New Lows in Health Insurance -- Pay More for Drugs, If You Can Afford Them

The basic social bargain of health insurance -- that we all pay premiums while we're healthy so insurance will cover our costs when we're sick -- has been breaking down for close to two decades. To see how high drug prices are shredding it further, look no further than today's NYT report on the high co-payments for expensive "specialty" drugs many insurance plans are now charging their members.

The gist is pretty simple. For more than a hundred of the world's most expensive drugs -- many of them biotech-derived treatments for autoimmune disease and cancer -- many insurers will no longer let members off with a fixed co-pay of $10 or $20. Instead, they force patients to pick up anywhere from 20 percent to 33 percent of the drugs' cost, which can amount to a huge sum for most people. What's more, private insurers can change their drug-coverage policies without much advance notice -- meaning, of course, that ordinary folks can be, and frequently are, blindsided by their pharmacy bills.

The most important thing this story illustrates is this stark fact: Health insurance no longer necessarily shelters you from the cost of getting sick. Between higher drug copays and high coinsurance rates -- the patient's share of responsibility for any medical bill, that is -- we are rapidly moving toward a system in which an unexpected medical emergency can still bankrupt the unwary or unfortunate even if they're insured. Because 33 percent of an unpayable medical bill is often still unpayable for many people.

This is also another example of our "whack-a-mole" healthcare system, one that's rigged so that no one can save money without jeopardizing someone else's income. The insurers seem to have reached the breaking point with high drug prices, and so are trying to slough a portion of their costs onto individuals. These ordinary people, meanwhile, can either forego treatment (and suffer and maybe die as a result) or scrape together the cash and carry on.

Now, the one potential bright spot here might be the possibility that higher co-pays could reintroduce some measure of price competition into the drug market. For the most part, pharmas and biotechs charge whatever "the market" (read: insurers) will bear for their treatments, although they'll usually shroud their decision in gaseous verbiage about pricing a drug for the "value" it represents. (Oddly enough, that "value" seems to go up every year -- often by staggering amounts.)

If enough people have to start paying a fraction of their drug costs themselves, though, then supply and demand might start to function again. Or it would, at least, if there were alternatives to many of these expensive specialty drugs (in many cases there aren't) and if were easy to substitute one drug for another (often enough, it's not). Plus, of course, if the manufacturers themselves weren't already willing to "help" patients who can't afford the drugs -- a seeming act of charity that, of course, is usually anything but.

(Photo of a cut-rate Mexican border pharmacy by Flickr user Irish Typepad, used under Creative Commons.)