Obamacare plans bring hefty fees for certain drugs? Really? Well … it depends on what the meaning of “bring” is.
MIAMI (AP) — Breast cancer survivor Ginny Mason was thrilled to get health coverage under the Affordable Care Act despite her pre-existing condition. But when she realized her arthritis medication fell under a particularly costly tier of her plan, she was forced to switch to another brand.
Under the plan, her Celebrex would have cost $648 a month until she met her $1,500 prescription deductible, followed by an $85 monthly co-pay.
Thus begins a deeply (but apparently unintentionally) confusing, yet very important, Associated Press article titled “Obamacare plans bring hefty fees for certain drugs,” published yesterday. (The title may be Yahoo News’s, rather than the AP’s; it’s not clear.)
“‘I was grateful for the Affordable Care Act because it didn’t turn me down but … it’s like where’s the affordable on this one,’ said Mason, a 61-year-old from West Lafayette, Indiana who currently pays an $800 monthly premium,” Kelli Kennedy, the AP writer, continues.
Where, indeed, is the affordable on this one? The essence of the article is that many people who have chronic serious illnesses, including, as Kennedy says, cancer, multiple sclerosis and rheumatoid arthritis–and who, because of a preexisting condition,had had no access to any healthcare insurance or who, like Mason (as Mason explained to Kennedy), had insurance that did not cover treatment for preexisting conditions, are being hit by a specific of their ACA-compliant plan that they did not know about when they bought the plan: an apparently relatively new gimmick insurance companies are using, by which the company categorizes some high-cost drugs as “specialty-tier” drugs and by quietly including in their individual-market plans a 50%- “co-insurance” rate for “specialty-tier” drugs.
“Co-insurance,” it turns out, is a cutesy euphemism for “co-payment” (which is at least a more descriptive term for “what’s not covered by the policy”); it took me two readings of the article to realize that. The policyholder is now an “insurer,” I guess, but with a customer base limited to himself or herself and immediate family members covered under that policy. Sort of like a closely-held corporation. But without the potential for profit.
That’s confusing enough, and led to this, as related by Kennedy:
William Hurd signed up for a Cigna plan with a $616 monthly premium that covered him and his wife in December. The government kicks in about $900 a month in tax credits. Hurd, a 61-year-old diabetic who works a construction job in Orlando, was eager to fill his insulin prescription along with two other medications. But he was shocked when the pharmacy said he would have to pay $1,400 out of pocket for a 90-day supply. He was under the impression that prescriptions were part of the plan and thought he only had a $10 co-pay for prescriptions.
“I already had the plan. I was in and I was ready to cancel it. If I’ve got to pay $1,000 more dollars for drugs … then it’s not worth it,” he said.
Fortunately, Hurd called his doctor and was able to switch to a cheaper brand of insulin and ended up paying only $112.
“This was an extremely expensive misunderstanding,” said his insurance broker Leslie Glogau.
But really confusing is Kennedy’s reference, twice, to ACA-compliant plans bought through ACA exchanges as not private insurance plans.
Huh?
Kennedy points out that insurance companies are free to place any drug they wish into whatever category they wish. And she notes the strong suspicion by patient advocates that, by categorizing high-cost drugs as “specialty” drugs, insurance companies are trying to evade the ACA’s prohibition against denial of comprehensive coverage, or of coverage at all, because of a preexisting condition by discouraging chronically ill patients from purchasing their plans. But she prefaces the sentence in which she makes that point with this one:
Avalere Health, a market research and consulting firm, estimates some consumers will pay half the cost of their specialty drugs under health overhaul-related plans, while customers in the private market typically pay no more than a third.
And she ends her discussion of William Hurd’s situation by saying that Glogau, his insurance broker, “ran into her own problems with she switched from a private insurance plan to one on the exchange and learned one of her prescriptions was cancelled under the new plan, prompting numerous appeals.”
Ms. Kennedy, please understand: The ACA-compliant individual-market plans are private insurance plans. Customers in the private market who typically pay no more than a third are, presumably, people who have employer-based group plans. But customers in the private market who have employer-based group plans are not the only customers in the private market. Blue Cross, Aetna and Humana are not government agencies.
The ACA-compliant individual-market plans all—all—are private insurance plans. That’s because Connecticut Senator Joe Lieberman made his vote for the ACA continent upon the removal of the “public option” from the bill–and because we have a president who couldn’t trouble himself to make the case to the public for the public option. (Or for much else, of course; the public option was just another casualty of our president’s deliberate, concerted ineffectuality throughout his tenure as president and, best as I can tell, his entire political career.)
Then again, Ms. Kennedy apparently is just using the terminology of Caroline Pearson, the person she spoke with from Avalere Health. Kennedy writes:
Even before the Affordable Care Act took effect, insurers had increasingly begun requiring patients to pay a percentage of the drug costs instead of a flat co-pay, but experts say patients often spend more for their prescriptions in plans offered under the health law because of the co-insurance.
“There’s a significant percentage of plans who are using co-insurance of 50 percent or higher,” said Caroline Pearson, who tracks the health care overhaul for Avalere Health, which studied plans in 19 states. “It is generally a lot higher than what we see in private insurance.”
In other words, contrary to the article’s title’s assertion, Obamacare plans do not bring hefty fees for certain drugs. Some Obamacare plans do not eliminate hefty fees for certain drugs. Before the ACA took effect, Kennedy reports, Mason “paid slightly more for her monthly premium on a plan that didn’t cover her arthritis or pain medications and some routine doctor’s visits.”
Kennedy buried the lead, about six feet under–or, actually, toward the end of the article, where she writes:
Insurers say prescription drugs are one of the main reasons health care costs are rising.
“Spending on specialty drugs is growing rapidly. It’s unsustainable,” said Clare Krusing, spokeswoman for America’s Health Insurance Plans, a trade group that represents the private insurance industry.
Only 1 percent of prescriptions written in 2012 were for specialty drugs, but they accounted for 25 percent of the total cost of prescription drugs, according to a study by America’s Health Insurance Plans.
So there it is, folks. Spending on specialty drugs is growing rapidly. It’s unsustainable. Which is the fault of the ACA. Because the ACA absolutely requires that spending on specialty drugs grow rapidly.
And to think we all thought the Obamacare “mandate” referred to the tax penalty assessed if you don’t purchase insurance! Silly us.
In addition to its seriously-confused, but important, discussion of “specialty tiers” for drugs, the Kennedy article includes another significant bit of information, this one about the failings of so-called regulatory federalism:
Brian Rosen, senior vice president for public policy for The Leukemia & Lymphoma Society, said the group studied premiums and benefits for patients with blood cancer in seven states, including Florida, California, Texas and New York. They found 50 percent co-insurance rates for specialty drugs on several plans in Florida and Texas, while the highest co-insurance rates on California plans were 30 percent and in New York, co-pays were typically $70.
Hmmm. Florida and Texas vs. California and New York state. Makes me want to vote for Ted Cruz for president.
Hmmm:
Go to my post here: http://angrybearblog.strategydemo.com/2013/12/why-will-healthcare-insurance-be-cheaper-in-florida-with-the-ppaca.html#sthash.lLYMWIMx.dpuf
and you will find this:
What resulted was Florida Senate Bill 1842, which among other things, suspended for two years the requirement that insurers get state approval for rates for new plans — such as those that will appear on new marketplaces. Companies would still have to file rate changes with the state. But they could act on those changes without approval.” Democrats say Florida stripped insurance commissioner of power to set health plan rates ‘”
There is more to read about Florida.
Ah. I just read your post, run. Really informative. So I guess the perfect presidential ticket for 2016 would be Ted Cruz/Marco Rubio. Because, y’know, small government is the ticket to health and prosperity–for the Koch brothers.
I don’t get Hurd’s problem. If he stuck with the name-brand drug, he would have paid $183/month. Is he better or worse off than before the ACA?
Switching to generics gives him $172 in income a month (presumably he and his wife have other health care expenses)… how is this a horror story?
Every time I’ve switched medical plans I’ve had to figure out which brand, dose, preparation, and sometimes which drug is the one that plan covers cheaply, and sometimes the insurer will change their arrangements with pharmaceutical companies. This is nothing new.
Alex:
“This is nothing new.”
Precisely; but, the Republican/Tea-bagger I hate Obama propaganda machine makes it an issue in their spin on how Obama lied to the public about keeping your policy even though in the McCain-Obama debates of 2008, then candidate Obama explained that those with ESI policies would be able to keep their insurance. In 2010, Healthcare Secretary Sebulius explained the movement of millions of “Individuals” to the Individual Market of the PPACA for policies.
This is a story about nothing meant to incite people about nothing. Nobody is thinking anymore.
My tenuously employed cousin recently signed up for ObamaCare.
Initially she complained that the government was forcing her to buy insurance she couldn’t afford (I thought it odd she was signing up a couple months early… but oh well).
Next she posted a big rant that she has a very cheap prescription for which the copay was higher than the cost of the drug, so she just paid for it without insurance. (oh and by the way the premiums for her insurance were almost entirely “waived”… which I guess is right wing nutter speak for “paid for by the federal government”, when the nutter in question is the one being paid for) Apparently she and various associates of hers are unaware that this has been a possibility for years. Happened to me 5-10 years ago with a cheap prescription for penicillin or something. I had the option of a $20 copay or paying $12 or so for the pills. Such is the insanity of US healthcare for the past couple decades at least. Even more crazy depending on deductible exhaustion, etc, it might save some people money to pay that $20 copay!
The structure of the ACA makes it easy for those with a desire to blame it to assign all existing insanity (and that’s a lot of insanity) of US medical billing to the new law, particularly those who have been uninsured a while.
Jeff:
2012 and pre-PPACA.
Generic Lipitor: I could buy a 90 day supply for $114.00 from United Healthcare mail order as suggested by my company, a monthly supply from Walgreens/CVS for $23/month, or go to Meijer’s Grocery store and get a 30 day supply for free. One answer from United Healthcare was I would satisfy my prescription deductible faster if I got it through the mail order and I said huh? Why would I want to pay more to satisfy a deductible when I could pay for a 30 day supply cheaper (and it would still be applied to my deductible) than a 90 day supply or get it free at Meijer (as told to me by the doctor’s nurse)? Our insurance rep’s point was, well what if they run out or change their policy on Lipitor? Duh, I will get another prescription then.
Other than the cost of the drug, the differences in prices for a drug has been going on for a long time before the PPACA. It pays to shop around. I definitely would price drugs at Costco, Sams, Walmart, Kroeger, and Meijers (Michigan and Ohio) as you may do better than through your insurance, mail order, or traditional drug stores. Some are $10, $4, or as in the case of Meijers “free” for some drugs. It never was a one size fits all market and there is a lot of variation out there. You have to know your insurance policies and what it will pay for in the “individual” market.” It is not the same as the Employee Sponsored Insurance market where the employer does all the negotiation an we still complain.
First, as others have said: high prices for specialty drugs (almost always cancer drugs and drugs for MS) is nothing new and had nothing to do with the ACA.
Beverly: This is not a “relatively new gimmick” I was writing about it years ago–specifically with regards to drugs treating cancer and MS.
Secondly, and most importantly: note that the AP story says that “Under the plan, her Celebrex would have cost $648 a month until she met her $1,500 prescription deductible, followed by an $85 monthly co-pay.”
Beverly–if you fact-check the AP story (which I did by going to the Exchange in the town where she lives, plugging in her age, and looking for a plan with the premium she describes, you will find that she has a $85 co-pay BEFORE paying down her deductible–not After paying a $1,500 prescription deductible.
Third, much has been written about the risks of taking Celebrex. This is the black box warning: “Cardiovascular risk
Nonsteroidal anti-inflammatory drugs (NSAIDs) may increase risk of serious cardiovascular thrombotic events, myocardial infarction (MI), and stroke, which can be fatal. Risk may increase with duration of use.
Patients with existing cardiovascular disease or risk factors for such disease may be at greater risk. NSAIDs are contraindicated for perioperative pain in setting of coronary artery bypass graft (CABG) surgery.
Gastrointestinal risk; NSAIDs increase risk of serious gastrointestinal (GI) adverse events, including bleeding, ulceration, and gastric or intestinal perforation, which can be fatal. GI adverse events may occur at any time during use and without warning symptoms. Elderly patients are at greater risk for serious GI events”
Doctors who practice evidence-based medicine steer patients away from Celebrex, recommending less risky pain-killers. Celebrex should be prescribed only as a “last resort.”
One of the good things about the ACA is that it encourages insurers to look at medical evidence regarding drugs. Under the ACA insurery often won’t cover Celebrex unless and until the patient first tries another, less risky drugs. (The ACA forces insurers to compete on price: all must cover the same “essential benefits”.so it’s pretty easy to make apples to apples comparisons based on price. Then you can check whether the plan covers your drugs. In Ginny Mason’s Exchange (and in most Exchanges) it is very easy to do that. Bottom line, insurers are paying more attention to the risks and benefits of expensive drugs because they know they have to keep premiums down–or lose market share.)
It is worth noting that Medicare does not ask patients to try less risky drugs first. This is one of the many ways that Medicare is not as protective of patients as the better private sector insurers. (Medicare’s board of directors of Congress; Congress is heavily influenced by lobbyists represent companies that make drugs like Celebrex). If we had a public option, it would all too much like Medicare.
Fourth: Take a close look at these two paragraphs in the AP story:
” Caroline Pearson, the person she spoke with from Avalere Health. Kennedy writes:
“Even before the Affordable Care Act took effect, insurers had increasingly begun requiring patients to pay a percentage of the drug costs instead of a flat co-pay, but experts say patients often spend more for their prescriptions in plans offered under the health law because of the co-insurance.
“There’s a significant percentage of plans who are using co-insurance of 50 percent or higher,” said Caroline Pearson, who tracks the health care overhaul for Avalere Health, which studied plans in 19 states. “It is generally a lot higher than what we see in private insurance.”
Note that Pearson says that co-insurance in the Exchanges is “significantly higher than what we see in private insurance.”
As someone else commented: the coverage sold in the Exchanges IS private insurance. Is she talking about private insurance in the individual market Pre-Obamacare? If so, what she says isn’t true.
I have fact-checked quite a few stories quoting Pearson from Avalere. Often her facts are not true. She seems biased against Obamacare, but perhaps she is just sloppy.
Also consider this statement : ” but experts say patients often spend more for their prescriptions in plans offered under the health law because of the co-insurance.”
As the story notes, co-insurance has been rising pre-Obamacare.
Where is the evidence that Obamacare causes higher co-insurance?
Who are the experts?
This story is an excellent example of fear-mongering without evidence-and without checking facts.