Employers have discovered another way to shift health insurance costs onto their workers by reclassifying certain high-cost prescription drugs to a new category that increases the out-of-pocket expense for employees.
According to a recent Los Angeles Times report, a number of health insurers, including Aetna and Anthem Blue Cross, have reclassified certain drugs used to treat cancer, HIV and multiple sclerosis from a copay to a new cost-sharing tier. As a result, some employees who rely on these drugs have seen their out-of-pocket cost soar by several hundred dollars per month.
The move falls in line with recent cost-shifting trends in the workplace. A 2010 Kaiser Family Foundation study showed that the average worker's share of an employer-sponsored health plan rose to 30 percent in 2009, a 3 percent annual increase that used to be picked up by the employer. Fewer companies are offering health insurance these days as well.
High-cost drugs represent only about 1 percent of all prescription medication used nationwide but account for 17 percent of drug spending by insurers, according to the medical data tracking company IMS Health. The average annual cost of high-priced prescription drugs for conditions such as multiple sclerosis ($24,116 in 2010) and pulmonary hypertension medication ($32,570) has largely been shouldered by employers.
But that's changing as employer health plans shift from a three-tier to a new four-tier price structure.
According to the report, the new tier structure breaks down like this:
- Tier 1: $10 copay for generic drugs.
- Tier 2: $30 copay for brand-name drugs.
- Tier 3: $50 copay for nonpreferred brand-name drugs.
- Tier 4: 10 to 20 percent coinsurance or $150 copay for specialty drugs.
According to Kaiser, the percentage of U.S. workers in a plan with four tiers (or more) has doubled from 7 percent to 14 percent in the last five years. That could leave workers to pay out of pocket for 20 percent or more for their prescription medication.
The shift to the cost-sharing tier was staggering for Robert Gomer, who saw his monthly bill for three HIV drugs soar from $80 to $450. Consumer groups are concerned that the steep cost shift could drive some workers into medical debt and bankruptcy and others to ration or go without vital medication, both lose-lose propositions for the worker, the employer, and ultimately society at large. Lawmakers in more than 20 states have introduced legislation to limit the impact for policyholders. New York banned four-tier medicine copay structures and higher pricing in 2010.
Health care reform establishes out-of-pocket spending limits beginning in 2014, but insurers point out that it does nothing to address the underlying costs of these drugs. And because these drugs are derived from living organisms, they are likely to remain in great demand, and thus expensive, for years to come.
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