Congress to Clamp Down on Health Insurers' Sharply Higher Co-Pays?

The health insurance industry just can't seem to resist the urge to anger its policyholders and politicians, giving voters and politicians new reasons to clamp down on the industry's propensity to stick it to its sick customers in an effort to sell more insurance policies.

That the story about how insurers are making drug copays unaffordable for their chronically-ill patients is featured by NY Times means that Congress will rush to fix the problem one way or another. HMO stocks such as Coventry (CVH), Health Net (HNT), Humana (HUM), United Health (UNH) and Wellpoint (WLP) will be depressed even more, and drug companies' earnings and stocks will be depressed until the politicians deal with the issue.

As patients' non adherence to physicians' prescriptions grows due to the higher co-pays imposed by insurers, more will have to be admitted to hospitals, and insurers' non-pharmaceutical claims probably will soar. The NY Times reports that insurers have sharply increased co-pays on private and Medicare patients, making some of the most advanced drugs unaffordable. Impact graphs from the Times: 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.

The system means that the burden of expensive health care can now affect insured people, too. 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. Insurers say the new system keeps everyone’s premiums down at a time when some of the most innovative and promising new treatments for conditions like cancer and rheumatoid arthritis and multiple sclerosis can cost $100,000 and more a year.

But the result is that patients may have to spend more for a drug than they pay for their mortgages, more, in some cases, than their monthly incomes.

Disclosure: none

Comments

[cnm:]

We personally don't get the tests and specialist treatment we should be getting to reserve our health. Not because we don't worry about our health, but because we can't afford the co-insurance. And we are employed and not in deep debt. In light of the debt crisis and recession one can imagine how much less health care many others are getting. At some point the government will be forced to step in pay for the health care of it's citizens if the nation is to survive. It's a time-bomb waiting to go off.

2008 Apr 14 09:33 AM

[lrp retired:]

This is a terribly missleading article. (not surprising from the N.Y.Times) Large Drug expenditures for people on Medicare are covered in part D. There is also a variety of programs for the poor.

The supposition that this will cause more inpatiant care has obviously been thought through by the insuance companies and if they have estimated wrong it will be to their advantage to change.

Government heathcare has not worked anywhere in the world and anyone who thinks they will get more care at less cost from the government has not studied the results of political management of healthcare or any other industry.

Almost all those expensive drugs that are available to us have been developed in the USA.

2008 Apr 14 11:04 AM

[Virginia:]

The healthcare financing industry is absurd. The industry could resolve so many systemic problems before Congress creates knee jerk, flawed solutions. With the consolidation in the industry, 5 players represent the lion's share of the market (WLP, UNH, AET, CIGNA and CMS) - - they need to create the solutions. Nonsense like medical underwriting and jacking up copays for essential RX on conditions like RA and MS - these are not just flawed strategies, not just embarrassing in their underlying policies, but doomed to self-destruct the industry.
Congress' solution will surely not be the one that makes the most sense. But the industry plan is probably to sit back, wait for Congress to act and then hope they can derail that action.

The industry should spearhead solutions.

2008 Apr 14 11:11 AM

[User 178215:]

What thing that people haven't really talked about is that Wellpoint and all these insurance companies similar to AIG actually invested in mortgaged back securities and subprime (that's what they do with the premiums) but it hasn't been reflected in the stock prices yet. The last warning from Wellpoint didn't even write down their mortgage back securities $500million of which were subprime. :( Everyone's talking about value investing but one only needs to look at the recent Yahoo message boards and see how unhappy the employees are and how much the insiders have sold off in the last year. They've left skeleton crews while spending millions outsourcing customer service overseas (I spent 2 hours on one call for a patient last year) that ended up with a lot of snafus. People say it's well run- it hasn't because of the merger with Anthem.

2008 Apr 14 07:14 PM