Wall Street Analysts Examine Effects of New Medicare Law on Health Insurance Industry
Wall Street analysts at a conference on Thursday examined the impact that last year's Medicare overhaul will have on the health insurance industry, CongressDaily reports. Attendees at the conference, "Wall Street Comes to Washington," which was sponsored by the Center for Studying Health System Change, said that only Medicare beneficiaries who join HMOs under the Medicare Advantage program will receive "quality" prescription drug coverage, though joining the plans will limit their choices of physicians and hospitals, according to CongressDaily. Robert Laszewski of Health Policy and Strategy Associates said that insurers prefer to offer HMOs within individual counties rather than create regional preferred provider organizations because of "all of the limitations, the regional issues, all of the complexities" of PPOs. Norm Fidel of Alliance Capital Management said that in part because Medicare Advantage plans can keep savings from effective use of prescription drugs, the plans will be able offer drug benefits that are "much more generous than most people are thinking" and that might be comparable to those offered in the under-65 commercial market. Fidel noted that free-standing prescription drug plans created under Medicare's new Part D may save money on managing medication use, but the savings will not go to plans. Consequently, few insurers or pharmacy benefit managers are likely to participate in the stand-alone drug plans, Fidel said.
Panelists at the conference disagreed over how long the government's "generous payments" to private plans, as outlined in the Medicare law, will last, CongressDaily reports. Urban Institute President Robert Reischauer said the Medicare Advantage plan payments "have the life expectancy of an ice cube on a Jamaican beach" because regardless of the results of the election in November, "Medicare is unavoidably going to be a contributor" to solving the deficit problem. However, Laszewski said that the payments were likely to last because "the Republican Party has a huge investment in Medicare Advantage" and they will be unlikely to back away from the payments "even in the face of the deficits" (Rovner, CongressDaily, 6/24).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.