← Becker’s Healthcare Podcast
Becker’s Healthcare Podcast
Regional Insurers Struggle and the Rise of Trump RX with Jakob Emerson
00:10:11
Loading summary
Transcript12 lines
- [00:00]
A
This is Scott Becker with the Becker's Healthcare podcast. I'm thrilled today to be joined by regular guest and brilliant journalist and leader Jacob Emerson. Jacob joins us to talk about the payer industry and payer trends. And it is a fascinating time in that world as always, it seems. Jacob, I'm going to tee up. Why don't you tell us what are some of the key issues that you're watching currently.
- [00:23]
B
Absolutely. Good to talk with you, Scott. So one of the issues I wanted to point out is a broad industry issue that we've been seeing for a while, a while now. And we got a report out last month really putting it all into one place, showing that regional non profit insurers, so basically the big six ones, those regional payers, their, their profits are declining, they're really struggling right now to stay afloat and their businesses are being basically sucked up by the large national payers. And so around the country, you know, this was a study about 100 insurers, they're falling quickly behind and we're probably going to see a lot more closures going into the next few years. And I could dive into that. And then I wanted to touch on where we are seeing some of the big insurers step into how they're going to be working with Trump rx, which is the new national drug discount program under the Trump administration that is going to be operational early next year where we're seeing some of the big guys announce their involvement with that.
- [01:23]
A
Fascinating. And talk about the regional insurers really struggling. And does that mean some markets that will be really poorly served, does that mean the bigger consolidators stepping into those markets or some of both?
- [01:34]
B
Yeah, I'd say probably both. And you know, when I say regional nonprofit health plans, I'm talking about insurers that might operate in one state or only in a handful of states. The health plans that are attached to the health systems and then some of the BCBS plans, especially some of the smaller ones. And so this study that I'm referring to, it looked at 111 regional nonprofit plans across the country. And the big point here basically is that 80 of those were brain at a loss last year and over 50% have two years or less before regulatory intervention is triggered because they are doing so financially bad that state regulators basically have to step in to make sure that they are able to get their, their members offloaded to other, to other health plans. And that's if, you know, more capital is not, is not found. So basically if you're not one of those big insurers, you know, United Elevance, Aetna, Cigna, Centene and Humana. It's, it's, it spells trouble for you over the next few years. And there's, there's a few reasons for that and I can go into that, Scott. But national payers are sucking everything up.
- [02:45]
A
Yeah. I mean, rising medical loss ratios, tougher margins, not as good of reimbursements that we're getting from some of the Medicare Advantage plans and some other things. Are there other things that I'm missing there? I know the, the increased medical cost ratios have been a challenge. What, what else are you seeing there? Anything else?
- [03:02]
B
Yeah, no, you're right. And think about what the big insurers, we've talked about it many times, Scott, what they've done over this past decade, they've diversified, they've scaled into new parts of the healthcare system. They're getting a lot of their money now from their healthcare services companies like Optum, for example. And these companies have struggled to do that. They're still mainly reliant on the health insurance side of the business. But then there's also, you know, people expect more in terms of digital infrastructure, AI, where the glp, one issue that has arisen these last few years. So that's just some macro issues, but then coming down the pipe, it's, there's the one big beautiful bill and that's going to really affect Medicare, the Medicaid business. And that's what a lot of these, these regional insurers, especially attached to the hospitals, that's what they focus on is, is Medicaid. It's contracting with the states. And so if that business, if that membership goes down, that, that spells real, real trouble for your business. So it's a whole host of things, but overall, if you're not one of those big players, you know, I think a lot of these executives are very worried right now.
- [04:02]
A
And talk about. You had mentioned Trump rx. I'm just starting to see headlines on that. Tell us what that means, what that is, because I'm certainly not familiar yet. And just starting to see headlines this morning on it. What is Trump Rx and what's that going to mean?
- [04:16]
B
Yeah, so I guess, you know, we'll see how this all pans out. It's supposed to be operational next year, but the website is up and available to view and it's, they say it's a program that's aiming to lower the cost of expensive prescription drugs, especially specialty drugs for US Residents. So it was launched after an agreement between the administration and Pfizer, basically hoping to align our expensive drug prices with the cheaper prices you would find in other high income countries and cut some of those costs for expensive therapies, including fertility drugs, weight loss medications, like I just mentioned, with the GLP1s. And like I said, that's going to, supposed to be operational early next year. And so now we're starting to see some of the big insurers announce how they're going to be playing a part in that. And I think kind of going back to the original story we were talking about, Scott, the diversification of these big, these big companies. You know, the Trump RX concept is supposed to cut out, you know, the insurance part of high drug prices, the PBM part of high drug prices, which we know has been a very popular, just rhetoric movement over the last few years with, with Cosmos drugs and things like that. But what's interesting is now CVS and Cigna, they're still going to be a part of this, but in a way that's I think, a little bit different than maybe they have done something like this in the past. So they, they say they're going to be joining the program to offer discounted fertility medications specifically. So Cigna, through their Evernorth subsidiary, so they're going to be offering popular fertility meds at discounted rates through the program. And then CVS said they're going to make those drugs available through its specialty pharmacy and 9,000 retail locations across the country again, all to try to get the cost of fertility medications down. Which is interesting because last week we heard from the administration rolling out a new measure to make fertility treatments more accessible, rolling out a new pathway for employers to offer fertility benefits to their workers. Because right now only about a small portion of employers across the country actually offer fertility coverage. So the government has struck a deal with Fertility, a fertility drug manufacturer, to offer lower drug prices, discounted drug pricing so that consumers can buy those drugs directly at a discount through Trump Rx again in theory next year. So it's, it's really interesting how this is like kind of all coming together.
- [06:43]
A
No, it's absolutely fascinating. I mean, I, I, not to be too personal, but now it's a long time ago because my kids are in their 20s. But when we went through fertility treatments 100 years ago, it was quite expensive then and it was, you got a couple treatments out of your health plan, then you had to pay for a little bit and it was just, it was brutal. Yep. And with mounting challenges on fertility and fertility Birth rates and so forth. Fascinating to see this issue. I can't even imagine what it cost today because it was expensive 24, 26 years ago. I can't even imagine what it costs today. But, but in this concept that we pay more in our country than other developed countries for the same drugs, obviously it drives us crazy in our country that that's the case, that we sort of subsidize that so strongly. It just is insanity. But. Well, we'll see if this helps. It's interesting to watch what goes on here and how the market adjust. Whether it helps, we'll see.
- [07:35]
B
Yeah, no, definitely. And to your point, Scott, I think some of the numbers from HHS when, because this has been a big topic within the Trump administration, fertility overall and how to get better access to those kinds of drugs and treatments. And it's, yeah, it costs in the tens of thousands of dollars for one treatment and a lot of people have to go through multiple rounds of it. So it's insanely expensive. Most employers do not cover these types of treatments. And like I mentioned, this has been a big piece of the Trump administration policies they talked a lot about on the campaign trail. And, and we know that he's been through executive orders, been directing federal agencies to come up with rulemaking on how to lower costs, broaden IVF type access. We had heard on the campaign trail that the president wanted to mandate CMS and private insurers cover all costs associated with IVF treatments. But there's been no policies announced that would indicate that's going to come to fruition. Fruition. So this seems to be kind of how the government, how the administration is tackling this for right now through, through Trump Rx and through some of these partnerships with the drug manufacturers and with the big insurance conglomerates.
- [08:44]
A
I mean, truly a fascinating situation. Jacob? Yeah, no, Anybody who's been through the IVF situation, the fertility situation, knows how many cycles they went through, how expensive it was and all those things. And just an absolutely fascinating discussion. And to see them trying to address it, all I can say is, is good luck. It's like the GLP1s. It's. So then when insurance ends up paying for it, it ends up being, it just, it ends up being different challenges for premiums and stuff like that. It's, it was the few years in our employed insurance where I felt like we got more than our money's worth and it wasn't many years like that. So. Anyways, Jacob, thank you so much for joining us. A fascinating set of discussions on challenges of not rougher insurance, especially the small regional ones. Challenges with or the movement towards this Trump Rx Fascinating. We'll see how that goes. And it is fascinating. I see, like now the Trump administration is doing all they can to sort of help to reduce the import of Obamacare that the account of Affordable Care act ended up getting sort of generally named Obamacare. And I wonder how many presidencies it'll take until somebody else tries to change this program to call it something other than Trump Rx That's a different political issue as to what goes on in our country, but absolutely fascinating. Jacob Emerson it is great to visit. They always learn something. I can't even tell you how appreciative. Thank you so much for joining us today on the Beckford Healthcare Podcast.
- [10:07]
B
Thank you, Scott.