California Exchange Caps Copays for Pricey Drugs


Prices for specialty drugs keep skyrocketing. Some of the newer ones for chronic conditions, like hepatitis C, multiple sclerosis, rheumatoid arthritis and HIV, can cost over $10,000 per coarse of treatment. For those in individual medical plans with a 30 percent copayment (copay), that means spending $3,000 themselves after the insurance pays its part to purchase the medication. California’s insurance exchange – Covered California – has now placed caps on the copays that people will pay for pricey drugs starting next year.

The California exchange action is the first in the country. It means that those who buy Affordable Care Act (ACA) plans for 2016 (those Platinum, Gold, Silver and Bronze ones) on the individual policy marketplace will now have monthly maximums that on what they can spend out of their own pockets for expensive covered medications. It also means a rate increase of about 1 percent across the board for everyone else.

After any deductible is paid, most plans will cap specialty drug costs at $250 per month, per prescription. The cap on Bronze plans, which have far lower premiums, will be $500 a month after a $500 brand name drugs deductible is met. All of the metal plans have annual out-of-pocket maximums on spending for all copays and coinsurance; typically they are about $6,600 per year.

Patient advocates argued that the $500 per month limit for Bronze plans was too high. Those plans, however, typically have higher copays or coinsurance rates anyway. Those who argue that setting the limit at $500 per month claims that the poor will not be able to afford expensive prescriptions or have to put out large amounts of money.

Those critics are ignoring two facts:

  • One is that they have been paying a lot more for the prescription drugs now and this would cut their costs. Presently, some patients spend their entire annual out-of-pocket costs in the first few months of taking the medication. This would reduce that instant financial drain and spread the costs over the period the prescription is used.
  • The other is that lower income people who get large government subsidies to be able to pay their premiums usually have far lower copays than those who can “afford” to buy the health insurance plan themselves.

In setting the monthly caps, the exchange had to balance improving benefits for those who need specialty medications and not driving up the costs for insurance premiums too much for everyone else. They sought to “strike a balance between ensuring Covered California consumers can afford the medication they need to treat chronic and life-threatening conditions,” according to Peter Lee, executive director of Covered California, while trying to keep premiums down for others.

How many people use the specialty, extremely expensive prescriptions? Drug industry statistics show that the prescription costs for 139,000 Americans topped $100,000 in 2014. That was three times the number the previous year. While it is not clear how many of those people are on ACA plans, there are 2.2 million people who purchased insurance through the individual Covered California exchange, however, who could potentially benefit from the caps on copays for pricey prescription drugs.. The state legislature is considering requiring drug copay caps on employer-based health insurance plans too.

By Dyanne Weiss

Los Angeles Times: Obamacare: California exchange caps specialty drug costs for patients
NPR: Covered California Votes To Cap What Patients Pay For Pricey Drugs
Bloomberg: Covered California First to Cap Monthly Specialty Drug Copays
Forbes: Growth In Drug Spend Is Hitting A 13-Year High