Hard as it is to believe, there is yet another price spike coming courtesy of ObamaCare. Avalere Health, a market and healthcare research firm, estimates that some consumers will pay as much as half the cost of so-called “specialty drugs” under health overhaul-related plans. By comparison, consumers in private plans typically pay no more than a third of those costs. “There’s a significant percentage of plans who are using coinsurance of 50 percent or higher,” said Caroline Pearson, who tracks the health care overhaul for Avalere Health. “It is generally a lot higher than what we see in private insurance.”
A study by America’s Health Insurance Plans (AHIP) revealed that while only 1 percent of drug prescriptions written in 2012 were for specialty drugs such as Avastin, a cancer drug, or Letairis, used to medicate hypertension, they accounted for 25 percent of the total costs associated with prescription drugs. It’s not hard to see why. The average cost per patient for Avasitn is $11,000 per year. Letairis costs a whopping $32,000 per patient per annum. “Spending on specialty drugs is growing rapidly. It’s unsustainable,” said Clare Krusing, spokeswoman for AHIP.
This is not news. Specialty drugs have long represented the fastest growing category of medical prescription and overall healthcare expenses, yet ObamaCare put no cost-controls in place to either stop or slow that momentum. As a result, health insurers can charge more money for drugs that control chronic illnesses. Avalere’s study of 19 states found that nearly 60 percent of ObamaCare’s Silver plans, and 38 percent of Platinum plans, charged coinsurance rates for specialty drugs, and 60 percent of bronze plans charged coinsurance rates of more than 30 percent.
“In the past, we’ve seen 10 or 20 percent coinsurance rates. Now we’re seeing 30, 40 and 50 percent,” 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. “So patients are being asked to bear more of the cost.” Milliman’s study of California, Texas, Florida and New York confirmed coinsurance rates as high as 40 and 50 percent for specialty drugs in those states. Drugs that can cost $8000 or more per month. Rosen addressed the inevitable result. “Patients are going to spend their entire out-of-pocket cap before they ever see a dime from the insurance company,” he explained.
Obamacare caps out-of-pocket expenses at $6,350 for individuals and $12,700 for families. Thus it is relatively easy for patients with serious illnesses such as multiple sclerosis, arthritis, leukemia, or diabetes to reach those caps within a few months. Pearson notes that once patients pay more than several hundred dollars for their medications, they begin abandoning them altogether.
As of now, insurers are generally free to put whatever drugs they want into the specialty tier of a healthcare plan. Some patient advocates believe insurers are doing this to discourage chronically ill patients from enrolling in their plans. Yet insurers began replacing fixed-dollar co-payments for specialty drugs with coinsurance rates long before ObamaCare became law. Unfortunately, ObamaCare apparently exacerbates that reality: experts note that patients often spend more for their prescriptions under ObamaCare plans because of the coinsurance.
And despite the contentions of advocates, insurers had little choice regarding the change because some drug costs can reach astounding levels. For example, the average annual cost of treating severe lupus can can reach $63,000, according to a 2011 study published in the journal Arthritis Care and Research. Approximately 1.5 million Americans have the disease. Other drug costs can run more than $100,000 per year for a single patient.
Obviously some percentage of cost-sharing is designed to discourage usage, “especially the avoidable kind,” notes Bruce Pyenson, a principal and consulting actuary at Milliman who isn’t surprised by the increased cost levels. “That’s a significant issue that more and more people are going to be facing, whether on the exchange, off the exchange, or in their employer-sponsored plans through large organizations,” he contends. He envisions another challenge for health insurance exchange (HIX) patients, who will also find it difficult to determine what is and isn’t covered.
Largely obscured in the discussion of these increases in coinsurance is the reality that they are often being used to keep premium costs low in order to attract the so-called “young invincibles” insurers need to maintain financially viability. It’s not working. The coveted 18 to 35 year old demographic the Obama administration predicted would account for 40 percent of enrollment has reached only 25 percent. Even that’s a rosy assumption because administration officials have this pathetically deceptive habit of making no distinction between those who signed up for ObamaCare and those who actually paid for coverage.
Thus, Avalere Health made an equally unsurprising prediction. “There is extensive concern about rate increases next year,” warned Vice President Pearson. “Particularly since early exchange enrollment is skewed toward older enrollees, some are concerned that plans will need to raise prices in 2015.”
And as surely as night follows day, the Obama administration surreptitiously and illegally enlarged the insurer bailout contained in the law to cope with those rising prices.
Section 1342 in the Affordable Care Act had already provided insurance companies with a bailout. It was engendered by the reality that insurers would have to cover the costs associated with caring for seriously ill people for the same price as healthy people, underwriting the plan’s mandatory benefits, paying $100 billion in taxes over a decade and, later on, coping with the illegal changes President Obama made to the law — all while keeping premium prices affordable.
Prior to Friday March 14, many insurance companies were faced with either jacking premiums through the roof, or abandoning the exchanges. With the “enhanced” bailout that increases permissible profit margins from 3 percent to 5 percent, and the amount of money companies can spend on non-patient-related expenses from from 20 percent to 22 percent, companies can continue to sell policies with artificially low premium prices — secure in the knowledge that billions of taxpayer dollars are readily available to underwrite their losses.
Adding insult to injury, the administration is also talking about extending those “risk corridors” an additional three years past their current 2016 expiration date. If there is a clearer indication this entire plan is fiscally unsustainable, one is hard-pressed to imagine what it is.
Many Americans have become acquainted with the phrase “kicking the can down the road” as it relates to our national debt, even as only a relative handful of them really understand the grotesque consequences associated with that unprecedented irresponsibility. ObamaCare is a far more potent time bomb. It affects people on a far deeper personal level in an area of their lives where they already feel highly vulnerable.
Yet there is something far larger going on here. Because ObamaCare is wholly owned by the American left, its failure represents an existential threat to their ideology. Thus Americans should expect even more changes to the law, courtesy of people who believe the ends justify the means, even if the rule of law must be tossed aside in the process. ObamaCare represents the epitome of such lawlessness — along with the bankruptcy of progressive ideology.
Don’t miss Jamie Glazov’s video interview with ObamaCare expert Monty Morton, who gives a report card for president’s “Affordable Care Act”:
Freedom Center pamphlets now available on Kindle: Click here.