I recently received phone calls from a few small employers who are members of Associated Industries of Massachusetts (AIM) expressing strong concern about the new “minimum creditable coverage” (MCC) standards which will become effective on January 1, 2009. The provision which is generating the concern is the requirement that insurance must cover prescription drugs in order to fulfill the MCC mandate. Individuals with insurance coverage which does not include prescription drugs presumably will not satisfy the requirements of the individual mandate and will therefore be subject to a penalty as high as $912 in 2008.
Although the new MCC standards are effective on January 1, 2009, in reality, insurance policies are generally in effect for one year, so those renewing on or after February 1st will need to meet the new standards. A recent report released by the Massachusetts Taxpayers Foundation revealed that approximately 163,000 insured individuals do not have prescription drug coverage, 30,000 of whom have non-group coverage and 133,000 of whom have employer-sponsored coverage. These individuals and employers are going to facing very steep premium increases as they renew their coverage in the next 12 months. Not only will they face the 8%-12% “inflationary” increases that most small employers are facing this year, but also their premiums will increase another 15%-20% to reflect the additional cost of a drug benefit.
Although I have to confess that as a board member of the Connector I supported the MCC compromise last March that included prescription drugs, I am now having second thoughts about the wisdom of implementing this requirement as this time. We are still in the very early phases of putting into place some key requirements of our new health care reform law, such as the enforcement of the individual mandate. It is too early to know what the public reaction will be as penalties begin to be assessed on people who failed to obtain health insurance coverage in 2007. We also have not made any meaningful progress regarding in addressing the double digit increases in health insurance costs which we have experienced for almost the past 10 consecutive years. Finally, it must be pointed out that about 1/3 of individuals who have purchased health insurance in the last eight months through the non-subsidized Commonwealth Choice program have been choosing products without drug coverage. Many of them are probably buying insurance for the first time, and now will be required to buy much more expensive insurance if the MCC standards remain unchanged.
As I listened to the employers who called me on this, I appreciated the huge challenges they face just to remain in business in Massachusetts – rising energy costs, a sluggish economy, intense competition from overseas, and now health insurance increases that could exceed 25%. No other state in the nation requires that health insurance must include a prescription drug benefit. I am increasingly persuaded that we should, at the very least, reconsider the timing of this mandate until we are much further along in terms of implementing health care reform and have made some progress in addressing the spiraling cost of health insurance.
Richard C. Lord
President and CEO
Associated Industries of Massachusetts
I respect Rick, his work as a Connector Board member and his dedication to the success of health reform very much. However, I have to respectfully disagree with his change of heart. First, it’s important to keep in mind that Massachusetts is not only the first state to require that individuals have health insurance with prescription drug coverage. We are the first state to require that individuals have health insurance – period. We are the first state to require coverage of hospital services, coverage of physician services, coverage of emergency services, etc. It may seem crazy to suggest that health insurance wouldn’t cover hospital or physicians services. Like doctor visits and hospital care, medications play an indispensable role in health care today.
Almost a year ago, the ACT!! Coalition joined with Senator Moore, Representative Walrath and many other organizations to call on the Connector Board to include prescription drug coverage in the requirements for Minimum Creditable Coverage. Together, the 75 ACT!! Coalition members – including providers such as the Massachusetts League of Community Health Centers, labor unions such as SEIU615 and 1199 SEIU, health care advocates such as American Cancer Society and the AIDS Action Committee, religious organizations such as Greater Boston Interfaith Organization, community organizations such as the Coalition for Social Justice and public health organizations such as the Boston Public Health Commission – joined with Senator Moore, Representative Walrath, AARP, MassGeneral Hospital for Children, Greater Boston Legal Services, NARAL Pro-Choice Massachusetts, the Massachusetts College of Pharmacy and Health Sciences, Massachusetts Association of Behavioral Health Systems, NAMI, the American Diabetes Association, Professor Stephen Soumerai, Dr. Jerry Avorn and numerous other physicians to explain to Connector Board members why prescription drug coverage must be part of basic health care coverage. We were relieved that they recognized the importance of drug coverage and we call on them to hold their position.
We appreciate and support the need to strike the right balance between affordability and adequacy of coverage in the MCC standards. However, as consider what we believe to be the right balance, we are guided by a basic principle that is core to our beliefs: no insured person should be underinsured. We firmly believe that insurance that provides the illusion of coverage, leaving people exposed to barriers to basic care and financial hardship, should not be deemed creditable by the Commonwealth. Adequate MCC standards also ensure that Massachusetts residents are not mandated to purchase insurance that does not meet basic quality standards.
And, prescription drug coverage is indeed basic to health care – in the same way that doctors services and hospital visits are basic to health care. Medications play an indispensable role in medical care today. They are the first line of defense in preventing and combating disease. Even people who may consider themselves healthy need access to medications, including antibiotics, allergy medications and oral contraceptives, among others. Those who suffer from chronic or acute disease rely on medications to control and combat their conditions. Access to drugs helps us maintain our health and avoid more costly care down the road.
At the same time, prescription drugs are expensive. People who would have to pay the full cost of their drugs, at a rate not negotiated by their health plan, are likely to be unable to afford the medications that they need. The high cost of drugs acts as a barrier to people complying with their health care needs. It is illogical that plans would allow people access to doctors, but then make it impossible for them to comply with their doctor’s orders.
Affordability is certainly an issue that we as a state will continue to struggle with – and, hopefully, make progress on. It is an issue that the ACT!! Coalition care deeply about. However, making coverage more affordable at the expense of access to basic care is not the solution. The ultimate goal of our health reform is to expand affordable access to health care not just insurance.
Lisa Kaplan Howe
Consumer Health Policy Coordinator
Health Care For All (member of the ACT!! Coalition)
The mandates in the Massachusetts law serve to flush out the hidden costs of our patchwork system, and lack of prescription drug coverage is one of these.
Often, failure to take prescribed drugs (due to cost concerns) can lead to complications and more expensive — but covered — care down the road. So money is saved by the individual, but more money is expended by the system — feeding onto all those double-digit increases in premiums.
Yes, there are some prescription drugs that can break the bank no matter how you slice it (and now that coverage — one leg of the stool — has been addressed in MA, the second and third legs — affordability and access — need to be addressed.
It’s hard to address all three pieces simultaneously, so no matter where you push in on the balloon, something will bulge out on the other side until we reach a new homeostasis.
As Lisa wrote so eloquently, prescription drugs are a key component of contemporary medicine, and comprehensive health care coverage isn’t really comprehensive without prescription coverage.
[...] RETHINKING PRESCRIPTION DRUG MANDATE by Richard C. Lord [...]