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Axios Vitals

The Biden administration's decision Thursday to offer limited Medicare coverage for Biogen's controversial Alzheimer's drug Aduhelm raises questions about what's ahead for other new and costly drugs.

Driving the news: The Biden administration announced Medicare will cover Aduhelm, but will limit the coverage to patients enrolled in a clinical trial in order to access the drug.

Those patients must also have mild rather than advanced symptoms of the disease and show evidence of a build-up of amyloid plaques in the brain, which is one of the hallmarks of the disease.

The class of drugs Aduhelm is part of will be subject to similar conditions unless they're approved through the FDA's traditional drug approval pathway.

"There is potential for promise with this treatment. However, there's not yet enough evidence of clinical benefit to say it is reasonable and necessary for people with Medicare," said CMS chief medical officer Lee Fleisher in a call with reporters.

Catch up quick: Aduhelm received "conditional" approval from the FDA in June with the requirement that further trials show the drug slows cognitive decline and is safe. 

As the first Alzheimer's drug to win approval in about 20 years, it spurred excitement and an intense advocacy push from Alzheimer's patient groups. But it has been widely panned within the medical community over unproven clinical benefits, serious side effects and $28,000 annual price tag.

That put it at the center of an intense lobbying battle in recent months, as well as congressional debates over the FDA's "accelerated approval" process.

What they're saying: "The big question will be 'Is this really just CMS talking about one class or is CMS going to expand this out and consider this for accelerated approval for other drugs?" Chris Meekins, a former HHS official who is now an analyst at Raymond James, told Axios.

"I continue to believe this is a special case and this won't become a broader policy for drugs that receive accelerated approval," he said. 

Yes, but: Others say there are more far-reaching precedents.

"One of the implications of it is: What is the order for getting approval for a drug?" Mark Miller,  a former top Medicare official who is now at Arnold Ventures, told Axios.

"Are we asking manufacturers to produce their evidence in order to get FDA approval and ultimately CMS coverage? Or are we starting to relax our evidence standards? This should be the exception," he said. 

The other side: "This unprecedented CMS decision effectively denies all Medicare beneficiaries access to Aduhelm," Biogen said in a statement. "These coverage restrictions, including the distinction between accelerated approval and traditional approval, have never been applied to FDA-approved medicines for other disease areas."

George Vradenburg, chairman of patient group UsAgainstAlzheimer's called the decision "devastating" for Alzheimer's patients, but also said it set a precedent that could apply to other drugs like cancer or HIV.

"The precedent they're setting is that Medicare beneficiaries cannot have access to any drug unless it is proven in a phase 3 clinical trial to produce a clear clinical benefit," he said. "That means every accelerated approval ... is not going to be covered until there is a demonstrated clinical benefit for those drugs." 

What to watch: This decision will limit the overall number of patients who will likely access the drug.

That could mean a previously announced premium hike linked to the cost of the drug could come back down.

Medicare's limits on Aduhelm coverage sparks questions about future drugs

The Biden administration announced Medicare will cover Aduhelm, but will require patients to be enrolled in a clinical trial in order to access the drug.

Alzheimer's disease

Health care costs

The U.S. faces a range of health care flashpoints — unaffordable drugs, opioids, vaping — as we debate whether to adopt universal care. For now, the Affordable Care Act is the law of the land, but Republicans want to issue it a final death blow.

Health

Percent change in the number of uninsured people if premium tax credits expire, 2023

Data: Urban Institute Health Insurance Policy Simulation Model 2022; Cartogram: Jacque Schrag/Axios

A disproportionate share of young adults, low-income, Black Americans and residents of Southern states will lose health coverage if Congress doesn't extend enhanced Affordable Care Act subsidies, according to a new analysis by the Robert Wood Johnson Foundation. 

Why it matters: The analysis estimates that 3.1 million Americans would become uninsured when the subsidies expire beginning next year, and millions more would face much higher premiums than they currently pay. But those effects wouldn't be felt evenly across the country.

The big picture: Democrats' coronavirus relief package last year made ACA subsidies more generous and expanded who was eligible for them, but only temporarily. 

Millions more people have entered the ACA marketplaces as a result. But Democrats' efforts to extend the subsidies have stalled in the Senate, along with the rest of President Biden's domestic agenda. 

Details: The uninsured population would increase most significantly among people with incomes of 138-400% of federal poverty absent congressional action, according to the analysis. 

When looking at race and ethnicity, Black Americans would see the largest change, followed by white Americans. Young adults ages 19-34 would be the most affected age group.

States that haven't expanded Medicaid, like Florida, Georgia and South Carolina, would see some of the highest increases in their uninsured populations.

Yes, but: Extending the larger subsidies would cost the federal government more than $25 billion in 2023 alone, and $305 billion over 10 years.

Between the lines: Being uninsured obviously has implications for people who then struggle to pay for health care when they need it. 

But it also creates financial problems for hospitals, which are required to treat patients having emergencies regardless of their ability to pay.  

What we're watching: Insurers calculate premiums months before open enrollment begins in November. 

That means that if the tax credits aren't extended in the first half of this year, insurers may not have time to adjust their premiums accordingly — meaning premiums would likely be inflated, the authors of the analysis argue.

That, in turn, could discourage marketplace enrollment and increase federal costs.

Go deeper: End of the pandemic could usher in spike of uninsured

Affordable Care Act subsidy cliff hits Southern states hardest

More than 3 million people will lose their insurance if enhanced ACA subsidies expire, per an analysis.

Affordable Care Act

Medicare will cover the controversial Alzheimer's drug Aduhelm but it will limit it to patients who enroll in a clinical study, officials announced Thursday.

Why it matters: The drug has been the center of a fierce battle between patient groups and members of Congress pushing for access, and members of the medical community questioning the lack of evidence supporting the drug's safety and efficacy. 

CMS is easing up on its initial plan which could have required a patient to undergo a randomized controlled trial in order to obtain the drug and will require a broader number of trials to access the drug.

Medicare will cover controversial Alzheimer's drug Aduhelm with limits

Medicare will limit coverage of the drug it to patients who enroll in a clinical study, officials announced Thursday.

Biogen

Data: Patients for Affordable Drugs.; Chart: Baidi Wang/Axios

Two blood thinners that Medicare spent a collective $46 billion on between 2015 and 2020 have more than doubled their list prices since entering the market, according to a new analysis by Patients for Affordable Drugs.

Why it matters: List prices don't reflect the rebates negotiated between drug manufacturers and payers, but they are often used to determine Medicare Part D cost sharing — meaning as prices go up, patients pay more out of pocket. 

The big picture: More than 8 million Americans regularly take blood thinners. Until 2010, the standard of care was warfarin, which was cheap but carried the risk of heavy bleeding. 

In 2011, Johnson & Johnson's Xarelto entered the market, and Bristol Myers Squibb and Pfizer's Eliquis followed it in 2013. Both are much less risky but had list prices of more than $200 for a month's supply — much higher than warfarin.

Those list prices have increased in tandem over time, and both are now more than $500 for a month's supply. 

Eliquis was Medicare's top-spending drug in 2020, and Xarelto was the third most costly. In 2020, nearly 4 million Medicare beneficiaries took one of the two drugs.

The other side: Drug companies say health plans are responsible for the higher costs patients are seeing. 

“People should have affordable access to the medicines they need, yet many do not, in part because of the growing affordability gap between the lower net prices for insurers and the higher costs insurers charge patients,” said a Johnson & Johnson spokesperson.

Between the lines: It's unclear how much health plans pay for the drugs once rebates are taken into account, making it impossible to compare net prices over time.

Drugmakers argue that they've had to give insurers and pharmacy benefit managers increasingly large rebates, which are reflected in drugs' rising list prices. After taking rebates into account, Xarelto's net price is 40% of its list price — a 60% discount, according to one estimate. 

But some patients' out-of-pocket drug costs are determined based on list prices, including those who are still in their deductible phase, the uninsured and those with cost-sharing requirements.

What we're watching: Neither blood thinner has a generic competitor on the market, and each has received dozens of patents that will likely keep rival products off of the market for years, per the analysis.

The bottom line: Finger pointing by various industry players obfuscates who wins in this scenario, but the losers are definitely patients who rely on the blood thinners.

Medicare blockbusters' list prices more than doubled since launch

Net prices are unclear, but patient cost-sharing is often based on a drug's list price.

Drug prices

Rate of avoidable deaths and maternal mortality in women, 2021

Data: The Commonwealth Fund; Chart: Baidi Wang/Axios

American women of reproductive age score worse on just about every major health metric compared to their peers in other wealthy countries.

Why it matters: It's no secret that the maternal mortality rate in the U.S. is the highest among developed nations.

But a new report from the Commonwealth Fund offers a higher resolution view of the role that cost plays as a barrier to care for women of reproductive age.

"Maternal deaths and complications may be a bellwether for the U.S.’s wider failures with respect to women’s health and health care," the authors wrote.

By the numbers: The researchers looked at women ages 18–49 in 11 developed nations and found the U.S. had the highest maternal mortality rate by far at 23.8 maternal deaths per 100,000 live births. 

When broken out by race, the rate was 55.3 deaths per 100,000 births for Black women, or about triple the 19.1 deaths per 100,000 for white women and 18.2 deaths per 100,000 for Hispanic women.

Zoom out: American women also were among the most likely to have two or more chronic conditions, skip necessary care due to cost and have the worst rate of avoidable deaths. For instance...

Chronic conditions: The U.S. and Canada tied for having the highest percentage of women of reproductive age — 20% — who had two or more chronic conditions in 2020. Only about 7% of women in this age group in Switzerland had two or more chronic conditions. 

Delayed care: Nearly half (49%) of American women in this demographic said they'd skipped or delayed care in the last year. The country with the second highest percentage of women who'd skipped or delayed care in the last year was Australia (32%). Only 12% of women in the Netherlands had.

Avoidable deaths: The U.S. was also the worst by this metric, with 198 avoidable deaths per 100,000 women annually. The next highest rate was in the U.K. where they had 146 deaths per 100,000 women. Switzerland had 90 avoidable deaths per 100,000 women annually, the lowest rate of the countries examined.

What they're saying: Across the U.S., access to women's health care is a big problem with only 50% of all counties having OB/GYNs and with rural providers closing, says Mary Jacobson, chief medical officer at Alpha Medical, a virtual primary care group which specializes in women's health. 

Preventative care for women is also often poorly covered, she tells Axios. But the problem goes far beyond those myriad access problems and far beyond their sexual health care.

"In medical schools, there's not enough education about gender-based care or the sex differences in different medical conditions," she says. The benchmark for medical guidance is often based on the benchmark of a white man and assumed to be the same for women of all races, which is often not the best care. 

"There's also implicit bias for women. Let's say there's a woman who comes in, she's in her mid-40s and has chest pain, maybe the first diagnosis they think of is anxiety. It's not a heart attack, it's not angina, it's not cardiovascular disease. It's a missed opportunity," she adds. 

Driving the news: Congress is weighing a number of bills aimed at tackling the maternal mortality crisis in the United States.

Several provisions that were part of the Black Maternal Health Momnibus Act were included in recent reconciliation language passed by House committees, according to the Georgetown Health Policy Institute. 

The big picture: America's health care hasn't compared favorably to other wealthy nations in recent years. 

In a study published in the BMJ, the U.S. was top among wealthy nations when it came to the highest absolute number of excess deaths during the COVID pandemic in 2020.

The bottom line: "The U.S. health care system too often fails women of reproductive age," the Commonwealth Fund wrote. 

"The COVID-19 pandemic has unveiled the true extent of health and racial inequities in U.S. health care and exacerbated its many weaknesses, including underinvestment in primary care and mental health." 

American women more likely to die from preventable causes

They score worse on just about every major health metric than those in other wealthy countries.

Women's health

Illustration of a female symbol and a red cross merged together.

The decades-long debate over whether the federal government can and should use its legal muscle to lower prescription drug prices may be reaching an inflection point, especially with President Biden's drug pricing agenda stalled on Capitol Hill. 

Why it matters: Democrats would love to be able to show voters they've acted to lower drug prices before the November midterms, and progressive groups are urging them to so both legislatively and administratively. But taking on pharma through executive action risks uncertain legal outcomes, and opponents say that it could have a chilling effect on innovation.

State of play: Democrats' dreams of sweeping drug pricing proposals — including Medicare negotiations, which is hugely popular with their base — are being dashed in the Senate with the rest of Biden's domestic agenda. 

If the stalemate continues, that would put pressure on the administration to find ways to lower prices administratively. In a drug pricing plan that HHS released in September, the agency said that using legal authorities to circumvent drugmakers' patents on medicines developed with the government's help is still on the table.

"HHS, NIH, and other agencies have been petitioned to take action under these provisions, and HHS will continue to give such petitions due consideration," the plan states. 

The intrigue: A test case of how far the administration is willing to go is already teed up. The NIH is currently reviewing a request for it to lower the price of Astellas and Pfizer's prostate cancer drug Xtandi by using "march-in" rights, which allow federal agencies to remove exclusive patent rights on drugs that were developed using federal funding. The drug has an annual cost of about $160,000.

March-in rights — which have existed for decades but have never actually been used — only apply in certain circumstances, per the law. The primary legal debate is over whether exorbitantly high prices count as justification for the government taking control of rights. The NIH has previously said that it doesn't believe they do.

But the retirement of former NIH director Francis Collins, who was opposed to using march-in rights to lower prices, may create an opportunity for change.

"Director Collins has been a major figure, so like any agency transition, there’s an opportunity now to think differently about how the U.S. government is going to relate to the medical breakthroughs that it has pioneered and financed, and what sort of return is due to the American people for those taxpayer investments," said Public Citizen's Peter Maybarduk.

What we're watching: Groups both for and against using federal authority to circumvent drug patents have become increasingly vocal on the issue. 

A petition sent by progressive advocates to HHS last week outlined how the Biden administration could use its power to lower the prices of six drugs, including Xtandi and Paxlovid, Pfizer's COVID antiviral. 

A separate group, including leading pharmaceutical industry groups, recently sent a letter asking the agency to reject the pending petition, arguing that "as the agency correctly and consistently concluded, using march-in rights to involve the NIH in drug pricing is a clear misapplication of the law."

What they're saying: Despite all of the activity, administrative patent challenges may not be in the offing, at least until there's some clear indication that Congress won't pass drug pricing reform.

The petition advocating for the use of march-in rights "makes clear Xtandi is not a one off item that by moving forward with will appease progressives even if the courts eventually strike it down," writes Raymond James analyst Chris Meekins. 

"Instead, this shows progressives will go after more drugs resulting in the agency spending inordinate amounts of time dealing with these and likely result in the Administration having to alienate progressive[s] by not granting all of them."

Biden's looming prescription drug pricing dilemma

Pressure is increasing on the administration to go after drug patents.

Illustration of a donkey pulling a giant health plus. 

Prescription drugs

Average annual growth of national health expenditure

Data: "National Health Expenditure Projections, 2021–30: Growth To Moderate As COVID-19 Impacts Wane," Poisal et al., 2022; Table: Will Chase/Axios

U.S. health care spending is likely to grow at about the rate of inflation over the rest of the decade after the pandemic fueled a nearly 10% jump between 2019 and 2020, federal experts said Monday.

The big picture: The CMS actuaries' projections in Health Affairs came with plenty of caveats. But if trends hold, out-of-pocket spending is going up, as is spending on private coverage, Medicare and Medicaid.

What they're saying: "This outlook is contingent on a virus that has evolved and surprised at every turn — and could do so again," the authors wrote.

By the numbers: National health spending surged 9.7% in 2020, rising from $3.8 trillion in spending in 2019 to $4.1 trillion in spending in 2020. 

Spending growth is projected to drop to less than half of that, 4.2% in 2021, or about $4.3 trillion. 

The actuaries project 4.6% spending growth in 2022, or about $4.5 trillion.

Zoom out: Spending is expected to grow an average of 5.1% between 2021 and 2030 when it would reach almost $6.8 trillion. Growth in the Gross Domestic Product is also projected to be 5.1% annually over the same period.

That will keep the health share of the economy at just shy of 20%. 

Spending should be driven by more traditional economic, demographic and health-specific factors after it surged on pandemic-fueled assistance to health providers, public health programs and Medicaid payments.

Between the lines: Costs are also projected to rise.

For those on private health insurance plans, per-enrollee spending dropped nearly half a percent in 2020 before rising by a projected 5.5% in 2021. The report projects an 8.3% jump in 2022 and 7.2% increase in 2023.

Per enrollee spending on Medicare is projected to jump 9.4% in 2021, 5.1% in 2022 and 3.3% in 2023. Per enrollee spending on Medicaid is projected to increase 2% in 2021, 6.7% in 2022, and 6% in 2023. 

Out of pocket spending dropped by 3.7% in 2020. Projections show it jumping 4.6% in 2021 and 6.1% in 2022.

The bottom line: Health spending is going up (big surprise!) in traditional categories like hospitals, prescription drugs and doctors and clinical services through 2024 while pandemic-related effects like COVID vaccines, testing and treatment and expanded Medicaid coverage fall off.

Editor's note: This story has been corrected to show that national health spending reached $4.1 trillion in 2020, not $4.2 trillion.

New normal for health care spending

After a nearly 10% jump in U.S. national health care spending between 2019 and 2020 amid the COVID pandemic, federal experts say they expect spending to normalize.

Centers for Medicare and Medicaid Services (CMS)

U.S. private equity deals in life sciences

Data: Pitchbook, American Investment Council; Table: Thomas Oide/Axios

Private equity firms invested nearly $70 billion in the life sciences and medical device industries last year — a sign that the pandemic's disruptions didn't cool interest in the sectors, according to a new report by the American Investment Council. 

Why it matters: The influx of capital could help bring more lifesaving drugs and medical technologies to market. But private equity's growing presence in health care isn't always viewed positively, particularly when it's associated with price increases or reduced access to care. 

U.S. private equity deals in healthcare devices and supplies

By the numbers: Private equity deals in the life sciences sector were worth nearly $26 billion in 2021, the highest amount in a decade. 

Medical devices and supplies deals were worth nearly $44 billion last year, which was also the highest value over the last decade — by far.

Private equity has invested more than $280 billion into the sectors over the last decade, according to the report.

What they're saying: "What COVID brought was probably a bigger focus on health care gaps and needs in the country, and I think you saw more money going into this sector as a result of a new focus on exposing some of the challenges we have in the health care system," American Investment Council CEO Drew Maloney said in an interview.

"We really are filling a gap in the marketplace to bring these innovations to life through our funding mechanisms," he added.

The big picture: Private equity firms like Bain Capital, Cerberus and Blackstone Group already have invested heavily in hospitals, nursing homes and staffing companies — which not everyone thinks is a good thing. The companies typically rely on debt financing to buy assets, maximize returns to partners and exit in a fairly short window of time. 

The presence came into play during Washington's surprise billing debate, which focused partially on the behavior of private equity-backed physician staffing firms. Private equity-owned nursing homes have also been criticized as offering lower-quality care.

Yes, but: Investing in drug and device development isn't the same as investing in these other areas, said Craig Garthwaite, a professor at Northwestern University's Kellogg School of Management.

"There’s lots of value to be created and captured by these private equity firms, and there's much less of the worry ... about private equity and health care services or providers," Garthwaite said. "In a product market, we think of this being the domain of for-profit companies, and we're just arguing about what the capital structure is."

And for private equity to lead to higher drug prices, pharmaceutical companies would have to not already be charging the highest prices that the market will bear.

"I don’t think it'll raise prices here, because I think people will charge whatever they can for the product, and if they cut costs they'll just take it as profit," Garthwaite added.

Private equity's pandemic-era health care push

Private equity firms invested nearly $70 billion in pharmaceuticals and medical devices last year.

Private equity

Percentage of novel drugs using the FDA's Accelerated Approval pathway per year

The FDA's conditional approval of a controversial Alzheimer's drug last year has sparked heightened scrutiny and an attempted overhaul of a popular regulatory pathway used to fast-track cancer drugs and certain other treatments.  

Why it matters: Accelerated approval allows patients to access new drugs deemed to meet unfilled needs much faster than if the drug went through the regular approval process. But critics say that more needs to be done to prove these drugs actually work in the real world, which could have big implications for the pharmaceutical industry. 

State of play: Last year, 14 of the 50 new drugs approved by the FDA  — including Biogen's Alzheimer's drug, Aduhelm — went through the accelerated approval pathway. 

The pathway speeds up the drugs' market entrance by allowing the approval to be based on surrogate endpoints — or variables that suggest the drug likely works — rather than real-world clinical results. 

But the Aduhelm approval came amid significant doubts that the surrogate endpoint used for its approval proved the drug was effective, and the FDA's own advisory board had recommended against its approval. 

Drugmakers are required to perform confirmatory trials in the real world after receiving an accelerated approval. But in the case of Aduhelm, the FDA gave Biogen around nine years to conduct its trial, a period many experts thought ridiculously long to let an unproven drug remain on the market without confirmation that it works. 

The big picture: Although most experts and policymakers laud the pathway as a way to deliver lifesaving medicines to patients in a more timely manner, Aduhelm's approval has raised questions about whether the program is being misused.

The controversy has put a spotlight on what critics say is a system that makes it too easy for drug companies to delay confirmatory trials or in which the FDA doesn't enforce the rules around such trials strongly enough. The critics say the agency also may not have enough power to pull those drugs that fail the follow-up trials.

Now, influential members of Congress have picked up on these criticisms, the HHS internal watchdog is reviewing the program and the agency itself may even be stepping up its enforcement efforts.

“This has led to unintended consequences and scrutiny for an expedited program that was generally appropriately utilized," said former FDA deputy commissioner Anand Shah.

Driving the news: The powerful House Energy and Commerce Committee is considering legislation sponsored by Chairman Frank Pallone that would reform that pathway as part of a larger medical innovation package. 

"Under the current system, some sponsors have failed to conduct trials in a timely manner," Pallone wrote before a hearing on the bill last week. "Patients deserve to know that the drugs they are taking are safe and effective." 

Some lawmakers, including Senate Finance Committee Chairman Ron Wyden, have pointed out that the agency could use its existing authorities more vigorously without legislative changes. 

In a letter replying to Wyden's concerns about accelerated approval, recently-confirmed FDA commissioner Robert Califf said that ensuring follow-up studies are done in a timely manner will be a "high priority."

But even before his confirmation, the agency withdrew several accelerated approvals for cancer drugs last year and more have been withdrawn already this year. 

“I do think FDA is trying to enforce these requirements in a way that it hasn’t been previously, but also that they may be starting to run into some of the limits of their legal authority," said Rachel Sachs, a law professor at Washington University.

For example, even though the FDA says a prescription hormone called Makenna — which entered the market through accelerated approval — has failed to prove that it works, the drug is still on the market, the LA Times recently reported.

What they're saying: In written testimony to the E&C committee last week, a PhRMA official said the accelerated approval pathway "is a critical tool for patients and regulators, and the biopharmaceutical industry continues to support the pathway in its current form."

"Because most drugs do convert from accelerated to traditional approval within the five-year timeline, for most companies there would be no significant changes to their existing practices," Sachs said. "But companies in general are opposed to any efforts to constrain their ability to get these drugs to market and to sell them.”

The other side: Some critics are more cynical about the industry's support of the status quo.

"They've figured out it's a lower bar to get accelerated approval. They can then dictate the trial, and something can get on the market quite rapidly and not get pulled off the market," said Zeke Emanuel, a professor of medical ethics and health policy at the University of Pennsylvania. 

"Their business model would have to change, because they'd actually have to finish these studies," he added.

Controversial Alzheimer's drug approval ignites FDA reform debate

Policymakers are considering cracking down on use of the accelerated approval pathway.

Food and Drug Administration (FDA)

 More than a quarter of cancer patients depleted most or all of their savings to cover the costs of their care, according to a study released Thursday by the American Cancer Society Cancer Action Network.

Why it matters: The cost of cancer care is having a substantial impact on the lives of cancer patients, even among those who have insurance.

By the numbers: The poll of more than 1,2o0 cancer patients conducted between Feb. 9 and 23 found a majority of patients and survivors said they were unprepared for the costs of their care.

In order to afford their care, 28% of respondents said they'd gone into credit card debt and 20% had borrowed money from relatives and friends.

More than one in 10 took out another type of loan, like borrowing from a payday lender or refinancing their homes.

About half of patients said they incurred cancer-related medical debt. Of those, about half reported it had gone to collections and hurt their credit.

Half of cancer patients report medical debt

The cost of cancer care is high, even among those who have insurance.

Cancer

Employers and private insurance plans in 2020 paid hospitals 224% of what Medicare paid for the same services, with rates for inpatient and outpatient care varying widely from site to site, a new report from RAND finds. 

The intrigue: The report found that hospital prices had no significant correlation with hospitals' share of Medicare and Medicaid patients, which hospitals say factor into private rates. Price did positively correlate with hospital market share.

Why it matters: Hospitals account for about 37% of health spending for the privately insured — and even people who don't use hospital services foot some of the bill through their premiums.

The big picture: Annual per-person spending growth for workplace health coverage has exceeded spending growth for government programs in nine of the past 13 years, largely because enrollment and demand for services among the commercially insured has barely changed.

The divergence in pricing has been linked to mergers and acquisitions, affiliation agreements and other consolidation that increases hospitals’ leverage.

In 2021, the average premium cost of an employer-sponsored family plan was more than $22,000, an increase of 47% from 2011, according to the Kaiser Family Foundation.

What they found: The report draws on medical claims data from employers and state databases from 2018 to 2020 covering 4,102 hospitals and 4,091 ambulatory surgical centers that account for $78.8 billion of spending.

States like Hawaii, Arkansas and Washington had relative prices below 175% of Medicare prices, while others including Florida, West Virginia and South Carolina had prices at or above 310% of Medicare levels.

In 2020, COVID-19 inpatient hospitalizations averaged 241% of Medicare, which is similar to the relative price for all inpatient procedures.

Prices for common outpatient services performed in ambulatory surgical centers such as imaging and colonoscopies averaged 162% of Medicare payments. However, Medicare pays the centers less than it pays hospital outpatient departments for the same services, the study notes, and the ratio would be lower if centers were paid the same way. 

Medicare per-procedure payments to hospital outpatient departments were 2.1 times higher than payments to ambulatory surgical centers and commercial payments were 2.6 times larger, the study found.

If the same providers were paid Medicare rates for the same services, employers and private plans would have saved $49.9 billion, researchers said. 

The other side: Hospitals say Medicare reimbursement rates are too low, so they have to charge privately insured patients more to make ends meet. The pandemic has also disrupted many hospital business models — for example, by forcing the cancellation of elective procedures. 

Employers pay hospitals billions more than Medicare

Hospitals charge most to the privately insured

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