Medicare Advantage is thelargest single purchaser of opioids; it accounts for more than afifth of prescription opioid spending and in 2017. (Photo:Shutterstock)

Recent data show that drug overdose deaths in the U.S. were 10percent higher in 2017 than 2016, with an almost 50 percentincrease in those related to synthetic opioids. A new research paper pointsto a glimmer of hope in this otherwise bleak story: MedicareAdvantage insurance companies seem to be doing a surprisingly goodjob at mitigating opioid abuse.

Medicare plays a larger role in the epidemic than many peoplemay appreciate. The program is the largest single purchaser ofopioids; it accounts for more than a fifth of prescription opioid spending and in 2017 alonespent more than $3 billion on these drugs. And use is relativelywidespread: Almost a third of people receiving drug coveragethrough Medicare obtained an opioid prescription last year. Someresearch even suggests the expansion of drug coverage underMedicare's Part D is partially responsible for the problem, byreducing the cost of prescribed drugs to consumers (even if thepeople receiving the lower-cost prescriptions diverted the drugs toothers).

Related: Trends, innovations and helpful solutions in theMedicare Advantage space

Given the prominent role played by Medicare, the government isright to crack down on abuses, for example by requiring pharmaciststo discuss large prescriptions with prescribing doctors. The recentresearch is also important, however, because it suggests part ofthe program could provide part of the solution.

Medicare Advantage, which is provided through private insurancecompanies, covers more than a third of beneficiaries. The research,by the economists Laurence Baker, Kate Bundorf and Daniel Kesslerat Stanford, examined patterns of opioid prescribing for MedicareAdvantage beneficiaries in 2014 for people aged 66 or older.

Since most of Medicare Advantage provides both drug and medicalinsurance, the authors surmise that the insurance plans have astronger incentive to mitigate opioid problems. As the authorsargue, the Medicare Advantage plans have “the incentive to accountfor the spillover effects of prescription drug use on the cost ofcare overall and can choose which physicians to include in itsnetwork and how it manages care.” Stand-alone plans providing onlyPart D drug coverage, by contrast, do not face the same incentives,since the cost of addressing medical problems is not theirresponsibility.

The economists find that beneficiaries in Medicare Advantageplans were 9 percent to 37 percent less likely to obtain an opioidprescription than other beneficiaries. That's a significant impact.For example, it is well known that opioid problems aresignificantly more prevalent among low-income populations and inareas with high unemployment; the Medicare Advantage effect isroughly the equivalent of living in a county with socioeconomicadvantages rather than one with high poverty and unemployment.

The research also highlights significant skewness in prescribingbehavior. The top 1 percent of prescribing doctors, for example,accounted for 27 percent of all Medicare opioid prescriptionswritten, and the top 10 percent of doctors accounted for more thanthree-quarters of the total. About half the lower opioidprescription rates between those enrolled in Medicare Advantage andothers reflects fewer prescriptions from the highest 1 percent ofprescribing doctors.

The researchers emphasize the importance of integrating the drugand medical insurance to align incentives properly, but they didnot assess whether the insurance companies were effective becausethey were more aggressive in excluding high prescribers from theirnetworks, altered benefits in a manner than discouraged people fromvisiting such doctors, or made other changes that reduced the needfor opioids.

Whatever the cause, the relative effectiveness of MedicareAdvantage plans in managing opioid prescriptions is welcome news.Such plans are likely to expand their coverage over time, with somemarket observers expecting them to account for half or more of allbeneficiaries in coming years. As they cover an increasing share ofMedicare beneficiaries, let's hope they remain effective atmitigating the opioid problem.

(Full disclosure: Lazard regularly advises firms in thehealth-care sector.)

Peter R. Orszag is a Bloomberg Opinioncolumnist. He is a vice chairman of investment banking at Lazard.He was director of the Office of Management and Budget from 2009 to2010, and director of the Congressional Budget Office from 2007 to2008. This column does not necessarily reflect the opinion of theeditorial board or Bloomberg LP and its owners.