Health Care In The States

Wash. State Insurer, Official Clash Over Drug Coverage Cutbacks

By Harris Meyer

July 2nd, 2012, 11:42 AM

A fight between the Washington State insurance commissioner and the state’s largest seller of individual health insurance is spotlighting problems in that increasingly troubled market. The spat arose over insurers’ efforts to curb soaring premiums by restricting or eliminating prescription drug benefits.

Experts say they haven’t yet seen similar moves by insurers in other states to axe drug coverage from policies sold in the individual market. But some predict expensive drug benefits will offer an inviting target.

Since 2009, Premera Blue Cross’s LifeWise unit has sold a high-deductible plan called Wise Essentials Rx,  the only catastrophic-type plan in the state offering drug coverage. Its enrollment quickly zoomed to 45,000. But that plan and Lifewise’s standard plan covered only generic, not brand-name, prescriptions.

Earlier this year, Premera’s two main rivals, Regence BlueShield and Group Health Cooperative, filed requests to switch their standard plans for individuals from full to generic-only drug coverage. Group Health said it doesn’t favor a generic-only benefit but feared its plan otherwise would get swamped with sicker enrollees who couldn’t get brand-name drugs in other plans. All three insurers have reported losing money in the individual market.

Those requests prompted Insurance Commissioner Mike Kreidler to issue an emergency rule in February barring generic-only coverage. He said patients with multiple sclerosis, some types of cancer, AIDS, rheumatoid arthritis and certain forms of mental illness can’t necessarily be treated effectively with generics. The insurers’ moves, he warned, would leave most Washingtonians in the individual market without adequate drug coverage.

Average annual prescription drug claims per health plan member nationally totaled about $800 in 2010, according to IMS Health, a consulting company. Costs are far higher for people with serious chronic conditions. Annual brand-name drug costs for multiple sclerosis patients, for example, can exceed $50,000.

In response to Kreidler’s rule, Regence and Group Health withdrew their bids to switch to generic-only coverage.

Premera reacted differently. In April, it told LifeWise members that it planned to eliminate all drug coverage in the catastrophic plan, effective Aug. 1.

Kreidler spokeswoman Stephanie Marquis said Premera’s elimination of drug benefits was part of its effort to “get rid of high-cost patients.”

But Premera spokesman Eric Earling denied that. He explained that adding full drug coverage to the LifeWise catastrophic plan would hike monthly premiums by hundreds of dollars, making it unaffordable for many. Adding brand-name coverage to the standard LifeWise plan will boost premiums by 7.2 percent. “Customers are very price sensitive, and the catastrophic plan hits a good sweet spot,” he said.

Some Lifewise members have complained about Kreidler’s rule, saying they were happy to have a relatively affordable plan with at least some drug coverage. “The last thing anyone in state government should do is limit access to health care and consumer choice,” Republican State Sen. Linda Evans Parlette, a pharmacist, recently wrote.

But others supported the commissioner’s move. Patrick Nelson, a LifeWise member and insurance agent who received notice LifeWise was terminating drug coverage after he was diagnosed with metastatic lung cancer, told the Seattle Times that Kreidler was “just trying to referee some fairness” into health insurance.

Starting in 2014 when the federal Affordable Care Act takes full effect, all health plans will have to provide full drug benefits including brand-name products.

4 Responses to “Wash. State Insurer, Official Clash Over Drug Coverage Cutbacks”

  1. Nancy says:

    Both the insurance companies and the state insurance commissioner should negotiate with the pharmaceutical companies for lower prices rather than cause the patient to be the one who suffers. Many drugs are far more expensive here in the U.S. compared to other countries. It seems the pharmaceutical companies could lower their prices and still make a significant profit.

  2. Eugene says:

    Thank goodness for the Affordable Care Act: enough people will be in the pool to facilitate getting costs down for everyone, and the premiums of healthy individuals will help support the costs of those with medical needs, including paying for brand name medications, when no generic drugs are available (like for people living with multiple sclerosis). I agree with Nancy that pharmaceutical companies need to cooperate more with their customers and get costs down, so that insurance companies don’t have to take such drastic and frightening steps.

  3. John Spek says:

    ACA is being looked at to add soooo many people into the pool that costs will go down

    Where will these people come from?

    estimates are that there are about 50 million uninsured

    20 million can not buy insurance, because they are not documented

    30 million are expected to go onto Medicaid, or have pre-existing issues and add costs to the pool

    so where is the dilution of costs from healthy people jumping into the pool?
    Oh – they are on mommy and daddy’s plan

  4. Kim says:

    Sorry John — but you’re way off on your facts.

    The ACA could potentially reduce the number of un-insured by ~ 32 million — estimates and assumptions vary — roughly half in Medicaid and half through commercial health insurance policies to be sold through the future exchanges. But he’s correct on the un-documented who are not eligible for either. (Who knows how many? Pretty hard to count if they’re un-documented!)

    And the sooner all these folks get covered, the better, and for all of us. They’ll help distribute risks more evenly and stabilize the pools and marketplace over time. So will the new requirements that all individual and small group policies cover “essential health benefits” – including prescription drugs. Sounds like Kreidler acted wisely to stop a dangerous new trend among carriers in WA. Too bad he can’t solve the problem of outrageously priced vital medications, but he did what he could to help tide many vulnerable people over until more choices and protections kick in in 2014.