A rule presented by Centers for Medicare and Medicaid Services would allow insurers to shift more prescription costs onto patients. (Courtesy photo)

A rule presented by Centers for Medicare and Medicaid Services would allow insurers to shift more prescription costs onto patients. (Courtesy photo)

Trump administration’s new insurance rule puts sick patients at risk

Proposal ultimately would drive up healthcare spending

By Kenneth E. Thorpe

Roughly half of sick Americans struggle to afford their prescription drugs. And a new rule from the Trump administration could soon make their lives even more difficult.

The proposal, released late last month by the Centers for Medicare and Medicaid Services, would allow insurers to shift more drug costs onto patients. That’ll put many medications out of reach for the nation’s sickest people — and ultimately drive up total healthcare spending.

For many Americans, high out-of-pocket drug costs aren’t just a financial challenge — they are a matter of life and death. Nearly one in three Americans skipped medication doses in the last year due to cost concerns. Such nonadherence is especially common among chronic disease patients, roughly half of whom deviate from their medication regimens. Nonadherence results in 125,000 deaths each year.

The administration’s proposal would worsen this nonadherence problem by deliberately inflating patients’ out-of-pocket spending. Here’s how.

Many health plans require patients to pay 100 percent of their own medical expenses up to a certain amount, known as a deductible. These amounts vary widely, depending on the insurance plan, but deductibles of several thousand dollars are quite common.

After patients reach their deductibles, insurance kicks in, but patients must still fork over copays or coinsurance — a percentage of a prescription’s total cost. Only after patients reach their annual out-of-pocket maximum spending limits are they completely off the hook. This year, no individual plan sold through the Affordable Care Act’s exchanges can have an out-of-pocket maximum of more than $8,200. Family plans can’t feature an out-of-pocket max beyond $16,400.

That’s an enormous amount of money for many working and middle-class Americans.

To alleviate these out-of-pocket burdens, pharmaceutical companies often send patients “copay coupons.” These coupons cover some or even most of patients’ copays or coinsurance at the pharmacy counter.

For instance, let’s say a 30-day supply of insulin normally costs $300 at the pharmacy. Since it’s February, there’s a good chance patients won’t have yet reached their deductibles for the year — so they’d normally owe the full $300 out of pocket. However, drug companies might send out coupons for $200 off the prescription, making the burden much more manageable.

Unsurprisingly, these coupons dramatically improve adherence rates. A 2014 analysis in the journal Health Affairs found that, in the vast majority of cases, coupons for specialty drugs reduced patient out-of-pocket costs to less than $250 a month, while boosting adherence for anti-inflammatory medicines as well as drugs for multiple sclerosis. A more recent study in the journal Pharmacotherapy found that coupons for brand-name statins — used to treat high cholesterol — increased utilization rates and made patients less like to abandon their drug regimens.

Traditionally, these coupons have counted towards patients’ deductibles and out-of-pocket maximums. In other words, the diabetes patient who used the $200 coupon, and paid $100 of her own money, would move $300 closer to her deductible.

The Trump administration’s proposal would allow insurers to stop counting these coupons towards deductibles or out-of-pocket maximums. In practice, that’d greatly increase patients’ out-of-pocket liabilities — and make it far more likely that patients will go off of their medications.

This proposed change makes absolutely no sense — for several reasons.

First, it flies in the face of existing state and federal policy. Many states, including Virginia, Arizona and Illinois, have passed laws requiring insurers to count coupons towards deductibles and out-of-pocket maximums. And just last year, federal regulators issued guidance that largely mirrored these state policies.

Second, the proposal is logically inconsistent. Coupons from drug companies wouldn’t count toward out-of-pocket maximums — but virtually identical coupons from non-profit foundations or charities would.

Third, and most importantly, the change would cause nonadherence rates to rise — and thus inflate overall healthcare spending. Nonadherence already causes about 10 percent of hospitalizations and drives up healthcare spending by roughly $300 billion annually.

High out-of-pocket costs threaten millions of Americans’ access to medicines. The new CMS proposal would exacerbate the problem.

Kenneth E. Thorpe is a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.

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