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Why Medicare Part B Premiums Are Going Down · CareTalk: Healthcare. Unfiltered.

• 0:00
  - Welcome to "Care Talk." America's home for incisive debate about healthcare business and policy.
• 0:05
  I'm David Williams, President of Health Business Group.
• 0:08
  - And I'm John Driscoll, the CEO of CareCentrix.
• 0:11
  David, it's that time of year again when we talk Medicare premiums.
• 0:17
  We've got I think close to 40 million people in original fee for service Medicare where the traditional Medicare and almost 30 million in Medicare Advantage, the managed care version of Medicare.
• 0:30
  With cost of life going up, how much are healthcare premiums going up in Medicare?
• 0:37
  - So, John it's sort of axiomatic.
• 0:39
  We expect every year that premium is gonna go up.
• 0:42
  And last year premiums went.
• 0:42
  - It's healthcare.
• 0:44
  Just everything, John.
• 0:45
  In this economy, of course everything's going up.
• 0:48
  Last year, the premiums jumped a lot, but not this year.
• 0:50
  And that is weird cause I thought inflation was actually picking up.
• 0:54
  So, let's talk about what's happening and why.
• 0:56
  But the headline, John is the premiums are not going up, they're going down.
• 1:00
  - How can that be, David?
• 1:03
  - You know, so everyone wants to know, how much are Medicare premiums going up in 2023.
• 1:07
  And what's actually happened, the so-called part B premium, B like baby, is going from$170 a month to a $164.90 and the deductible's dropping too from $233 to $226.
• 1:21
  - Say it ain't so.
• 1:22
  Have we suddenly tamed healthcare prices?
• 1:25
  I mean, are people listening to all of our wonderful ideas?
• 1:29
  I mean, this is the only healthcare...
• 1:32
  I think it's the only healthcare thing other than drugs going generic, where I've heard about premiums and costs going down in the middle of this massive inflationary environment.
• 1:42
  Are you telling the truth, David?
• 1:43
  - I'm telling the truth, John and I'm gonna say the word that you always tease me when I say it.
• 1:47
  Aduhelm, that's the reason.
• 1:50
  - God bless you.
• 1:50
  - Thank you...
• 1:52
  Thank you, John.
• 1:52
  I'll see I have my Kleenex round.
• 1:54
  So, last year the reason that the premium went up so much was because this new Biogen drug for Alzheimer's was being introduced and it was gonna be a budget buster John, like a blockbuster.
• 2:05
  And the premium actually went up almost 15%.
• 2:09
  And guess what?
• 2:10
  Aduhelm's not really being used and so, the premium's going down and that's the main driver.
• 2:14
  One drug, John.
• 2:16
  - I'm not sure I'm a buyer of that, but Aduhelm, just for those who may not have remembered it was the quasi approved drug from Biogen that allegedly helped people with Alzheimer's.
• 2:35
  And I should note today that Biogen had reported some results about a drug that we should probably talk about in another podcast, maybe with Dr. Rudy Tansy.
• 2:45
  Alzheimer is increasingly common.
• 2:48
  The fastest growing part of the population is people over the age of 80.
• 2:53
  Age-related dementia is a huge burden on society.
• 2:58
  And if you recall, David, Biogen I believe was the manufacturer.
• 3:03
  But the Aduhelm was initially had very mixed results as to whether it helped with Alzheimer's.
• 3:10
  But given the need, they just decided to price it through the roof.
• 3:14
  So what happened to the Alzheimer's drug, Aduhelm?
• 3:19
  - Well basically, the FDA approved it, but then, CMS basically recommended that it not be used or be used in very narrow circumstances.
• 3:27
  And nobody really wants to prescribe it because it doesn't really work.
• 3:31
  Now, as you say, John, the need is still there, but in terms of Medicare and the part B premiums, it's not affected this year.
• 3:37
  Maybe that other drug will be out there.
• 3:39
  John, I thought you were gonna ask me, not about Aduhelm just to embarrass me, but also what is Medicare Part B?
• 3:46
  I mean part B, A, B, C, D, how long does it go?
• 3:51
  - Well, why don't you step back and explain kind of how Medicare works.
• 3:57
  I'm gonna see whether you get the details right.
• 3:59
  I'm just gonna sit back and see whether you screw anything up.
• 4:01
  - Oh boy, John, I hope I don't have the Aduhelm moment.
• 4:03
  So, you know, Medicare is primarily for people who are over 65 years of age.
• 4:09
  But also, it's for people with disabilities and will those with end stage renal disease.
• 4:13
  We talk about that on a different podcast.
• 4:16
  And there's this Medicare tax that goes along with your social security tax.
• 4:21
  And the idea is that's most to fund Medicare.
• 4:23
  Medicare was originally so called part A, that was the hospital insurance, but then they added part B later on.
• 4:28
  Part B is for outpatient services, like doctor visits and a whole bunch of other things, including some drugs that are prescribed like infused drugs, like Aduhelm on an outpatient basis.
• 4:39
  Part C is actually Medicare advantage.
• 4:42
  We talked about before.
• 4:43
  And part D is the outpatient drug benefit for people who have part A and part B, but not part C.
• 4:48
  Although part C has-- And while you boringly navigate through the alphabet soup that is the different parts of Medicare, maybe give some context here.
• 4:59
  In 1964 when Medicare was originally kind of created by the Johnson administration, hospital costs were the crippling costs that people had a really hard time, particularly elderly folks and poor people had a hard time actually affording.
• 5:14
  And the costs of physician services, what's currently part B bravo, not part A alpha.
• 5:20
  Things like doctor visits and home health and crutches and basically, equipment.
• 5:28
  None of that stuff was that expensive as everything has been more expensive.
• 5:34
  What the country has done, has chosen to cover not just the hospital part, but also the services part.
• 5:40
  And then part D, David, is the drug benefit because honestly, drug costs are increasingly a higher and higher percentage of the total costs.
• 5:50
  And it's, in fact, for commercial plans, drug costs on a per member month basis are nearly equivalent or greater than the cost of covering, ensuring hospitalizations and that's what those extraordinary expensive drugs and just the day-to-day expensive drugs where big pharma can jack up the prices monthly.
• 6:14
  That's really created the need to kind of continuously extend the coverage.
• 6:20
  But all of that said, is this good news, David with this premium reduction?
• 6:26
  - Sure, I mean it's good news because for the people that are paying it, they're gonna have less coming out of their social security check, which is where the funds come from, so that's a good thing.
• 6:35
  John, I hesitate to say this, but you actually raised a good point about drug pricing.
• 6:40
  Yeah, inadvertently, perhaps, but if you say how much...
• 6:43
  I understand why there's like the A, B, C, D, those make sense, but now you talked about, well there's drugs in part A cause if you get drugs when you're in the hospital, then there's drugs in part B, like an infused drug and non self administered drug.
• 6:55
  And then, there's drugs in part D as well.
• 6:58
  And then, Medicare Advantage is covering drugs too.
• 7:00
  So, it's actually hard for the government to even just to look and say how much is Medicare spending on drugs and some of these might be in part A or part B or part D, depending, could be the same drug.
• 7:11
  And so, it's actually kind of hard to keep track of.
• 7:12
  So, I think it works against the ability to control drug spending the way it's set up.
• 7:18
  - I'm not sure where you're going there.
• 7:21
  I mean why shouldn't you put the drugs where the...
• 7:25
  Again, I don't know where you're going.
• 7:27
  I think the government could actually lean in and as our government, the US government, could like every other country, actually negotiate drug prices for the...
• 7:40
  I mean, I I believe that...
• 7:43
  I mean, I think currently Medicare covers about just under 20% of the population.
• 7:50
  It's close to...
• 7:52
  I mean, I think it's the second largest budget item in the federal government, Medicare, just Medicare.
• 7:57
  12-ish percent of the total federal government.
• 8:02
  We take a big chunk of that drugs, we negotiate prices or rate set prices for everything other than drugs.
• 8:09
  I mean, why shouldn't the federal government...
• 8:11
  I mean, how do you defend your position that they can't negotiate drug prices, David?
• 8:16
  - I was trying- I mean, come on!- I was trying- Step up.
• 8:18
  - I was trying to give you some kudos for racing a point.
• 8:22
  It turns out you weren't raising it.
• 8:23
  You don't even understand what the heck I'm talking about.
• 8:25
  But, to be that as it may, the government, they haven't negotiated prices on Medicare Part D.
• 8:33
  It was part of the original part D not to even allow it.
• 8:36
  Now the inflation reduction act that was just passed actually does say that starting in 2026, Medicare can start to negotiate the price of 10 drugs, which goes up to 15 new ones, the next year in 20 the year after that.
• 8:48
  Those are drugs that have been on the market for a long time that don't have any generic equivalent or biosimilar.
• 8:55
  So it actually, rather than me defending my indefensible position as you would put it, say that actually congress managed to pass something that that fits what you keep jaw-boning about which is these drugs that aren't that innovated, that's been on the market for a long time and have no competition.
• 9:11
  So I think they did the right thing, John.
• 9:12
  Someone was listening to you, even if it wasn't me.
• 9:15
  - Well, I think what's really interesting about that is if you think about one drug potentially taking a...
• 9:24
  I don't think it was 15%, I think it was a 14.5% increase in premium last year at a time when costs were flatter going down, pretty dramatic.
• 9:33
  The fact that you could go up and go down pretty significantly in terms of premiums.
• 9:39
  What was the dollar differences in the premiums, David?
• 9:42
  - So, the premiums, it's a monthly premium and it's now gonna be$165 a month for next year and it was $170 for this year.
• 9:52
  - So, that matters to people on a fixed income.
• 9:54
  That one drug could make that much of a difference tells you how important the decision to start to negotiate, even a little bit of this could mean in terms of resetting the relationship between big pharma and the federal government.
• 10:10
  I mean, the reality is they are walking a tight rope because we want to keep inventing great drugs that help people, but we kish can't beggar the government.
• 10:18
  - Oh I think John, negotiating 10 drugs in 2026 is not walking a tight rope, John.
• 10:26
  That's like flying Melendez.
• 10:28
  They're climbing up there on like stair five, like waving off to people.
• 10:31
  Hello, we're thinking of getting ready for the show.
• 10:33
  You might wanna get your popcorn and get back to you seat.
• 10:35
  It's not gonna be much of a show.
• 10:37
  And then, when they do get up on the tight-- David, we haven't even bothered, we haven't even bothered to go up the ladder! I mean this is a big win for people.
• 10:45
  I think your Wallenda insult will not stand.
• 10:51
  And by the way, I don't even know what...
• 10:53
  That reference is like from the fifties and you're not that old, buddy.
• 10:57
  - John, we throw a lot of numbers around, a lot of dollar numbers and we're talking about premiums and you know, how is Medicare financed really?
• 11:05
  Because there's supposed to be like a trust fund, it's coming outta my paycheck, but somehow, I mean does it all add up?
• 11:13
  What do you mean the government spending?
• 11:14
  I paid for it when I'm working.
• 11:15
  - There are three or four ways that the federal government pays for Medicare.
• 11:21
  There's the payroll tax that everybody pays.
• 11:24
  And I think that's about roughly 53%.
• 11:28
  That's funding the annual costs.
• 11:32
  You've got two trust funds.
• 11:36
  It's not just one Medicare trust fund and then there's the incremental premiums and the the amount that people pay as part of...
• 11:45
  Because it's not a get covered in no pay kind of thing.
• 11:49
  There are the premiums that you refer to.
• 11:51
  It is also tiered a little bit to tag or increase the prices or the cost sharing if you will for those over about$90,000 a year in income.
• 12:03
  And then, there's some incremental pieces and bits, but only 53% of the annual costs are actually paid through payroll taxes.
• 12:10
  So, we actually have to pay a lot of attention to how it is funded.
• 12:14
  That may be a better topic for another session, just cause it's kind of complicated.
• 12:18
  But what makes it more relevant to the current consumer and citizen is we've got 10,000 people turning Medicare eligible every day.
• 12:30
  We're in the midst of the baby boomers, this big bulge in the population bracket that are the babies from the fifties and sixties turning 65.
• 12:42
  And so, you've got sort of an extraordinary acceleration of people who are eligible for Medicare and you also have an increasing lifespan.
• 12:51
  which increased the vast- Not last year.
• 12:54
  of the population over 85.
• 12:56
  You know, obviously the public health emergency in COVID took real bite out of the vulnerable elderly, but you're still gonna see Medicare as a percentage of the total dollars and frankly of the total payments.
• 13:09
  It's gonna continue to increase for at least the next five or 10 years.
• 13:13
  - John, there's one other point that, I know we were talking about mostly about the Part B premiums, but there's another element about drug costs that it's not 2026 and it's not just a few drugs, it's one particular one, which you've also talked about a lot, which is insulin.
• 13:27
  And as part of the inflation reduction act, we have a cap on insulin for people in traditional $35 a month which is--- A win! I guess you're gonna criticize that one too, I guess.
• 13:41
  - John, you're so touchy today.
• 13:42
  So, I wanna close with a question, John.
• 13:45
  We're getting close to the midterm elections.
• 13:47
  Healthcare is a big issue, I think for people.
• 13:51
  How, if at all, are some of these changes in the Medicare premium, insulin, inflation reduction act as they relate to healthcare, are they gonna affect the midterm elections and if so, how?
• 14:04
  - I think the only thing that's really gonna move the needle with regard to healthcare is the Dobs decision and the the overturning of Roe V. Wade, which is got some of these very very difficult cases of rape, incest, disabled children and the the no exceptions abortion rules that are being set up in places like Arizona.
• 14:25
  I think the biggest healthcare lever in this particular midterm is gonna be women's health issues.
• 14:32
  Honestly, I think that the inflation reduction act, which is a material be capping insulin prices in a country where 30 to 40% of the people are obese and and diabetes is raging, is absolutely critical.
• 14:46
  And increased insulin costs affect poor people more and vulnerable people more than anything.
• 14:51
  But the one big healthcare issue, I believe for the midterms is gonna be women's health issues.
• 14:56
  I think the rest of this is kind of complicated healthcare noise.
• 14:59
  I mean, what do you think, David?
• 15:01
  - John, I think you'd be a great politician because you answered the question you wanted to answer as opposed to the one that I asked, but it was close enough to the one that I asked that you could get away with it.
• 15:08
  So yes, I think that the Roe V Wade being overturned is the biggest healthcare issue for the election.
• 15:14
  Having said that, even people who are apolitical are gonna be interested in what is coming out of my social security check next year for healthcare and isn't it nice that it's going down as opposed to up.
• 15:30
  And so, I think it will have some complimentary advantage that may accrue to the party in power, which-- Itsy bitsy.
• 15:38
  - Yeah, all right, we'll see, John.
• 15:41
  Don't forget to cast your vote.
• 15:42
  In any case, that's it for yet another episode of "Care Talk." We've been talking today about Medicare and the Part B premium decrease that people weren't expecting.
• 15:53
  I'm David Williams, President of Health Business Group- And I'm John Driscoll, the CEO of CareCentrix.
• 15:58
  And if you like what you heard or you didn't, please subscribe.
• 16:02
  (upbeat music)