[CayoKay]

Co-Payments Go Way Up for Drugs With High Prices

By GINA KOLATA - Published: April 14, 2008 - The New York Times

Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.

With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.

No one knows how many patients are affected, but hundreds of drugs are priced this new way. They are used to treat diseases that may be fairly common, including multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers. There are no cheaper equivalents for these drugs, so patients are forced to pay the price or do without.

http://www.nytimes.com/2008/04/14/us...pagewanted=all

(free registration required to read The New York Times)

[Koala77]

Oh dear. That sounds like it's going to hurt some people really badly.

I'm sorry to hear about this. It's as if the powers of be just don't want to see anyone with a chronic illness still manage to pay for their medications, pay their mortgages and eat as well!

How long before one of these three things have to go because people simply can no longer afford them?

It's just not fair!

[CayoKay]

you're absolutely right, Koala.

it's totally not fair, because the very PRINCIPLE of health insurance is to SPREAD the risk around!

this part of the article really broke my heart:

It happened to Robin Steinwand, 53, who has multiple sclerosis. In January, shortly after Ms. Steinwand renewed her insurance policy with Kaiser Permanente, she went to refill her prescription for Copaxone. She had been insured with Kaiser for 17 years through her husband, a federal employee, and had had no complaints about the coverage.

She had been taking Copaxone since multiple sclerosis was diagnosed in 2000, buying 30 days’ worth of the pills at a time. And even though the drug costs $1,900 a month, Kaiser required only a $20 co-payment. Not this time. When Ms. Steinwand went to pick up her prescription at a pharmacy near her home in Silver Spring, Md., the pharmacist handed her a bill for $325.

There must be a mistake, Ms. Steinwand said. So the pharmacist checked with her supervisor. The new price was correct. Kaiser’s policy had changed. Now Kaiser was charging 25 percent of the cost of the drug up to a maximum of $325 per prescription. Her annual cost would be $3,900 and unless her insurance changed or the drug dropped in price, it would go on for the rest of her life. “I charged it, then got into my car and burst into tears,” Ms. Steinwand said.

from 20 bucks, to $325 !!

that's horrendous !!!!!

[CayoKay]

except for one small thing!

the NYT needs to PROOF-read their stuff, or fact-check it, or something.

Copaxone is not "pills"

that's a majorly stupid error, methinks.

[AfterMyNap]

I saw that too, Kayo, it's pretty tragic when the insurers' greed becomes the measure of our national healthcare.

[lady_express_44]

I used to manage the budgets for employee benefits at a large firm, and having an employee on the payroll that incurs a $100,000 a yr in drug/treatment cost will substantially effect the employer (or employee, depending on who pays) premiums for that benefit. This premium goes straight to the bottom line, i.e the premium charged is based on individual company averages, not the average of all people (across the state or country) who use that insurance agent.

So . . . either ALL employees will end up sharing increased costs, by paying a larger % of their salary towards these costs, or the employer loses a % of income they would otherwise have (if they are paying the premium for the employees).

These costs have never been absorbed by the insurance companies as they are there to MAKE MONEY (just like our employers and the pharma companies that charge UNNECESSARILY high costs for these drugs!). If the insurance company starts paying out more for prescriptions (this new annual cost/premium is re-calculated annually), it is reflected in the new premiums for the employers (which may or may not be charged back to employees).

For instance, if the payroll costs for a company are $500,000 per year, and the prescription costs for the insurance agent has been $50,000 per year, the % of direct costs are:

$ 50,000
$500,000 = 10% of every dollar paid out in wages goes to paying for prescriptions.

= Total cost for employees, if paid by employer: $550,000.

Now if someone who takes, say Tysabri @ $100,000 a yr, is suddenly incurring that cost in the plan:

$150,000
$500,000 = 30% of every dollar paid out in wages goes to paying for prescriptions (or a 200% increase in premiums)

= Total cost for employees, if paid by employer: $650,000.
OR
= If the premium costs are passed on to employees: 30% of their salary is now deducted to pay for the prescription costs/increased premiums of everyone in the plan.

My question is . . . who SHOULD pay this cost?

Cherie

[wkikta]

A very good explanation of just what Insurance does in spreading the costs over all the members of the group.

[Nancy T]

Originally Posted by lady_express_44

I used to manage the budgets for employee benefits at a large firm, and having an employee on the payroll that incurs a $100,000 a yr in drug/treatment cost will substantially effect the employer (or employee, depending on who pays) premiums for that benefit. This premium goes straight to the bottom line, i.e the premium charged is based on individual company averages, not the average of all people (across the state or country) who use that insurance agent.

Cherie--thanks for that informative post. But I've never understood the principle behind raising rates ONLY for the employer with the very sick employee. Why don't the insurance companies spread that cost around to other employers? It appears as if they're punishing a company--and/or its workers--because one of its employees got sick--and companies have no control over this (other than promoting employee wellness plans and incentives, which aren't going to prevent anyone from getting MS or most kinds of cancer).

This should be ILLEGAL, in my opinion. The idea of insurance is to spread the cost around, and not punish sick people for being sick.

But maybe there's some point I'm missing? What IS the principle or rationale that the insurance companies use? If it's merely to protect their bottom line, why can't they be made (by law) to protect their bottom line (which they must do, to stay in business) by spreading the costs to their other clients as well, instead of dumping all the burden on one employer and its employees?

We have GOT to have health-care reform in this country. The current system is SO stupid.

Nancy T.

[lady_express_44]

Hi Nancy,

I guess what you are getting at is the need for a "universal health care" policy . . .?

In Canada, most of our medical costs are done this way, at a NATIONAL level, and the government pays for the vast majority (except prescriptions, in most cases). This is true of our car insurance costs (provincially) too . . . .

When it comes to some variable costs though; where an employer may be able to influence the costs they incur (like for health plans/prescriptions, Workers Compensation, disability costs, etc.), most of our employers are charged based on their claim history.

Using Workers Compensation as an example, rates charged to employers are based on their industry, then their claim history. For example, a company that employs office workers only might only pay 1% of their payroll into their WCC premiums, but a construction company may pay as high as 7% because they tend to have more accidents. Prices charged for goods and services reflect these costs . . .

This principle is applied for the first year or two, and then WCC starts factoring in claim history. A construction employer who has lots of accidents might end up paying 10%, and a construction employer who has very few accidents might end up at 4%. That can be a significant cost or cost reduction, and can influence how an employer conducts their business, sets policy, etc.

I tend to agree with your feelings about health care, since there really isn't a whole lot that an employer can do to influence the costs incurred (except lay undue pressure on employees , who generally have no choice in how sick they are). However, the people who are "well" might not agree with us . . .

Most people don't really consider their health until it fails. If they are paying $300 a month for a health care plan, many don't want to see it raise up to $450 in order to pay for the "sickies" of the country. Therein lies the difference between the way Canadians vs. Americans have "elected" to deal with their citizens' health costs.

On the other hand, Canadians don't mind not having the cadillac of service and treatments either. Most of us would SERIOUSLY consider the cost of a very high priced drug, and how that will affect the total costs of our healthcare, before we demand the "best" (or fastest) treatment there is available to us.

There are lots of things that would have to change (current procedures, policy, mindset, etc.) in order to make a universal (or national) health care system work in the US.

Cherie

[Riverwild]

They did reverse this decision for the time being and return the money people paid when it was first changed.

BUT...it does NOT bode well for any of us, whether we have private insurance or public assistance insurance.

I work for a small nonprofit that is dealing with major budget cuts right now. Our state has decided that their most vulnerable citizens are the first, best place to start with the 200 million dollar budget shortfall. This includes disabled people on Medicare/Medicaid, MH and MR patients, the elderly and uninsured children.

Something's gotta give. There's got to be a better way.