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ACA Fix: Can we afford coverage without $ limits?

Much has been written in recent weeks about repeal and replacing the ACA. President Trump’s executive order on this topic was an early shot across the bow.

The executive order gives federal agencies broad authority to eliminate or fail to enforce any number of ACA requirements, though by itself, it doesn’t change any existing ACA regulations. This quickly gets political and complicated.

This article is not about political maneuvering or handicapping the likelihood of “repeal and replace” or perhaps, just “repair”.

The short strokes on that, at least as of today, is President Trump appears to be resigned to taking a more cautious approach to impacting the ACA, while remaining committed to relieving the financial, reporting and compliance burdens on companies and individuals.

No doubt, a great deal of attention will be devoted to individual and employer mandates, exchange markets and related subsidies and taxes and fees. These are critical areas and others have shared their opinions on these. However, there is another important facet that is seldom discussed but should not be overlooked.

An essential provision of virtually all health and welfare insurance policies is maximum $ benefit limits. Yet, under the ACA, medical insurance cannot include any $ limits.

Think this doesn’t matter much? Consider that the explosion of specialty drug costs will quickly become a big problem.  

“Seven of the ten most expensive specialty drugs scheduled for release are oncology drugs whose costs could exceed $270,000 per patient, per year.”

These “costs” are actually prices that are determined mostly without regard to competition. The course of treatment for many of these specialty drugs is measured in years, not months.

Realistically, insurers or large self-funded companies are the only entities that can afford to pay at these levels.

Introducing a maximum $ benefit level would create some needed balance.  While it’s true that “necessity never made a great bargain”, it’s also true that regardless of how good your solution is, to make a market, you need a buyer to agree on price. 

So, how far do you think drug prices would fall if health plans or plan sponsors capped the benefits of any specialty drug? 

The biggest issue I hear from my clients surrounds the affordability of health premiums for their associates. Among competing priorities for the health care dollar, preserving affordability must rank at the top. Policymakers and analysts will grapple with mandates, exchanges, subsidies and taxes. In the midst of their rework of the ACA, they would do well to consider the likely impact of specialty drugs on affordability.

I strongly encourage lawmakers to exercise the insight and courage to permit health plans and plan sponsors to impose responsible maximum benefit limits on specialty drugs. This would help balance the security of coverage with preserving its affordability.

Jim Moniz is Sr. VP and Market Leader at Starkweather Benefits Solutions.  Starkweather & Shepley is a leading independent insurance advisory and brokerage firm. Jim works with clients to help create strategic benefits programs that create a sustainable competitive advantage. Jim’s past experience includes serving as CFO for a managed care insurer. Contact Jim Moniz directly by Email