Everyone knows that when it comes to health insurance, few stories are good ones. If you have a story about health insurance, it usually means something bad. When health insurance does its job, it's not story-worthy. It just stays in the background, helping you pay your bills. If your insurance gets your attention for some reason, that reason is generally one that is not going to make you happy.
Well, I should be happy. I've won the health insurance game. For this year, at least.
But I don't feel happy. Because I feel like I'm participating in a huge fraud, something cheating insurers, in this case my employer, out of thousands of dollars per patient. If I'm right, I'm essentially getting my healthcare for free, because a drug manufacturer is lying about how much a drug costs.
If I'm wrong, and I would love to be wrong, then I need someone to explain this to me. Because it really makes no sense.
I go into quite a bit of detail below the break. If you're the TL;DR type, a paragraph near the end sums it all up. I would really appreciate any feedback. Am I right to feel this is wrong? Or should I just laugh, pocket the money, and be happy the system is broken in my direction for once?
First, a brief background on my situation. I receive my insurance through my employer, who is self-insured. It's a good plan: $2500 deductible each for myself and my spouse, $4000 total family deductible. Once the deductible is met, the plan pays 100% of medical expenses for the rest of the year. Prescription drugs count toward the deductible. I pay the full cost of prescriptions until the deductible is met, then my drugs are free.
Now, before last year, it had always been my wife who needed medical care. I was the healthy one in the family, the one who went to the doctor once a year and didn't need anything else. Then in the spring of last year, some numbers on a blood test led to a series of events that ended in me being diagnosed with ankylosing spondylitis and Crohn's disease. Suddenly, I needed physical therapy, I needed procedures, I needed tests, and I needed prescription drugs. I needed health insurance, and was so happy that I had it. And I began to learn how it worked.
We talk about deductibles as if they represent money you have to pay before your insurance starts contributing to your expenses. Here's the funny thing: that's not exactly true. Deductibles are not reduced by your payments. They're reduced by claims filed against your insurance. But isn't that the same thing? No, not really.
Here's how it works. Say you go in for an X-ray. The hospital will file a claim with your insurance for some stupid insane amount, let's say $1000. Your insurance will negotiate that way down, to maybe $250. The hospital accepts the adjusted amount. That's it. Your deductible has now been reduced by $250.
Well, yeah, but now the hospital will bill you for $250, right? No. Not necessarily. There's nothing that says the hospital has to bill you for $250. That's just the most they can bill you. The hospital system I use gives all patients a 20% discount off their bill, up to $300 off, if they pay their bills quickly. So in this case, I would log onto the hospital's bill pay site, and settle my bill for only $200.
I only paid $200, but my deductible was reduced by $250. That represents $50 in free health care down the road. Not bad, right? And these little 20% discounts aren't really hurting anyone on either side. But when you start to talk about prescription drug discounts, things get a little crazy.
Are you familiar with that bit at the end of many prescription drug advertisements? "Having trouble affording your prescriptions? So-and-so Pharmaceuticals may be able to help." What they're referring to is a "co-pay assistance" program, which are available to everyone, not just people with low incomes. I'm signed up with two of these. The way they work is simple. You give the company some basic contact information, and they send you a card. You present the card to your pharmacist, and you get a discount on your drugs. The drug company gets to have your address for mailing lists, and in return they cut you a deal on your pills.
These discounts vary from drug to drug, as well as from person to person, depending on your insurance. For one of my drugs, the plan discounts my price for a month's supply from $350 to $230. For another drug, my three-month supply is discounted from $1000 to $5.
Yeah, you read that right. That's not a typo. The list price for three months of this drug, a fairly common one, advertised regularly on TV, is $1000. After you sign up for their plan, it's $5.
What a deal, right? Isn't that awesome? I called the specialty pharmacy (this drug has to be shipped), all ready to settle up my $1000 bill, and was quoted five dollars. I literally had trouble reading out my credit card number over the phone, because I was trying so hard not to laugh.
At first, I was over the moon at how lucky I was to pay essentially nothing for such an expensive drug. Then it began to sink in what had just happened. Remember what I said above, about how deductibles are reduced by claims, not payments? For plans like mine, where prescriptions are handled like any other medical expense, the same rules apply. For my one drug, the pharmacy files a claim for $350 and then charges me $230. For my other drug, the claim was filed for $1000, and then the pharmacy turned around and billed me $5.
So in short, between the hospital discounts and the drug discounts, I am paying way less than my deductible would have you believe. I've already met the $4000 deductible for this year, and I've only spent about $2700. Amazing. That's what you call winning at health insurance. And the loser in this case is the insurance company, who now has to pay 100% of my health expenses (and believe me, there will be more), for the rest of the year.
Now, if I was insured privately through one of those insurance companies, I wouldn't even be writing this diary, because seriously, f*** those guys. They deserve everything they get after what they've done to their customers for so many years. But my employer is self-insured. Every dollar of every health claim comes directly from a company that has treated me very well.
Even so, I'd still feel okay about this if I felt everything was being done in good faith.
The idea behind the deductible model is that my wife and I must receive a total of $4000 in medical care before the insurance starts paying for any of it. How that medical care is paid for is not the insurance company's concern. They don't care whether I pay for it out of my own pocket or whether the provider decides to eat the cost. The question is whether I've truly received $4000 worth of health care. More specifically, did I really receive $1000 worth of this drug?
Am I supposed to believe that the drug company is essentially giving this drug away out of the goodness of their heart? Remember, everyone can get in on these programs, not just the destitute. I make over $75,000 a year. If I can get a discount down to $5, just about anybody can. So the drug company is essentially giving away this insanely expensive drug to everyone who needs it.
Or... They're using a ridiculously inflated list price to force all their customers to join their assistance program. Hmm. I can pay $4000 a year for my drugs, or give them my address and phone number and pay $20 a year. What would you do?
So to sum up, here's what's happening. The maker of one of my drugs pretends that a three-month supply costs $1000, when they're perfectly happy to charge everyone $5. They do this to ensure that all customers sign up for their assistance program. The pharmacy submits a claim for the list price of $1000, taking $1000 off my deductible as I'm charged only $5. Every time I refill, it knocks almost a grand off my deductible while I pay essentially nothing. By the end of the year, my employer is on the hook for thousands of dollars in medical expenses that they wouldn't have to pay if I were using another, less insanely-discounted drug.
I win! My employer loses. And I feel... not so great about it. I don't like to game the system. I'm a progressive. My philosophy is that if there's a problem with the system, you fix it, you don't cheat it.
So, what do you think? Should I just be happy that this broken system is broken in my favor? Or is it not broken, and there's something I just haven't understood yet. If that true, and one of you does understand, I would love to be clued in.