Our view on health care: Beware drug co-pays, no-pays
21 04 08 - 14:44
Insurance 'tiered' pricing makes the sickest pay the most for medicine.
For all the complexity of health insurance, the idea behind it is pretty simple. You and millions of other people pay premiums so that those who get sick will be protected, particularly if the illness is severe or debilitating. But increasingly - and to policyholders' surprise - that's not the case when someone needs the most expensive drugs.
Policyholders might find out only when they or a family member suffer a serious illness - such as multiple sclerosis, rheumatoid arthritis or many types of cancer. Then they are faced with a financial catastrophe on top of a health crisis: Costs can run as high as $100,000 a year for some medicine needed to cope with a serious disease.
One example: Debra Minkkinen, a secretary for a suburban Minneapolis school district, discovered her vulnerability after her son, now 13, had surgery for a brain tumor. The follow-up treatment affected Kevin's production of growth hormones, so doctors prescribed drugs to take their place. While the Minkkinens' insurance set most drug co-payments at $25 per prescription, it put growth hormone in a special category, she told USA TODAY.
The cost per month under the family's policy was more than $500, or about 20% of the drug's price, up to a maximum of $4,000 a year. But every plan is different. Some charge higher percentages. Other drugs could cost more. People can end up on the hook for thousands of dollars a month. In extreme cases, they can be left paying the entire cost.
"It was a rude awakening," said Minkkinen. The family refinanced its house, added credit card debt and finally sought help from a patient assistance foundation. That assistance will last one year.
This sort of "tiered" drug pricing system - now on the rise - is a disturbing outgrowth of what started as a sensible idea. In the late 1990s, many insurers began charging patients a higher "co-payment" for brand-name drugs when generics were available. In 2007, the average co-pay in this type of private plan was $10 for generics and $23 for brand-name drugs, according to a survey by the non-profit Kaiser Family Foundation.
The idea was to encourage patients to use lower-cost, equally effective generics in order to control skyrocketing health care costs. But some insurers have taken that idea too far.
When a new Medicare drug benefit was introduced in 2006, some insurers began offering plans that placed a wide array of expensive medicine on a specialty tier, often called Tier 4. Soon, more plans followed that lead, and by this year, 72% of Medicare drug plans had four tiers, according to research firm Avalere Health. Since then, the practice has spread to insurance offered by employers. Today, Avalere found, about 10% of private employer health plans have a Tier 4.
America's Health Insurance Plans, the industry's lobbying group, argues that higher co-payments for expensive medicine help keep down the price of insurance for everyone. No doubt.
But that comes at a high personal cost for anyone who is sick — or anyone who might get sick. Often, there are no equivalents on a lower-price tier for these expensive drugs. Quite simply, tiered systems make those who are the sickest pay the most. That's not how insurance is designed to work.
Posted at 12:21 AM/ET, April 21, 2008 in Health care/Insurance - Editorial, Medical Issues - Editorial, USA TODAY editorial | Permalink