AUGUSTA, Maine — A new trend in health insurance has Victoria Kuhn worried she won’t be able to afford her son’s hemophilia injections.
If a bill now before Maine legislators fails to pass, her 7-year-old son’s medication could leave her and her husband footing an annual bill of $30,000, she said.
“I don’t know what we would do as a family,” Kuhn said.
In an effort to control spending, some insurers are passing along more costs for expensive drugs to consumers and employers. Medications for arthritis, cancer, multiple sclerosis and other conditions now often carry an out-of-pocket “co-insurance” charge, rather than a flat co-payment, that can run into the thousands of dollars.
“Month in and month out, we’re paying our premiums,” Kuhn said. “Month in and month out, I’d like to have my kid’s medication covered.”
Three days a week, Kuhn and her husband inject William with his “Superman juice,” a drug that prevents painful bleeding episodes and allows him to ride his bike, ski and swim like other kids, she said. The drug costs $100,000 a year, $3,000 of which the family pays for out of pocket.
But if their health plan leaves them picking up more of the tab for the specialty medication, the cost could skyrocket, she said. Kuhn and her husband would be forced to put the brakes on the growth of their small Portland marketing company and risk jeopardizing their son’s health by missing his injections, she said.
A bill sponsored by Rep. Stacey Fitts, R-Pittsfield, would prevent private insurers from charging Maine consumers more for specialty drugs than for other medications. The bill, LD 1691, would not apply to government-subsidized plans or self-funded health insurance used by some employers.
So-called “tiers” have long been used by insurers and employers to set varying rates for different types of prescription drugs. But the practice took off when Medicare began allowing tiers for certain costly specialty drugs, and the private insurance market soon followed.
The percent of employers offering plans with specialty drug tiers grew 25 percent last year, according to the Pharmacy Benefit Management Institute. In 2010, New York passed legislation outlawing specialty drug tiers and a number of other states are considering similar measures.
Insurers argue the practice saves money by steering patients to cheaper generic drugs, but health advocates say generics aren’t available for many specialty medications and say tiers can discourage patients from taking their medications.
“When employers use these so-called tiers of drugs, it’s really one of the levers they use to control costs,” said Chris Dugan, a spokesman for Anthem in Maine, which opposes the bill.
Mandated benefits, such as those spelled out under LD 1691, ultimately drive up premiums for all policyholders, he said.
“While we think the legislation is well intended, it’s hard for our customers to absorb these types of costs going forward,” Dugan said.
The bill is also premature, as provisions of the federal health reform law governing drug benefits are still being ironed out, he said.
The Legislature’s Insurance and Financial Services Committee is scheduled to take up LD 1691 next week.
I don’t have a horse in this race, but I’d like to make a point about trying to limit the price of specialty drugs. All drugs cost a fortune to develop and get FDA approval. Not just ‘a lot of money’; a fortune. The incentive for a drug company (which has shareholders, just like any company) to develop a new drug is greed. Greed is good; it can also be called the profit motive. Absent greed, there really isn’t any compelling reason for a bunch of strangers to work and slave, sometimes for years on end, to perfect a new drug. On top of all the work and testing, there is the regulatory process to get through, and that alone is horrifically expensive. If the new drug isn’t developed, then nobody will have it – at any price. Period. If we move to limit the price of newly developed specialty drugs, there will be fewer of them. We can’t even know what we might be missing because they will never happen. Yes there are brilliant people out there, who can invent new drugs, but they generally aren’t rich. They need other people, with capital to invest, in order to prevail in their quest. People with lots of money, in a position to invest in the big gamble of developing a new drug. Oh, excuse me! Those are the Fat Cats that people say can afford to give more! What to do? Take away their money and give it to the welfare class? Lots of votes for politicians, if we do that. Or maybe let them invest their money, in the hope of making a profit on the new drug? That would benefit mankind, because, down the road, the drug will go generic, or a better drug will come along. What ever we do, passing the costs along to private insurers will only drive up their rates and result in more people doing without insurance – an unintended consequence, but one which may be anticipated. About the only thing I can think of would be to streamline and modernize the regulatory process so as to minimize the costs of government control and meddling in drug development.
I understand that it costs a pharmaceutical company a lot of time and money to develop a drug. That is NOT what this bill is all about.
Group insurance means the cost is shared across the group. You get a disease and I am healthy, I pay part of your cost. I get a disease and you are healthy, you pay part of mine. It does not mean we get singled out after paying the same premium for insurance that another person in the group pays, and then are told that we have to pay MORE because our drug costs are higher. With the outrageous amount of profits insurance companies report year after year, they can cover these costs.
I am reviewing a bill from December right now for for two doses of a drug that I need to remain a viable, taxpaying, contributing member of our society. If I stop taking this drug, I become disabled and you pay more taxes to support me for the remainder of what would have been my working life. If I remain on the drug, I work for many more years and contribute to the economy and the cost of supporting people who are deemed disabled if something happens to them.
I know what the wholesale cost of the drug is, I know what the retail cost of the drug is, I know how much it costs to deliver the treatment, I know how much the hospital gets from the insurance company, I know how much the hospital marks up the cost of the drug and the delivery of that drug into my system and I know why that happens. I know how much it cost to develop that drug, test it, bring it to market, manufacture it and what was associated with it from start to finish, how much time and money it took and why it took so much. I also know it works for me and I suffer no symptoms from my disease because of the drug and haven’t since I started taking it almost 5 years ago.
I HAVE insurance, and it’s a good plan, but the insurance company doesn’t feel as if I need to have my drug paid for in the same way you do, even though we pay the same premium. THAT is the point of this bill.
And what happens if the person buys the policy on their own, outside of a group?
This bill excludes major groups, so it also discriminates between people.
Now that the 2010 health care law comes in to play.
The new government rules – if the drug is not on the approved treatments list – it does not have to be covered, by the law.
The drug will just not be covered – just like medicare does not cover many possible treatments today, by law.
If it is on the approved treatment list, everyone’s costs for insurance go up, based on the increased costs incurred by the few.
By the way – it is in the insurance company’s best interest for the cost of care to go up.
Insurance is now cost plus 15% or 20% MLR.
By being cost plus, the more claim costs, the more premium charged.
Since claims processing cost and administration costs are rather constant, the increased dollars in the 15% or 20% MLR range are increased PROFIT dollars.
If that sounds familiar, let me help you…this is how taxpayers ended up paying 600.00 for hammers and 1200.00 for toilet seats. DoD is run on a cost plus basis.