Insurers Increasingly Requiring People To Pay Percentage of Cost of Some High-Priced Prescription Drugs
The New York Times on Monday examined how a number of health insurers have begun to charge members a percentage of the price of certain expensive medications, rather than set copayments, to help reduce costs. According to the Times, the implementation of such "Tier 4" systems "means that the burden of expensive health care can now affect insured people, too."
Under Tier 4 systems, members typically pay between 20% and 33% of the price of the medications, which can amount to thousands of dollars per month. Tier 4 systems include hundreds of medications for a number of common diseases -- such as multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers -- and, because those treatments have no generic alternatives, members must "pay the price or do without," the Times reports.
Health insurers began to implement Tier 4 systems after the start of the Medicare drug benefit, and 86% of those plans include such systems. In addition, about 10% of group health plans include Tier 4 systems today, compared with almost none in 2003, Dan Mendelson of Avalere Health said. Karen Ignagni, president of America's Health Insurance Plans, said that private insurers began to implement Tier 4 systems for employers who wanted to reduce costs. The Times reports that insurers believe this system can keep premiums down when "innovative and promising new treatments for conditions like cancer and rheumatoid arthritis and multiple sclerosis can cost $100,000 and more a year."
However, Tier 4 systems often require members with serious illnesses to pay more for their medications, according to James Robinson, a health economist at the University of California-Berkeley. He said, "It is very unfortunate social policy," adding, "The more the sick person pays, the less the healthy person pays." Mendelson said, "This is an erosion of the traditional concept of insurance," adding, "Those beneficiaries who bear the burden of illness are also bearing the burden of cost" (Kolata, New York Times, 4/14).
