Does PDP Program Need A Fallback Plan?
I have made much of the politically motivated Democratic Inflation Reduction Act’s (IRA) provisions to reduce cost-sharing for seniors in Part D. It was a terrible piece of public policy that has led to a huge increase in costs and risk to plan sponsors. While Medicare Advantage (MA) has survived, it certainly led to benefit reductions. But in the standalone Part D (PDP) world (which largely serves the traditional Medicare beneficiaries), the IRA changes have led to benefit reductions, rising premiums, fewer choices and coverage, and a financially untenable system.
A Health Affairs Forefront blog makes the case that a government-facilitated fallback plan may need to be introduced now before the financial situation gets worse.
The author traces the failures to growing MA and its payment and benefit advantages, which means the PDP market gets smaller and riskier. The capping of cost-sharing and elimination of costs in the catastrophic phase are big costs for plans. The author argues the program is headed for a death spiral, which is a case I have made.
The Centers for Medicare and Medicaid Services (CMS) has demonstration authority for a fallback on a regional basis but not yet a national one. The author argues a federally-facilitated PDP — with core benefits defined by CMS — would strengthen competitive conditions and exert downward pressure on premiums across remaining private sponsors.
I am not a big fan of a government plan running in parallel. It would clearly have advantages and could even make things worse. But the point about reform now rather than later is an important one. And as noted by the author, a federally-facilitated plan should be viewed as a complement to broader structural reform.
#medicareadvantage #partd #pdp #ira
— Marc S. Ryan
