Earlier this week, I wrote about an individual who is piling up million dollar months on a PPACA Qualified Health Plan in Iowa. My initial focus was on the how PPACA enabled these types of claims on the individual market now as there is no underwriting for QHP’s and no lifetime or annual limits. Under the pre-PPACA rules, this individual either would never have been allowed to buy insurance or would have hit their lifetime maximum a year ago.
This is also an excellent teaching example of the limits of Medicare and how it differs from the individual and small group QHP rules. This is a corner case but those can be the best illustrations at times.
Under the QHP, the individual is responsible for their full out of pocket maximum. Assuming they bought a Bronze plan, they have a maximum exposure of $6,850. They hit that number sometime around the first shift change on New Year’s Day. After that, their family pays nothing beyond the monthly premium for the rest of the year of care.
Medicare is a lot fuzzier. Let’s start with some assumptions. Let’s assume they have traditional Medicare with no supplemental policy. They have a minimally qualified Medicare Part D drug plan. Let’s also assume they are spending quite a bit of time in the hospital (probably intensive care) with several specialists spending at least 30 minutes a day with the patient. Let us also assume half of their monthly bill is prescription drugs.
Medicare Part A has a $1,288 deductible that is met on the first day. The next sixty days of hospitalization are no cost. Hospital Days 61-90 $322 co-pays per day for slightly more than $12,800. After that the individual is either going to a skilled nursing facility at $161 per day for SNF Days 20-100 ($16,100) or is going into their lifetime reserve hospital days ($644 per lifetime reserve day for 60 more days or $38,000). After 250 days they are SOL and paying full price to either the hospital or the skilled nursing facility if they need any more inpatient care. They’ve run up $68,000 in personal responsibility payments just for inpatient care. And their benefit is exhausted by October. This is the case in Year 1, if it is a multi-year case, their benefit in Year 2 is gone in August in the best case scenario.
Now let us also assume that they are seeing three specialists per day (which is a very low estimate if they are in the ICU). Each specialist is getting $200 from Medicare of which the Part B co-insurance is 20%. So each day, the patient is running up $120 in medical bills. Over the course of a year that is another $44,000 in co-insurance.
If drugs cost $500,000 per month and they have a basic Part D plan with no extra help, they will pay a 5% co-insurance on everything above $7,000 per year. In Year 1 that means they’ll be on the hook for $300,000. In Year 2, they qualify for extra help so they’ll pay a $7.40 co-pay per brand name prescription. So Year 2 their prescription costs go down to the high four figures to the low five figures.
This is a worse case Medicare scenario.
If the individual has Medicare Advantage or a full Medicare Supplemental policy, their total exposure is capped from anywhere between $3,500 to $7,000 depending on what they bought.
However this should be a good illustration of the limitations of Medicare as it is currently built.
But- but- single payer! Medicare for All!
I was lucky in my choice of insurance agents, who advised me to get the gold supplemental policy. The premium is horribly high, but like a fixed rate mortgage, I know how much money I need to find every month and am not surprised by large co-pays.
The thing about Medicare that bugs me is part D. I need expensive RA drugs and am currently on Rituxin, which I get at hospital in IV form. They bill $40,000+ per treatment. Since it’s in the hospital, it’s covered under Part B and I pay nothing. But if I switched to a drug that is a pill or an injecion I give myself at home, the co-pay is 33%, which might run $1,000 or so a month until I hit the max. At least Obamacare got rid of the donut hole, which was a real pain.
Medicare is still infinitely better than regular insurance. I had put off knee replacement for years and the minute that precious card came in the mail, I called the surgeon.
@Mary G: @Luthe: yep, Medicare is decent but not great for everyone and it is odd in how things get covered
Jack the Second
Continuing something from the previous thread on this for my own curiosity–
So what’s the general opinion here on million-dollar-a-month treatments?
If a treatment that actually costs a million dollars a month in perpetuity (eg, fairly priced and not a one-off procedure) and actually works (not just snake-oil or a last-ditch false-hope treatment) and actually keeps a person functional, healthy, active, and happy (not a vegetable comatose in a hospital bed, not in constant pain), do you think we as a society should provide that treatment, damn the cost, or do you think there is a line to be drawn on how much we spend in the worst case, and it’s somewhere before “a million dollars a month”?
@Mary G: The way the end-user pays for medication depending on how it’s delivered, whether it’s a prescription or not, etc., is a real scandal that Congress needs to address. While not anywhere approaching your case, I experienced the same issue when Allegra D went off prescription and became (sorta) OTC. It was basically free via the doc, but now is around $3 a pill OTC (with the indignity of being treated like a junky when one tries to buy it).
Hang in there.
You know, I believe in olden days there were these things called Press Conferences and Debates where reporters would ask the candidates about their policy proposals and try to educate the public about whether they were workable. It seems these days, the press is most interested in horse races and team playing (“Will you support Donnie?!?! Tell us!!11”).
M4A sounds great. Single-payer sounds great. But those who have dealt with Medicare know that it’s not Happy Gumdrop Fairy-Tale Land. There are limits that can and will bite you. Medicare is never going to cover everything.
Someone should have made Bernie talk about the specifics of his plan. It was irresponsible for him not to be challenged on it.
Thanks very much for showing us the (worst-case) reality.
@I’mNotSureWhoIWantToBeYet: But aren’t you a Hillbot if you challenge St. Bernard on anything?
@Jack the Second: I’m of a few minds about ungodly expensive treatments.
1) Generally, as we learn more about things, we figure out ways to make them more effective and less expensive in the future. The $1M/mo treatment for Mr. Smith in 2016 may help pave the way for $1k/mo treatments for Ms. Jones in 2026. Expensive treatments can encourage others to enter that segment of the market, helping to (eventually) drive down costs, also too.
This assumes, of course, that the expense is not just monopoly rents enabled by patents.
But heroic, expensive treatments that only prolong life for a tiny period (and in some cases only prolong suffering) seem to me to be problematic. At times I put open-heart surgery for extremely old people and similar extremely expensive treatments in that category. At times I think that most transplants are almost by definition wasteful because they are so expensive and because there will never be enough donors of the right kinds. At other times, I’m more of the “well learn more so it will be cheaper and more available in the future”. I haven’t worked that out fully yet (and may never be able to do so).
2) Not spending $1M/mo on Mr. Smith doesn’t mean that that money is going to be spent on little Tommy and Souxie. (Just like not going to war in Iraq would have meant that we would have SUPERTRAINS by now.) They’re different issues.
3) It’s important for companies and people to be able to make a living, so that means new drugs and new technologies are going to be expensive initially. But ways must be found to separate real innovation from simply changing a pill color or making it dissolve differently or sticking an extraneous atom on a molecule to change it just enough to get a new patent. How one does that reliably, I dunno.
4) As long as there are these corner cases of $1M/mo for Mr. Smith, then there needs to be a way to spread the risk and the cost over the country. Reinsurance or a national program (e.g. like the one for dialysis, flood insurance, etc.) seems to be a no-brainer.
@gindy51: Yeah, there’s that. :-/ But I’m sure parishioners of the Church of Bothsiderism could find things to question HRC about as well. ;-)
pseudonymous in nc
It’s an obvious patchwork quilt with bits added over time and bits changed to deal with the inevitable gaming and arbitrage that happens on the provider side.
Doesn’t the NIH take on rare diseases that are expensive to treat because it’s better for all of the cases to be handled by one facility than for them to be scattered over the entire USA, and that’s the best way to advance medical knowledge? A $1m/month bill might not count as a rare disease per se, but if it’s a chronic illness, it seems like the same basic principle applies: normal circumstances do not apply, so just take the entire thing out of the conventional healthcare market.
@pseudonymous in nc: Yep, either national reinsurance or shipping the patient to a center of excellence (Mayo, Atlanta, Mass General, Hopkins etc) would make a lot of sense.
An explanation for a complicated issue. Done in language anyone could understand. Thanks Mayhew.
@I’mNotSureWhoIWantToBeYet: About 5.5 years ago, my mother–who was 75 at the time–was on dialysis twice a week, thanks to idiopathic kidney failure (though I’m now suspecting the meds she took for reflux that they recently linked to kidney issues). I remember my brother and I basically saying, this is as good as her life is going to be.
She was a trouper–she avoided dialysis for at least two years by monitoring her diet rigorously–but the dialysis wore her out, and she and my dad couldn’t really travel or do much. A few days before Christmas in 2010, I think, she got a kidney, and it completely transformed her life; my brother and I could not have been more wrong. This was made possible, in part, by my dad’s health insurance; he’d been a sheet metal worker, and his union insurance was and is awesome. So I rather disagree on the expense of transplants :-). And, really, they have gotten better and cheaper over time, especially for kidneys and a few other organs; some work better than others, apparently. At the same time, I also recognize that it was my dad’s insurance and my parents’ determination that facilitated this whole thing–i.e., I see your point about very expensive treatments.
O/T One of my closest friends was recently diagnosed with metastatic breast cancer. I really had to pester her to sign up for insurance on the exchange and fortunately she did so. This is a person who had never even taken an antibiotic before so seemingly completely healthy. She would have lost everything (she owns a business) if she hadn’t been insured or if this had happened in the pre PPACA days.
The on topic part of this is that this is a person who will now receive incredibly expensive treatments. Just in the last few weeks she has had all the diagnostic testing and consults with specialists.
@I’mNotSureWhoIWantToBeYet: The cost effectiveness of transplants depends on the recipient. I have a good friend who had a heart transplant in his early twenties and is making the most of it. There are a bunch of conventions that wouldn’t exist without him.
The cost effectiveness of flood insurance, otoh, is nil to negative. When one speaks of perverse incentives, flood insurance is a huge one. All it does is encourage idiots and rich people to rebuild in places that will eventually be under water because of climate change. Raising the premiums would discourage this, but the last time it was tried, the screaming from constituents caused Congress to reverse course post haste.
@narya: A colleague at work donated a kidney to another guy he met in the gym. It is amazing what can be done, and I do recognize the benefit. Some of my qualms will go away when (not if, but when) we can grow organs tailored to the recipient in the lab. And knowing how to replace failed organs and replace them with customized grown ones wouldn’t happen without first being able to do human-human transplants.
At the moment, I’m more torn by the (unavoidable) unfairness of the sorting procedures for who gets an organ and who doesn’t. The wealthy will always find a way to be near the head of the line. But I still haven’t decided where I really stand on this. I’m glad I don’t have to make decisions like this!
Hey Mary, I believe the patent for rituxan will expire in 2018 (in the US) and there will be biosimilars to bring down the price a bit.
@I’mNotSureWhoIWantToBeYet: Those expensive “never enough doners” transplants have been the number one source of information on artificial organs as an alternative.
But 21 people die in the US every day due to lack of donor organs. That’s in the US. Imagine what it’s like in poorer countries.
Some kid dying of liver failure in coal country WV isn’t going to have the same chance as Steve Jobs to get a new liver.
As long as there is a shortage of donors, then there will have to be a ranking system. And there exists no effective human system that cannot be “gamed” (for good and bad reasons).
Again, I’m not saying that transplants shouldn’t be done – just that there seem to me to be some problematic aspects of it that can lead to unfair, very expensive, outcomes. How would one make it better? How could one reduce the costs? Dunno. Is it a big problem in the greater scheme of things in medicine? Probably not.
I’m almost entirely certain that if it took a million dollars worth of other people’s money and effort every month to keep me alive, I’d decide the whole thing just wasn’t worth it.
Hell, I’d probably decide the same thing if it were ten thousand dollars a month.
It’s a deeply taboo subject in our society to be okay with the concept of one’s own demise. We must “fight” to stay alive, and other must fight to keep everyone else alive, no matter what the cost, whether it monetarily, socially, or emotionally.
And it’s horseshit.
@pseudonymous in nc:
The NIH Clinical Center is a research hospital (and clinic). Being seen there requires enrollment in one of their many research studies, or an evaluation visit as a potential study participant. They don’t generally provide tertiary care the way MGH, Mayo, Hopkins, etc. do.
I think they were a designated Ebola receiving hospital, but that was an unusual situation.
As for geographic dispersion, NIH’s ability to fly patients to and from Bethesda for studies gives it an advantage for rare disease research, but it’s not practical for folks with conditions that preclude air travel.
@John Harrold: Generics are not always useable by some people. My former boss has a heart condition — involving her valves. Her doctor tried her on a generic of the brand-name drug. She didn’t do as well on the generic as on the brand name drug. The insurance she had at the time would cover the generic with a low co-pay. The brand name would only be covered at 50% and it was expensive, While the generic was supposed to be bio equivalent, there was something in the other ingredients that was different enough to change how her body reacted to it. Actually, IIRC, at first the insurance didn’t want to pay for that drug at all. The insurance company had put the drug list into tiers as to what would be covered at what rate.
@I’mNotSureWhoIWantToBeYet: The organ gaming system is overhyped. The areas with high numbers of organ donor deaths (accidents, stroke, heart attack, overdose, suicide – basically anything where you arrive alive but brain dead at the hospital) are also the areas with the highest needs for hearts and kidneys. So little gaming is possible. Liver need, however, is evenly distributed throughout the country, but available livers are not. So in some ways the system is being gamed, but the argument can be made that the current rules keeping donated organs locally is unfair as well. That kid in coal country has more available livers on offer than the tech titan in California. No system, especially one with life and death stakes, exists that will not be gamed somehow. Denouncing all of organ donation due to the possible gaming of the waiting line for one organ (out of 14) which can be donated is demanding a perfection which human systems cannot achieve.
I do know that the criteria for receiving organs is being revised and updated, so that organs don’t always just go to the sickest. I don’t know the details of how it is turning out, but the general idea is to shift priorities so that younger recipients get priority for younger, healthier organs and older patients get organs from older donors. The problem is seen as people getting sicker and sicker on the waitlist, getting weaker in ways that will impair their post-transplant life. Also – dialysis is expensive, I don’t know what the break even point is, but kidney transplants can save money.
Interesting note on the recent uterus transplant (which I do find problematic) is that in Europe, they have chosen to go with living donor organs, from the patient’s mother. The US is using organs from the current organ donation system. I haven’t read any commentary on this and find it interesting.
@I’mNotSureWhoIWantToBeYet: I remember reading about some insanely expensive piece of equipment in the tech field, and having someone point out that that is what anything costs if you are having it hand built to order by PhDs.
@Feathers: Good points all around. Though I hear post-docs work pretty cheap. ;-)
I’m listed as an organ donor myself, so I really am conflicted on this (not pretending to be while arguing against it), believe it or not. Once I’m dead, I don’t see the need not to do something useful with my parts, if possible. But the system does need to be improved…
@I’mNotSureWhoIWantToBeYet: Not to be macabre, but make sure appropriate family and friends know your wishes. I’ve seen understandably distraught surrogate decision makers (usually family, but sometimes friends) countermand a signed organ donor card.
I’ve reminded older relatives, who think their organs might not be suitable for donation that corneas can restore sight to two people and that skin can help save a burn victim.
ETA: There’s a tradition among anatomy professors that they donate their bodies for dissection. I’ve always felt the default for doctors should be that we are assumed to be organ donors unless we opt out. Put your liver where your livelihood was, as it were.
Obviously, the patient in this case is unusual. However, Richard’s description of how Medicare would deal with him/her should convince anyone that “Medicare for All” is not a solution to our desire for comprehensive, universal health care in the US. The only reason Medicare works for elderly people is because they are buying supplemental policies to pay for all the things Medicare doesn’t pay for. Those who have to depend on Medicare alone can easily be exposed to ruinous medical charges, the avoidance of which is the whole point in having a universal health care system.
Medicare alone is fine for a healthy person. Just like no insurance at all is fine for a healthy person.