Bills to cut drug costs would raise insurance premiums
A well-intentioned pair of bills aimed at reducing the cost of certain essential medicines have passed the state House and are pending in the Senate.
While their goal is laudable, the bills wouldn’t actually reduce drug costs — they’d merely shift who pays for them. And they do so in a way that could cause many employees of small businesses to lose their health insurance.
The two bills are part of an ambitious 15-bill package that sponsors say would slash drug prices while increasing access to health care. They passed with bipartisan support.
While there are worrisome issues with several of the bills, the two specifically aimed at insulin and cancer medicines are the most problematic.
One would would cap the out-of-pocket expense of insulin drugs at $50 for a 30-day supply. The other limits outlays for patients taking orally administered anti-cancer medicine at $150 for a monthly prescription.
Prices for both drug categories have risen sharply across the country. Many patients are struggling to pay for them, even with insurance coverage.
So again, the instincts of the Legislature to do something to help patients dependent on these medicines is understandable.
But the arbitrary caps demanded in the bills don’t address the cost of the drugs. They just change who pays for them.
Pharmaceutical companies will be able to charge the same for the medicine. But more of the out-of-pocket expense will be billed to insurance companies instead of the patients.
While that may sound like a reasonable solution, the reality is that insurers will pass on the additional cost burden to their clients in the form of higher premiums.
Employer groups are banding together to oppose the legislation, arguing the impact on insurance premiums will force many small businesses to drop coverage for their employees.
The added cost for insurers is expected to be $17.6 million for the cancer drugs and $39.6 million for the insulin medications.
Just 30% of small businesses based in Michigan offer health insurance coverage to employees.
Forcing-up insurance premiums will prompt more employers to suspend coverage and force their workers onto federal insurance exchanges.
State legislatures are not the right places to address the cost of prescription medicine. This is a national problem that demands a national solution.
The better approach would be federal measures to bring more transparency to drug pricing and encourage more competition in the pharmaceutical industry.
The bills pending in Michigan do nothing to address the real cause of rising prices. What patients save at the pharmacy they’ll likely give back in their monthly health insurance premium.
The Senate should treat these bills as the right instinct, but wrong approach.
— Detroit News