The Affordable Healthcare Act (Obamacare) changed the landscape of health insurance for all Americans, not just the uninsured; hence, the looming repeal of the ACA will impact everyone. Just as the ACA changed the dynamic of prescription discount cards in the market place during the last eight years, so will the repeal. There will be many new markets for all segments touched by the ACA in which the RxCard may help to fill the gaps created. To understand those segments, we must first understand where prescription coverage stands today under the ACA.
Even eight years after the ACA, the pharmaceutical industry and subsequent coverage went largely unregulated due to the stages involved in the ACA roll out. For example, we wouldn’t have seen elimination of the “donut hole” in Medicare Part D until 2020. We also saw huge increases in the cost of prescription medication (think about the EpiPen cost uproar in 2016). As a result, the cost of prescription medication went up. On average, Americans spend about $1,300.00 per year on prescription medications and that number is growing about 12.5% per year. This is not just in reference to the uninsured, it pertained to the insured as well as insurers cut prescription coverage to control profit loss under the ACA. The result is a huge increase in cost to the consumer either through higher copays, lack of coverage and off-formulary/cash pay medications.
According to recent reports, we know that Congress has started the repeal process and are starting and plan to start with the provisions that affect spending and revenues including the federal subsidies, Medicaid expansion, and employer and individual mandates (Luhby, 2017). Although we don’t know yet what portions or if all of the ACA will be repealed, we can look at the various segments affected by a repeal to determine possible RxCard growth opportunities and how the RxCard can serve each of these segments. It is our belief that it is worth exploring changes to the following segments: Medicare Part D, Medicaid, Employee Sponsored coverage, Individual coverage and those who will remain covered even through the repeal.
Let’s start with Medicare, one of the most complicated government sponsored programs made more complex every day. Under the ACA, individuals with Medicare Part D saw a dramatic decline in the donut hole, the cost sharing portion of prescription coverage, with plans to have it phased out totally by 2020. In 2016, the donut hole gap began at $3,310 for medication and ended after the individual hits $4,850 in costs (Luhby, 2017). Every year of the ACA roll out saw that out of pocket cost window close a bit more until 2020 when out of pocket costs to the individual would be $0. This was to be funded through the various mandates. With the repeal of those mandates, the donut hole returns and may go up dramatically to the individual.
We frequently take member calls to explain how the RxCard works with Medicare. We advise individuals with Medicare Part D that the RxCard can be used to off-set out of pocket costs while in the donut hole. If that person falls into the donut hole late in the year or don’t spend enough out-of-pocket to get out of the donut hole, we suggest they use the card to help off-set out of pocket prescription costs. Using the card may prevent the out-of-pocket cost from applying to the cost sharing, but, if the individual part was not going to pay enough to get back out of the donut-hole then the card would save them money.* If the donut hole grows or even stays the same, the RxCard may be a perfect fit.
Another segment of the population that could be negatively affected by the repeal of the ACA are those individuals and families that make up some of our poorest populations, specifically the working-poor. The ACA originally mandated that the states expand coverage of Medicaid to capture more of our poorer populations. Pre-ACA, many of the working poor made too much to qualify for Medicaid but not enough to afford healthcare including prescription medication. As a result, we saw low medication compliance issues, like pill-splitting or not finishing a course medication due to cost of refills, which cause things like antibiotic resistant germs. By expanding Medicaid, the hope was that these Americans could afford healthcare and approximately 17 Million people gained health coverage. This was one of the most hotly contested mandates and the states won the right to decline this expansion if they did not take the federal funding that came along with it. Amidst the repeal movement, there is political pressure from some quarters to maintain the Medicaid expansion but the states that accepted the expansion may find it too difficult without federal funding (Osborn, 2017).
As the mandates are rolled back and funding for the program is eliminated, you could see this segment of our population lose access to Medicaid. “Repealing Obamacare could leave millions of the poorest Americans uncovered” (Luhby, 2017). The working poor, unfortunately, have always been the traditional demographic for the RxCard. The RxCard has allowed these individuals and families access to discounts which they may not have received otherwise. In many cases, this demographic must make painful decisions within their budget when filling a prescription and the RxCard helps ease that burden. We have included a demographic representation of the states where we see the RxCard used most prominently.
The next few segments have always and will continue to present opportunities as the ACA is repealed: Employer Sponsored insurance, individual insurance and insurance for individuals with pre-existing conditions. In a sense, the three segments play off of each as far as marketing opportunities for the RxCard.
Under the ACA, Employers with greater than 50 full-time employees are mandated to provide health insurance to employees or pay a tax penalty. During the first years of the roll out, many employers elected to pay the fine but we saw that gradually change. The ACA also changed the definition for full-time from 40 hours worked per week to 30 hours worked per week. Finally, under the mandate, employers could not decline to cover certain types of medications like birth control (think Hobby Lobby). With the repeal, all of those requirements could change. For example, employees may only be considered if they work 40 hours per week. Just that alone would greatly increase the amount of people needing to buy insurance in the individual market. Furthermore, employees with pre-existing conditions and women in child-bearing years and those who suffer from mental health issues could be asked to pay up to three times more than other employees; this includes not covering certain types of medication like birth control or dropping prescription coverage all together. This means that even individuals and families that are insured will pay more for their medications because they are not covered or the insurer has adjusted pricing to grow the bottom line (Owens, 2016).
Any changes to the employer mandate could drive a significant amount of individuals and families into the individual market for health insurance, which was largely unregulated prior to healthcare reform (Luhby, 2017). The law set minimum standards for health insurance plans which included prescription coverage. Insurers had to offer a pharmacy benefits plan that included at least one of each class of medications (Owens, 2016) with the substitution for lifestyle medication like Viagra. The ACA, however, did not regulate the tier structure for copays or put a cap on the price of prescriptions. Furthermore, insurers could not deny or charge a higher rate to those people with pre-existing conditions because everyone was required to purchase insurance including the young and healthy. It is estimated by the Kaiser Foundation that 52 Million non-elderly Americans could lose insurance due to pre-existing conditions (Jacobson, 2017).
As far as the end to the individual mandate, according to the Commonwealth fund, could lead to the low estimate of 15.6 million Americans losing coverage by 2021 and has been projected to as many as 25.1 million additional uninsured in the same time frame (Jacobson, 2017). Many other non-partisan groups have come up with similar estimates. The Urban Institute projects that 66% of those losing their insurance due to a repeal of the ACA will have a high school education or less: the people who are at the highest risk of illness and non-compliance with prescription medication.
While the ACA took big steps to extend drug coverage (Jacobson, 2017), the benefits have not fully taken effect even though it required insurers to include in all of their insurance plans. Although we don’t know exactly how the repeal and replace plan will look, it is clear that it will most likely leave many without prescription drug coverage. In 2015 alone, we saw a dramatic rise in people using prescription medication, 3 out of 5, and 15% of those individuals taking more than five prescription medication per day while prescription cost continued to grow under the ACA. It is our hope that a deeper insight into the matter will allow you to plan and prepare for some of the key demographics for individuals and families needing assistance paying for prescription medication.
Jacobson, Louis. “What Would the Impact be if the Affordable Care Act is Repealed?”. (1/5/2017). http://www.politifact.com/truth-o-meter/article/2017/jan/05/what-would-be-impact-if-affordable-care-act-repeal/
Luhby, Tami. “Repealing Obamacare Affects”. (1/12/2017). http://money.cnn.com/2017/01/02/news/economy/repealing-obamacare-health-insurance/
Owens, Caitlin. “Why Prescription Drugs Aren’t Part of Obamacare”. (3/24/2016). https://morningconsult.com/2016/03/24/why-prescription-drugs-arent-part-of-obamacare/
Osborn, John. “Repealing and Replacing Obamacare: Whatever You Do, Preserve Medicare Part D and Fill the Donut Hole”. (1/13/2017). http://www.forbes.com/sites/johnosborn/2017/01/13/repealing-replacing-obamacare-whatever-you-do-preserve-medicare-part-d-and-fill-the-donut-hole/#40080e8d91e3
*To be clear, depending on what insurer they have chosen for Part D coverage and the PBM processing the claims, the money spent out-of-pocket may not apply towards the cost-sharing portion of Medicare Part D.