Despite Health Law, Many People May Be Left Underinsured

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People with chronic conditions will be better protected from crippling medical bills starting in January, as the health law's coverage requirements and spending limits take effect.

But a recent analysis by Avalere Health found that many people may still find themselves underinsured, spending more than 10 percent of their income on medical care, not including premiums, even if they qualify for cost-sharing subsidies on the health insurance marketplaces.

"You have some great protections in place, but these out-of-pocket costs and how plans are structured are going to create some serious problems," says Marc Boutin, executive vice president at the National Health Council, an advocacy group for people with chronic health conditions.

Potential trouble spots include prescription drugs, specialist care and services such as physical therapy that typically require a course of treatment over weeks or months.

The health law prohibits insurers from turning down sick people for coverage and generally eliminates lifetime and annual dollar limits on benefits, including hospitalization and prescription drugs.

The law also caps the amount people spend out-of-pocket in 2014 at $6,350 for individuals and $12,700 for families that buy a plan on the individual and small group markets, including the health insurance exchanges. People with incomes below 250 percent of the federal poverty level ($28,725 for an individual or $58,875 for a family of four in 2013) may qualify for cost-sharing subsidies on the marketplaces that reduce those caps as well as their deductibles and copayments.

The Avalere analysis found that many chronically ill people, especially those in bronze or silver plans that offer less generous coverage, will likely reach their out-of-pocket maximum every year.

John Earley worries he may be one of them. Earley, 60, has severe plaque psoriasis, a condition that causes painful, itchy red patches on his skin.

After he was diagnosed more than 30 years ago, topical creams and ultraviolet light treatments that slow the growth of skin cells worked for a while. But eventually their effectiveness waned. He finally found relief with a prescription drug called Humira.

The twice monthly injections cost more than $2,200, but the Texas high-risk pool through which Earley and his wife are insured covers the drug with a $100 copayment. The drug's manufacturer, AbbVie, covers all but $5 of that amount through its patient assistance program. Their insurance premium is $1,460 per month.

With the Texas high-risk pool set to close early next year, Earley, who works on contract as an architect in Arlington, is checking into plans on the health insurance marketplace. The plan with the best Humira coverage — a $150 copay per refill — is a gold plan with a $1,718 monthly premium for the two of them, says Earley. Plans with lower premiums would require 40 to 50 percent coinsurance for the drug, which is in a high-cost specialty tier.

"What I'm finding with the insurance policies that are available, it's going to cost you either way," says Earley.

The gold plan with the best Humira coverage would cost roughly a quarter of their income, says Earley, who is not eligible for tax credits to subsidize his premium cothsts. But that may be their best option, even with financial assistance from the drug's manufacturer, given the high drug coinsurance charges on the other plans.

Drug costs are perhaps the most often cited coverage concern for people with chronic conditions, but there are others, say experts.

Access to specialists and to academic medical centers with the necessary expertise can be problematic on the marketplaces, where many insurers have opted for a narrow network of doctors and hospitals in order to keep a lid on premiums. A recent McKinsey & Co. study found that 70 percent of the 120 plans it examined offered narrow hospital networks that excluded at least 30 percent of an area's biggest hospitals. Academic medical centers were generally part of broader plans whose premiums were 10 percent higher than average.

For people who need specialist care, narrow networks can be problematic since the law's limits on what a patient spends out-of-pocket only apply to in-network care. Dermatologists trained in handling severe psoriasis may not be in network, nor the academic medical centers that some people need for treatment, says Leah Howard, director of government relations and advocacy at the National Psoriasis Foundation.

On the other end of the spectrum, sometimes the out-of-pocket costs for effective treatments such as phototherapy can deter patients who would have to make a copayment for perhaps dozens of sessions.

"We've seen people who would prefer to be on phototherapy, but can't afford $500 in copays over eight weeks, so they end up stepping up to a systemic treatment," says Howard.

In addition, although dollar limits on benefits aren't allowed, plans typically limit the number of sessions for certain treatments such as physical therapy.

Because of the rocky rollout of the exchange websites in many states, many consumers have found it difficult to get basic information about premiums and plan deductibles, say experts. Many don't know which providers are in the plan networks or what benefits the plans cover.

"As more and more people become covered and as people start to use their plans, we'll see if the cost protections in the plans are sufficient, and directed toward getting people the care they need," says Sara Collins, a vice president at the Commonwealth Fund.