(sorry for the book, but this NEVER gets said)
We like to bash insurance companies, mostly I think because they happen to be the last point of contact in the financial chain between us and our medical suppliers.
Read down a bit in the LA Times article and you see this:
"Because high-cost pharmaceuticals reduce the affordability of health insurance, Anthem moved some of these drugs from a co-pay tier to a cost-sharing tier," said company spokesman Darrel Ng. "We continue to evaluate and refine the drug classifications in our four-tier plans to enhance value and affordability."
Robert Galle, Aetna's head of pharmacy benefit management operations, said his company is responding to employers' concerns about escalating costs from these specialty drugs. "As new drugs are brought to the market, we are generally adding them to these tiers," he said.
Here's the deal - a company negotiates coverage for it's employees and establishes a fair plan with a reasonable price tag. If a larger than usual number of employees develop cancer/HIV/long term illnesses etc, then the pool of available funds (as dictated by the premiums contributed) quickly evaporates due to the costs associated with treatment. A tier 4 (the highest rating) medication for HIV switches from a simple co-pay to a percentage - typically 25 - 30% depending on the plan, but could be more. Assuming that Mr Gomer is being covered under a group plan and only paying for 25% of his medication, his non-insured cost of medication would be $1800 per month ($21.6k annually). If the average employee within his company pays $160 per month for single coverage, it would take almost 11 other healthy employees who
never use their coverage to carry Mr Gomer's full medication cost - not accounting for administration fees. This also doesn't take into account Mr Gomer's doctor/hospital visits, labs, etc.
Is this the insurance company's fault? Health insurance companies are simply agents who pay a share of our medical costs from a pool of our own money which we contribute to their administration. They are forbidden by state law to make a profit at our expense, although they are allowed a small percentage for administrative costs (payroll, advertising, etc) - and even this is scrutinized by our state's insurance commissioner. If the costs for our medical coverage increases, there are only a few options available to an insurer - they can either try to find more healthy individuals to augment the pool or they can increase our premiums or they can find a reasonable way to keep our premiums steady yet push more of the burden onto those who use the resources.
Now this statement bears closer scrutiny:
Assemblywoman Fiona Ma, a San Francisco Democrat, is pushing a bill that seeks to limit consumers' financial exposure to high drug costs and other medical bills. The proposed legislation would cap annual out-of-pocket medical costs at $5,950 for an individual and $11,900 for a family.
Lawmakers in more than 20 states have introduced similar measures to limit bills for expensive medications. In 2010, New York banned four-tier and higher pharmacy plans.
Based on the fact that insurance
isn't free money and Mr Gomer's out of pocket expense for his 3 medications without insurance would be $21.6k annually, who would pay for the other $15650 he needs for treatments? Any way you look at this, he still needs 11 healthy co-contributors who never use their insurance to cover JUST his medication costs - quite a few more to cover his other medical expenses.
I know how unpopular it is to even suggest that pharmaceutical companies do something to reduce their profit margins - it's akin to asking Chevron to stop charging us so much at the pump. However, the only way to reduce the amount of our medical costs is to chase down the providers and demand lower prices. Insurance companies do their best using collective bargaining to limit the costs of doctor and hospital visits, but they can do nothing about the costs of the medications we're being prescribed - especially when those costs spiral ever upward.
Finally, the article never mentions the particular drugs which were prescribed to Mr Gomer or even if they were the same drugs prescribed on both plans. It is quite possible that his doctor caved in to the pharmaceutical company reps and prescribed the much more expensive name brand drugs rather than to try to control his condition with generics - which would rate in a lower tier.
= new reply since forum marked as read
