The DataPath Voice

April 2008 Volume VII, Issue 4

Tier 4 Co-pays Creating Hardships for Individuals on Co-Pay Plans

The New York Times recently published a story on “Tier 4”, a system introduced with Medicare drug plans and now being incorporated into individual and group coverage.  In an attempt to lower overall premiums, insurers are abandoning traditional fixed co-pays for certain prescription drugs and instead are charging 20-33% of the cost of high-priced drugs. 

Some of these drugs, which are used to treat chronic illnesses such as hepatitis, arthritis, and cancer, may cost thousands of dollars for a single month’s supply.  People whose plans have suddenly changed from a plan in which they have minimal exposure to a plan in which some are paying as much as several thousand dollars a month for essential medicines are distraught and exposed to the possibility of financial ruin.

The idea of consumer driven healthcare has been to expose individuals to the real costs of healthcare while shielding them from catastrophic expenses.  Having an illness that requires over $1000 a month in prescription costs very well may be a catastrophic expense. 

One factor that has always worked against CDH has been its lack of appeal to individuals with several hundred dollars a month in prescription drug costs; for those individuals, the higher premium with low co-pay may be more advantageous.  However, with carriers charging by percentage for high costs drugs, some individuals with high prescription drug expenses may find High Deductible Health Plans preferable for the first time.  The lower premium cost, tax savings of an HSA, and out of pocket maximums associated with HDHPs may prove preferable to a new segment of employee population as traditional coverage begins to increasingly marginalize individuals with chronic health problems.

To read the New York Times article, click here.











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