Consumers ultimately pay for drug cost increases.

When it comes to claims of price gouging, drug companies rarely flinch. But EpiPen makers (Mylan) have gotten an ear full and then some. This week, Mylan announced the release of a generic version of the EpiPen at half the cost ($300).  See Reuters Report.  But these spikes in drug costs are intended for insurance companies…not the consumer, right? Ultimately, one way or another, it is the consumer who will pay.

Another significant (double-digit) premium rate increase is anticipated in 2017 for some individual and family plans in California.  Insurance carriers have stated that drug costs are one of the main reasons for the increase.

Lower cost plans in our new healthcare reform marketplace (Bronze) tend to have smaller premium increases, but medication costs are subject to a large plan deductible like any of the other covered services. This is one of the factors that make the Bronze plan premiums less expensive.  This also means rising drug costs will have a significant impact on a Bronze plan subscriber’s out-of-pocket costs.

In our new healthcare system, individuals can change plans from year-to-year during open enrollment.  So, wouldn’t the increase in out-of-pocket costs be temporary if a Bronze plan member moved to a Silver or other plan level? Moving to a Silver level plan, for instance, would mean having a separate drug benefit with copays kicking in after a $250 drug deductible is met.  Having a lower deductible and copays for expensive medicine can often make up the difference for higher premium plans.  Problem solved, right? Not exactly. Carriers typically increase premiums of these richer benefit plans (Silver, Gold, and Platinum) to compensate for the increased cost in medical and drug services.

How long can these double-digit rate increases continue? Some insurance companies don’t see a future in remaining in the public healthcare exchange.  A number of carriers have already left state exchanges stating financial losses.

While pharmaceutical companies are counting on insurance companies to cover the increased drug cost gouge, in the end, the consumer pays both in cost and choice.

Phil Dougherty
OnlyHealthInsurance