driver of healthcare spending inflation. For inpatient care, hospital prices grew 42% from 2007 to 2014 while physician prices rose 18%, according to researchers who studied the Health Care Cost Institute’s claims data for people with employer-sponsored insurance from Aetna, Humana and UnitedHealthcare. Similarly, for hospital-based outpatient care, hospital prices increased 25% while physician prices grew 6%, according to the Health Affairs study. About 33% of total healthcare spending is directed toward hospital care, translating to about 6% of total GDP, according to CMS data. Healthcare inflation in the U.S. is projected to grow by an average of 5.5% annually from 2017 to 2026, ultimately reaching $5.7 trillion by 2026, the CMS estimated.
A bipartisan effort to curb the practice of surprise billing picked up steam last week. Six senators, led by Bill Cassidy (R-La.) and Maggie Hassan (D-N.H.), penned a letter to a broad swath of insurers, employers and providers asking insurers how their out-of-network payments compare with Medicare rates and provider charges. The senators also probed whether fixing one area could risk raising costs overall, asking for data to show whether tying an insurance plan’s out-of-network rate to an average of provider charges would drive up premiums. Hospitals were asked to show the percentage of their earnings from emergency care and specialty department treatment that comes from balance billing. The senators also sought the percentage of specialty care given to patients at an in-network hospital that is billed as out-of-network.