By David Morgan
WASHINGTON (Reuters) – President Barack Obama’s ban on discriminatory health insurance practices against the sick has not stopped insurers from increasing up-front charges for the expensive drugs needed to control chronic illnesses from leukemia to multiple sclerosis.
Actuarial studies of plans sold through health insurance marketplaces in some states found that many make consumers responsible for as much as 50 percent of the price of specialty drugs, which can cost $8,000 or more a month.
Long before the U.S. Patient Protection and Affordable Care Act, known as Obamacare, became law in 2010, insurers began replacing fixed-dollar co-payments for the drugs with co-insurance rates that require consumers to pay a percentage of the cost of specialty medicines.
Insurers say they had to move toward greater cost-sharing due to higher prices for new drugs, some of which can cost more than $100,000 annually per patient.
Researchers also say the higher rates help insurers bankroll low monthly premiums to attract healthy young enrollees.
“Research shows that spending on specialty drugs is expected to significantly increase. Therefore, any discussion of prescription drug coverage must also include a focus on the direct link between rising prescription drug prices and consumer cost sharing,” said Clare Krusing, spokeswoman for America’s Health Insurance Plans, a trade and lobbying group.
THE CHRONICALLY ILL
The healthcare overhaul, Obama’s signature domestic policy achievement, bars insurers from denying coverage to people due to prior illness. The law protects the chronically ill from insurer practices that limited their annual medical benefits but did not cap their out-of-pocket expenses, the Department of Health and Human Services said in a statement.
Obamacare caps those expenses at $6,350 for individuals and $12,700 for families.
But patient advocates say the spike in cost-sharing means chronically ill people could reach those caps quickly, in some cases within the first months of coverage.
“In the past, we’ve seen 10 or 20 percent coinsurance rates. Now we’re seeing 30, 40 and 50 percent. So patients are being asked to bear more of the cost,” said Brian Rosen, senior vice president for public policy at the Leukemia & Lymphoma Society, which commissioned actuarial firm Milliman Inc to study the new plans.
“Patients are going to spend their entire out-of-pocket cap before they ever see a dime from the insurance company,” he added.
Opponents of Obamacare have sought to use the difficulties faced by the chronically ill in congressional elections this year. A television campaign funded by a conservative group, Americans with Prosperity, recently featured women with leukemia and lupus who say they face unexpected costs due to Obamacare.
Patient advocates, however, insist that the law is not directly to blame for higher charges on specialty drugs.
“The Affordable Care Act is great,” said Dr. Patience White, a rheumatologist and vice president for public health policy and advocacy at the Arthritis Foundation. “Insurance companies now have to take people with chronic illness. But they have investors and can’t lose money. That’s the way American healthcare is.”
WINNERS AND LOSERS
Among people with preexisting conditions, winners and losers have emerged from Obama’s overhaul of the U.S. healthcare system. Nearly 4 million people have signed up for the Obamacare plans, and the enrollment period for 2014 ends on March 31.
One of the winners is Robert Ruffino, who is among the 1.1 million Americans who suffer from blood cancer. The 45-year-old sales manager from Baton Rouge, Louisiana, has had chronic myelogenous leukemia for a decade.
Ruffino’s individual policy previously cost him $13,000 to $19,000 a year in monthly premiums, co-payments and coinsurance charges for drugs, blood tests and specialist visits. When the law’s provisions on preexisting conditions took effect in 2014, he was able to join his wife’s employer-sponsored family health plan, which had modest co-pays.
“It’s a no-brainer,” Ruffino said. “We have so much more flexibility and options to gain insurance. Before, we were virtually locked out.”
But that may not be the case for other patients who need specialty drugs to keep chronic illnesses at bay.
The Milliman study on the health exchange plans in California, Texas, Florida and New York found coinsurance rates of 40 and 50 percent for specialty drugs in two states whose Republican leaders have sought to thwart Obamacare.
Plans from Aetna Inc, Humana Inc and Cigna Corp, three major publicly traded insurers, accounted for some of the highest coinsurance rates in Texas and Florida.
Some bronze-level plans, the least expensive in the state exchanges, in those states charged no coinsurance or co-pay for specialty drugs but had deductibles at or near the law’s out-of-pocket maximum costs of $6,350.
California and New York, which were quick to embrace the Obamacare marketplaces, had substantially lower specialty drug costs. Most of California’s coinsurance rates were below 30 percent, while New York insurers charged co-pays of no more than
A separate study of 19 states by consulting firm Avalere Health said most health exchange plans require consumers to pay coinsurance rates for many specialty drugs and that many plans also charged high monthly premiums.
Avalere said 59 percent of mid-range silver plans and 38 percent of top-quality platinum plans had coinsurance rates for specialty drugs. Sixty percent of bronze plans had coinsurance rates greater than 30 percent, it said.
“These cost-sharing levels are considerably higher than the cost-sharing that is typically seen in the commercial marketplace,” Avalere Chief Executive Officer Daniel Mendelson said. “We’re at this crux where we have to ask ourselves what we want insurance to cover, what we want insurance to be.”
Among the people who say they have suffered since the healthcare law went into effect, Emilie Lamb has become one of the faces of Americans for Prosperity’s attack on Obamacare.
The 40-year-old Tennessee accountant and lupus sufferer is among the women featured in the political group’s ads, which the media has criticized for overstating or not supporting its claims.
Her ad claims Lamb’s annual health insurance costs went up more than $6,000 as a result of Obamacare. She says that number is actually $4,400, after she learned four of her six prescription drugs were in fact covered by her Obamacare plan.
She now has a $373 monthly premium, no deductible and a $1,500 cap on out-of-pocket expenses, but the higher cost requires her to work a second job. Lamb, who voted for Obama because she wanted healthcare reform, called the law a disaster.
“I don’t know what to do other than repeal it and start over,” she said.
Lamb’s former health plan, however, was unusually inexpensive, costing only $53 a month in premiums with modest co-pays that added up to about $1,000 a year. It capped coverage at $25,000 annually, compared to her current plan, which has no benefits limit.
The average annual cost of treating lupus cases more severe than Lamb’s can reach $63,000, according to a 2011 study published in the journal Arthritis Care and Research. An estimated 1.5 million people have the disease in the United States.
(Reporting by David Morgan; Editing by Michele Gershberg and Amanda Kwan)
[Sick man coughing via Shutterstock]