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Tag: drug prices
On Election Eve, Worried Voters Face Staggering Hikes In Healthcare Costs

On Election Eve, Worried Voters Face Staggering Hikes In Healthcare Costs

In my final post before the mid-terms, here’s where things stand for Americans on health care costs, which voters rank as either their first or second most pressing economic concern:

  • The cost of employer-sponsored health insurance will leap 8.2 percent in 2027, which will drive workers co-premiums up by a similar amount if not higher. (Worker co-premiums jumped nine percent last year.)
  • The average worker on a company-sponsored plan this year paid $8,460 in premiums and $3,564 in deductibles, co-pays and other out-of-pocket expenses. Combined, that’s 13.7 percent of the median household’s income.

  • The cost of individual and family plans sold on the federal and state exchanges, where open enrollment began this week, rose 15 percent for 2027. That’s the second straight year of double digit increases.
  • The uninsured rate rose to 11 percent this year after millions of people were thrown of Medicaid or lost their Affordable Care Act plans due to rising premiums and lost subsidies. That’s up from eight percent in January 2025 when President Trump took office for the second time.
  • While no one publishes reliable numbers, the price of seniors’ Medigap policies is also soaring. In New York State, for instance, UnitedHealth sought a 12.6 percent increase for its Medicare supplemental plans earlier this year. State regulators approved “only” a 5.6 percent increase, two percentage points higher than the overall inflation rate.
  • Seniors who purchase stand-alone drug plans will see a 50 percent increase in their average premiums in 2027, according to today’s KFF News. Trump’s response? “We have the lowest drug prices anywhere in the world,” he told a campaign rally in Ohio earlier this week.

    • I am traveling this week to San Antonio to attend the American Public Health Association’s annual meeting, where I will be moderating a panel discussion on Monday afternoon. The topic: Where the nation stands in its 100-year quest for universal coverage and where we go from here.

    Merrill Goozner, the former editor of Modern Healthcare, writes about health care and politics at GoozNews.substack.com, where this column first appeared. Please consider subscribing to support his work.

    Reprinted with permission from GoozNews

Health Inflation Won't Stabilize Until Politicians Confront Monopoly Hospitals

Health Inflation Won't Stabilize Until Politicians Confront Monopoly Hospitals

Today’s inflation report is a wake-up call for wannabe-be health care reformers. It provides the perfect opening for injecting how to control hospital prices into this year’s political debate.

The overall inflation rate ratcheted up 4.2% last month, driven largely by fast-rising gasoline and diesel prices that are entirely due to Trump’s ill-conceived, undeclared and unwinnable war against Iran. If you take out food and energy, inflation was up “only” 2.9%. That’s still nearly a full percentage point above the Federal Reserve Board’s target level.

But dig a little deeper into the numbers and you find medical inflation, which many Americans consider their most pressing concern, rose 3.6% over a year ago, faster than the core inflation rate. Prices for hospital services were almost entirely responsible for the jump — up 5.7% year over year.

The second largest component of health care services — physician fees — grew at a much slower pace, up 2.8% or about the same rate as core inflation. Drug prices fell 2.1% over the past year.

The drug price component of the consumer price index is somewhat misleading since the Bureau of Labor Statistics measures the change in existing drugs and generics, not the price of new drugs coming to market. Big Pharma introductory prices for new drugs like the popular GLP-1s have reached sky-high levels, which often come down somewhat after launch to attract more customers.

Novo Nordisk’s Wegovy, for instance, came to market at $1,349 a month, but now can be purchased for as little as $350 a month. That shows up as a major price decline in the index, even though many consumers still can’t afford it because their insurance companies won’t pay for it.

Speaking of insurance companies, the New York Times reports their prices fell 6.4% over the past year, which is hard to understand given the rising prices for almost all of the services they finance with the premiums collected from employers and consumers. I also don’t know where the Times got that data since I couldn’t find it in either the Bureau of Labor Statistics press release or the agency’s detailed data tables.

I suspect at least some of the decline in health insurance prices reflects what individuals pay for plans sold on the exchanges, where millions of people are switching to bronze plans from pricier silver plans to lower their upfront premiums. Unfortunately, when they use their insurance, they will have much higher out-of-pocket costs.

This isn’t a price decline. It’s a cost-shift. I suspect some health care economists will insist cost-shifting doesn’t exist, claiming it reflects consumer preference for the cheaper item.

None of this is good news for the nation’s hospital leaders, who have launched a major media campaign to shift the blame for rising health care prices onto health care’s other special interests. The American Hospital Association’s March report “The Cost of Care” blamed the surging cost of drugs, labor and supplies for their price increases.

Some of that is true, but the document offers a classic inside-the-beltway manipulation of data to make its case. The AHA report used a consulting firm’s data to show that “advertised salaries for registered nurses have grown 26.6% faster than the rate of inflation over the past four years. These increases are essential to maintain staffing levels but also contribute to the overall financial challenges hospitals face.”

Let’s take a closer look at that claim. The cumulative inflation rate between May 2022 and May 2026 was 13.8%, an average of about 3% a year before compounding. A 26.6% increase brings that to 17.5% over four years, or an average of about 4% before compounding. If anything, the AHAs data shows nurse wages have gone up about a percentage point faster each year than underlying inflation, which is what you might expect from a sector of the economy with a large union membership. Hospital prices, on the other hand, have gone up about two to three percentage points faster than inflation.

Higher wages for nurses can actually be a good thing for hospitals, which frequently hire traveling nurses to staff unexpected surges in patient load or temporarily fill open positions. The staffing firms that provide those nurses (like publicly-traded AMN Healthcare) impose huge mark-ups on the underlying nurse salaries, which make their cost considerably higher than hiring permanent staff. The same is true for many of the support staff occupations inside hospitals. If hospitals paid adequate wages and provided decent working conditions for their permanent staff, perhaps they wouldn’t have to rely on high-priced staffing firms to keep their facilities running.

Meanwhile, the House Energy and Commerce Committee today held a hearing on Capitol Hill to promote greater hospital and insurance company price transparency, an issue for which there is bipartisan support. The assumption is that greater transparency will promote competition and allow health care “consumers” to shop.

This ignores the economic realities of health care. First, only a small portion of health care services are shoppable. Second, there is little or no competition in most markets. Third, even where competition exists, most patients are locked into networks and hospital systems that offer a closed loop of primary care and specialty physician providers. More than half of all doctors in the country now work for either hospitals or insurance companies.

“The monopolization with regard to hospitals and so many health care interests exists and is getting worse,” Rep. Frank Pallone Jr. (D-NJ), the ranking member of the committee, said in his opening statement. “So, let’s not forget that … to use transparency more effectively …, we have to also look at the competitive environment to make sure it truly is competitive.”

I’m not holding my breath for Republicans to endorse greater antitrust enforcement. But it is disappointing that Democratic leaders are putting all their marbles on competition policy to bring down hospital prices, which under the best of circumstances will take years of court battles to bring results.

I didn’t get a chance to listen to the hearing today, but I bet not a word was said about putting hospitals on budgets, putting physicians on salaries and giving administrators the freedom to deploy their financial resources in ways that deliver better health outcomes. The American people are ready for meaningful change. So far, such proposals are missing from this year’s health care debate as we head into the mid-term election season.

Merrill Goozner, the former editor of Modern Healthcare, writes about health care and politics at GoozNews.substack.com, where this column first appeared. Please consider subscribing to support his work.

Reprinted with permission from Gooz News

At 'Washington Post,' Bezos' Bozos Struggle To Justify High Drug Prices

At 'Washington Post,' Bezos' Bozos Struggle To Justify High Drug Prices

I am tempted just to ignore the Washington Trump-Post after Jeff Bezos’ purge, but perhaps there is some ridicule value that can be exploited for the purpose of educating the public. The Post ran an editorial complaining that people looking to lower drug prices in the United States were being short-sighted because it just means that we will see fewer new drugs in the future. It said the real problem is that Europe doesn’t pay enough for drugs because they don’t give drug companies unfettered government-granted patent monopolies, but instead limit prices based on a drug’s usefulness.

Two simple numbers show how ridiculous the Post’s argument is. Last year we spent over $720 billion on drugs and other pharmaceutical products. The industry spent around $150 billion on research. That means patients in the United States paid almost five times as much for drugs as what the industry spent on research.

It likely costs around $150 billion to manufacture and distribute the drugs. (We know this based on the price that generic drugs sell for.) That leaves the industry with $570 billion to cover $150 billion in research. The rest goes to profits, advertising, high pay for CEOs and other top executives, and payoffs to politicians, doctors, and media outlets.

Fans of arithmetic, which I guess excludes the Washington Post editors and other Trumpers, would know that Europe would be paying plenty to cover research costs, even if its prices were 40 percent of U.S. prices. The only thing that would be accomplished by raising the price of drugs in Europe is that Jeff Bezos’ rich friends would become even richer.

If we want to talk seriously about lowering drug prices, we would be looking to change the way we support research. Instead of relying on government-granted patent monopolies, we could just pay for the research upfront, say by vastly increasing the $50 billion we now spend funding research through the National Institutes of Health. Then all the research could be fully open source, with all patents in the public domain.

Not only would this mean that new drugs could be sold as cheap generics from the day they are approved by the FDA, but research would likely advance more quickly since new findings would quickly be made freely available. This would allow researchers all over the world to follow promising leads and avoid proven dead ends.

This way of financing research would also remove the enormous incentive the industry now has to lie about the safety and effectiveness of new drugs. We saw this problem most clearly with the opioid crisis where the industry misled doctors about the addictiveness of the new generation of opioid drugs, but the issue of misrepresenting research comes up all the time. It is exactly what economic theory predicts happens when a government monopoly allows companies to sell products at prices that are thousands of percent above production costs.

I have been screaming about the corruption of the pharmaceutical industry for a long time and pushing direct upfront funding as an alternative. I am happy to see a new paper from Dana Brown at the Vanderbilt Policy Accelerator making the same argument.

There’s an old saying that intellectuals have a hard time dealing with new ideas, and direct upfront funding of pharmaceutical research is certainly a new idea to people who can’t imagine an alternative to patent monopolies. Also, since the major media outlets are controlled by rich people like Jeff Bezos, they aren’t anxious to publicize policies that could cost their rich friends hundreds of billions of dollars.

But at least folks who read my stuff can know. The Washington Post is lying to you. There are more efficient mechanisms to finance biomedical research which can give us both lower drug prices and better medicine. Drugs can and should be cheap, we don’t have to make them expensive with patent monopolies. Maybe one day we will be able to have a serious discussion about alternatives to patents to finance the development of new drugs.

'Great Healthcare': White House Delivers Trump's Concept Of A Non-Plan

'Great Healthcare': White House Delivers Trump's Concept Of A Non-Plan

One year into his second term, President Donald Trump on Thursday called on Congress to pass a health care plan that would do next to nothing to lower employer-based insurance costs or reduce out-of-pocket expenses for individuals and families.

The 20-paragraph “fact sheet” on the administration’s plan contained few specifics; no new ideas; had only one estimate of projected savings or costs. Its insurance reforms included either provisions already on the books or previously rejected Republican proposals that would make things worse and force more people into the ranks of the uninsured.

The stock market took notice. Insurance stock prices (IHF) rose almost 2% on the news.

Its lead provision called on Congress to enact a law forcing drug companies to set prices at international levels. Given the pharmaceutical industry’s widespread support on Capitol Hill (most of the GOP and a hefty share of Democrats have routinely opposed so-called international reference pricing), passage of such a law is highly unlikely.

Moreover, the administration could do this on its own if it really wanted to. The first Trump administration in its waning days proposed a far-reaching rule for international reference pricing, which was rejected by the Biden administration in favor of pursuing price negotiations with manufacturers. Last month, it proposed two pilot projects that would apply international reference pricing to only 25% of Medicare patients, and then for only five years. The plan unveiled today made no mention of either effort.

Nor has the administration moved to expand rules over the drug prices it already has some say over — those for Medicare. The Medicare drug price negotiations law affected only a handful of high-priced drugs. The plan makes no mention of expanding that authority.

Financial markets took notice. Drug company prices (XPH) fell by less than 1% after the announcement.

The health care trade press was duly skeptical about the plan, calling it “a hodgepodge of health care policies that would create new price-control power over pharmaceutical companies, but that otherwise wouldn’t fundamentally overhaul America’s existing system,” as StatNews report opined.

Here’s what one investment advisory firm told its clients: “We view this new document as a largely political exercise. We think it is intended to demonstrate that the White House is doing ‘something’ about affordability and healthcare prices, but we believe the policies either stand little chance of being enacted by the current Congress or will have a minimal impact if enacted.”

The ‘details’

For drugs:

Beyond asking Congress to codify international reference pricing, the plan calls for making more drugs available as cheap over-the-counter medications. While this could limit sales of a few prescription anti-acids and pain relievers, for which there are already plenty of cheap over-the-counter alternatives, it would have no impact on the high prices of biotech specialty drugs, which are the major drivers of escalating pharmaceutical spending.

Nor would it affect the slow progress in bringing biosimilars to market, or their pricing. Most biotech drugs are either injected or infused in clinical settings, which makes them inappropriate for over-the-counter sales.

The plan also calls for Congress to end the kickbacks pharmacy benefit managers receive from large drug companies for including their products on preferred drug lists. The CBO estimated the GOP bill that passed the House in December with this reform would save drug insurance plans about $15 billion a year, a tiny fraction of the more than $300 billion that patients and their insurers spend at retail pharmacies each year.

For health insurance premiums:

The plan calls for scrapping the existing subsidy system for Obamacare plans and replacing it with a voucher that allows people “to buy the health insurance of their choice.” This refers to the GOP-backed Lower Health Care Premiums for All Americans Act (H.R. 6703), which would expand association plans that don’t meet basic Obamacare requirements like providing essential benefits or setting limits on out-of-pocket expenses.

The White House fact sheet touts the Congressional Budget Office estimating the association plan proposal would save $36 billion for the federal government. It didn’t mention the CBO’s conclusion it would cause 100,000 people to drop existing coverage each year over the next decade while adding just 700,000 newly insured through inferior association plans.

The White House plan also calls on insurance companies to publish the percentage of their revenues paid out in claims versus overhead and profit costs. The Affordable Care Act of 2010 already limits insurers, both on the exchanges and in the private market, to paying out at least 85% of the revenue in medical costs for large company plans and 80% for small businesses.

If there’s a problem, it’s in enforcement, not the standard. Indeed, I would like to see a 90% medical loss ratio as the best way to limit insurance industry marketing spending.

For providers:

The plan includes nothing about limiting hospital pricing; enforcing antitrust rules in every health care sector; or rectifying pay inequities between primary care physicians and specialists. Instead, its sole approach to addressing provider sector pricing is greater price transparency, which is already required by a rule adopted by the Centers for Medicare and Medicaid Services in 2019.

That has been a bust for two reasons. First, hospitals post those prices on websites or in places where consumers can’t find them or in such complicated tables that the average person has no idea what they mean.

But more importantly, even if prices were published in an easy-to-read format and posted on a wall, as the plan proposes, what would mean to most people? An analysis by the Health Care Cost Institute of the 70 most shoppable services (routine procedures like colonoscopies or cataract surgeries, for instance) accounted for just 12% of health care spending.

To sum up: When it comes to health care, affordability is most Americans’ number one concern. The plan the Trump administration announced Thursday does almost nothing to address that problem.

Merrill Goozner, the former editor of Modern Healthcare, writes about health care and politics at GoozNews.substack.com, where this column first appeared. Please consider subscribing to support his work.

Reprinted with permission from Gooz News

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