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About the Underinsured

 Exchange Plans Increase Costs of Specialty Drugs for Patients in 2015 by Avalere Study

A new analysis from Avalere Health finds that patients accessing specialty medications – drugs often used to treat life threatening illnesses, such as cancer, rheumatoid arthritis, or multiple sclerosis – through exchange plans are more likely to experience higher out-of-pocket costs in 2015 than in 2014. In particular, the incidence of plans charging coinsurance greater than 30 percent for specialty medications has increased from 27 percent of Silver plans in 2014 to 41 percent in 2015. Coinsurance is the practice of charging consumers a percentage of the total cost of the medication, as opposed to a set co-payment fee. Approximately two-thirds of exchange enrollees picked Silver plans in 2014.

“Health plans continue to focus on managing drug costs to keep premiums low,” said Dan Mendelson, CEO at Avalere Health. “Competitive premiums are key to a sustainable exchange marketplace, which has led plans to pursue more significant cost-sharing. In some cases this could make it difficult for patients to afford and stay on medications.” Overall, 80 percent of Silver plans use coinsurance for consumer cost sharing on the specialty tier. In comparison, 91 percent of Bronze, 80 percent of Gold, and 66 percent of Platinum plans charge coinsurance for specialty medications.

“Coinsurance may make medication costs unpredictable. In addition, changes in cost sharing requirements from year-to-year may surprise some medication-dependent patients,” said Caroline Pearson, vice president at Avalere Health. “As a result, consumers who rely on specialty drugs should make sure they are evaluating their plan options in 2015. In particular, some patients may be better off paying more in monthly premiums in exchange for lower out-of-pocket costs.”

Avalere PlanScape®, updated November, 2014. These data include the federally facilitated marketplace (FFM) landscape file, as well as data from Covered California and New York State of Health. Notably, the FFM landscape file forces plans into four tiers of data, which excludes some cost sharing detail. When plans indicated “no charge” in the HHS Landscape file, Avalere assigned the plan to $0 copayment or zero percent coinsurance depending on which cost sharing type was most prevalent for the specified benefit. For Tiers 1-3, Avalere used $0 copayment, and for Tier 4, Avalere used zero percent coinsurance.

Underinsured Patients Expected to Rise in the Wake of Healthcare Reform

Nearly 25 million Americans were underinsured in 2007, a number that’s expected to soar in the wake of healthcare reform. While the Affordable Care Act is expected to reduce the number of uninsured Americans by 32 million, the number of underinsured patients – those who have health insurance but cannot afford their out-of-pocket medical expenses – is expected to only increase. That’s because one of the primary goals of the legislation is to provide access to competitively priced health insurance options to the uninsured, many of which will include financial responsibility for recipients.

While having health insurance will be a significant improvement for many Americans, there are concerns that the newly insured persons will not fully understand their responsibility based on their plan choice and face significant out-of-pocket costs.

As the underinsured population continues to increase, the assistance provided by PAN and its donors will become even more critical to ensure continued access to high-cost medical therapies. PAN is dedicated to working with our partners to evolve the Foundation’s support offerings to assist the newly emerging demographic.

To better understand the need for co-pay assistance in the wake of healthcare reform, PAN commissioned a discussion paper entitled Healthcare Reform and Future Directions for Co-Pay Foundations. Released on May 23, 2011 the paper examines the key provisions of the Affordable Care Act, identifies gaps in insurance coverage created by the law and predicts a growing need to help individuals with their medical expenses. Click here to read the executive summary; you may also read the full report by clicking this link.

America's 25 Million Underinsured: A Quiet Growing Concern

The Commonwealth Fund estimates that the number of underinsured adults (ages 19-64) in America grew by 60 percent from 2003-2007 to approximately 25 million. The underinsured are people who have health insurance that doesn’t adequately cover their medical expenses.

The underinsured are paying out of pocket not only for their insurance plan deductibles, but also for required copayments and for medications, treatments and services that are not covered by their individual plan.

With such a heavy burden of out-of-pocket costs, the underinsured are forced to make difficult choices in their household budgets, whether, for example, to pay the mortgage or fill a life-sustaining prescription or whether to buy groceries or see the doctor for treatment of a nagging illness. As our Patient Access Network (PAN) Foundation patients have told us – it can truly become a matter of choosing life or death.

This isn’t just a “poverty problem.” The Commonwealth Fund research also showed that those hardest hit by being underinsured were families with middle and high incomes – those whose income was greater than 200 percent of the FPL or those with an annual income of $40,000 to $50,000. These families may have plans with high deductibles of $1000 or more, and with caps on or no coverage of certain services, which costs can eat away at family resources.

It also hits senior citizens and those on Medicare, either because the person doesn’t have funds to cover copayments and deductibles or because they fall into the Medicare drug benefit “doughnut hole,” where they’ve outspent their annual benefit, but haven’t yet reached the Medicare catastrophic coverage level.

A formal definition says that these are individuals who are insured all year long, but fall into at least one of these categories:

Medical expenses greater than 10 percent of annual income

Annual income less than 200 percent of the federal poverty level (FPL) and medical expenses greater than 5 percent of annual income

Health plan deductibles equal to or greater than 5 percent of annual income.

For more information click here