America's Benefit Specialist July 2023

NOTEWORTHY

ARIZONA EMPLOYEE BENEFITS BENCHMARKING RESULTS

WHAT IS THE POTENTIAL IMPACT OF NEW DRUGS FOR OBESITY AND ALZHEIMER’S DISEASE ON MEDICARE COSTS, COVERAGE AND BENEFICIARIES? Two new Kaiser Family Foundation analyses examine the potential impact of Medicare coverage of new prescrip tion drugs for obesity and Alzheimer’s disease on program spending and beneficiary out-of-pocket costs, as well as the role that the Inflation Reduction Act could play in mitigating these effects. Manufacturers of both types of drugs are lobbying for broad Medicare coverage of them, though they face different challenges. The availability of effective weight-loss drugs, including Novo Nordisk’s Ozempic and Wegovy (semaglutide) and Eli Lilly’s Mounjaro (tirzepatide), has the potential to be transformative for people who struggle with obesity and obesity-related medical conditions. But, as the first analysis explains, these drugs, which are expensive, are not covered by Medicare because current law prohibits Medicare from covering drugs prescribed for weight loss. Congress would need to amend the law for weight-loss drugs to be covered under Medicare, though coverage could also potentially be achieved administratively through a demonstration waiver or a Center for Medicare and Medicaid Innovation model. Without coverage, access to these relatively high-priced drugs will continue to be limited to people who can afford them, raising equity concerns. Wegovy, for example, has an estimated annual net price of $13,600. While Black Medicare beneficiaries have the highest rates of obesity, they may be least able to afford these new drugs, given their substantially lower incomes and assets compared with White beneficiaries. In the fight against Alzheimer’s, the Food and Drug Ad ministration will soon announce whether it will grant full ap proval to the new drug Leqembi (lecanemab), made by Eisai and Biogen, after granting accelerated approval in January. KFF’s second analysis explains that, if that happens, Medicare is expected to cover Leqembi for all indicated populations. Medicare coverage of a drug that could slow the progression of cognitive decline offers hope for Alzheimer’s patients and their families. But it also raises concerns about the potential impact on Medicare spending. The take-up rate of Leqembi among eligible individuals is difficult to estimate but, for illustrative purposes, if five per cent of the 6.7 million older adults in the United States with Alzheimer’s disease were to take Leqembi, at the annual list price of $26,500, this would add an estimated $8.9 billion to Medicare Part B spending annually, roughly equal to spend ing on the top three Part B drugs combined in 2021. If double that share were to take the drug, the higher spending would amount to $17.8 billion. Higher spending would likely lead to higher Medicare Part B premiums.

The results of the 10th annual Arizona Employee Benefits Benchmarking Survey of midsize employers (10-5,000 em ployees) were recently presented. Highlights include: • Over 428 Arizona employers participated in the survey, representing over 93,000 employees and over $1.1 billion in healthcare dollars spent. • In Arizona, the median deductible for traditional copay plans was $3,000 in 2023, the same as last year, which had been a 50% increase from 2018. • The median deductible for consumer-driven health plans in Arizona increased to $4,000 in 2023 from $3,500 in 2022. However, the median employer contributions to health care accounts in these CDHPs was $1,000 for individual and $1,500 for family plans. • Twenty-nine percent of Arizona employers surveyed are looking at shifting more cost to employees in 2023, com pared to 22% in 2022. • For the first time, median premiums for employee-only coverage exceeded $500 per month for both CDHP and traditional copay plans in Arizona, with the rates consider ably higher nationally. • On a national basis, the amount spent on outpatient and pharmacy services has increased significantly. The percentage of healthcare costs for outpatient services increased from 19% in 2019 to 29% in 2023, with pharmacy spend increasing from 17% to 22% in the same period. This benchmarking survey, conducted by Benefit Com merce Group, an Alera Group company, is in its 10th year of data collection. The survey was developed and tabulated by one of the world’s largest and most respected actuarial firms and is in its 21st year nationally. “Over 428 Arizona employers participated in this survey through mid-May, an increase of 15% over last year,” said Scott Wood, managing partner and principal of Benefit Commerce Group. “This is exceptional given the heavy burdens on busi ness leaders and HR professionals. It is evident that the topic of employee benefits is a significant area of focus for em ployers today, both in terms of enhancing what employees receive and in controlling the costs for businesses and their employees and families.” In addition to Arizona employers, the survey results include data from thousands of mid-sized employers nationally, representing over $12.8 billion of annual healthcare spend and nearly 1 million employees. These numbers will increase throughout the year as the program continues to collect survey data from thousands more employers. For more information, visit www.benefitcommerce.com.

26 ABS | benefitspecialistmagazine.com