Prescription Drugs May Cost More With Insurance Than Without It

By Charles Ornstein and Katie Thomas
The New York Times, December 9, 2017

In an era when drug prices have ignited public outrage and insurers are requiring consumers to shoulder more of the costs, people are shocked to discover they can sometimes get better deals than their own insurers. Behind the seemingly simple act of buying a bottle of pills, a host of players — drug companies, pharmacies, insurers and pharmacy benefit managers — are taking a cut of the profits, even as consumers are left to fend for themselves, critics say.

Pharmacy benefit managers, the companies that deal with drug benefits on behalf of insurers, often do negotiate better prices for consumers, particularly for brand-name medications, but that’s not necessarily true for some generic drugs.

As a result of these complicated layers of negotiation — which are not made public — different insurers end up paying different prices for individual drugs. Further compounding confusion for consumers, some insurers require a set co-payment for each prescription — say, $15 or $20 — even when the insurer reimburses the pharmacy at a much cheaper rate.

Consumers also may face penalties if they don’t use their insurance and pay cash to save money. In many cases, insurers won’t let them apply those purchases to a deductible or out-of-pocket spending maximum.

Still, many find that leaving their prescription card at home is worth it. Some have found a better deal even at pharmacies that are owned by their drug plan, like CVS.

Even as more Americans have health insurance since the Affordable Care Act was passed, insurers are increasingly asking consumers to pay a larger share of their costs. In 2016, about five million people in Medicare hit a stage in which they had to pick up a greater share of their expenses.

Consumers may also pay more if they are covered by plans that require them to pay a set co-payment, no matter the cash price. In some of those cases, the insurers require the pharmacies to send them the difference between what they collect from the consumer and what the insurers have agreed to reimburse the pharmacies.

https://www.nytimes.com…

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Poison pill

By Jacob S. Hacker and Theodore R. Marmor
Boston Globe, December 7, 2003

Tomorrow, President Bush is set to sign Medicare’s biggest overhaul in 38 years into law. But after watching the shrill yet perfunctory debate that culminated last week in the passage of the bill, even close observers of Washington politics can be forgiven for wondering just what exactly it was all about. On one side, congressional Republicans and President Bush described the $400-billion legislation as a moderate, sensible means of providing long-overdue drug coverage to seniors.

On the other, Democratic opponents — including most House Democrats, Senate minority leader Tom Daschle, and Senator Ted Kennedy, who led an unsuccessful filibuster — decried it as a monstrous giveaway to insurers and drug companies. They also charged that it was a “Trojan horse” aimed at crippling Medicare’s universal benefits in order to foster go-it-alone competition.

All this becomes more understandable when one recognizes that the bill is really two bills. The first provides a much-needed, if modest and excessively complex, drug benefit. But while this new benefit is generous for some low-income seniors, it will end up raising out-of-pocket drug costs for other poor beneficiaries. And because it is poorly designed and does not include effective ways of controlling drug costs, the plan will ultimately leave most seniors little better off than they are today, and some worse off.

The second, darker side of the new Medicare bill is a slew of changes that have little or nothing to do with drug coverage and everything to do with special-interest demands and ideological animus toward Medicare. These include huge new subsidies for private insurers, and provisions that ensure that drug companies will be spared from their greatest fear: that Medicare will use its massive buying power to demand reductions in drug prices. Perhaps most ominous, the bill also contains elements that favor private plans and risk further degeneration of Medicare’s all-in-the-same-boat structure.

What is most striking about the bill is not the consistency of its vision, but its deep incoherence. In the name of greater free-market competition, the legislation offers massive new subsidies to the pharmaceutical and insurance industries. In the name of providing greater protection, it threatens Medicare’s guarantee of universal benefits. And in the name of greater cost containment, it encourages the expansion of private plans that have, to date, not saved Medicare money, while creating new budgetary rules that could very well make Medicare less equitable and affordable down the road.

Behind these glaring inconsistencies lies the one great fact of contemporary American politics: partisan and ideological polarization.

It’s also certain to cause political conflict — which may be the bill’s ultimate contradiction. Republicans hope to take off the table an issue with which they have been battered for years, and they may well do so through 2006. But by pushing through such an unwieldy bill, they are virtually ensuring that Medicare will be the biggest issue in American politics in the coming decades. Sadly, at the present juncture, that seems to promise more acrimony, confusion, and disappointment, rather than the constructive steps forward that Medicare so desperately needs.

http://www.pnhp.org…

You know that there is something wrong with our health care financing system when you may have to pay more for your prescriptions when you use your insurance than you would if you simply paid cash. Fourteen years ago, when H.R. 1, The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 was enacted, Jacob Hacker and Theodore Marmor explained what a mess the Medicare Part D drug benefit was, and how it came to happen.

They wrote, “What is most striking about the bill is not the consistency of its vision, but its deep incoherence. In the name of greater free-market competition, the legislation offers massive new subsidies to the pharmaceutical and insurance industries. In the name of providing greater protection, it threatens Medicare’s guarantee of universal benefits. And in the name of greater cost containment, it encourages the expansion of private plans that have, to date, not saved Medicare money, while creating new budgetary rules that could very well make Medicare less equitable and affordable down the road.”

So where are we now? Their prescient comment: “But by pushing through such an unwieldy bill, they are virtually ensuring that Medicare will be the biggest issue in American politics in the coming decades. Sadly, at the present juncture, that seems to promise more acrimony, confusion, and disappointment, rather than the constructive steps forward that Medicare so desperately needs.”

The drug pricing nightmare is but one symptom of that sickness, leaving us in critical condition. We need to move our health care financing system into the health policy intensive care unit, immediately. We know how to save this patient, as long as we keep the quacks out.

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