Health insurance industry representatives urged Maryland's insurance commissioner yesterday to allow the free market to control rising prescription drug plan premiums and the growing use of benefit caps rather than resorting to government intervention.
"We advocate allowing the marketplace to come up with solutions," said Eric Estes, a sales and marketing director in the pharmacy management department of Aetna/US Healthcare, the nation's largest health insurer.
His comments echoed those of several other health insurance company representatives who testified at a hearing in Baltimore before the Maryland Insurance Administration.
Insurance Commissioner Steven B. Larsen said he organized the hearing after receiving many requests for rate increases from large health insurers.
The insurance commissioner has the authority to approve or deny benefit plan rate increases and limitations on plan benefits.
Larsen said he is particularly concerned that a growing number of insurers in Maryland are requesting that they be allowed to place annual caps -- as low as $500 a year for some individual and small group plans -- on pharmacy benefits.
"A big concern of ours is the caps," said Larsen. "The question isn't just are they justified, but who do they impact and how much?"
Aetna's Estes said the company doesn't advocate the use of drug benefit limits as a cost-control measure.
But Dr. Winston Wong, pharmacy director for CareFirst, a not-for-profit managed care arm of BlueCross BlueShield, testified that the use of caps or "maximums" is increasingly being used by employers and other clients as a way to control employers' costs.
CareFirst estimates that annual caps industrywide average $2,000 to $3,000 among large employers and $500 to $1,000 for individuals who have purchased a managed care plan.
Larsen said he also is concerned about insurers' requests for premium increases that exceed 20 percent.
Last year, the commission granted benefit plan rate increases averaging 20 percent.
Health insurers said at yesterday's hearing that a number of factors are driving up health plan costs.
PCS Health Systems Inc., a Camp Hill, Pa.-based company that manages pharmacy plans, said those factors include an aging population, increased use of drug benefit plans, a surge in drug company advertising aimed at consumers, and more expensive new "breakthrough" drugs.
Dr. Tracy Markson, clinical manager for PCS, also said doctors are increasingly using new drugs to prevent trouble from chronic illnesses such as diabetes, high blood pressure and high cholesterol.
Drugs used to treat such conditions don't come cheaply, industry representatives noted. Several industry representatives pointed to new drugs for arthritis, among them Enbrel, which costs $14,300 annually.
In response to insurance administration queries, health insurance industry representatives said they have not been able to calculate how much employers and insurers were saving as the result of better drug treatments that help avoid surgery or other costly treatments.
Many health insurers said during the hearing that they are increasingly being pressured by employers to find ways of controlling costs borne by the employer without raising employee rates excessively.
Among the ideas the industry is embracing is "tiered" drug benefit programs.
Under such programs, people pay a lower co-payment for a generic than a brand name drug included on a plan's list of insured drugs, or formulary. Some plans offer a third tier under which people make an even higher co-payment for prescribed drugs that fall outside a formulary.
"Lots of people know exactly what their prescription co-payment is. But they have no idea of the real cost of some of these drugs," said D. Robert Enten, a lawyer and lobbyist for the Maryland Association of Health Maintenance Organizations.
"There's also a lot of misunderstanding that the formularies are evil, and there's no thought to quality care. This is not true. It's ludicrous."
Pub Date: 3/23/99