Insurance co-payments for costliest drugs rise sharply

Spirit in the Night

I have good news and bad news about health insurance.

We’ll start with the good news – a second victory in California.

Hot potato

A couple of months ago a California arbitrator awarded Patsy Bates a $9 million settlement in her complaint against her health insurance company, which had cancelled her policy to avoid paying for expensive cancer treatments (see the e-Alert “Sweet Comeuppance” 3/11/08).

End of story? Not quite. Insurance industry watchdogs were just getting started.

Let’s say it’s been more than 10 years since your doctor gave you the good news that your cancer was in complete remission. But you happen to need a new health insurance policy, and when you’re signing up you’re asked if you’ve been treated for cancer over the past decade. Happily, you can honestly answer, “No.” You’ve had occasional blood tests to monitor possible recurrence, but no treatments.

So a few months after you sign the new policy, your doctor says you need a hip replacement. But your insurance company rep says no. In fact, the company drops your policy because you didn’t inform your rep about the blood tests, which the company classifies as treatments.

Unfair? Completely. But what can you do? You file a complaint. You consider a lawsuit. The red tape and the bills start mounting. Your hip isn’t getting any better. You feel lost.

A case similar to this was recently settled when the California Department of Managed Health Care (CDMHC) ordered some of the largest insurance carriers in the state to reinstate the policies of 26 people whose coverage had been abruptly canceled. In each case an insurance company said the customer had given misleading information, and in each case the CDMHC said the company had no reasonable grounds to cancel the policy.

Even better, these case-by-case reviews of dropped policies are continuing and some industry insiders estimate that hundreds, perhaps even thousands of people will have their policies reinstated.

That’s the good news.

Either way your choose

Now for the bad news: Affordable co-payments for expensive drugs are fading away.

A recent New York Times article featured the story of a multiple sclerosis patient named Robin – a woman in her early 50s who paid $20 per month for Copaxone, a drug that costs $1,900 per month without insurance. Shortly after Robin and her husband renewed their health insurance, her monthly co-pay increased to $325. She now has to decide: Should she save for her son’s college education, her retirement, or continue to take the drug that helps reduce multiple sclerosis relapses and new lesions?

One of the most annoying aspects of this situation is that you and I may be participating in the problem without our knowledge or consent.

When the company you work for makes changes in your group insurance coverage (which seems to be happening more and more frequently these days), you’ll obviously be happy if your premiums don’t rise. But your employer may be making a tough decision to keep your payments from constantly bumping up.

In a system called “Tier 4,” expensive drugs for conditions such as MS, cancer, hepatitis C, and rheumatoid arthritis are grouped into the Tier 4 category, which requires very high co-payments. So insurance companies offer employers the choice: higher premiums for everyone, or lower premiums for NEARLY everyone, with the caveat that some employees will have to bite the bullet and pay hundreds of dollars each month in Tier 4 co-payments.

Dan Mendelson, a representative for a health research organization, told the Times: “This is an erosion of the traditional concept of insurance. Those beneficiaries who bear the burden of illness are also bearing the burden of cost.”

We often hear mainstream commentators wondering why people seem to be resorting more and more to the use of “untested” alternative health care. Of course, those commentators are usually well-paid “experts” with very reliable safety nets. They may genuinely have no clue what it’s like out here where expenses run high, doctors prescribe freely, and side effects abound.

Sources:
“26 Californians Get Back Cancelled Health Coverage” Jane Akre, Injury Board, 4/18/08, injuryboard.com
“Co-Payments Go Way Up for Drugs With High Prices” Gina Kolata, The New York Times, 4/14/08, nytimes.com