One of the great ironies of our health care system are copayment assistance programs. Such programs seem like a wonderful way to help patients obtain access to modern medical treatments. But as was pointed out in NPR’s This American Life show on health care reform, there’s a “dark side” to these programs.
Here’s how they work. Let’s say a company comes out with a new drug, and they set a price of $800 for a month’s supply. The insurer may cover much of the cost of the drug, but because the drug is so much more expensive than other options, the insurer puts the drug on “tier 3,” requiring patients to pay 20 percent of the cost. In this example, that’s $160 per month, nearly $2,000 per year, which is a considerable sum of money. Some patients either can’t or won’t pay that much, so to help patients get better access to the drug, the company may offer a rebate or coupon program that cuts the cost of the co-payment from $160 to something far more affordable, perhaps just $10 or $20/month.
This sounds like a great way to help patients, but unfortunately, it is also a great way to game the system and keep the costs of drugs high. The purpose of co-payments is to create some incentive for patients to choose a lower cost product, but the co-payment assistance cards insulate patients from the cost of the drug, so they may choose the higher priced drug even though its benefits may be marginal in relation to the much higher cost. This allows the drug company to continue charging the insurer a very high price, and there is little pressure from the patient to provide lower costs drugs.
Insurers ask patients to pay for a part of the cost in order that patients consider the financial cost of using the biologic. If drug companies are permitted to eliminate the co-payment that insurers have in place, the drug company no longer has to compete on price.
A similar phenomenon happens when doctors see patients without charging co-payments for the visits. The doctor may feel that they are just being nice to patients by not charging the co-payment. But these co-payments have a central place in helping regulate patients’ use of doctors’ services. Doctors can reasonably see a patient without charging the patient (or the insurer) anything if the doctor wants to help the patient out. Taking payments from insurers without trying to collect the co-payment is somewhat dubious and sometimes illegal.
Years ago, while still in training, I went to see a dentist for a regular check-up and to address a minor problem. It was a very rainy day, and I was able to get in right away due to a cancellation. Understanding that I was a student, the dentist offered me a very reasonable, low price for his services. Upon finding out that I was insured, he said I didn’t need to worry about the bill at all, and that he would happily take care of everything directly with the insurer. Almost certainly, he billed the insurer far more than he offered to bill me directly. Insurance doesn’t just insulate the purchasers of services from the cost of the service; the doctors who provide the service have little compunction about charging unseen, third party insurance corporations whatever the doctor can, while many doctors wouldn’t directly charge the patient such a high price.