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October 29, 2016 12:00 AM

Editorial: Drugs and insurance affordability will top the post-election agenda

Merrill Goozner
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    Goozner

    Healthcare pricing concerns are making a late run for relevance as the presidential campaign heads down the homestretch.

    Unfortunately, too much attention is being paid to price hikes on the Obamacare exchanges, which affect only a thin sliver of the population. Too little attention is being paid to the main drivers of popular concern—high drug prices and employers' insistence on shifting more healthcare costs onto the backs of their employees.

    The American people get it. According to the latest Kaiser Family Foundation tracking poll, taken during October, 63% of the public—including large majorities of Democrats and independents and half of Republicans—called government action to lower prescription drug prices a top priority. Other top concerns include making sure insurers have adequate hospital and physician networks (57%) and ending surprise billing for out-of-network providers (54%).

    By contrast, repealing Obamacare garnered just 37% support from the overall public and was a partisan issue. While it remains the second most important priority for people who identify as Republicans (60%), it has little support from Democrats (17%) and less than majority support from independents (40%).

    While the Kaiser poll didn't ask about it, more of the general population is also upset about what's going on with employer-sponsored plans, which cover half of all Americans. The annual Mercer survey of more than 2,500 employer-sponsored health plans released last week showed their costs rose just 2.4% in 2016, and will rise 4.1% in 2017.

    How did they manage that after a year when drug costs went up nearly 10%? The share of people in high-deductible plans jumped to 29% last year from 25% the previous year.

    Plans being sold by private insurers on the exchanges are behaving very differently. The government last week announced an average increase of 25% for 2017.

    But as the mainstream media finally discovered, there are some easy-to-explain, hard-to-correct issues confronting the exchange market. Too few healthy people signed up because the penalties are too low; the insurers deliberately set prices below cost in the early years to gain a bigger share of the market; and the federal government failed to make the full risk-adjustment payments promised in the law, which were designed to mitigate the possibility that mostly sick people would sign up in the early years.

    The same issues affecting the broader market are also affecting the exchange plans. Unexpectedly high drug prices remain the single biggest driver of the rise in overall costs.

    But when you are put into a high-deductible plan, or choose one as many do on the exchanges for their low initial premiums, you get saddled with fairly large initial bills for drugs and doctors when you get sick. Hospital coverage in most bronze plans amounts to a catastrophic insurance plan. Unless wages grow a lot faster than in recent years, that's a prescription for mounting anger at the entire healthcare system.

    It's now pretty clear what the healthcare agenda must be for the next administration. The No. 1 priority is coming to some consensus on a drug pricing system that delivers medicine at a cost that patients and the insurance system can afford.

    This can be done without jeopardizing innovation as long as the pharmaceutical and biotech industries adopt the same mindset as the rest of the healthcare delivery system, which is actively engaged in trying to control costs. One sector—drugs—cannot be allowed to ignore a societal mandate to deliver more affordable care.

    The second major agenda item is fixing the exchange-based market and a tax system that pushes employers toward high-deductible plans. Whether that involves stronger penalties, an automatic enrollment system, more guarantees in routine coverage or plan choice flexibility will be hotly debated.

    There's room for compromise. One can only hope that after this sickening election season, both parties and the new president will see the wisdom in coming together on those issues.

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