Substantially more health plans on the federal insurance marketplaces require consumers next year to pay a hefty portion of the cost of the most expensive drugs, changes that analysts say are intended to deter persistently ill patients from choosing their policies.
The class of medicines known as specialty drugs often treat chronic illnesses such as multiple sclerosis, rheumatoid arthritis, HIV, hemophilia, some cancers and hepatitis C. Individual doses can be priced at more than $600. Many newer medicines cost $5,000 to $10,000 a month. That means patients with even a small cost-sharing requirement have to come up with thousands of dollars. For many patients there are no cheaper and equally effective alternatives.
In the four years that the healthcare.gov marketplaces have existed, plans requiring consumers to pay roughly a third or more of the cost of specialty drugs have expanded to 63 percent of all offerings from 37 percent, according to a Kaiser Health News analysis.
High cost sharing is one reason that the marketplaces have been subject to criticism. The marketplaces, also called exchanges, may be phased out by a hostile Republican Congress and new president. Nonetheless, they remain important in 2017 — and possibly longer — for the millions of people who are buying insurance on or off the marketplaces.
Six of every seven policies in Maine, Missouri, New Jersey, Tennessee and Illinois, and every plan in Alaska, require consumers to pick up 30 percent or more of the cost of specialty drugs, the analysis found. Around the nation, some plans make consumers split the cost of these drugs with the insurer, and a few make consumers pick up the majority of the tab. In West Virginia, five Highmark Blue Cross Blue Shield plans require a $1,000 copayment for each specialty drug prescription.
In California, a state that runs its own insurance exchange, more protections are in place for consumers. Beginning this year, Covered California capped what enrollees pay for specialty drugs to either $150, $250 or $500 for a 30-day supply. The Bronze plans — which have the lowest monthly premiums — are the policies with the highest out-of-pocket cost at the pharmacy.
Covered California customers may wind up paying less for drugs than people in other states, but Californians paying for specialty drugs for an entire year may still shoulder a financial burden of as much as $1,800 in some Silver plans, or $6,000 a year in a Bronze plan.
“While Covered California is doing its part to protect consumers against these rising costs, a broader solution is needed to curtail the explosion in specialty drug costs,” said Covered California Executive Director Peter Lee, who added that the broader fix shouldn’t involve driving up insurance premiums for everyone.
A state law going into effect in January of 2017 will apply a $250 drug cap to all health plans obtained through small groups or the individual insurance market outside of Covered California.
Around the country, people relying on specialty drugs quickly run through their deductibles and maximum annual out-of-pocket costs, which next year will be no more than $7,150 for individuals. After that, the insurer must pick up the entire cost.
Researchers suspect some insurers are designing their plans with stingy specialty drug benefits to discourage patients who need them from signing up in the first place.
“Plans are no longer able to actively exclude people based on health status, but they still have an incentive to try to end up with healthier enrollees,” said Benjamin Sommers, a health economist at Harvard’s T.H. Chan School of Public Health. “This isn’t just about drugs. These drugs can be a signal of other types of high health care spending. The people who use them have conditions that make them more likely to end up in the hospital or emergency room.”
Ben Woodworth, a 28-year-old in Atlanta, said he pays $380 a month for medications that prevent his body from rejecting a transplanted kidney. The Blue Cross Blue Shield of Georgia policy he is considering for next year, which is not sold on the exchange, would require him to pay either 40 or 50 percent of the price of specialty drugs, depending on how the insurer classifies them.
“What seems so unreasonable about it was that for many years, on several different insurance plans, I paid no more than $20 a month” for the drugs, said Woodworth, who had previously been covered through a university at which he was studying or by his parents’ plan. “To have that suddenly turn into about $400 a month was hard.”
Even with high cost sharing, people using specialty drugs are less vulnerable financially than they were before the Affordable Care Act created the marketplaces. In addition to the limits on how much patients have to pay, insurers can no longer refuse to sell policies or charge more based on consumers’ health. The government also pays for much of the cost sharing for lower-income people in the marketplaces, although this, too, is on the chopping block of a Republican Congress.
Rising Costs ‘Unsustainable’
The insurance industry and President Barack Obama’s administration say benefit changes are a reaction to the increasing cost and use of the medicines, especially unique ones where drug makers can dictate prices. Express Scripts, a pharmacy manager, estimated 576,000 people took more than $50,000 worth of medications during 2014.
“Rising prescription drug costs are an issue throughout the health care system, especially specialty drugs,” said Aaron Albright, a spokesman for the Department of Health and Human Services.
Kristine Grow, a spokeswoman for the trade group America’s Health Insurance Plans, denied that insurers are raising cost sharing to avoid expensive patients. “The true issue here is that the ever-increasing costs of specialty drugs are simply unsustainable,” she said.
But Caroline Pearson, an executive at the health consulting firm Avalere, said insurers have an incentive to repel patients in poor health because of flaws in the government’s method of reimbursing them if they get an unexpectedly large share of very ill customers.
“The model doesn’t adjust for the severity of your disease,” she said. For instance, she added, the government recognizes that a rheumatoid arthritis diagnosis means a patient is sicker than many others, but people with severe cases and mild ones are considered to be equal in health. People who use specialty drugs are more often suffering from acute ailments than are those who use other types of medicines, she said.
“It’s effectively a race to the bottom,” Pearson said. “You don’t want to be the single plan in a region with really good coverage for high-cost conditions.”
The government is proposing tweaks to its models that would do a better job of assessing patient health, but that would not take effect next year.
Other Costs Up, Too
Consumers are not just being squeezed by their share of the rise in specialty drug costs. High cost-sharing requirements for brand-name drugs that are not on insurers’ preferred lists have increased at a similar rate as for specialty drugs, KHN’s analysis found.
Some insurers are making high cost sharing for specialty drugs — 30 percent or more — a component of the majority of their plans. KHN’s analysis found that 85 percent of BlueCross BlueShield of Illinois and Florida Blue have that level of cost sharing. Of 373 plans offered by Anthem subsidiaries that KHN examined, 81 percent require consumers to pay 40 percent or more of the cost of specialty drugs.
Greg Thompson, a spokesman for Health Care Service Corp., which owns BlueCross BlueShield of Illinois, said in an email that its high cost sharing for specialty drugs allows it to pick up more of the cost of generic and brand-name drugs “and allows us to design plans that have a broader appeal across the entire marketplace.” But KHN’s analysis found insurers are also increasing patients’ contributions for the cost of the brand name drugs that are on those lists. In 2014, 38 percent of plans charging copays made customers pay $50 or more per prescription. By 2017 that portion had risen to 67 percent.
Robert Zirkelbach, a spokesman for the drug industry trade group PhRMA, said insurers had “powerful tools” to negotiate lower prices for medicines with drug companies, including the threat of not covering them at all. “At the end of the day, for any particular medicine, they make a determination of whether they are going to cover it and what formulary it’s going to sit on,” he said.
Paul Kluding, a spokesman for Florida Blue, said in an email that many drug makers offer coupons that can reduce some of the cost that consumers pay out of pocket for the drugs. That does not cut the insurers’ costs, however.
In September, the Center for Health Law and Policy Innovation at Harvard’s law school filed civil rights complaints with the federal government charging that insurers in eight states are using high cost sharing and other methods to discriminate against people with HIV or other chronic conditions.
Jane Parker, who runs a small business with her husband in Naples, Fla., expects to pay $15,643 in premiums and out-of-pocket costs next year. The monthly infusion she receives of Orencia, which treats her rheumatoid arthritis, costs $11,000 a month, including the hospital charges for the procedure.
Parker, 57, said she expects she will have to pay her new plan’s out-of-pocket maximum of $6,350 in January, but it is unavoidable since no other medication has worked for her.
Without the infusions, she said, “I wouldn’t be walking.”
California Healthline Senior Correspondent Pauline Bartolone contributed to this report.
This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.