Biden's health care policy will change Medicare in 2 big ways
President-elect Joe Biden’s biggest goals for Medicare are reining in high drug prices, while making the government healthcare program available to more older Americans.
“The Biden plan reduces pharmaceutical companies’ influence on providers through price stabilization thereby encouraging the best treatments for Americans,” said Justin Beck, CEO of Contakt World, a healthcare technology company, “not necessarily the treatments that provide the most profits to pharmaceutical companies who aggressively market prescriptions to providers.”
Biden’s proposals come when two-thirds of Americans reported their prescription drug prices have increased since 2017, according to a recent Gallup survey, and drug prices have jumped by 33% since 2014, according to study from GoodRx.
“The last thing you need when you’ve finally retired is to have the rug pulled out from underneath you by a 500% price increase for a medication that keeps you alive,” said Beck.
Here’s what Biden would do if Congress passes his plans for Medicare.
Lowering drug prices
Open up negotiation
In his plan for older Americans, Biden intends to repeal a law that is responsible for prohibiting the Health and Human Services Department from negotiating lower drug prices with pharmaceutical corporations.
Medicare already negotiates pricing with hospitals and other health care providers, the campaign noted, and given the vast number of Americans covered under the program, the government would have leverage to get lower prices.
“The outrageous price increases of both specialized drugs and broadly-used necessities like insulin will keep happening unless we make smart rules like this,” Beck said. “It’s about time that Americans get protections like these.”
Cap prices of new drugs
To make sure reasonable prices persist, Biden wants to allow the Secretary of Health and Human Services to launch an independent review board to assess the value of specialized biotech drugs that face no competition.
The board would recommend a reasonable price for the drug based on how the drugs are priced in other countries through a process called external reference pricing. If the drug does not exist elsewhere, the board will independently review and recommend a price. Private plans participating in the marketplace will also access a similar rate.
Peg prices to inflation
Biden’s plan also includes limiting price increase for all brand, biotech and abusively priced generic drugs to inflation. Those companies exceed inflation when increasing prices would face a tax penalty under Biden’s plan.
“Economically, the Biden Plan will make Medicare more sustainable so that its annual cost increases more closely mirror inflation,” Beck said, “whereas the current trajectory has costs rising as an overwhelming percentage of GDP in the United States.”
Allow Americans to buy abroad
Americans would also be allowed to buy prescription drugs from other countries under Biden’s plan, creating more competition for U.S. drug companies to incentivize them to keep prices lower. The only criteria is that the U.S. Department of Health and Human Services must certify these drugs are safe.
Improve supply of generic drugs
Non brand-name drugs, otherwise known as generics, would also receive a boost. Biden’s plan would work to improve the availability of safe generic drugs, which help to reduce health care costs. He plans to remove roadblocks that keep generic versions of drugs coming to market sooner and make it easier for generic manufacturers to get samples of brand-name drugs.
Lower eligibility age
Medicare currently enrolls more than 60 million Americans, including retirees and people with disabilities. Biden wants to increase those numbers by lowering the Medicare enrollment age to 60 from 65.
“Many of these individuals would no longer be constrained by their employer-provided coverage,” said Cobi Blumenfeld-Gantz, CEO of Chapter, an online Medicare marketplace. “In turn, this could facilitate earlier retirements as well as lower healthcare premiums for younger employees, if older employees opted to take Medicare instead of employer-sponsored coverage.”
The move would also add up to 23 million people to Medicare, according to Avalere Health, a consulting firm.
“We have let the rest of the world leapfrog ahead of us when it comes to making sure that we get both effectiveness and value for our money in [healthcare],” Beck said. “It’s past time that America steps into the 21st century on this.”
Dhara is a reporter Yahoo Money and Cashay. Follow her on Twitter at @Dsinghx.
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