- Congress could reform O'care by permitting any health plan that previously met state eligibility to be offered on the exchanges.
- Some argue these narrow benefit designs aren’t unique to Obamacare. But this isn’t entirely true.
- Americans who sign up for insurance under Obamacare are finding many of these plans offer very narrow options.
Americans who sign up for insurance under Obamacare are finding many of these plans offer very narrow options when it comes to their choice of doctors and drugs.
Some argue these narrow benefit designs aren’t unique to Obamacare. But this isn’t entirely true. The construction of the exchanges pre-ordained the wider adoption of these restrictive networks and formularies, and certainly made these constructs politically suitable.
Since many plans have little or no co-insurance outside of their networks and formularies, patients seeking care outside of these narrow arrangements can be saddled with the full cost of these choices. Under many plans, when patients are out of their networks or off their drug formularies, these costs don’t count against deductibles or out of pocket maximums.
To get a sense of how restrictive the formularies are, and its impact on patients, we looked at drugs used to treat two different chronic diseases, rheumatoid arthritis and multiple sclerosis.
We examined the drug coverage offered by lower cost silver health plans offered in the most populated counties in ten different states, and focused on ten disease-modifying drugs that are widely prescribed for these patients. We found that none of the plans provided coverage for all of the drugs, or covered any of them without significant cost sharing that would tap out most peoples’ annual deductibles and out-of-pocket limits on spending.
The challenge for consumers is that most of the plans have “closed” formularies where non-formulary drugs aren’t covered. Moreover, the cap on out of pocket spending only applies to costs incurred on drugs included on a plan’s formulary. That means that patients could be saddled with the full cost of many of these drugs, with no limits on that spending.
Among some our findings, the multiple sclerosis drug Aubagio was left off the closed formularies of two of ten plans. So patients on these plans could have to pay the full $4,420 monthly retail cost of this medicine, translating to about $53,000 annually. The drug Avonex left off the formularies of two of the ten plans, potentially saddling patients with the drug’s $4,805 monthly cost ($57,660 annually). Extavia wasn’t included on two of ten formularies, at a monthly cost of $4,625 ($55,500 annually). Tecfidera was left off six of the ten plans at a monthly cost to patients of $5,209 (at a total cost of $62,508 annually).
We found similar results when it came to drugs targeted to the treatment of rheumatoid arthritis. The RA drug Xeljanz wasn’t included on the closed formularies of four of the ten plans we examined at a monthly cost to the patient of $2,485, or $29,820 annually. Orencia was left off two plans ($2,673 a month, or $32,076 annually); and Kineret wasn’t included in two plans (at a cost of $2,978 a month, or $35,736 annually).
The RA drug Remicade was left off the formulary of three plans (about $3,592 for a two-month supply, or $21,552 annually). Rituxan was left off of six plans (a course of therapy will cost about $2,868). While Actemra was left off four plans (about $1,555 every two weeks for a bi-weekly course of therapy, or $37,320 annually). Simponi was left off two plans (at a cost of about $2,867 for a one-month 50mg supply, or $34,404 annually).
The high cost of developing innovative medicines translates into high retail prices. This is a challenge for our healthcare system. But the cost of disease progression, and the ensuing disability, can far outweigh the cost of effective management with some of these drugs. Many newer medicines are more targeted to these diseases, and far more effective.
These findings have been replicated by other analyses. One study by Avalere Health of 22 carriers in six states found that the number of drugs available on formularies ranged from a low of about 480 to nearly 1,110. Even if your drug makes it onto the plan’s formulary, getting access can still be a costly affair. Another analysis released this week looked at 123 formularies from different exchange plans. It found that more than one-fifth of silver plans require co-insurance of 40% or more for drugs for one of seven different chronic diseases. About 30% of plans provided no coverage for at least one key drug for multiple sclerosis.
The same challenges are being seen when it comes to the networks of doctors that the health plans offer. More than two-thirds of exchange plans have assembled provider networks considered “narrow” or “ultra-narrow,” in which as many as 70% of hospitals and other local health providers aren’t included. Earlier this year, we released an analysis on these networks that consistently found that exchange plans offered just a fraction of the specialists available in the PPO plan offered by the same carrier and offered in the same region.
In the 1990s, consumers firmly rejected the idea of very restrictive health plans and drug formularies when they spurned HMOs in favor of Preferred Provider Organizations. Yet the ACA is premised on a view that consumers were making a bad trade. The ACA effectively codifies the HMO model into law – forcing consumers into restrictive networks and formularies as a way to pay for the costs of Obamacare’s mandated benefits.
Congress could reform Obamacare by permitting any health plan that previously met state eligibility (prior to Obamacare) to be offered on the exchanges. This would allow for a much wider selection of plans that make different tradeoffs between benefit design and networks. The restrictive schemes are an unfortunate consequence of the way that Obamacare structured the state exchanges. It is within Congress’ power to fix these rules.