Gina Kolata writes in the New York Times that health insurance companies are adopting a new pricing system for some of the most expensive drugs, pushing more of the cost onto consumers. It goes by the innocent sounding name of “Tier 4.” It might as well be called “bankruptcy for the seriously ill.”
All insurers require a co-pay on prescriptions, generally running from $10 to $35 dollars, with incentives for choosing generics over brand names. Despite the fact that some drugs cost hundreds, even thousands of dollars per month, the total exposure for the consumer has been the co-pay ceiling. Not any more. Under Tier 4, insurers are charging patients a percentage of the cost of certain high-priced drugs, anywhere from 20 to 33 percent. For the most part, Tier 4 covers exotic new medications for serious illnesses, medications where there are no cheaper alternatives. Patients are in a box – and if they cannot come up with hundreds or even thousands of dollars per month, they may literally end up in a box.
Tier 4 drugs include those for treating multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers. Tier 4 targets “high cost drugs used to treat a relatively small number of people who suffer from complex conditions.” Heck, if you don’t have the common sense to avoid getting sick, we’ll add to your misery by making you pay through the nose.
Take the case of Julie Bass, a 52 year old Florida resident suffering from metastatic breast cancer. She is disabled and covered by a Medicare HMO. Her doctor has prescribed Tykerb, which her insurer has designated as a Tier 4 drug. The monthly cost is $3,480 for 150 tablets – a 21 day supply. Given Bass’s very limited financial resources, there is no way she can afford the co-pay. Tier 4 for her may be the equivalent of a death sentence.
As Dan Mendelson of Avalere Health notes, “This is an erosion of the traditional concept of insurance. Those beneficiaries who bear the burden of illness are also bearing the burden of cost.”
Insurers are quick to point out that they are saving healthy people money: by pushing the cost of the drugs directly onto the patients, premiums for everyone else will remain (theoretically) lower. To which I say: no one is seeing lower premiums. At best, you have lowered the rate of the annual increase.
Rules of the Game
As Tom Lynch pointed out in the Insider’s instructive five part series on health care in America, the administrative bureaucracy in American medicine runs over 30 percent of total costs (no other country exceeds 10 percent). Some portion of the boated admin is eaten up by the good folks who dream up things like Tier 4. This is clearly a situation where the affluent will be able to survive certain illnesses and the poor will not.
Call it what you will, Tier 4 is health care rationing and the American public is not going to embrace it. (It may even increase the momentum for a single payer system.) The talented bureaucrats who designed Tier 4 had best start working on a clever marketing scheme, to help the public swallow this bitter pill. For starters, they could bring back Smoky Robinson and the Miracles to sing “Tracks of my Tiers.”