Health insurance CEOs named pharmaceuticals and expensive therapies as reasons for rising healthcare spending, during a Tuesday Wisconsin Health News event.
Last week, the Office of the Actuary at the Centers for Medicare and Medicaid Services released a report finding that total national health spending last year grew 4.6 percent to $3.6 trillion, or more than $11,000 per person.
“We’ve got so much money that we’re actually inefficient,” Quartz Health Solutions CEO Terry Bolz said. “We kind of stumble over each other. I think if we can come up with an approach where people actually take money out of the system, we’d see efficiencies.”
Bolz said he’s seen some health systems and providers come to terms with healthcare spending and try to address it. He’s optimistic that money can come out of the system.
Group Health Cooperative of South Central Wisconsin CEO Dr. Mark Huth said insurers are thinking about how to keep premiums affordable as healthcare costs increase quickly.
“Balancing those two extremes is becoming increasingly difficult,” he said. “I would go so far as to say that until we address the cost issue with pharmaceuticals, with cost of care, with technology and other therapies, if we can’t fix that, there’s not going to ever be a payment mechanism that’s going to allow us to navigate this at least on the trend that we’re on now.”
Security Health Plan CEO Julie Brussow said that prescription drug prices are driving their growth in costs compared to other areas. In their large group commercial space, drugs used to account for 10 percent of the spend. Now, it’s around 15 percent.
“That really has climbed recently over the last couple of years,” she said. “We really don’t see an end in sight.”
Brussow said that she appreciates the attention by federal and state policymakers on the topic, including the Governor’s Task Force on Reducing Prescription Drug Prices, which held its first meeting last month.
Mike Quist, CEO of WEA Trust and Health Tradition Health Plan, said that healthcare is at an “inflection point” with high spending, leading people to pursue other means of getting the care that they need.
“We’re in a broken system,” Quist said. “That $11,000 per person is just unsustainable. And when you couple that with the fact that life expectancy has dropped for three consecutive years – what are we doing with the money that we’re spending?”
He said people with cancer or chronic diseases like diabetes can face “financial ruin” even with health insurance, depending on the plan they’re on.
Dean Health Plan President David Fields said an aging population and new technology, which he said includes new drugs and gene therapies, are driving spending. He noted that some medications can have multi-million dollar claims.
“It is going to force organizations like ours to think about how we can come together to protect ourselves from extraordinary costs like $2 million gene therapy,” he said.
Fields, who’s also the leader of pharmacy benefits manager Navitus Health Solutions, said that last year their pharmacy trend was 0.3 percent. He noted that the trend for specialty drugs was just above 10 percent, but balanced against that was a negative trend in both generic and branded drugs.
“But there are solutions,” he said. “It just depends upon which path you choose to address those costs. There are still smart people out there. There are still good people out there trying to figure out how to bend this cost trend.”
This article first appeared in the Wisconsin Health News daily email newsletter. Sign up for your free trial here.