Consumers Union: Insurance companies artificially inflate premiums by blaming drug prices
Are insurance companies deceptively raising rates by blaming high drug prices?
Consumers Union, one of the country’s most reputable consumer advocacy groups, says that two of the largest insurance companies in California are “exploiting the outrage over high drug prices to artificially inflate their premiums for individual coverage under the Affordable Care Act.”
Both insurance companies, which account for half of all patients enrolled in California’s insurance exchange, are requesting nearly 20 percent increases in insurance premiums.
“Blue Shield has proposed an average 19.4 percent increase for about 550,000 individual policyholders, both in the Covered California exchange and outside the marketplace,” Kaiser Health News reports. “Anthem, the nation’s second-largest health insurer, wants a 17.2 percent increase for nearly 580,000 customers in and outside the exchange.”
In seeking rate hikes, the insurance companies point to recent headlines over the cost of Hepatitis C treatments.
Yet, Consumers Union refutes that claim. It points out that “the growth in spending on prescription drugs has been slowing… Prescription drug spending grew 3.9 percent for the past 12 months through July, according to the Altarum Institute. That’s down from 8.5 percent for the previous year.”
Quote of the Day: Trojan Horse for Higher Insurance Premiums
“The cost of prescription drugs is an issue. But pharmaceutical expenses may be the factor most open to exploitation by health plans searching for a Trojan horse with which to usher in excessively priced insurance rates.”
– Dena Mendelsohn, a staff attorney at Consumers Union in San Francisco
Blue Shield of California: Highest Rate Increase in California Marketplace
Blue Shield of California is seeking the highest rate increase in California’s marketplace.
“For Blue Shield policyholders, it seems the only thing they can count on, like death and taxes, is that their health plan rates will continuously and steeply rise,” Consumers Union wrote in its comments to state health regulators. “Blue Shield is a nonprofit that sets rates like a for-profit.”
In its detailed comments analyzing the rate hike request, Consumers Union raises questions about the validity of the insurance company’s claims.
“In addition to failing to provide substantive information, but including inconsistent and confusing information, Blue Shield also makes use of terms that are not self-explanatory and which lack actual explanation. For example, there is no explanation of the term “medical management,” which it appears Blue Shield’s own independent actuary may have failed to fully understand. Similarly, acronyms such as “CoHC” leave the reader assuming a certain definition to fill a gap that should not exist. Again, this ambiguous language makes it impossible to fully analyze the filing.”
Misdirection: Anthem Blue Cross of California raising rates by blaming drug prices
Consumers Union similarly takes Anthem Blue Cross to task over its outrageous rate hikes.
“The rates proposed by Anthem are based on unjustified medical trend projections,” Consumers Union states in its comments on the proposed rate hike.
The consumer advocacy group offers its strongest criticism when it comes to the insurer’s drug price analysis and lack of transparency on real drug spending.
“The price of these drugs appears to be coming down, yet Anthem continues to use Hepatitis C treatment as a justification for high prescription drug trends,” Consumers Union explains. “Let us not forget that the sticker price of these specialty drugs is just that: a sticker price. And as anybody familiar with drug pricing will agree, health plans do not pay sticker price. What they do pay is generally aggressively negotiated down by pharmacy benefit managers, such as Express Scripts; the final agreed-upon price is, infuriatingly, frequently shrouded from the public and regulators.”