Source: United States House of Representatives – Congresswoman Carol Miller (R-WV)
Washington, D.C. – Last week, Congresswoman Carol Miller (R-WV) participated in a Ways and Means Committee hearing on healthcare affordability. The purpose of this hearing was to investigate rising healthcare costs by examining the role of large, vertically integrated health care companies that control affiliates including health insurance carriers, pharmacy benefits managers (PBMs) and medical practices. A video and transcript of the Congresswoman’s questions and provided responses can be found below.
Congresswoman Miller began by highlighting the challenges rural patients face when accessing medical care. She then discussed the rising disparity between insurers’ profits and the costs of medicine and physician services before questioning the witness on the causes of this disparity.
In my home state of West Virginia, distance, provider shortages, and limited hospital capacity already make accessing care a challenge, and affordability is really inseparable from access. Insurance companies frequently cite drug costs as a driver of premium increases, but according to the insurance industry’s own data, brand medicines make up less than 10 cents of every premium dollar.
While hospital consolidation and drug prices do play a role in overall health care costs, I want to focus today on factors within insurers’ control. Analyses show that administrative overhead, insurer profit margins, and PBM-related practices account for a significant share of premium spending. Roughly sixteen cents of every premium dollar goes to profits and administrative costs, making overhead the second-largest category of premium spending. Without profit, you close your doors. I understand that, I own a business. But, this exceeds spending on medicines and physician services.
That being said, Mr. Hemsley, can you walk us through the top insurer-driven drivers of premium growth and explain why patients, especially in rural areas, are paying more while getting less access?” asked Congresswoman Miller.
“Well, again, a very good question, Representative. Thank you for bringing it forward.
As we have said, the input costs, more than 70% of the total cost, actual cost of health care services, have been inflating at a rate of three times the normal, the general inflation rate, for more than 25 years. And that has created a very significant pressure.
Businesses like ours have reduced those cost trends. Those are net of us taking $300 billion of costs out of these increases by better negotiations, by better data, by better coordination. And you still get these significant cost increases.
Those are, by far, the largest factors completely that we can get a better system. And we all have a role to play in it. But it is the cost trends and the compounding impact of these trends being higher than general inflation, that is really driving the affordability crisis,” responded Mr. Hemsley.
The Congresswoman then discussed concerns with overly-inflated medication prices and the motives of insurers and PBMs who control these factors, which create profits for insurers while driving up costs for patients. She questioned the witness on the effects this has on West Virginians and for the justification of this practice.
“But West Virginians are already stretched thin by rising premiums, deductibles, and out-of-pocket costs, and prescription drug pricing is also a major contributor to that burden.
Data specific to West Virginia shows that the Medicare program is being charged outlandishly different prices for the exact same drug within the same timeframe. For example, Imatinib, a leukemia drug, was billed to Medicare on the low end at $75 and the high end exceeding $8,000. These prices are not set by patients or providers, but by the insurers and their vertically integrated PBMs.
Some would allege that disparities are the result of insurers gaming the Medical Loss Ratio to artificially inflate medical spending, allowing profits to flow through affiliated entities while driving up costs for seniors and taxpayers.
Mr. Joyner, what effect do these pricing practices have on West Virginians who rely on these drugs to survive, and how do you justify such extreme price variation for the same medication when your company controls the benefit design, pharmacy networks, and reimbursement structure?” asked Congresswoman Miller.
“Congresswoman, this is a very good question. And if I look more broadly, the drug manufacturers, I’ll just look, just January 1st of this year, 500 plus drugs took a price increase. So if I, if I took that price increase for the drugs on the branded manufacturers for this past January, it represented almost $25 billion of added cost to the customers that we serve.
So the role that we play and the importance of a PBM is to negotiate down and actually lower the cost for the folks in West Virginia.
So we’re trying to do our job in creating competition and making sure that gets passed down, not just to the clients, but the importance of consumer transparency, making sure those discounts then flow all the way through to the consumer,” responded Mr. Joyner.
Congresswoman Miller concluded by urging the witnesses to identify why certain drugs many kidney disease patients rely on are not covered by insurance.
“Thank you. One final point. Many of your industry plans do not cover Vafseo and Defencath. I know them primarily as just kidney drugs, but access to these medications would dramatically increase quality of care, as well as reduce the cost for both insurers and taxpayers.
I don’t want that answer now, but I do want you all to go back and talk to your teams internally and find out why these drugs are not covered. We have a lot of kidney disease that we deal with in my state. When you go through the obesity, the diabetes, the kidney disease, we need access. And so please discuss it and figure out how we can handle this.
Mr. Chairman, I yield back,” concluded Congresswoman Miller.