Senate to Probe Alleged Misuse of Obamacare Funds

SAN JUAN — Sen. Ángel “Chayanne” Martínez Santiago said Wednesday that, as the recently designated chairman in the Senate’s Health Committee, he will carry out a thorough investigation regarding supposed fund misuse by the exiting administration through the Patient Protection and Affordable Care Act, commonly known as Obamacare.

The New Progressive Party (NPP) senator lashed against Gov. Alejandro García Padilla’s administration for supposedly spending most of Obamacare funds in only four years, and ensured the committee he will preside as of January will put the responsibility on those officials who “failed the people.”

Sen. Ángel "Chayanne" Martínez Santiago, designated chairman of the P.R. Senate's Health Committee. (Agustín Criollo/CB)

Sen. Ángel “Chayanne” Martínez Santiago, designated chairman of the P.R. Senate’s Health Committee. (Agustín Criollo/CB)

“The health reform is largely financed by Obamacare funds. Section 2005 of the Affordable Healthcare for America Act assigned Puerto Rico $5.4 [billion] to ‘Mi Salud’ from July 2011 until September 30, 2019. We are in December 2016 and the vast majority of those funds were spent by this exiting administration,” said Martínez Santiago.

“This excessive waste of funds is unjustified. This committee will perform a thorough and responsible investigation about this affair and we will make referrals to pertinent authorities, both in Puerto Rico as well as to a federal level,” he added.

According to official data from Medicaid and Medicare Service Center, in addition to those $5.4 billion, the U.S. government assigned $925 million for Medicaid and Medicare. From these resources, which ascended to $6.4 billion in May 2015, only $3.4 billion remain.

Martínez Santiago reminded that federal input to ‘Mi Salud’ increased from 55% to 57.2% from Jan. 2014 until Dec. 31, 2015, which would have represented additional savings to the local government, thus extending those resources.

However, the senator said that as recently as late 2015, Dennis González, regional director of the Eastern U.S. Department of Health and Human Services (HHS), confirmed that García Padilla’s administration had spent disproportionately the Obamacare funds. He added it was imperative to demand Congress to declare Puerto Rico in health emergency.

“We had already addressed a letter to U.S. House Speaker Paul Ryan so he would give us the opportunity to discuss this issue in an emergency meeting, so he would declare Puerto Rico in a health emergency zone to look for the way to get federal funds,” explained Martínez Santiago.

“The grave problem Mi salud will have next year will be the lack of Advantage funds, which will be reduced by 11%. With this, thousands of people from the platinum programs -around 250,000 lives- could lose their medical plan and will be forced to emigrate toward reform because they aren’t guaranteed services via Medicare Advantage the moment they enter reform. This would represent the [local] government an annual blow of $400 to $500 million,” he said.

Alas, the senator was optimistic of the bill to be submitted by Resident Commissioner-elect Jenniffer González, to request additional funds through a mechanism known as Quick Fix, which he said would represent $3.5 billion for local health services while Congress works on new public policy regarding Obamacare.

However, when questioned what would be González’s course of action if her request were unsuccessful, Martínez Santiago said Plan B would be to look for recurrent funds from other means.

“I am developing measures that we will see in January of some areas that are being nourished by some funds that weren’t really given much importance. Funds are used for minuscule things from which we could take a percentage and not leave those organizations without funds, and they can be used for a special fund to manage Mi Salud,” he explained, although he didn’t specify which are those areas.

Sen. Rossana López demands explanation from Rosselló, warns of health crisis

SAN JUAN – Popular Democratic Party (PDP) Sen. Rossana López León called on Gov.-elect Ricardo Rosselló and the Financial Oversight & Management Board to present what she called their fiscal plan, including additional cuts “to important areas, like healthcare.”

She stated that “the fiscal oversight board and the incoming governor, Ricardo Rosselló Nevares, must be clear and show their budget cuts in essential services at once.”

PDP Sen. Rossana López León./ Inter News Service

PDP Sen. Rossana López León./ Inter News Service

She went on, saying, that regarding healthcare, “for example, they must be responsible and specify how many cancer patients won’t receive treatment, how many will die because organ transplants weren’t performed, and how many will be at the mercy of the pain caused by their sickness.”

López León said that when the fiscal oversight board emphasized there won’t be additional funds and referred to Medicare and Medicaid from the Affordable Care Act, “it isn’t talking about the island losing $865 million” nor that the local government has been carrying deficits for the past years.

“What that means is that more than 100,000 people will be left out of the government’s healthcare system. This includes those who are already facing illnesses and those who are about to face these terrible physical challenges,” she explained.

She stressed that cutting healthcare funds would be “a catastrophic infringement on civil rights for thousands of Puerto Rican families, because a human being’s dignity is inviolable and letting them die without treatment is an infringement on their right to healthcare.”

The PDP senator also added that Medicare funds are paid for by the working class, which is why “a $3 billion cut would be unfair and reproachable.”

“It is unfortunate that a nation that promotes social justice and democracy would run over an ally that has always been willing to contribute with its blood and lives in their wars, as well as the best talent for their territory’s industrial development,” she concluded, regarding the United States and its historical relation with Puerto Rico.

Policy Prescriptions: Clinton and Trump on health care

FILE - In this Oct. 6, 2015, file photo, the website, where people can buy health insurance, is displayed on a laptop screen in Washington. About 9 in 10 Americans now have health insurance, more than at any time in history. But progress is incomplete, and the future far from certain. Rising costs could bedevil the next occupant of the White House. Millions of people previously shut out have been covered by President Barack Obama’s health care law. No one can be denied coverage anymore because of a pre-existing condition. But “Obamacare” remains divisive, and premiums for next year are rising sharply in many communities. (AP Photo/Andrew Harnik, File)

In this Oct. 6, 2015, file photo, the website, where people can buy health insurance, is displayed on a laptop screen in Washington. (AP Photo/Andrew Harnik, File)

WASHINGTON (AP) — Hillary Clinton has been involved in the nation’s health care debate for more than 20 years and, as her campaign likes to say, she has the scars to prove it.

The Democratic presidential candidate failed in her 1990s effort to steer her husband’s universal coverage program through Congress, as the complex plan collapsed for lack of political support. Since then, she has tacked sometimes to the right on health care, and sometimes to the left.

Clinton is campaigning as the candidate of continuity and would leave all major health care programs in place. She has a long list of tweaks and adjustments that reflect her familiarity with policy and would expand the government’s role in health care.

Donald Trump calls President Barack Obama’s health care law “a disaster,” and vows to seek its repeal. He’d provide a new tax deduction for health insurance premiums, but also limit federal support for Medicaid, which covers low-income people. An independent analysis recently estimated his seven-point plan would cause 20 million people to lose coverage.

Trump’s ideas on health care have shifted over time, and his latest plan hews to basic GOP talking points. He’s expressed a belief that an economically advanced country like the United States can’t have people “dying in the street” for lack of medical care.

Here is a summary of their proposals:



The government’s premier health insurance program covers about 57 million people, including 48 million seniors and 9 million disabled people under age 65. It enjoys strong support from voters across the political spectrum, although its long-term financial outlook is uncertain.

CLINTON: She would authorize Medicare to negotiate drug prices with pharmaceutical companies, and she supports allowing patients to import lower-cost prescriptions from abroad. Medicare beneficiaries represent a big share of the market for medications.

Clinton would also allow people ages 55-64 to buy into Medicare, although her campaign has not released much detail on how that would work.

TRUMP: He promises not to cut Medicare, and has suggested that other Republicans like House Speaker Paul Ryan made a political mistake by calling for major changes. But it remains unclear how Trump’s proposed repeal of “Obamacare” would affect its improvements to Medicare benefits, including closing the prescription drug coverage gap known as the “doughnut hole.”

Earlier, Trump spoke approvingly of giving Medicare legal authority to negotiate prescription drug prices, but that idea currently is not mentioned in his health care plan. Instead, he also supports allowing drug importation.



The federal-state program for low-income individuals covers more than 70 million people, from pregnant women and children to elderly nursing home residents. Under Obama’s health care law, states can expand the program to include more low-income adults. Medicaid has sometimes carried a social stigma, but polls show the program has a solid base of public support.

CLINTON: She’d work to expand Medicaid in the 19 states that have yet to take advantage of the health law. She’s proposing three years of full federal funding for those states, the same deal given to states that embraced the law right away.

TRUMP: In 2015 Trump told an interviewer: “I’m not going to cut Social Security like every other Republican. And I’m not going to cut Medicare or Medicaid. Every other Republican’s going to cut.”

But his campaign plan would convert Medicaid into a block grant, ending the open-ended federal entitlement and capping funding from Washington. Over time, such an approach is likely to result in a big cut.



About 177 million people under age 65 have private health insurance, with nearly 9 in 10 getting their coverage through an employer. Rising out-of-pocket costs such as insurance deductibles and copayments are a sore point with consumers.

CLINTON: She has proposed a new tax credit of up to $5,000 per family, or $2,500 for an individual, for households that face “excessive” out-of-pocket costs. The credit would be refundable, meaning that people who don’t owe income tax could still get money back. An independent analysis of her plan defined “excessive” costs as exceeding 5 percent of household income.

Clinton would also require insurers to cover three sick visits to the doctor each year without patients needing first to meet their plan’s deductible, the annual amount patients pay before their insurance kicks in.

TRUMP: He has no similar proposals on out-of-pocket expenses but has called for requiring hospitals, clinics and doctors to disclose prices so patients can shop around to reduce costs. And he would expand the use of tax-sheltered health savings accounts, used to pay for medical expenses not covered by insurance.



More than half of U.S. adults take prescription drugs, and according to a recent Kaiser Family Foundation poll most of those patients report no major problems affording their own medications.

But consumers have been alarmed by the introduction of breakthrough drugs costing tens of thousands of dollars a year, along with a spate of seemingly random price hikes for older medications. More than 3 out of 4 say the cost of prescription drugs is unreasonable. A majority favors government action to curb costs.

CLINTON: She has several proposals, including a new government board with the power to penalize drug companies for “unjustified, outlier price increases,” a monthly limit of $250 on patients’ copayments for prescription drugs, lowering the period of protection from generic competition for biologic drugs from 12 years to 7 years, and requiring drug companies to provide rebates for medications used by low-income Medicare recipients.

Those ideas are on top of Medicare negotiations and allowing patients to import lower-cost prescription drugs from abroad.

TRUMP: In addition to backing drug importation, he also has called on Congress to remove barriers to competition from lower-price, equally effective medications.



The 2010 Affordable Care Act expanded coverage for the uninsured and made carrying health insurance a legal obligation for most people. It offers subsidized private insurance for people who don’t have access to a job-based plan, along with a state option to expand Medicaid.

About 11 million people are covered through the law’s private insurance markets, while the Medicaid expansion has added at least 9 million to that program. It’s unclear if all those people were previously uninsured, but experts say the law deserves most of the credit for 21 million gaining coverage since its passage. Americans, however, remain deeply divided over “Obamacare.”

CLINTON: She wants to strengthen Obama’s signature law. Clinton would resolve a “family glitch” that denies health insurance subsidies to some dependents, sweeten subsidies for people buying coverage on the health law’s markets, and offer a new government-sponsored insurance plan to compete with private companies.

Her proposals would expand coverage to about 9 million more uninsured people, according to a recent study by the Commonwealth Fund and the RAND Corporation.

But Clinton would repeal the law’s tax on high-cost insurance, known as the “Cadillac Tax.” Many economists are critical, saying repeal of the tax would eliminate a brake on costs.

TRUMP: He would completely repeal the 2010 law and start over again. Trump has proposed a tax deduction for health insurance premiums, and also allowing insurers to sell policies across state lines, a longstanding GOP idea.

Critics say a deduction, usually claimed after the end of the tax year, wouldn’t do much to help lower-income people squeezed to pay premiums.

And the idea of selling across state lines has been opposed in the past by state insurance commissioners and attorneys general, who warned that it would undercut consumer protections. The insurance industry is divided, with smaller companies fearing it would favor major insurers.

Social Security Recipients to Get Tiny Increase in Benefits

In this Jan. 11, 2013 file photo, the Social Security Administration's main campus is seen in Woodlawn, Md. Millions of Social Security recipients and federal retirees will get only tiny increases in benefits next year, the fifth year in a row that older Americans will have to settle for historically low raises.  (AP Photo/Patrick Semansky, File)

In this Jan. 11, 2013 file photo, the Social Security Administration’s main campus is seen in Woodlawn, Md. (AP Photo/Patrick Semansky, File)

WASHINGTON — Millions of Social Security recipients and federal retirees will get a 0.3 percent increase in monthly benefits next year, the fifth year in a row that older Americans will have to settle for historically low raises.

There was no increase this year. Next year’s benefit hike will be small because inflation is low, driven in part by lower fuel prices.

The federal government announced the cost-of-living adjustment, or COLA, Tuesday morning. By law, the COLA is based on a government measure of consumer prices.

The COLA affects more than 70 million people – about 1 in 5 Americans.

The average monthly Social Security payment is $1,238. That translates into a monthly increase of less than $4 a month.

More bad news for seniors: Medicare Part B premiums, which are usually deducted from Social Security payments, are expected to increase next year to the point in which they will probably wipe out the entire COLA.

By law, the dollar increase in Medicare’s Part B premium cannot exceed a beneficiary’s cost-of-living raise. That’s known as the “hold harmless” provision, and it protects the majority of Medicare recipients.

But another federal law says that the Part B premium must raise enough money to cover one-fourth of expected spending on doctors’ services. That means that a minority of beneficiaries, including new enrollees and higher-income people, have to shoulder the full increase. Their premiums would jump.

Millicent Graves, a retired veterinary technician, says Medicare and supplemental insurance premiums eat up nearly a third of her $929 monthly Social Security payment. And don’t tell the 72-year-old from Williamsburg, Virginia, that consumer prices aren’t going up. She says her insurance premiums went up by $46.50 this year, and her cable TV, Internet and phone bill went up, too.

“I just lose and lose and lose and lose,” Graves said.

More than 60 million retirees, disabled workers, spouses and children get Social Security benefits. The COLA also affects benefits for about 4 million disabled veterans, 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor. Many people who get SSI also receive Social Security.

Since 2008, the COLA has been above 2 percent only once, in 2011. It’s been zero three times.

“This loss of anticipated retirement income compounds every year, causing people to spend through retirement savings far more quickly than planned,” said Mary Johnson of the Senior Citizens League. “Over the course of a 25- or 30-year retirement, it reduces anticipated Social Security income by tens of thousands of dollars.”

By law, the cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.

The COLA is calculated using the average CPI-W for July, August and September. If prices go up, benefits go up. If prices drop or stay flat, benefits stay the same.

The numbers for July and August suggest COLA of just 0.3 percent. The numbers for September are to be released Tuesday.

Some advocates complain that the government’s measure of inflation doesn’t reflect the costs many older Americans face.

For example, gasoline prices have fallen by nearly 18 percent over the past year, according to the August inflation report, while the cost of medical care has gone up by more than 5 percent.

For seniors who don’t drive much, they don’t get the full benefit of low gas prices, said Max Gulker, a senior research fellow at the American Institute for Economic Research. Many seniors, however, spend more of their income on health care.

Graves said she appreciates lower gas prices, but doesn’t drive much.

“I just have to rely more each month on cashing in investments,” Graves said. “I’m lucky I can do that.”

Medicare Unveils Far-Reaching Overhaul of Doctor’s Pay

FILE - In this July 30, 2015 file photo, a sign supporting Medicare is seen on Capitol Hill in Washington. Medicare on Friday, Oct. 14, 2016, unveiled a far-reaching overhaul of how it pays doctors and other clinicians. Compensation for medical professionals will start taking into account the quality of service, not just quantity.  (AP Photo/Jacquelyn Martin, File)

In this July 30, 2015 file photo, a sign supporting Medicare is seen on Capitol Hill in Washington. Medicare on Friday, Oct. 14, 2016, unveiled a far-reaching overhaul of how it pays doctors and other clinicians. (AP Photo/Jacquelyn Martin, File)

WASHINGTON– Medicare on Friday unveiled a far-reaching overhaul of how it pays doctors and other clinicians. Compensation for medical professionals will start taking into account the quality of service – not just quantity.

The massive regulation is known as MACRA. It’s meant to carry out bipartisan legislation passed by Congress and signed by President Barack Obama last year.

MACRA creates two new payment systems, or tracks, for clinicians. The majority of medical professionals billing Medicare – some 600,000 doctors, nurse practitioners, physician assistants and therapists – are affected. Medical practices must decide next year what track they will take.

Starting in 2019, clinicians can earn higher reimbursements if they learn new ways of doing business, joining a track that’s called Alternative Payment Models. That involves being willing to accept financial risk and reward for performance, reporting quality measures to the government, and using electronic medical records.

Advocates say the new system will improve quality and help check costs. But critics say the complicated requirements are overwhelming for solo practitioners.

It’s going to take time to assess the impact on Medicare’s 57 million beneficiaries.

The government’s premier health insurance program is in the midst of an overhaul in how it pays service providers, trying to shift to a new emphasis on rewarding quality. But it may take years to see whether the new approach can lead to major savings.

Medicare’s previous congressionally-mandated system for paying doctors proved unworkable. It called for automatic cuts when spending surpassed certain levels, and lawmakers routinely waived those reductions. MACRA was intended as a new beginning.

Medicare officials say the change will be gradual, and the agency is requesting additional public comment on Friday’s final rule.

Officials say they worked to address the concerns of smaller medical practices, by exempting more of them from the new system.

Hispanic Caucus Holds First Gathering of the Week at DNC

PHILADELPHIA — Puerto Rico came to the forefront during a gathering of the Democratic Hispanic Caucus held Monday at the Philadelphia Convention Center.

The island’s debt crisis, the Zika virus and the role Puerto Ricans on the U.S. mainland could play ahead of the presidential elections were some of the topics discussed during the caucus, along with immigration and discrimination issues. Victims of the recent Orlando shooting were also paid tribute, as speakers heavily criticized racism and discrimination against Latinos and the LGBTT community.  

“The big elephant in the room—and I don’t mean Republicans—is that we still have a colony,” said Rep. José Serrano, adding that as long as Puerto Rico continues to be a colony of the U.S., the island’s woes, particularly its fiscal problems, won’t be solved once and for all.

Along with Serrano, New York City Council Speaker Melissa Mark-Viverito; Liza Ortiz, campaign manager for Popular Democratic Party gubernatorial candidate David Bernier; and Manuel Ortiz, a lobbyist on K Street with ties to the Democratic Party and who advises New Progressive Party gubernatorial candidate Ricardo Rosselló’s campaign, took part in a panel that discussed various issues related to the island.

Serrano believes the U.S. is “just putting bandaids on” without solving Puerto Rico’s political status. He urged Congress to explicitly express which options are available, and says he supports three formulas: statehood, independence and free association.

Mark-Viverito stressed it is important for the Puerto Rican diaspora to take on an active role in finding solutions to the crisis. Moreover, she said the fiscal board to be established by the Puerto Rico Oversight, Management and Economic Stability Act, or Promesa, should concern everyone and urged once again for completing an audit of Puerto Rico’s debt.

As for the Bernier campaign manager Ortiz, she said economic development must be achieved first and foremost, adding that the island’s debt must be restructured. She added that Bernier “has been in talks with bondholders since Day 1,” and was confident a solution could be reached with the island’s creditors.

In his evaluation, lobbyist Manuel Ortiz insisted it is impossible to de-link status from Puerto Rico’s economic issues. On that front, he touted the NPP gubernatorial candidate’s plan to seek economic development by achieving parity in the Medicare and Medicaid federal programs.

“Economic development tools for Puerto Rico are clearly lacking,” Ortiz said during an exclusive interview with Caribbean Business after the panel discussion.

He added that Promesa lacks provisions for economic development. “The most important thing is that the board members be chosen from technocrats. People who are experienced, financial services people, people who know municipal debt—not ideologues and people who are going to bring their own agendas. I am inspired by conversations that I have had with the White House and with Speaker [Paul] Ryan,” Ortiz said.

“Once they get in there, I think it is important that the new administration produces audited financial statements; the data that is out there right now is not enough to get a clear picture,” he added, pointing to claims that Rosselló made that the debt was overblown to obtain the oversight board.

“[Promesa] is important to me and, yes, it is important to our constituents,” former Miami Mayor Manuel Díaz said for his part during an exclusive interview with Caribbean Business.

Hispanic caucusOn the Zika front, Serrano doesn’t think that “any American, including Puerto Ricans, understand the major threat posed by the virus,” adding that resources and funding must be provided to fight the virus in Puerto Rico.

Meanwhile, as expected, Republican presidential candidate Donald Trump was slammed during the event, particularly for his stance against immigrants.

“How have we allowed Trump’s language to be acceptable of this country’s political debate?” said DNC Vice Chairwoman María Elena Durazo, criticizing the GOP candidate for his continuous remarks against immigrants, particularly Hispanics, in the mainland U.S.

“Today, we are here to protect and defend immigrants in the U.S.,” added Rep. Luis Gutiérrez, who also took part in one of the event’s panels.

“We are all going back home…back to Puerto Rico to elect Hillary Clinton,” Durazo added. Yet, although Puerto Rico residents vote in U.S. primaries, they don’t have the right to vote in the presidential elections.

“Preach the good word; let’s make sure the Latino community puts Hillary in the White House,” said actress Rosie Pérez, who moderated the Puerto Rico panel during the Hispanic caucus.

Medicare Safeguard Overwhelmed by Pricey Drugs

WASHINGTON – A safeguard for Medicare beneficiaries has become a way for drugmakers to get paid billions of dollars for pricey medications at taxpayer expense, government numbers show.

The cost of Medicare’s “catastrophic” prescription coverage jumped by 85 percent in three years, from $27.7 billion in 2013 to $51.3 billion in 2015, according to the program’s number-crunching Office of the Actuary.

Out of some 2,750 drugs covered by Medicare’s Part D benefit, two pills for hepatitis C infection – Harvoni and Sovaldi – accounted for nearly $7.5 billion in catastrophic drug costs in 2015.

The pharmaceutical industry questions the numbers, saying they overstate costs because they don’t factor in manufacturer rebates. However, rebates are not publicly disclosed. Sen. Charles Grassley, R-Iowa, is calling the rise in spending “alarming.”

Medicare’s catastrophic coverage was originally designed to protect seniors with multiple chronic conditions from the cumulatively high costs of taking many different pills. Beneficiaries pay 5 percent after they have spent $4,850 of their own money. With some drugs now costing more than $1,000 per pill, that threshold can be crossed quickly.

Lawmakers who created Part D in 2003 also hoped added protection would entice insurers to participate in the program. Medicare pays 80 percent of the cost of drugs above a catastrophic threshold that combines spending by the beneficiary and the insurer. That means taxpayers, not insurers, bear the exposure for the most expensive patients.

FILE - In this June 14, 2011 file photo, various prescription drugs on the automated pharmacy assembly line at Medco Health Solutions in Willingboro, N.J. A safeguard for Medicare beneficiaries has become a way for drugmakers to get paid billions of dollars for pricey medications at taxpayer expense, government numbers show. The cost of Medicare’s “catastrophic” prescription coverage jumped by 85 percent in three years, from $27.7 billion in 2013 to $51.3 billion in 2015, according to the program’s number-crunching Office of the Actuary. (AP Photo/Matt Rourke, File)

Various prescription drugs on the automated pharmacy assembly line at Medco Health Solutions in Willingboro, N.J. (AP Photo/Matt Rourke, File)

The numbers provided to The Associated Press reflect the total paid by taxpayers, insurers and beneficiaries. They offer a glimpse into the volatile and often mysterious world of high-cost drugs:

– Catastrophic spending for Harvoni and Sovaldi – two hepatitis C pills from Gilead Sciences – more than doubled in two years, from about $3.5 billion in 2014 to nearly $7.5 billion in 2015. Harvoni topped the list of Medicare’s high-cost drugs last year; Sovaldi was first in 2014.

The FDA approved Sovaldi in Dec., 2013, and its $1,000-per-pill price quickly made headlines. A congressional investigation last year found that Gilead was focused on maximizing revenue, even as a company analysis showed that a lower price would allow more patients to be treated.

– Revlimid, a cancer drug derived from 1950s thalidomide, surpassed $1.7 billion in catastrophic costs in 2015, coming in second among high-cost drugs. Spending on the medication from biotech company Celgene increased by 50 percent in three years.

– Gleevec, a breakthrough drug introduced in 2001 to treat leukemia, was ensconced as 5th among the top ten pricey medications, with more than $1 billion spent in 2015. That was a 54-percent increase from 2013. Drugmaker Novartis has been criticized for repeatedly hiking the price of Gleevec.

– Catastrophic spending accounts for a fast-growing share of Medicare’s drug costs, which totaled nearly $137 billion in 2015. The catastrophic share was 37 percent, yet only about 9 percent of beneficiaries reached the threshold for such costs. For those patients, average spending jumped by 46 percent, from $9,666 in 2013 to $14,100 in 2015.

“If the numbers continue to increase like this each year, I worry about how much the taxpayers could afford,” said Sen. Grassley, who plans to ask Medicare for explanations.

“It may be that some drug companies are taking advantage of government programs to maximize their market share, and we need to know whether that’s the case,” he added.

Catastrophic coverage will soon cost as much as the entire prescription program did when it launched, said Sen. Ron Wyden, D-Ore. “Congress can’t continue to stand idle.”

Experts say the rapid rise in spending for pricey drugs threatens to make the popular prescription benefit financially unsustainable.

Nonpartisan congressional advisers at the Medicare Payment Advisory Commission have called for an overhaul. The presidential candidates, as well as the Obama administration, have proposed giving Medicare legal authority to negotiate prices.

The drug industry says Medicare patients are getting valuable, innovative medicines.

Lisa Joldersma, policy vice president for the Pharmaceutical Research and Manufacturers of America, also questioned the cost numbers. “I would push back on the notion that taxpayers are bearing 80 percent of the risk here because the numbers do not reflect rebates,” she said.

Rebates for individual drugs are not disclosed. They averaged nearly 13 percent across the entire program in 2013, according to government figures, and were estimated at about 17 percent for 2015.

Most beneficiaries haven’t seen a drastic hit yet from rising drug costs, but that may be changing. This year, average premiums went up more than 15 percent in five of the top eight drug plans, according to the Kaiser Family Foundation.

Concerns about catastrophic costs undercut the image of Medicare’s prescription program as a competitive marketplace in which private insurers bargain with drugmakers to drive down prices.

“The incentive is to price it as high as they can,” said Jim Yocum, senior vice president of Connecture, Inc., a company that tracks drug prices. Medicare is barred from negotiating prices, “so you max out your pricing and most of that risk is covered by the federal government.”

An architect of the program says no one anticipated $1,000 pills. Former Medicare administrator Tom Scully said catastrophic coverage was meant to protect patients taking many different medicines over months and years.

“The pricing is pretty wild,” he said.

A look at Medicare’s top 20 priciest prescription drugs in 2015, ranked by their cost above the program’s “catastrophic” coverage threshold.

Drug Name Uses Cost
Harvoni Hepatitis C $6.3 billion
Revlimid Cancer $1.7 billion
Sovaldi Hepatitis C $1.2 billion
Copaxone Multiple sclerosis $1.1 billion
Gleevec Cancer $1 billion
Humira Pen Rheumatoid arthritis $886 million
Tecfidera Multiple sclerosis $724 million
Renvela Kidney disease $675 million
Xtandi Prostate Cancer $633 million
Lantus Solostar Diabetes $633 million
Zytiga Prostate cancer $623 million
Enbrel Sureclick Rheumatoid arthritis $586 million
Abilify Mental illness $555 million
Sensipar Kidney disease $533 million
Truvada HIV $525 million
Aripiprazole Mental illness $504 million
Lantus Diabetes $484 million
Imbruvica Cancer $473 million
H.P. Acthar Multiple sclerosis $467 million
Lyrica Seizures $461 million
Some medications have additional uses.
Cost above catastrophic threshold in 2015; includes spending by taxpayers, insurers and beneficiaries.
Source: Centers for Medicare and Medicaid Services, Office of the Actuary

New Peak for US Health Care Spending

WASHINGTON (AP) — The nation’s health care tab this year is expected to surpass $10,000 per person for the first time, the government said Wednesday. The new peak means the Obama administration will pass the problem of high health care costs on to its successor.

The report from number crunchers at the Department of Health and Human Services projects that health care spending will grow at a faster rate than the national economy over the coming decade. That squeezes the ability of federal and state governments, not to mention employers and average citizens, to pay.

Growth is projected to average 5.8% from 2015 to 2025, below the pace before the 2007-2009 economic recession but faster than in recent years that saw health care spending moving in step with modest economic growth.

National health expenditures will hit $3.35 trillion this year, which works out to $10,345 for every man, woman and child. The annual increase of 4.8% for 2016 is lower than the forecast for the rest of the decade.

Various prescription drugs on the automated pharmacy assembly line at Medco Health Solutions in Willingboro, N.J. (AP / Matt Rourke)

Various prescription drugs on the automated pharmacy assembly line at Medco Health Solutions in Willingboro, N.J. (AP / Matt Rourke)

A stronger economy, faster growth in medical prices and an aging population are driving the trend. Medicare and Medicaid are expected to grow more rapidly than private insurance as the baby-boom generation ages. By 2025, government at all levels will account for nearly half of health care spending, 47%.

The report also projects that the share of Americans with health insurance will remain above 90 percent, assuming that President Barack Obama’s law survives continued Republican attacks.

The analysis serves as a reality check for the major political parties as they prepare for their presidential conventions.

Usually in a national election there are sweeping differences between Democrats and Republicans on health care, one of the chief contributors to the government’s budget problems. But this time the discussion has been narrowly focused on the fate of Obama’s law and little else.

Republican Donald Trump vows to repeal “Obamacare,” while saying he won’t cut Medicare or have people “dying in the street.” Democrat Hillary Clinton has promised to expand government health care benefits.

Both candidates would authorize Medicare to negotiate prescription drug prices, which the report says will grow somewhat more slowly after recent sharp increases.

Obama’s health care law attempted to control costs by reducing Medicare payments to hospitals and insurers, as well as encouraging doctors to use teamwork to keep patients healthier. But it also increased costs by expanding coverage to millions who previously lacked it. People with health insurance use more medical care than the uninsured.

Despite much effort and some progress reining in costs, health care spending is still growing faster than the economy and squeezing out other priorities, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan group that advocates for reducing government red ink.

“No serious candidate for president can demonstrate fiscal leadership without having a plan to help address these costs,” she said. “No matter whether a candidate has an agenda that focuses on tax cuts or spending increases, there will be little room for either.”

The $10,345-per-person spending figure is an average; it doesn’t mean that every individual spends that much in the health care system. In fact, U.S. health care spending is wildly uneven.

About 5 percent of the population — those most frail or ill — accounts for nearly half the spending in a given year, according to a separate government study. Meanwhile, half the population has little or no health care costs, accounting for 3% of spending.

Of the total $3.35 trillion spending projected this year, hospital care accounts for the largest share, about 32%. Doctors and other clinicians account for nearly 20%. Prescription drugs bought through pharmacies account for about 10%.

The report also projected that out-of-pocket cost paid directly by consumers will continue to increase as the number of people covered by high-deductible plans keeps growing.

Wednesday’s report was published online by the journal Health Affairs.

In Nod to Sanders, Clinton Offers New Health Care Proposals

ORLANDO, Fla. – In another nod to primary rival Bernie Sanders, Hillary Clinton is proposing to increase federal money for community health centers and outlining steps to expand access to health care across the nation.

Clinton’s campaign says the proposal is part of her plan to provide universal health care coverage in the United States. The presumptive Democratic presidential nominee also is reaffirming her support for a public-option insurance plan and for expanding Medicare by letting people age 55 year and older opt in.

The announcement Saturday was a clear gesture toward Sanders, who ran a strong primary campaign against Clinton and has held back from endorsing her candidacy as the party’s convention nears.

In a statement, Clinton said: “We have more work to do to finish our long fight to provide universal, quality, affordable health care to everyone in America.”

Clinton’s campaign noted that Sanders had promoted doubling money for primary care services at federally qualified health centers. Money for these centers was increased under the Affordable Care Act, an effort led by the Vermont senator.

According to the Clinton campaign, her proposal would make money for these centers permanent and expand it by $40 billion over the next 10 years. Her campaign said the money would be mandatory and not subject to annual appropriation. The proposal would more than double the money for the centers, which currently get $3.6 billion annually.

Sanders, in a conference call after the Clinton campaign’s announcement, said her proposal “will save lives” and “ease suffering” and represented “an important step forward in expanding health care in America and expanding health insurance and health care access to tens of millions of Americans.”

The health care proposal follows on Clinton’s recent announcement of new ways to tackle college affordability, including a plan that ensures families with annual incomes up to $125,000 pay no tuition at in-state public colleges and universities.

That initiative was seen as a response to Sanders’ call for free tuition at all public colleges and universities, an idea popular with the young voters who flocked to his rallies.

FILE - In this July 8, 2016 file photo, Democratic presidential candidate Hillary Clinton speaks in Philadelphia. In another nod to primary rival Bernie Sanders, Hillary Clinton is announcing a new proposal to double funding for community health centers, aiming to increase access to primary care services. (AP Photo/Matt Rourke, File)

In this July 8, 2016 photo, Democratic presidential candidate Hillary Clinton speaks in Philadelphia. (AP Photo/Matt Rourke, File)

Clinton’s policy overtures come as Sanders appears to be close to supporting her candidacy.

Two Democrats with knowledge of Sanders’ plans told The Associated Press that Sanders was closing in on offering his public endorsement of Clinton. The Democrats spoke on condition of anonymity to discuss private conversations they were not authorized to disclose.

Clinton’s campaign has announced a stop in New Hampshire on Tuesday but did not say whether Sanders also would attend.

Sanders told reporters that the two campaigns “are coming closer and closer together in trying to address the major issues facing this country.” He added: “We’ll have more to say, I think, in the very near future.”

Clinton and Sanders frequently clashed over health care during the primaries. Sanders campaigned on a “Medicare for all” plan that would have provided universal coverage. Clinton said that would undercut President Barack Obama’s health law, rely too heavily on GOP governors and reopen a contentious debate with Republicans in Congress.

Clinton’s health care priorities have centered on capping out-of-pocket costs for prescription drugs and providing tax credits for families facing high medical costs.

Clinton has reiterated her support for a “public option” for states to set up their own health insurance plan to compete against private insurers. Sanders was instrumental in passing legislation that would allow that.

Both supported a public insurance option at the national level but opposition from moderate Democrats prevented that proposal from being included in the health overhaul law.

CMS Proposes Medicare Changes that Benefit Puerto Rico

SAN JUAN — The Centers for Medicare and Medicaid Services (CMS) has issued a proposed rule that would modify aspects of the formula used to compensate hospitals in the United States for providing services to traditional Medicare patients, and the revised formula—which will take effect on Oct. 1, 2016—would significantly benefit the approximately 50 acute-care hospitals in Puerto Rico. After a public comment period, CMS will issue a final rule on August 1, 2016.

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Resident Commissioner Pedro Pierluisi

The federal government reimburses hospitals who admit Medicare patients under the Inpatient Prospective Payment System. Each hospital receives a “base rate” payment, which can then be adjusted upward due to a variety of factors. The base rate payment is intended to cover both the operating costs and the capital costs that a reasonably efficient hospital would incur in providing care. Every hospital in the states is paid the same base rate. Until recently, however, hospitals in Puerto Rico were paid a base rate that was about 14 percent lower than the base rate paid to hospitals in the states, according to statement released Monday by Resident Commissioner Pedro Pierluisi’s office in Washington, D.C.

In March 2015, Pierluisi introduced legislation, H.R. 1417, to fix this disparity. The language of H.R. 1417 was included in the Consolidated Appropriations Act for fiscal year 2016 and enacted into law in December. As a result, starting this year, hospitals in Puerto Rico will receive the same base rate as hospitals in the states with respect to the “operating costs” portion of the formula, which is the largest factor in the formula.

“At the urging of the resident commissioner, the proposed rule just issued by CMS would also extend state-like treatment to hospitals in Puerto Rico under the smaller but still significant ‘capital costs’ portion of the formula, starting on October 1st. It is estimated that, once all of these changes are fully implemented, annual Medicare base rate payments to hospitals in Puerto Rico could increase by nearly $12 million per year.  

“In addition, the rule issued by CMS proposes to improve the way in which Puerto Rico hospitals are treated under the Medicare ‘disproportionate share hospital’—or DSH—program,” the congressman’s statement reads.

FILE - In this July 30, 2015 file photo, a sign supporting Medicare is seen on Capitol Hill in Washington. A Medicare proposal to test new ways of paying for chemotherapy and other drugs given in a doctor's office has sparked a furious battle, and cancer doctors are demanding that the Obama administration scrap the experiment. (AP Photo/Jacquelyn Martin, File)

A sign supporting Medicare is seen on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin, File)

Since the 1980s, the federal government has utilized the DSH program to provide additional financial support directly to hospitals that treat a high percentage of low-income patients, who tend to be more costly to care for. The formula used to calculate DSH payments to a hospital has operated to the disadvantage of hospitals in Puerto Rico because it relies in part on how often a hospital treats a patient who is enrolled in both Medicare and the Supplemental Security Income program, known as SSI, but Congress has not extended the SSI program to Puerto Rico.

The resident commissioner’s release adds that “In June 2015, Pierluisi introduced H.R. 2635, the Improving the Treatment of the U.S. Territories Under Federal Health Programs Act, and Section 203 of that bill would amend the DSH formula for Puerto Rico, establishing a substitute—or proxy—for SSI for part of the formula. The rule just issued by CMS does precisely that, which will help ensure that island hospitals receive fair DSH payments. According to CMS, this change is expected to have net positive impact of approximately $8.4 million annually, increasing DSH payments from $66.7 million a year to $75.1 million a year.

“In the last several months, we have made significant progress in improving Puerto Rico’s treatment under traditional Medicare and Medicare Advantage. In December 2015, Congress enacted the Consolidated Appropriations Act for Fiscal Year 2016, which included two provisions taken verbatim from bills I introduced. The first provision provided Puerto Rico hospitals with the same base rate as hospitals in the states under Medicare, and the proposed rule that CMS just issued ensures that this provision will be fully implemented starting on October 1st.

“The second provision fixed another disparity, authorizing bonus payments under Medicare to hospitals in Puerto Rico that become meaningful users of electronic health records, which help modernize services and improve patient care. Then, in April, after years of efforts, CMS issued a rule that will help stabilize and strengthen the Medicare Advantage program in Puerto Rico, which provides health insurance to nearly 570,000 seniors and disabled individuals on the island. Finally, the proposed rule just issued by CMS will help ensure that Puerto Rico hospitals are treated equitably under the Medicare DSH program,” Pierluisi stated.

“There is still much work that remains to be done to ensure that Puerto Rico is treated fairly under federal health programs, whether it be Medicaid, traditional Medicare or Medicare Advantage, but it is important to pause and acknowledge the progress we are making towards this goal,” added the Resident Commissioner.