Viewpoints from Craig Hasday
Change in the healthcare provider marketplace is rapid, and agility will be essential to manage the gyrations. This past week saw several significant announcements impacting healthcare.
Elevance, the parent company of Anthem, announced the acquisition of the Blue Cross health insurance company in Louisiana, its 15th Blue Cross franchise acquisition.
There is change afoot in the “Blues” world. Pursuant to a planned settlement of a decade-long class action suit alleging anti-competitive practices, Blue Cross companies agreed to pay out $2.67 billion in a settlement and to change some of their market practices. While the court granted final approval to the Settlement on August 9, 2022, some class members objected to the Settlement and appealed the Court’s decision. The settlement cannot become final – and benefits cannot be distributed – until all appeals are resolved. While there is currently no timeline for the resolution of these appeals, I have little doubt that this signals more consolidation of health insurance companies to come.
The non-traditional channels are also changing.
Amazon’s acquisition of One Medical, together with its 2018 acquisition of PillPack, is taking shape with a new strategic move. The RxPass program will allow Prime members to receive select generic medications for a monthly fee of $5. This program includes drugs treating 80 conditions, and in the context of high deductible plans, might be a very appealing option. Mark Cuban’s Cost Plus has now partnered with EmasanaRx, a Pharmacy Benefit Manager (PBM), to offer a transparent and potentially low-cost alternative to the “Big Three” PBMs: Express Scripts, Optum and Caremark.
These programs, together with federal PBM transparency regulations, are sure to cause ripples in the marketplace.
Spread pricing, where PBMs make money from the difference between negotiated prices and the price the customer pays, will be under pressure. The Big Three PBMs have market share dominance and presumably the ability to negotiate better prices from drug manufacturers. The large PBMs will not be passive in their response to these new market inroads.
Consumers are hungry for change.
The COVID-19 pandemic has made Americans even more concerned with healthcare. HealthCare.gov and the state plans, in the most recent enrollment period, enrolled greater than 16.3 million people. The number of people who have signed up for an affordable healthcare plan through HealthCare.gov has increased by 50% since 2021. 3.6 million people (22% of total) are new to the Marketplaces for 2023, and 12.7 million people (78% of total) had existing coverage. Over 1.8 million more people have signed up for health insurance, a 13% increase compared to the prior year. Those enrolled in high deductible plans will gravitate toward the lowest-cost generic medications (as they did when Walmart introduced $4 generics) outside of their insurance programs. Amazon hasn’t been successful in its prior healthcare forays – but this one might have legs.
The best advisors are watching changes attentively and help employers capitalize on opportunities. EPIC is on it.
EPIC offers these opinions for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this article and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.
