Social Security COLA Will Rise 5.9 Percent in 2022

The Social Security Administration announced today (October 13) that its annual Cost of Living Adjustment (COLA) will rise by 5.9 percent next year – the largest one-year boost since 1982. The increase will add $92 to the program’s average monthly benefit, which will rise to $1,657 from $1,565.

The increase was determined by the rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2021 to the third quarter of this year. Other important changes driven by the COLA include:

The ceiling on wages subject to Social Security payroll taxes will rise to $147,000 in 2022 from $142,800 this year.

Wage earners who have begun receiving Social Security but not yet reached their full retirement age (FRA) may earn $19,560 next year – up from $18,960 in 2021 — after which $1 in benefits will be deducted for each $2 earned in excess of that amount. The earnings limit for working beneficiaries who reach their FRA next year will be $51,960 – up from $50,520 this year – after which $1 in benefits will be deducted for each $3 in additional earnings.

A full list of new 2022 COLA-related adjustments may be found here.

Medicare will shortly announce the average Part B monthly premium for 2022. It was projected to rise by $10 — to $158.50 from $148.50 this year – in the recent annual report by Medicare program trustees. Part B premiums usually are deducted from Social Security benefits.

U.S. Drug Prices a Rip-Off, But . . .

As if we needed more evidence, here’s a recent analysis of how much Americans pay for big-ticket drugs and how much money pharmaceutical companies collect in the U.S. compared with their worldwide revenues for these drugs.

Manufacturer Drugs Revenues (billions) U.S Share of Total
Percent
U.S. Rest of World
AbbVie Humira
Imbruvica
$20.4 $3.7 85
Bristol Myers Squibb Eliquis
Opdivo
Revlimid
$17.7 $10.5 63
Johnson & Johnson Imbruvica
Xarelto
$11.9 $6.0 66
Pfizer Eliquis
Enbrel
Ibrance
Prevnar 13
Xtandi
$10.3 $8.3 55
Roche Avastin
Ocrevus
Rituxan
$9.0 $6.1 60
Merck & Co. Keytruda $8.4 $6.4 57
Gilead Sciences Biktarvy $6.1 $1.2 84
Regeneron Pharma. Eylea $4.9 $0.0 100
Amgen Enbrel $4.9 $0.1 97
Eli Lilly Trulicity $3.8 $1.2 76
Astellas Pharma Xtandi $2.2 $2.0 52
AstraZeneca Trulicity $1.6 $2.8 36
Bayer Eylea $0.0 $8.5 0

This graphic was drawn from a report issued by Public Citizen, the consumer advocacy group founded in 1971 by Ralph Nader.

“For 17 of the 20 top-selling drugs worldwide in 2020,” the report said, “pharmaceutical corporations made more money from U.S. sales than from sales to all other countries in the rest of the world combined.”

This situation has been largely caused by U.S. laws that prohibit Medicare – far and away the nation’s largest health care payer – from negotiating directly with drug companies over prices.

In other countries, by contrast, national governments do have that power.

It’s not clear (to me at least) the extent to which drug companies do not push back against foreign governments because they don’t have to so long as Uncle Sam shoulders the bulk of global drug revenues.

It’s also not clear to me how much industry revenues could drop before discouraging drug companies from spending the huge sums of money needed to develop the kinds of blockbuster drugs we want.

Wouldn’t it be nice to find out? Congressional approval for Medicare to negotiate drug prices would be a great place to start.

Here’s a Welcome, Fact-Based Guide to Successful Aging

In a world that often seems short on facts and distressingly long on opinions, there’s nothing to beat a solid report from the Society of Actuaries, a group dedicated to fact worshippers!

A recent report from the SOA Research Institute provides a solid foundation for many of the common-sense lifestyle behaviors that most of us know we should pursue to live longer and healthier lives. The title is hardly clickbait — Maximizing Health Span: A Literature Review on the Impact of a Healthy Lifestyle on Retirement. And nearly half of the document is devoted to 346 research references.

The report’s review yields a distilled ranking of the things most likely to either kill older people or, equally important, rob their later years of enjoyment due to disabilities and steep health costs. The expression of these behavioral liabilities is labelled “health span,” which is defined as the difference between your remaining life span and the number of those years you spend in good health.

The culprits here won’t surprise you. “For both the pre- and post-retirement age groups,” the report says, “the five risk factors with the largest impacts on long and healthy lives are tobacco use, high body-mass index, high fasting plasma glucose, dietary risks, and high blood pressure.”

Getting a health span grade of zero would be a good thing, of course. A more clinical expression of this goal, which I obsessed over in my Medicare book, is “compressed morbidity” – to me, at least, a morbidly appealing concept.

Getting to zero is, however, a difficult journey and requires navigating a world of multiple medical challenges and complex inter-relationships that create their own risks. Not to worry, the SOA researchers note, “the Global Burden of Disease (GBD) Studies from the Institute for Health Metrics and Evaluation (University of Washington) is a comprehensive model that organizes these complicated relationships.”

When the dust clears from all this fact-based number crunching, the report notes that “while life expectancy at age 65 in the United States has climbed to 19.6 years, healthy life expectancy lags at only 13.1 years, and adults at age 65 can expect to live only 6.47 additional years in good health, on average.”

Here are verbatim snippets from the report about the leading health challenges we face and the quality-of-life benefits from confronting them:

Tobacco Use

Smoking trends in the U.S. are encouraging – amongst U.S. individuals aged 65-69, daily smoking prevalence decreased from 13.7 percent in 2000 to 11.1 percent in 2015, mirroring the overall decline in smoking prevalence amongst the U.S. population. (Interestingly, dietary and smoking risks tend to improve with age, whilst the converse is seen with the other factors that shall be explored. Smoking cessation prior to age 40 leads to the greatest gains in life expectancy (individuals who quit smoking between ages 25 to 34 gain an average of 10 years relative to those who continue smoking); however, even as one approaches retirement age, individuals who stop smoking between ages 45 to 54 stand to gain 6 extra years of life relative to those who continue smoking.

Body Mass Index (BMI)

As of 2017-2018, approximately 42.4 percent of United States adults were obese, a figure that has seen startling increases from 30.5 percent since 1999-2000. The prevalence of obesity persists amongst older adults – amongst those aged 65 to 69, 33.9 percent were obese. This number has increased since 2000, when – according to GBD data, amongst U.S. adults aged 65 to 69 – 25.3 percent were obese. According to 2019 GBD data, almost 12 percent of deaths (a 22.9 percent increase since 1990) and 11.3 percent of years lived in disability (a 47.5 percent increase since 1990) amongst adults 70 years and older were attributable to high BMI.

Metabolic Risks (Fasting Plasma Glucose, Blood Pressure, Cholesterol)

Amongst U.S. adults 70 years and older, 39.5 percent of deaths (a 15.6 percent decrease since 1990) and 25.9 percent (a 15.9 percent increase since 1990) of years lived in disability were attributable to metabolic risks. (Geek alert!) This excess risk is measured against minimum exposure thresholds of 4.8-5.4 mmol/L for glucose, 110-115 mmHg for systolic blood pressure, and 0.7-1.3 mmol/L for LDL cholesterol.

Dietary Risks

Amongst U.S. adults 70 years and older, 14.8 percent of deaths (a 28.9 percent decrease since 1990) and 5.2 percent (an 18.4 percent increase since 1990) of years lived in disability were attributable to dietary risks.

With age, several associated nutritional changes may affect quality of life, which makes the provision of a healthy diet even more important. These include reduced thirst and decreased body water, which increase susceptibility to dehydration; age-related changes in nutrient needs, which can lead to vitamin deficiency or toxicity; changes in taste, vision and smell, which can lead to decreased enjoyment of food; broken bones; edentulous, or missing or false teeth, which can limit food choices; increased disease incidence, which can lead to changes in nutritional requirements; increased use of over-the-counter or prescription drugs, which can lead to changes in appetite, nutrient requirements and increases in possible drug-nutrient interactions.

Physical Activity

In older adults, physical activity is associated with improved performance of daily activities, prevention of falls, improved quality of life in those with arthritis, increased longevity, lower risk of cognitive decline, and an increased sense of purpose in life. Even light/mild activity has been shown to have positive effects on healthy aging in older adults.

Older adults should at least try to incorporate multicomponent physical activity that includes balance training as well as aerobic and muscle-strengthening activities. Most evidence supports a program of exercise with the following characteristics: three times per week of balance training and moderate-intensity muscle-strengthening activities for 30 minutes per session, with additional encouragement to participate in moderate-intensity walking activities two or more times per week for 30 minutes per session.

The report also includes other behaviors that can greatly effect longevity and successful aging. These include paying attention to health screenings and immunizations, social engagement activities, adequate sleep, vision and hearing care (to which I’d add dental care), continuing to look for and engage in purposeful pursuits, managing the six ADLs, or activities of daily living (mobility, eating, dressing, bathing, toileting, and continence), and successfully aging in place in a home with “age friendly” modifications to minimize falls and other senior unfriendly challenges.

There will NOT be a later quiz on these extensive data points. Or excessive rants to “do the right” things. The facts are, well, the facts. How you respond to them is your call.

In the meantime, please raise your glasses in a toast to compressed morbidity!

Part B Premiums Versus the COLA — Updated

Updated to include projected Part A 2022 deductibles 

On August 30, trustees for Social Security and Medicare released their massive annual reports on how they fared in 2020, their financial footings, and the outlook for the nation’s primary retirement and health-care programs.

The short answer is that the financial soundness of both programs continues to be threatened. Shrinking payroll taxes are the primary culprit for Social Security. Rising health care costs are the villain for Medicare. The pandemic overshadowed both programs, and continues to do so, making projections tenuous.

What’s not uncertain is that the clock is ticking for key trust funds for both programs. Social Security will be unable to fully pay beneficiary claims by 2034, a year earlier than projected in last year’s report, at which time incoming revenues will cover only 78 percent of payable benefits. Medicare’s hospital trust fund has only five years of solvency, and would be able to pay 91 percent of expected costs in 2026.

These reports continue to be a statistical tour de force, and contain the nearest thing we have to definitive reports and projections. They are must-read documents for Washington policymakers and researchers.

Older and disabled residents of the United States, however, may be forgiven for viewing them (which they seldom do) as the programming equivalent of a very bad evening of C-SPAN.

As a card-carrying beneficiary of both programs, one piece of news jumped out at me. It was in Table V.E2 on page 210 of the Medicare report. Next year’s monthly premium for Part B of Medicare was projected at $158.50 – $10 higher than this year’s premium of $148.50.

While experts’ alarms about rising health costs may seem like statistical mumbo-jumbo, tacking on $10 a month to the primary Medicare expense that most people must pay will be a major shock. The annual Part B deductible would rise to $217 from $203 this year. Medicare’s high-income surcharges will rise by about 6.7 percent, adding more than $2 billion to the monthly Part B premiums paid by about 7 percent of Medicare’s high-income beneficiaries.

The report includes projections for Part A hospital, nursing home, and other deductibles. While these numbers are not officially adopted by Medicare, they have been spot-on in past reports:

                                                                 2022          2021

Inpatient hospital deductible:          $1,556        $1,484

Inpatient daily coinsurance

     Days 61-90                                 $  389         $  371

     Lifetime reserve days                   $  778          $  742

Skilled nursing daily coinsurance  $  194.50    $  185.50

Monthly Part A premium*

     Standard                                         $  499         $  471

     Reduced                                         $  274          $  259

*For those not qualifying for premium-free Part A

Projections for Part D prescription drug programs are an average monthly premium of $32.64, down from $33.06 this year. This does NOT mean drugs will be cheaper, only that drug plans will be reducing premiums but more than making up for that in higher charges for the drugs you use.

Other key 2022 Part D metrics have already been annouced: the annual deductible will be $480, up from $445 this year; the coverage gap in Part D plans will kick in when insured drug costs have hit $4,430, up $300 from this year, and, the catastrophic coverage zone of the plans (when consumer payments are limited to no more than 5 percent of a drug’s cost) will occur when out-of-pocket costs have reached $7,050, up from $6,550 in 2021.

The Trustees’ Social Security report does not carry a definitive estimate of next year’s cost of living adjustment, which has been widely projected at between 5 and 6 percent, the largest in many years. This will help cushion higher Part B premiums for all but those receiving the most meager Social Security benefits. They will be protected from any net reductions in their Social Security by what’s called the program’s “hold harmless” rule.

Part B Premiums Versus the COLA

Trustees for Social Security and Medicare released their massive annual reports yesterday on how they fared in 2020, their financial footings, and the outlook for the nation’s primary retirement and health-care programs.

The short answer is that the financial soundness of both programs continues to be threatened. Shrinking payroll taxes are the primary culprit for Social Security. Rising health care costs are the villain for Medicare. The pandemic overshadowed both programs, and continues to do so, making projections tenuous.

What’s not uncertain is that the clock is ticking for key trust funds for both programs. Social Security will be unable to fully pay beneficiary claims by 2034, a year earlier than projected in last year’s report, at which time incoming revenues will cover only 78 percent of payable benefits. Medicare’s hospital trust fund has only five years of solvency, and would be able to pay 91 percent of expected costs in 2026.

These reports continue to be a statistical tour de force, and contain the nearest thing we have to definitive reports and projections. They are must-read documents for Washington policymakers and researchers.

Older and disabled residents of the United States, however, may be forgiven for viewing them (which they seldom do) as the programming equivalent of a very bad evening of CSPAN.

As a card-carrying beneficiary of both programs, one piece of news jumped out at me. It was in Table V.E2 on page 210 of the Medicare report. Next year’s monthly premium for Part B of Medicare was projected at $158.50 – $10 higher than this year’s premium of $148.50.

While experts’ alarms about rising health costs may seem like statistical mumbo-jumbo, tacking on $10 a month to the primary Medicare expense that most people must pay will be a major shock. The annual Part B deductible would rise to $217 from $203 this year. Medicare’s high-income surcharges will rise by about 6.7 percent, adding more than $2 billion to the monthly Part B premiums paid by about 7 percent of Medicare’s high-income beneficiaries.

Projections for Part D prescription drug programs are an average monthly premium of %32.64, down from $33.06 this year. This does NOT mean drugs will be cheaper, only that drug plans will be reducing premiums but more than making up for that in higher charges for the drugs you use.

Other key 2022 Part D metrics have already been annouced: the annual deductible will be $480, up from $445 this year; the coverage gap in Part D plans will kick in when insured drug costs have hit $4,430, up $300 from this year, and, the catastrophic coverage zone of the plans (when consumer payments are limited to no more than 5 percent of a drug’s cost) will occur when out-of-pocket costs have reached $7,050, up from $6,550 in 2021.

The Trustees’ Social Security report does not carry a definitive estimate of next year’s cost of living adjustment, which has been widely projected at between 5 and 6 percent, the largest in many years. This will help cushion higher Part B premiums for all but those receiving the most meager Social Security benefits. They will be protected from any net reductions in their Social Security by what’s called the program’s “hold harmless” rule.

Will Health Care Be Coming to Your Home?

It usually requires only three reinforcing trends to fire up my punditry genes, but there are even more when it comes to the likelihood that older Americans will be able to age in place successfully, in large measure because their health care will be delivered to them at home.

In no particular order, they include the Pandemic, health care technology, a shortage of health care workers, the ugly profile of life in a nursing home, soaring hospital costs, the dearth of long-term care, and Baby Boomers, who are growing both in numbers and chronic health problems.

Oh, and don’t forget trillions of dollars in new infrastructure and health spending contained in the two massive bills now making their way through Congress.

Let’s explore them in order.

COVID-19, which seems likely to morph into COVID-21 and so on, is involved in many factors affecting home-based care.

It forced everyone to spend time at home. Once there, we liked what we saw, and have been pouring enormous sums into fixing up and expanding our homes. Home-centric life isn’t going to change anytime soon.

The Pandemic also created enormous pressures on the existing health-care infrastructure. We don’t have enough hospital beds, nurses, doctors, and other health workers. This also triggered the movement of health care to the home.

This virus was especially deadly to nursing home residents. The reasons for this are worthy of book-length treatment. The takeaway for me is that many people will be avoiding nursing homes like, well, the plague that they have been for many occupants.

The disease spurred telemedicine and digitized health technologies. You now can put a device on your wrist that generates real-time health readings and a 24-7 connection with a health care professional. At-home health technology companies say a shortage of Internet broadband service often has been the only serious obstacle to quicker implementation of home-based care programs. Cue the infrastructure bill!

I can’t tell you the fate of proposed increases in health spending being debated in Washington. But it seems likely that Medicare will be expanded and that coverage for at-home health care will be included in the package of enhanced benefits. Providing more funds will accelerate trends already in place that favor more at-home care.

Last year, when many hospitals were overwhelmed with COVID patients, some hospitals began expanding home-based care to free up beds. This real-world experiment has produced some appealing interim findings that home-based care can be as effective as hospital care and is much cheaper.

Brigham and Women’s Hospital in Boston is a leader here. Avera Health, based in South Dakota, at one point was treating nearly 1,150 patients in their homes. Boosted in part by expanded Medicare support for home-based care during the pandemic, nearly 100 hospitals across the country are in the program providing acute care to patients who would formerly have been hospitalized.

If these trends do come together, as I suspect, the impact on the senior care industry and real estate markets could be enormous. People will no longer regard nursing homes as their only source of long-term care.

The appeal of high-end continuing care retirement communities may also dim. Why spend $500,000 for a 1,200 square-foot apartment, and then $5,000 a month for a meal plan and related services? Why not have the care you need delivered for much less money to you in your own (much larger and nicer) home?

It will take many years for these changes to become commonplace. But anyone beginning to plan for their later years should include the development of at-home health care in their thinking.

 

Medicare for All is No Easy Fix

I have shied away from weighing in on the flurry of health proposals being discussed as part of the Biden Administration’s big spending bill. So many proposals have been floated, and I can’t handicap their odds of enactment better than you.

However, the resurgence of Medicare for All measures makes me think that some version of this proposal will be included in the measure the Senate hopes to pass via a simple-majority reconciliation bill.

Medicare for All falls far short of Progressives’ hopes for a single-payer overhaul of U.S. health insurance. But it has broad public support and, at the very least, could be an important stepping stone toward more substantive changes.

Medicare for All also can mean different things, and represents an interesting horse-trading vehicle for Congressional discussion and possible compromises. For example, it might encourage many of the roughly 180 million people now covered by employer health plans to switch to Medicare.

While this may seem a good thing, America’s employer health insurance providers are rightly concerned that it would undermine if not seriously weaken employer health plans, according to a recent analysis by the American Benefits Council (ABC).

Lower-income, younger, and healthier workers are the most logical ones interested in a public option. Any large-scale shift would force employer plans to raise rates on their remaining members, who by definition would have costlier medical bills. This kind of adverse selection response could feed on itself, leading to a worst-case death spiral for some employer plans.

Still, I expect serious consideration of Medicare as a public option for employees and those covered by other forms of private insurance (i.e., the Affordable Care Act exchanges). Giving people such a choice creates good optics for Democrats, although it may not lead to a lot of change so long as the option is voluntary.

Doctors and hospitals have long complained that Medicare’s accepted payment rates are too low. Employer plans pay rates nearly 2.5 times higher than does Medicare. The appetite for medical providers to serve Medicare patients clearly is supported by the higher prices they collect from employer plans. The prospect of millions of employees switching to lower-cost Medicare is a  major threat to providers.

More to the point, Medicare for All might not really change the huge profit incentives now enjoyed by the insurers, drug companies, and equipment providers that dominate the market for Medicare coverage. If you expect doctors and hospitals to flock to serve people with public-option plans if they feature low reimbursement rates like Medicare, you might want to color yourself naive.

And if you assume that Medicare for All would mean more government-provided health insurance, tack on another credulity demerit. Private companies dominate this market and are often the preferred partners of government Medicare and Medicaid program administrators.

This tangled web of mutually beneficial deals has cemented the continued escalation of U.S. health spending – now about twice as high per person as in any other developed economy. And it has made health care a darling on Wall Street.

If Medicare for All simply provides more of the same, it might appear as progress to some by expanding the pool of people with health insurance. But it might have nothing to do with badly needed health reforms that would change the trajectory of U.S. health spending, reduce the volume of unneeded care, and align the care that is provided with better health outcomes for people with health insurance.

To be sure, something does need to be done here. The pressures for higher health spending will only get worse. The AMC analysis includes a solid summary of future health trends. Here are a few sobering excerpts:

  • Health care utilization is not driving spending growth, price is driving spending growth. Patients are using the same or lower quantities of health care but are paying more for it every year.
  • Spending on hospital services accounts for 44 percent of total personal health care spending for the privately insured; hospital price increases are key drivers of recent growth in per capita spending among the privately insured.
  • According to the Centers for Disease Control and Prevention (CDC), 90 percent of the nation’s $3.8 trillion in annual health care expenditures in 2019 were for people with chronic physical and mental health conditions.
  • By 2030, an estimated 83.4 million people in the U.S. will have three or more chronic diseases—compared to 30.8 million in 2015.

Medicare Drug Pricing Rules Under the Microscope

Here’s background to help you keep track of two ongoing processes – one by Medicare and one in the courts – that could lead to big changes in the way Medicare charges you for expensive drugs. You’ve likely heard of one but perhaps not the other.

Under Medicare’s complicated rules for Part D drug plans, there is no ceiling on out-of-pocket costs for prescription drugs. There is protection here, but even in what’s called the catastrophic phase of Part D drug coverage, consumers are still responsible for paying 5 percent of the billed price for meds.

As someone who takes a very expensive medicine whose costs exceed $5,000 a month, I can tell you that I reach the catastrophic phase of my Part D plan each year February! For me, at least, 5 percent of that price is still a financial burden.

The price I pay is not so different from the tentative price announced by Biogen for its new dementia drug, aducanumab (the brand name is Aduhelm).

Unlike my situation, however, nearly every older Medicare beneficiary is interested in a drug that could delay the onset of a condition that they find terrifying. The collective bill could overwhelm not only consumers but the entire Part D program, which is heavily subsidized by taxpayers.

The Centers for Medicare & Medicaid Services (CMS) announced last week that it was launching a formal process to explore who should receive Aduhelm and what it should cost. The process is called a National Coverage Determination analysis and is designed to set national policy for how Medicare will cover the drug.

“Alzheimer’s is a devastating illness that has touched the lives of millions of American families and as CMS opens our National Coverage Determination (NCD) analysis, we invite interested stakeholders to participate,” said CMS Administrator Chiquita Brooks-LaSure in a CMS press release. “We want to consider Medicare coverage of new treatments very carefully in light of the evidence available. That’s why our process will include opportunities to hear from many stakeholders, including patient advocacy groups, medical experts, states, issuers, industry professionals, and family members and caregivers of those living with this disease.”

You can track the process of this NCD and submit your own thoughts here. While the NCD is underway, Medicare’s regional administrative contractors – there are 12 across the country – may issue Local Coverage Determinations (LCDs). You can track those determinations here. (Sorry for all the bureaucratic gobbledygook!)

Private insurers aren’t waiting for the CMS to weigh in. Some have already announced they will not cover the drug. Some prominent medical centers said last week they won’t administer it.

The second development involves a legal challenge to Medicare rules that prohibit medical providers, including drug companies, from providing consumers with price discounts and other financial assistance. Doing so would amount to trying to induce consumers to buy that company’s product.

Drug assistance programs are widely offered to non-Medicare consumers covered by private insurance plans. The reasonableness of the price and even the efficacy of the drug or product may never be discussed.

A compelling motivation for drug companies, of course, is to make expensive drugs more affordable and, not incidentally, thus induce more people to use the products. This is precisely why Medicare frowns on the practice.

You might ask why the companies don’t simply lower their prices. Good question. Only a cynic would note that maintaining high list prices helps the companies reap big gains from Medicare beneficiaries. Under the Part D program, the federal government pays 80 per cent of the price of drugs once they’ve reached the catastrophic phase of the program.

According to the Axios news service and reporter Bob Herman, Pfizer has challenged this rule in a court case involving heart medications that cost a whopping $225,000 a year. The case is now before a U.S. District Court.

If the government loses this case, the impact on Medicare users of expensive drugs could be enormous. Even if it wins, the case could add further pressure to legislative efforts to lower drug costs, especially for Medicare users.

What Does Successful Aging Mean to You?

Until the end of my career or life, whichever comes first, my journalism beat is going to be Successful Aging. Since beginning my first reporting assignment more than 50 years ago at The Charlotte Observer (I was the textile reporter), this is the first time I’ve been able to pick my own assignment.

 

I chose this topic because, after about 15 years specializing in writing articles and books about aging, health, and retirement, I believe these were just the “prelims” and that nearly everything of import in our later years is part of the universal quest to successfully age and come to terms with our brief time on Earth.

 

I don’t pretend to have the answers for what successful aging means to you. That’s your job, and there are no “averages” here or thresholds to meet. Your unique mix of attributes, values, and priorities will define what successful aging might look like.

 

What I can offer is a guide to the building blocks of a successful life and the roles they can play in shaping this definition. I don’t claim to know all these variables, and look forward to your help in defining more. But I have a beginning list, and it’s pretty long:

 

Age Friendly Communities

Aging in Place

Alzheimer’s-Dementia

Annuities

At-Home Care

Budgets and Spending

Caregiving

Continuing Care Retirement Communities

Charitable Giving, Divorce

Downsizing

Driving

Elder Abuse

End of Life

Estate

Family

Fitness

Happiness

Home

Hospice

HSAs

Independence

Insurance

Learning

Longevity

Long Term Care

Medicaid

Medicare

Money

Nursing Homes

Pain Management

Paying it Forward

Pensions

Preventive Health Care

Reverse Mortgages

Sex

Sleep

Social Security

Taxes

Technology

Travel

Volunteering

Work

 

List or not, you are the real experts here. I can tell you how a program works, its cost-benefit analytics, and what research experts have found about its role in successful aging. But your experiences and advice are hugely important here.

 

So, please flood my inbox with your thoughts. What have been the most important elements of your pursuit of successful aging, and why? What new elements would you add to this list?

 

Most importantly, please tell me a bit about yourself. Success, especially as we move into our 70s and beyond, doesn’t mean an idyllic life with no setbacks or physical constraints. It is shaped by how we deal with these universal companions of aging.

 

I will share your stories with the appropriate concern for your privacy. I also will be doing stories about the building blocks on my list, and any you convince me to add. These will not be click-bait pieces but will include extensive facts, comments from experts, and links to reports and websites.

 

The goal of these stories is to provide you with enough information to make an informed choice of what you want to do. That should be the goal of every story but of course it is not.

 

At the end of this process, or at least my role in it, you will have access to an archive of anecdotal and reported material that will help you as far along the path to successful aging as you are willing to travel.

 

Bon voyage!

Drug Prices and Unintended Consequences

Who isn’t angry about high drug prices? Complaints to pharmaceutical companies often produce tone-deaf defenses. And when a $56,000 annual price for the newly approved dementia drug aducanumab (the brand name is Aduhelm) was described by its maker last week as reasonable, rational thought became more difficult.

The clarity of these views about high drug prices, however, does not extend to clear solutions. Health care abounds with complex balancing acts. Plug one hole in the dike and others may appear, causing more damage than the original hole. Nowhere is this more true than with drugs.

One thing that is clear is that what we know about drug prices from news stories, talking heads, and Washington critics is just the tip of the proverbial iceberg. Understanding what those solutions should be will require a level of open and thorough analysis that would be difficult at any time but most likely impossible in today’s dysfunctional legislative environment.

There is no question that U.S. drug prices are the highest in the world. But to what degree have they also spurred pharmaceutical companies to spend hundreds of billions of dollars to research, develop, and test marvelous new medications we all want? I don’t know and I’m not willing to gamble on the unknown. The stakes are too high.

Would cutting these prices reduce the financial incentives for companies to pursue new and improved medications? Yes, but I have no idea by how much.

Was there a relationship between lucrative drug prices and the amazing work by these companies to produce highly effective COVID-19 vaccines in record time? I’m sure there was one, but, again, I can’t quantify it.

This leads me to two conclusions that are hardly brilliant or original.

The first is that drug prices are awesomely complicated and changing them will trigger unintended consequences that, like the phrase implies, can’t be known for sure in advance.

The second is that tackling drug prices needs to be an international effort, not something that U.S. lawmakers can accomplish successfully on their own.

If you want to dig into the way drugs are regulated in this country, spend some time with the source documents presented below.

A recent study of how drugs are sold by pharmacy benefit managers (PBMs), for example, illustrates the complexity of the system set up by drug companies, with oversight by government regulators who often are overmatched by their private-sector counterparts.

Kaiser Family Foundation’s assessment of the impact on Medicare of paying for Aduhelm describes how paying for this single drug could overwhelm program finances.

A New York Times story and three related research studies illustrate how we are literally hooked on prescription medicines and how pharmaceutical companies have gamed the system. By offering co-pay programs and other subsidies to younger consumers and families, they maintain an otherwise unsustainable marketplace.

Their payoff comes from Medicare beneficiaries covered by Part D drug programs. Part D rules prohibit the use of private co-pay subsidies, and Medicare also is legally prevented from using its market clout to negotiate lower drug prices. This permits drug companies to sell drugs at inflated prices. Under Part D rules, consumers are limited to paying only part of these prices but taxpayers are socked with 80 percent of the bill. This is a good deal for no one but the pharmaceutical companies.

The major legislative effort already put forward in the new Congress and introduced earlier by House Democrats – the Elijah E. Cummings Lower Drug Costs Act – was analyzed by the Congressional Budget Office in 2019. The savings are huge but so are the possible impacts on financial incentives for Big Pharma.

If you spend 30 or 40 hours reading these documents, you can become a card-carrying member of nerds who understand how hard it will be for the U.S. to combat high drug prices. Until recently, I would have said fashioning a global approach to drug prices was impossible.

However, Treasury Sec. Janet Yellen’s successful efforts to get major nations to agree to tackle low corporate tax rates provides a framework that deserves scrutiny by pharmaceutical-industry critics. By agreeing on a minimal tax rate that private companies should pay, Sec. Yellen’s initiative could reduce the incentives of companies to squirrel away their profits in low-tax nations.

Likewise, agreeing that nations should be unified on drug prices could reduce U.S. prices without destroying financial incentives that drug companies say they need for their development efforts.

Convincing the rest of the developed world to raise the prices they pay for drugs is a non-starter on its face. But combined with other things the U.S. does, particularly its massive international military presence, provides the Biden administration with leverage for developed nations to support a global system for drug pricing.

This may seem far-fetched today. But the inventory of new drugs will increasingly be populated with more Aduhelms, creating unsustainable pricing burdens on the U.S.

As always, I look forward to your informed views of how to get a handle on runaway drug pricing.

SOURCES:

National Bureau of Economic Research

https://www.bu.edu/econ/files/2021/01/Common_Agent_or_Double_Agent-.pdf

Common Agent or Double Agent? Pharmacy Benefit Managers in the Prescription Drug Market

“In 2018, three PBMs (Express Scripts, CVS Health/Caremark, and OptumRX) accounted for 80 percent of prescription drug volume and six PBMs account for 95 percent of the prescription drug market (Fein, 2019; Feldman, 2020). The CVS-Health/Caremark PBM alone reports nearly 90 million members in its PBM business—and so negotiates on behalf of a customer population larger than the population of Germany.”

 

Kaiser Family Foundation

Juliette Cubanski and Tricia Neuman

https://www.kff.org/medicare/issue-brief/fdas-approval-of-biogens-new-alzheimers-drug-has-huge-cost-implications-for-medicare-and-beneficiaries/

FDA’s Approval of Biogen’s New Alzheimer’s Drug Has Huge Cost Implications for Medicare and Beneficiaries

“It is hard to know exactly how many Medicare beneficiaries will take Aduhelm, but even a conservative estimate would lead to a substantial increase in Medicare spending. In 2017, nearly 2 million Medicare beneficiaries used one or more of the currently-available Alzheimer’s treatments covered under Part D, based on our analysis of Medicare Part D claims data. If just one-quarter of these beneficiaries are prescribed Aduhelm, or 500,000 beneficiaries, and Medicare pays 103% of $56,000 in the near term, total spending for Aduhelm in one year alone would be nearly $29 billion, paid by Medicare and the patients who use this drug – an amount that far exceeds spending on any other drug covered under Medicare Part B or Part D, based on 2019 spending. To put this $29 billion amount in context, total Medicare spending for all Part B drugs was $37 billion in 2019.”

 

Associated Press

https://www.modernhealthcare.com/medicare/medicare-copays-new-alzheimers-drug-could-reach-11500

Medicare copays for new Alzheimer’s drug could reach $11,500

 

Government Accountability Office

https://www.gao.gov/assets/gao-21-107.pdf

Drug Pricing Program: HHS Uses Multiple Mechanisms to Help Ensure Compliance with 340B Requirements

 

The New York Times

https://www.nytimes.com/2021/06/07/health/elderly-drugs-deprescribing.html

Looking to Tackle Prescription Overload

Health Affairs

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2020.00896

Ultra-Expensive Drugs And Medicare Part D

“It is not coincidental that the recent growth in Medicare Part D catastrophic coverage spending coincides with the rapidly increasing share of ultra-expensive drugs.7 For many users of ultra-expensive drugs, the beneficiary enters the catastrophic phase simply by filling a single prescription. . . .  Although increased spending for one or two ultra-expensive drugs can be absorbed by the health care system, the growing number of ultra-expensive drugs and patients receiving them is affecting Medicare Part D as well as other insurers and, most important, the patients faced with high cost sharing for these drugs.”

 

Journals of the American Medical Association (JAMA)

https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2777966

Prescription Drug Out-of-Pocket Cost Reduction Programs: Incentives and Implications

“Research has consistently shown that manufacturer copayment coupons used to induce demand for higher-cost drugs when lower-cost alternatives are available are inefficient and that this practice should be banned.”

 

Congressional Budget Office

https://www.cbo.gov/publication/55936

Budgetary Effects of H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act