According to a new report from Chad Terhune with Kaiser Health News, insurance giant Anthem is proposing a 35% premium increase for people in California who purchase insurance through the state’s individual marketplace. Their supposed reason for such a significant rate hike? An expected 30% increase in prescription drug costs.
There’s just one problem: Anthem’s own pharmacy benefit manager — Express Scripts — has been telling a different story. According to its trend report for 2016, Express Script notes:
- Average unit prices for drugs rose only 2.5%;
- Per-person spending on prescription drugs increased 3.8%;
- Specialty drug spending experienced its slowest growth in more than a decade; and
- Spending on treatments for hepatitis C also declined due to lower costs and utilization.
What about the growing use or utilization of prescription medicines, which seems to be a leading concern for Anthem? Here again the facts show a different reality. According to Express Scripts, utilization only increased 1.3% for all drugs last year.
It is important to emphasize that the data provided by Express Scripts reflects what its clients are actually experiencing, including Anthem. And this is very similar to what others are experiencing across the country:
- The Centers for Medicare and Medicaid Services (CMS) reports that national growth in prescription drug spending is slowing, from 9% in 2015 to less than 6% in 2017.
- On drug prices, CMS data reveals an estimated 1.6% growth this year.
- Meanwhile, spending on prescription medicines continues to reflect approximately 14% of total health care spending—roughly the same as in 1960.
When faced with the facts, prescription drug costs do not justify the premium increases those in California may soon experience. Needless to say, this has left more than a few people scratching their heads.
Charles Roehrig, a health economist at Altarum’s Center for Sustainable Health Spending, told Terhune, “‘I can’t understand why Anthem is predicting 30 percent [emphasis added].” And according to his report, “The advocacy group Consumers Union also questioned why Anthem’s cost projections are so much higher than its competitors, and it has asked state regulators to demand additional documentation from the nation’s second-largest health insurer [emphasis added].”
Unfortunately, we’ve seen this happen before. A staff attorney for Consumers Union once noted, “Pharmaceutical expenses may be the factor most open to exploitation by health plans searching for a Trojan horse with which to usher in excessively priced insurance rates.” That’s why BIO President and CEO Jim Greenwood has stated:
“BIO’s goal is to get all stakeholders together to reform our broken healthcare system. However, we’re also going to continue to hold insurers accountable for their actions.”