To help prevent Americans from being bankrupted by medical bills, the 2010 federal healthcare law placed an annual cap on deductibles, co-pays and other out-of-pocket costs imposed by health insurers. That’s turned out to be a mixed blessing for Americans who suffer from certain chronic diseases, including multiple sclerosis and HIV/AIDS. The specialty medicines they rely on are so costly that they can run up thousands of dollars in prescription drug bills early in the year, hitting the annual cap in short order. And as a study by the Kaiser Family Foundation showed, the typical household doesn’t have nearly enough money on hand to cover a full year’s out-of-pocket costs all at once.
To help them spread out their bills in a more manageable way, the state’s insurance exchange, Covered California, may require insurers to cap the monthly cost of each expensive specialty prescription at $500. That’s a step in the right direction, but it doesn’t go far enough to make sure those ailing Californians can afford the medicines they need. Lowering the cap to $200 would provide significantly more help, and given the limited number of people who need the help, the cost to other policyholders is expected to be minimal, according to a report by an independent actuary.
One of the core principles of the 2010 law is that insurance companies may not discriminate against people who need care. Because insurers pass along more of the cost of expensive drugs than routine forms of care, however, patients who need those drugs face a burden that others don’t: They can quickly hit annual out-of-pocket limits ($6,250 for a single person; $12,500 for a family) that most policyholders never approach.
With a new generation of extravagantly priced specialty medicines in the pipeline, this problem could soon broaden from those with chronic diseases to people with acute maladies. That’s why the state needs some kind of mechanism to spread high drug costs over the course of a year. Imposing a monthly limit on the cost of each prescription would be a good approach for those who require long courses of costly drug treatment. But many of them have to take multiple high-cost drugs each month, so a $500 cap offers only limited relief.
State Insurance Commissioner Dave Jones and six consumer advocacy groups have asked Covered California to set a $200 cap per drug, saying researchers have found that a significant number of people stop taking their medicines regularly when costs rise above that. That’s reason enough to give the lower cap a trial run.