"No, Obamacare Won’t Cover Every Drug — Just Like Every Other Insurance Policy"
Critics of the Affordable Care Act have gone from complaining that the new health care law won’t guarantee that Americans can keep their existing insurance policies and medical providers to arguing that they may have to give up their prescription drug benefits as well.
Consider the latest from Scott Gottlieb. In a piece titled, No, You Can’t Keep Your Drugs Either published at Forbes, Gottlieb — who also appeared on Fox News to tout the argument — writes that policies sold through the ACA’s exchanges don’t include unlimited drug coverage and may force patients to pay out-of-pocket for certain medications:
Simply put, many drugs may not be covered at all, and the costs patients incur by buying them with cash won’t count against out of pocket caps. This has repercussions for drug makers with big portfolios of specialty and primary care drugs (more on that later). But most of all, it has implications for patients. [...]
The out of pocket caps on consumer spending only apply to costs incurred on drugs that are included on a plan’s drug formulary. This is the list of medicines that the health plans have agreed to provide some coverage for. If the drug isn’t on this formulary list, then the patient could be responsible for its full cost (with little or no co-insurance to help offset that cost). Moreover, the money they spend won’t count against their deductibles or out of pocket limits ($12,700 for a family, $6,350 for an individual).
Under the law, insurers must offer drug benefits as part of 10 essential health care benefits, meaning that millions of uninsured Americans will now have drug coverage for the very first time. But the coverage won’t be limitless. Insurers will continue to rely on drug formularies — as they currently do in the private market and Medicare Part D — to decide which prescriptions are covered and which are not.
The ACA requires that issuers provide the greater of one drug from each category or class, or offer as many drugs in each category as are covered by a benchmark plan. The law allows states the choice of four different benchmarks, which Gottlieb helpfully lists in his article: 1) One of the three largest small group plans in the state by enrollment; 2) one of the three largest state employee health plans by enrollment; 3) one of the three largest federal employee health plan options by enrollment; or 4) the largest HMO plan offered in the state’s commercial market by enrollment.
States — not the federal government — select the benchmark and insurers then offer coverage for the drugs listed in those formularies. “What the vast majority of states have chosen is a common small business plan, so you know it’s saying what will be available in the exchanges and in the individual market generally is what’s popular among small businesses now and that seems like a reasonable place to start,” the Kaiser Family Foundation’s Larry Levitt explained.
But yes, there are certain limits: a formulary, for instance, may cover three drugs for treating a certain condition but not two others. Obamacare — like all insurers currently operating in the market — has a fix for that. ACA regulations demand that a health plan must have an “exceptions process” in place that allows patients to request and gain access to clinically appropriate drugs that aren’t covered by the health plan (in addition to internal and external appeal processes). So, if a health plan does not cover a particular drug that a patient absolutely needs, their doctor can certify medical necessity to extend coverage. Insurers have relied on drug formularies before the law went into effect and already have exceptions processes in place, meaning that most “will not have to implement significant changes.”
In his piece, Gottlieb illustrates the narrowness of some formularies this way: “I found one plan in North Carolina that doesn’t cover Actonel for osteoporosis, Aubagio for multiple sclerosis, or Xeljanz for severe rheumatoid arthritis, among other ‘non formulary’ drugs.” But as Washington & Lee law professor Tim Jost points out, “This is the way formularies work, we’ve decided we’re going to cover these drugs, but not those drugs… I don’t think you can know anything from seeing what they list as the non formulary drugs without knowing what the formulary is and how fungible those drugs are with the formulary drugs.” Jost notes that drugs within the same category and class are more or less fungible, and so for most people, the drug that’s offered will work as well as the one that isn’t — and is often far cheaper than the name brand option.
“A bigger problem for the insured is going to be co-sharing,” Jost admitted. But “If Gottlieb thinks that ‘s a bad idea then let him ask his Senators and Representatives to sponsor legislation to provide low deductible plans as qualified health plans, I think that’s a great idea, but it’s going to cost a lot of money.”
“The Affordable Care Act struck a balance here,” Levitt added. “There is a wide range of plans available to people with some people providing much more coverage, but at higher premiums, and then a minimum level of coverage that is really the kind of catastrophic coverage that conservatives have long advocates.”
And therein lies the irony of the attack: Republicans have traditionally seen high deductibles and limited coverage as a way to control individual health care spending. Now that Obamacare gives patients that choice, they’re suddenly complaining that the insurance is not generous enough.