Drug coverage costs pose a challenge
High-deductible plan is rejected
Massachusetts made history last March by requiring all residents to obtain health insurance that includes coverage of prescription drugs. Now, the state is finding that making such coverage affordable is an even more heroic task.
The goal is to ease the sticker shock for more than 160,000 people who have health insurance that doesn't cover drugs and will have to upgrade their coverage by January 2009, when the drug requirement takes effect. In addition, about 30 percent of people who bought nonsubsidized insurance through the Commonwealth Health Insurance Connector Authority this year have chosen coverage that excludes prescription drugs.
Yesterday, members of the board overseeing the insurance requirement rejected a proposal that could have cut insurance premiums a few dollars a month by imposing a $1,000 deductible for nongeneric drugs.
Although the board of the authority did not formally vote on the proposal, several members said it offered little savings on the monthly premium while potentially leaving people without adequate coverage.
"A deductible of $1,000 is pretty extreme," said Celia Wcislo, a board member and assistant division director of labor union 1199 SEIU. "It's a catastrophic plan; it doesn't solve the problem."
The board directed its staff to look for other ways to cut costs of prescription drug coverage, but the board is running out of time. Individuals buying insurance through employers may have to make adjustments in their coverage as early as January 2008 to meet the requirement for January 2009. And health insurers must still design actual policies that meet the new standard. The authority has set a November deadline to tell insurers what kind of coverage will meet state standards.
Typically, drug coverage adds at least 15 percent to a monthly insurance premium, or about $50 for a 37-year-old, according to the connector staff. The board is seeking to trim that to as little as 5 percent, or about $15, while still providing adequate coverage and allowing easy access to generic drugs.
"I'm concerned about people who will not only face double-digit premium increases when they renew their insurance, but additional costs to pay for drug coverage," said board member Richard Lord, president of Associated Industries of Massachusetts.
In March, when the authority approved minimum standards for insurance, it allowed drug coverage with a deductible up to $250 for an individual. That is in addition to a deductible of up to $2,000 for medical care.
Two insurance plans currently offered through the connector's Commonwealth Choice unsubsidized program include drug coverage with deductibles of $100 or $250. That coverage adds about $20 a month to the cost of insurance for a 37-year-old Boston resident. But four other insurers offering plans through the authority chose not to impose drug deductibles and added prescription coverage that costs from $32 to $40 a month. Most insurers also offer plans that provide more comprehensive drug coverage at a higher price.
Connector staff presented a proposal yesterday for a drug plan that would cover all generic drugs for a copayment of about $15 a refill. But that plan would include a $1,000 deductible on all nongeneric drugs, along with additional copayments of $50 or $75 per refill. The premiums would be nearly double for a 60-year-old.
The plan does not cover some expensive drugs at all, particularly when there are less expensive alternatives.
Coverage with that kind of separate deductible for drugs has not been popular in Massachusetts, and no insurer currently offers a plan with different deductibles for generic and brand drugs. But some suggested that it might appeal to people seeking the cheapest plan possible.
While some board members argued for providing people with this choice, others said employers might offer their staff only the $1,000 drug deductible plan, forcing employees to buy it or forfeit any employer subsidy. 