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California health insurance  -  Understand Health Coverage  -  Brand Name Prescriptions

Brand Name Prescription Coverage in Your California Health Plan

There has been a trend in the California health market over the past few years towards plan offerings that do not cover Brand name prescriptions or cap the annual payout on these costs.

We strongly feel this is the wrong direction considering the overall trends in prescription costs.

First, a little history as to why we are seeing this trend and a quick introduction to prescription coverage and your California health insurance plan.

Prescription Benefits 1.0 in the California health insurance market

Back in the late 90's, there was a marked change in the way pharmaceutical companies began to market their new brand name medications as well as an explosion in new products to the market.

Until that time, a person would go in to the doctor and the doctor would recommend a medication for his/her ailment.

The Pull method.

Starting in the mid to late 90's, the pharmaceutical companies began to market directly to the consumer.

The Push method.

We now take this for granted after years of television, radio, and magazine ads touting the latest medications with some advertisements not even stating what condition the medication treats. This had a huge impact on utilization, a snazzy insurance term which basically said more people used more medications at larger amounts.

The first sign that we were going to have an issue arrived with the triumvirate of allergy medications, Allegra, Zyrtec and Claritin. The public's uptake of a seemingly benign medication was so great that we were having people declined coverage due solely to their usage. The underlying medical condition (allergies...typically seasonal or common) was not the issue.

The cost of the brand name medication was the issue especially as more and more people were prescribed these meds on an ongoing, maintenance basis. It was hard to explain to an applicant why he or she was declined health insurance due to medications but it was essentially a knee-jerk reaction by the carriers as their medication re-imbursement skyrocketed.
Allergies is only one condition that experienced this growth among many others. It was the "good old days" for pharmaceutical companies but not for California health insurance carriers and their subscribers.

Acid reflux, acne, and a host of conditions were attacked by new classes of brand name medications with patent term dates far away.
The carriers first panicked and then they adjusted. The initial response was to keep the rich benefits (no deductibles, low copays, even on PPO plans) but increase the rates to offset the escalating costs.

There was a series of years with double digit insurance premium increases..sometimes twice a year.

Clearly, that could not continue.

They then start to add brand name deductible to brand name drugs. Generics were not the problem. We recall vividly the poor reception of our clients by having a brand name deductible added for medication...something you cannot get away from today. This deductible typically runs $250-500 annually per person for PPO and HMO plans; Individual Family health plans and Small Group health plans.

Prescription Benefits 2.0 in the California health insurance market

The second approach which has crept into the California health insurance market is to not cover brand name medications all together. The problem with this approach is that it ignores a new trend in medication, potentially much more important and serious than the Zyrtecs of the last decade.

The allergy and acid reflux medications were widely used but they ran on average from $60-150 monthly.

Yes, this adds up to $1000 plus each year in out of pocket cost but this is penny's compared to the new trend.
The new trend, which is a mixed blessing, is towards highly targeted, highly effective but very expensive medications.

An example is the treatment for Rheumatoid Arthritis which consists of 3 shots at $6000 each annually. This is very expensive but it stops the dreaded disease in its tracks. This will only continue as the much touted genetic and biotech promises start to materialize. Can we afford our new technology?? Probably not but that is more of a political question than a market one. The important point for California health insurance purchasers is that you do not wants plan which excludes these drugs. It was one thing not to cover a Zyrtec at $80/monthly. It's quite another to have a $20,000 tab. We have always believed that health insurance is really about covering the big bill and now medications have entered the "big bill" arena.
When brand RX costs started to skyrocket, the carriers responded with plans that covered generic RX only.

The most popular plans over the past few years have actually been suites of plans which offered both a Generic Only or Brand (called Upgrade) prescription option with all other benefits being the same.

For example, you might have a Smart Sense $3500 PPO plan with Anthem with either a Generic or Brand RX option (and of course, the premium would reflect this difference). These are still popular on the market although Blue Shield of California went all brand RX with their new plans July 1st, 2012.
The new direction for brand name medication benefits is to have a very high deductible...essentially making it a catastrophic benefit for brand name drugs. On the individual/family market, you'll see $7500 deductible or maxes for brand RX.

This essentially means that you will pay the brand RX costs until you hit the $7500 level. This is better than no brand RX at all but be aware it's there.
It will be interesting to see how Health Reform affects the brand RX question. As far as we can tell, brand RX will be required on all plans since the different levels are based on a very rich, no deductible $30 Copay plan with Kaiser that covers brand RX. We'll have to wait and see how this comes out in the wash.
Hopefully, this will help narrow the multitude of plans on the market to a few that work well for your situation. You can can now run your California individual health insurance quote or ask us questions regarding your particular situation.

You can run your California Bronze health plan quote here to view rates and plans side by side from the major carriers...Free.

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