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More Health Insurance Providers Require To Pay Medication Percentage

Armen Hareyan's picture

Two newspapers on Tuesdaypublished editorials that address a recent New York Times articleabout the increased number of health insurers that have begun to charge membersa percentage of the price of certain expensive medications, rather than setcopayments, to help reduce costs. Under such "Tier 4" systems,members often pay between 20% and 33% of the price of the medications, whichcan amount to thousands of dollars per month. Health insurers began toimplement 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 healthplans include Tier 4 systems today, compared with almost none in 2003 (Kaiser Daily Health Policy Report, 4/14). Summariesof the editorials appear below.

  • Las Vegas Sun: Such Tier 4 systems might help "keep premiums lower for the other, healthier members of the insurance pool," but the "concept is at odds with the original philosophy behind health insurance, which was supposed to distribute the cost of treating illnesses over a large group," according to a Sun editorial. The editorial states, "It seems oddly coincidental that Tier 4 pricing has increased during the same period in which the Bush administration has given private drug companies free rein to set Medicare prescription drug prices." The editorial concludes, "But as the experts noted, this philosophy is skewed. Health insurance should offer full protection to all who are covered, not simply the healthy" (Las Vegas Sun, 4/15).
  • New York Times: "It doesn't take a health policy expert to recognize that something has gone terribly wrong when patients have to pay thousands of dollars a month for drugs that they need to maintain their health -- and possibly save their lives," a Times editorial states. According to the editorial, "Congress needs to determine why this is happening and what can be done" to address the issue. "There is little doubt that the so-called tiered formularies, in which copayments rise along with the cost of the drugs, are a sensible approach for encouraging consumers to use the cheapest drug suitable for their condition," but the "system seems to break down when it moves to Tier 4 drugs where copayments can be huge and suitable alternatives don't exist," the editorial states. Pharmaceutical companies, "especially the biotechnology companies, are at the root of the problem" because of the high prices that they charge for medications, the editorial states, adding, "Washington needs to rein them in by encouraging generic competition for biological drugs and allowing government programs to negotiate lower prices." The editorial states, "If patients do without medicines or put off taking them, the likely result will be sicker patients, and higher costs, down the road" (New York Times, 4/15).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.