Column 37 NEW extension Rx costs

It was reported this week that the administration is going to hold firm to the 3/31/2014 deadline for the Exchanges and it will not be extended.  Anyone taking bets?  It will be interesting to see if the website is overloaded and crashes like it did on 12/23 (the deadline for 1/1/2014 effective dates).  I expect there would be a big uproar.

Another announcement said that consumers who currently hold individual policies that are not compliant with the ACA can keep them for another two years if the state approves it.  As of my deadline, CA has not made an announcement, nor have any of the insurers.

My educated guess is that the big Blues will not reinstate the old plans.  The ones that were extended to 3/31 may be extended, but from here in the trenches it looks as if the Blues have closed the book on those policies.  I would be surprised if Aetna decides to reenter that business.  It's simply too tumultuous.  Time will tell and clearly greater minds than mine are at work here!

One client suggested to me that all these changes are good for the wine industry because I expect that insurance brokers and executives are drinking more!

Next year's open enrollment period is now set to be 11/15/2014 to 2/15/2015. This is likely welcome news to insurance brokers who had small groups "early renew" in 2013, giving them a 12/1/2014 renewal.  It also means that there might be some insurance people that will get a Christmas holiday if they are so inclined.

If you are insured under the new 2014 plans, chances you are noticing that the formulary is much stricter and may very well be a closed formulary.  What this means is that your plan does not cover a medication if it is not on the Rx "list" also known as a formulary.  Prescription drug costs are expected to account for 10.1% of national health expenditures by 2021 according to the report.

report released by the Generic Pharmaceutical Association found that savings due to the use of generic prescription drugs increased $1 billion every other day - totaling $193 billion in 2011 and more than $1 trillion over the past decade. Prescription drugs are expected to account for 10.1% of national health expenditures by 2021. In commercial health plans Rx costs can represent as much as 15-20% of the entire premium.

What can you do to help offset some of these costs?  First consider using generics if it is at all possible.  In the majority of cases the prices will be lower.  That being said, one reader wrote to me about her frustration with prices even on generic as follows:

  "I do know that Raleys raised their prices for my thyroid over 10 times this month - from $3.33 for a 1 month supply ($9.99/3 mo.) to $34 for 1 month supply because I "had insurance."  Without insurance they would have charged me $14.69 for 1 month supply - still an increase of over 5x.  When I asked why they said they had to increase prices for a number of long-term generics that had been quite stable in the past because their costs for them had gone up so much.  I called Shopko and found something similar."

So the message is that you want to price the Rx with and without insurance. If it's lower outside the plan, you could then save your receipt and do a manual submission of the claim.

She also shared links to some articles one of which is an Op-Ed piece in the New York Times written by Margaret Clapp, former chief pharmacy office at Massachusetts General Hospital.  Her pieces references a system that reduced the number of suppliers for many generics.  This allows price manipulations and exemption from criminal penalties for the actions.  So these organizations control the supply and the price which is then passed to the consumer at the pharmacy.  She states that an investigation I under way from the GAO that should be finished this year.  A 2011 report found that group purchasing organization kickbacks inflated supply costs by at least $30 billion annually!! The article accuses the Rx manufactures lobby for the problem.

I never cease to be amazed at the different ways the system is gamed which in turn, inflates costs. Insurance company response uses plan design to steer consumers to lower cost options.  But since there is so little transparency in health care pricing, we are all subject to the surprise health care bill.  I am convinced that the new plans will cause consumers to be even more acutely aware of the price disparities among providers, vendors and plans.