Mandated Prescription Drug Coverage
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It’s no secret that some of us in the health insurance community do not agree with the Commonwealth of Massachusetts’ decision to require individuals to purchase prescription drug coverage as part of their health insurance benefits to meet the state’s minimum coverage requirement. And while the requirement has an effective date of 1/1/09, many people have been assuming that employers would start purchasing drug coverage from this point forward, so that it would be part of their plan design on 1/1/09 — when the requirement takes effect — but before their coverage renews.
Prescription drug coverage adds 10-15% — or about $50-$75 per month — to the cost of individual health insurance coverage. For families, it’s more like 15-20% — or about $150-$200 per month. For many people — like the 200,000+ who buy no drug coverage in Massachusetts right now, that’s usually the difference between buying and affording health insurance coverage, and not buying it at all.
To ease the burden, Harvard Pilgrim is offering no drug coverage plans to its enrollees and their employers through the end of 2008 — which will convert to plan designs with drug coverage on 1/1/09 — thereby meeting their minimum coverage requirement. This should lessen the financial blow for employers and individuals who currently buy — or plan to buy — no drug plan designs. I’m told that other health plans are following our lead. Good.
I don’t buy the argument that health insurance without drug coverage is no coverage. If someone’s over the age of 65, I buy it. Senior citizens should have outpatient prescription drug coverage, and I’m glad Medicare finally got around to providing it. But it’s kind of silly to say that a 25 year old who’s as healthy as a horse needs a health insurance plan with drug coverage. Wal-Mart has over 400 $4 generic drugs at its drug stores, and many other retailers have followed their lead in offering low cost generics.
The whole point behind health care reform was to expand options, make plan designs more affordable, get people enrolled, and take financial pressure off of hospitals that provide free care to people without coverage. Acting as the only state in the nation that mandates drug coverage seems to be a big step in the wrong direction.
Let’s hope this one gets re-visited before the end of the year.
This type of mandate is the same nonsense as people having to pay for cable channels they don’t want and don’t watch. Purchasing for consumers should be like going to a supermarket…. lots of good choices and you buy only what you want to buy. This type of mandated prescription coverage or the cable companies forcing you to pay for channels you don’t want would be the equivalent to someone putting expensive items in your basket at the supermarket and telling you that you have to pay for them. How long would people tolerate that?
It’s just like Medicare Part D, which you are required to buy whether you need it or not. My 75-year-old mother has been forced to pay for prescription drug coverage for several years even though she takes no prescription drugs.
I can see mandating the option; I can’t see mandating the purchase. It’s like making people buy car insurance even if they don’t own a car, because they might get one in the future.
I disagree, and would also like to note that Medicare Part D is voluntary — Haddie’s mother does not have to buy it (just like Medicare Part B), but it is a good deal in case she needs medicines in the future.
Compared to all types of medical care, pharmaceuticals are often the most clinically and cost effective treatment option. And the social rationale of insurance is not to “get a good deal” for the individual, but to spread risk around. So if only the people who currently have many health problems buy insurance with prescription coverage, then the costs will be higher for them. By requiring all people in MA to have prescription drug coverage as part of their health insurance, means that the average insurance costs will be lower - that’s what spreading the risk in a social insurance model is all about.
Using the reasoning that people shouldn’t be required to have prescription coverage could also be used to say they shouldn’t be required to have coverage for hospitalizations, or for physical therapy, or medical equipment. Broad policy positions that decide that some types of healthcare services or products are more important than others creates economic incentives that can drive clinical decisions in ways that are not best for patient care. Would a patient have surgery for an infected wound rather than take antibiotics because the surgery was covered, but the medicine wasn’t? And what about not taking prophylactic antibiotics after a procedure that is covered, and then ending up with a wound infection. There are other examples of how hospitalizations and procedures can be avoided by use of appropriate medicines, e.g. Medicaid in New Hampshire learned this lesson years ago when it restricted access to medicines for psychiatric diseases - only to see the rate of admissions for these illnesses rise significantly. This is a classic example of a “penny-wise and pound-foolish” in healthcare.
I applaud Wal-Mart’s decision to offer generic pharmaceuticals. But are such generics always a good substitute for drug coverage? It depends on the numbers, doesn’t it? If Wal-Mart can supply perhaps 90% of the pharmaceuticals offered by the UK’s National Health, then it would seem that NOT mandating drug coverage is clearly the best way to improve competition and the social good.
Of course 90% might take time to work up to.
As to the possibility of someone using surgery instead of drugs, because surgery is “cheaper,” please consider all the poor souls out there who already use prescribed drugs instead of healthy living because the drugs are cheaper for them and easier (and also they don’t know enough about the science).
I think the arguments for universal coverage apply to drugs, which are an integral part of health care. There’s plenty of evidence that many of the most vulnerable individuals cannot afford completely necessary drugs.
But it must be possible to design a less expensive pharmacy benefit. For instance, one that covers a limited formulary. Perhaps with a high deductible for non-formulary drugs.
What is Harvard Pilgrim’s position on this?
Thanks for your comments. All are interesting and thoughtful. I’m still with the “choice” crowd on this one - and would use the 1% doctrine so aptly articulated by Judy Norsigian - and referenced by me in an earlier post on this blog - to make my point. Judy has written that the rising C-Section rate in MA (and elsewhere) is driven by a 1% doctrine in health care - that is, if there’s even a small chance that something might go wrong, we throw maximum resources at the situation to ensure that it doesn’t. The end result, however, is an over-investment in an inappropriate solution - C-Sections for women who should be delivering vaginally - to solve the problem.
This, to me, is the problem with the mandatory drug coverage argument. Most people don’t need or use prescription drugs, except on an occasional basis. That’s a fact. Mandating that everyone buy prescription drugs - because they might need them - is an overly expensive solution to a small percentage possibility. And it’s one that might encourage people who should have some catastrophic coverage - because one day in a hospital costs a fortune - to simply go without coverage at all.
Michael raises an interesting issue about risk selection - pointing out that healthy people need to subsidize sick people to make health insurance work. If healthy people don’t buy drug coverage, the cost for just the sick people to buy it would be prohibitive. If the entire market was an individual market - his argument might make sense. But overall, health insurance is a group market - and the vast majority of the people in it have drug coverage. We’re talking about how to bring in uninsured young people and keep them in. You want ‘em in, you get ‘em in by giving them what they want, which is relaltively cheap, catastrophic coverage, not full price, fully loaded coverage with prescription drugs.
It seems that the issue really comes down to concern about driving out the marginal individual purchaser because of the increased premium cost with prescription benefits added. I believe that this marginal affordability problem should be addressed in subsidies to expand/encourage coverage with the benefit that has the best combination of healthcare value creating healthcare services/products, etc. Obviously I would include prescription drugs in that mix. To control costs (and thus premiums) you can have a formulary, prior-authorization, utilization review, step-care, just as insurers can require PCP referrals for specialist care or certain tests, etc. That makes more sense than encouraging adverse risk selection…. The goal should be to urge people into the best coverage for them, while providing options that continue to spread risk across a large group. That seems to be the reason MA delayed the requirement for having prescription drug coverage, i.e. get people covered and then bring them up to what should be a community standard benefit package.
Sure it would be nice to offer every person a healthcare policy with prescription drug coverage but the recent news from Massachusetts is all bad in terms of affordability of such a generous package. Most Mass taxpayers are now paying three times for healthcare: 1) Their own hefty premiums thru their employers (which are already inflated to help compensate for lower Medicare and Medicaid rates to providers and hospitals). 2) For Medicare thru the Medicare payroll tax we all pay (a program which may not even be around for younger citizens). 3) For Medicaid thru our state and federal taxes that fund this program. I think we are close to hitting a wall asking people to pay out even more for further coverage and now people want drug coverage added as well? This is not sustainable as the same group of people are paying the bills for everyone. A policy which at least gives coverage for hospitalization is a generous and important start and if they can get 90% of their prescriptions at Wal Mart, well… that’s a good start.
Folks - there was much discussion about having the plans offer a skinnier drug coverage plan design than the ones you see in typical plans designs. It couldn’t get past the folks at the Connector. If the state was willing to provide the framework to the plans to offer stepped down drug coverage, I think the plans would do so in a heartbeat. As it stands now, however, it’s going to be pretty fully loaded plan design for drugs starting in January of 2009.
Being self-employed, the plans offered by the Connector have been a life saver in terms of keeping my family insured at a reasonable cost. If they are to mandate drug coverage, I have a simple solution I think everyone on this message thread can agree with: a bare bones/high deductible drug coverage option. If I could get such a plan for my family for around 50 extra bucks a month, that would be OK. However, a fully loaded drug coverage plan costing an extra $150-200 would be hard to swallow. At the end of the day, affordability is the key. We will have achieved nothing if the most basic plan is financially out of the reach of the average working family.
Brian - absolutely, totally, completely right. Thanks for writing.
I just found out about the prescription coverage requirement for 09, and I’m outraged. We already pay $850/month (self-employed, family) for minimum health insurance (w/$2K deductible for ea family member! so we pay for every lab, xray, blood, etc.). I prefer alternative treatments (acupuncture, chiropractic) but cannot afford them.
Now we’re going to have to use prescription drugs just to make the $150-200/month worth our while!
Does anyone know how I can fight this? I need to scream at someone (oh, maybe there’s a drug I can take…let me make an appointment, pay $20 copay plus hundreds for tests, and then I’ll get my prescription…)
Recently, I have been paying just over $619 a month for my health coverage on an individual plan without a drug benefit–which has seemed incredibly high. With this drug benefit requirement, I will pay just over $726 a month. I have been health- and nutrition-conscious from a young age and almost never get sick or take drugs. I believe that healthy foods, exercise, targeted supplements, and various mindfulness practices and disciplines have worked together and helped me maintain or, at times, regain my health.
I feel that a large part of the health problems in America can be seen when you walk around in average grocery stores and see how much of the food is processed, lacks good nutrition, contains pesticides, preservatives, and other chemicals or unhealthy ingredients. (Fortunately transfats are not so prevalent as they were.)
I think we often forget the connection between what we eat, lifestyle issues, and our degree of health. Experimenting with symptoms can help us to track down habits, foods, or issues in our lives that are getting in the way of our health. Reaching for a pill to remove discomfort or symptoms can undermine this process, so we continue as we have been and, eventually, our health worsens to the point where we need what I consider “emergency medicine,” whether drugs or surgery.
Although a boon to the drug industry, this mandated drug benefit only encourages this reaching for a pill–and it can penalize those who choose to practice preventative and integrative health care, to work with their symptoms as warning signs to be explored. It seems that our stunning, important, and expensive array of tools in emergency medicine are extremely important for those times when we need them. Yet, it would save us all a great deal of money if we and our food industry realized how much they are an integral part of our preventative health-care system–or could be. IMHO, this should be our primary health-care mode.
As in the amusing commercials on television, pharmaceuticals always seems to have a long list of side-effects that can seem worse than the condition for which you are taking them. At least in some cases, the worst side effect of reaching for drugs to remove symptoms is that they can unwittingly encourage us to find temporary relief as we keep doing or not doing the things that caused the symptoms in the first place. Therefore we lose a valuable and satisfying way to know and work with our own unique bodies, tendencies, and capacities for change, evolution, and well-being.
I have enjoyed reading everyone’s posts and I encourage you all to write your state representative, I just did, regarding your feeling about the upcoming mandiated prescription drug coverage. I would like the state to revisit this new law, especially now that we are in a severe economic downturn. The added expense will mean that in our family we will have to downgrade our current coverage to pay for the prescription drug portion. I have checked to see if we can continue with our current plan as is but unfortunately our current provider will force us to purchase prescription drug coverage.
Please write your state representative.
I just received notification that our family coverage does not comply with the upcoming Jan. 2009 mandate that must include prescription drug coverage. The entire basis for the Mass Health Plan was to create a health care system in MA that guaranteed coverage for all individuals (not sure if this goal is even within reach) and by increasing the coverage pool, insurance rates would drop significantly. In fact rates have increased and continue to do so. Adding prescription coverage to the mandate forces those who do not use prescription drugs to have to downgrade their insurance coverage to be able to afford a portion of their policy that they will not use. In the end the pharmaceutical companies along with the insurance companies will benefit, while the public will be forced to pay higher premiums. Unfortunately, pharmaceutical drugs are an integral part of our health care system with all their often dangerous side effects, high costs and the “you need to take this for the rest of your life” mentality. While many do need drugs to maintain their illness, I think the general public would be better served by incorporating disease prevention education and alternative health care options (acupuncture, homeopathy, yoga, nutrition, etc…) within this health care system. Perhaps we can have a choice of Prescription drug coverage or spending the extra premiums on alternative (..or more like main stream in my family) healthcare that will inevitably lower health care costs for all. My family uses alternative health care and our doctor visits have decreased sharply during the past 12 years! Our use of prescription drugs are rare if ever! Who’s idea was it to create a health care system that fines families and businesses for not insuring when the costs are so high?
Rob — Very well said. I’m going to lift your comments here and use them to discuss this topic in a new post. Thanks for writing. Let us know if we can help you make the best decision for you and your family.
I’m not sure if this post about prescription drug coverage is still in effect, but if it is, I have a question. As a former Massachusetts self-employed resident, I’m enjoying much lower insurance premiums in Colorado — albeit with a high deductible ($5000). My question is, in evaluating a no-prescription plan, I want to consider my needs for prescription drugs if I DO hit my deductible. In order words, I’m clear that I don’t need drug coverage now, but if I experience a catastrophic illness or accident, will my lack of drug coverage be undue hardship? I’ve been able to verify that prescription drug coverage only applies to drugs you pick up at a pharmacy, not drugs administered in a hospital or doctor’s office. Since cancer is probably the most probable unpredictable risk, that’s helpful to know. However, I can’t find any information or discussion about how to think about drug needs following a catastrophic illness. I might be willing to pay for drug coverage if I needed it once I go over my deductible.
I have for years owned a small business and opted not to carry drug coverage because of the extra cost. My extra coverage is roughly $140 for my family. I am the only one who takes a prescritption (Tricor, no generic available). I recently went to the local phamarcy to fill the monthly prescription and used my new prescription card. I was presented with a bill for $114 after the coverage. I realize the deductable hasn’t kicked in yet but I was curious. In December I paid $116 by check with no coverage and saved a whopping $2 with coverage. I also noticed that the pharmacy had raised the list price of the drug to $146 and then discounted it with the phony coverage. Are you kidding me! Maybe it is time for the state legislators talk to the business owners before inacting these foolish laws. Maybe it’s time to change the leadership instead of the laws.
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Ernie - Thanks for sharing. I’m sorry things worked out this way - and believe, as you do, that there were better alternatives on this issue than full drug coverage as a mandated requirement for everyone.
Joy - The rules vary from state to state, so I hesitate to make unqualified statements on your question. So my first suggestion would be to ask whomever sold you the plan you have - your employer, your broker, or the health plan, if you purchased it directly. They should know more than anyone else what’s what in Colorado. That said, it sounds to me like you’d be interested in purchasing drug coverage - as long as it was priced presuming your $5,000 deductible applied first. I would guess that that would significantly reduce the cost of the drug coverage - and might give you a price point to add the coverage that you’d be willing to pay for. Thanks for reading.
I’d like to offer my perspective as a basically healthy, 62-year-old self-employed person who maintains Harvard Pilgrim coverage.
Until January 2009 I was paying for Pilgrim health coverage without a prescription drug option. At that time, I had to add that option at an additional cost of $62 per month.
In November 2008, before adding this ‘benefit’, I was able to renew prescriptions at CVS for two basic generics (Linsinipril and Hydrochlorothiazide) for the following cost: $29 for a 90-day supply of each.
In February 2009, with the ‘benefit’ in place, CVS charged me the following cost: $24 for a 30-day supply of each.
To CVS’s credit, upon my complaint they refunded my $24 purchase and instead provided me a 90-day supply of the two drugs for $29, the full out-of-pocket pricing.
This new purchase does not take advantage of my brand-new mandated prescription drug coverage. From now on, every time when renewing these items, to get the better pricing I have to explicitly tell CVS that I don’t want to use that coverage.
So — I’m back to precisely where I was before I had to take on the prescription drug coverage as mandated by Mass. law.
Except that now I’m also paying that extra $62 per month in health insurance premiums. Seven hundred forty-four dollars a year.
By any rational definition, this is insanity.
Jordan - I’m going to look into this and turn it into a new post. Thanks for sharing. Ernie - I’m going to look into your comment as well.
Published that new post yet, Charlie? If not, here’s some additional input for you.
Refer to my earlier post. I recently went to refill one of the prescriptions and, as advised, specifically requested that they give me a 90-day supply at the full price — i.e., that they not invoke my prescription drug coverage.
Can you guess what happened next? Despite my request, they gave me a 30-day supply at the ‘insured’ price (which, you’ll recall, is greater than the ‘full’ price for a 90-day supply).
To their credit, they refunded the charge and on the second try did what I had initially asked. But the episode got me thinking.
Apparently, everyone (including the person who initially handled the refill) has now been thoroughly conditioned to assume that if you have ‘insurance’, it must get you a better deal than you would have without it. Someone has done his/her job very well in this regard. So I expect that this is not the last time I’ll have this experience.
Oh, and by the way — about that extra $744 per year I have to pay for the mandated but (to me) useless prescription drug coverage. You’ll be happy to know that I’ve found a way to cover that. I’ve simply modified my Pilgrim plan to require a $2000 deductible, rather than the $1000 deductible that I had previously. That puts my annual premium right back in the neighborhood of where it was before the prescription drug coverage requirement came into being.
Now, if a REAL emergency strikes (the whole purpose of having insurance, no?), I’ll be covered — but with an extra $1000 out-of-pocket initial expense. Ain’t life grand?