Is it legal for health insurers to pay people to drop their policy?

http://www.technologyreview.com/featuredstory/520441/a-tale-of-two-drugs/ says that Vertex offers a cystic fibrosis drug for $307,000 per year to insurance companies and Medicaid/Medicare. The article also notes that Vertex offers the drug for free to patients who are uninsured. Doesn’t that give an incentive to an insurance company to cooperate with the patient? Instead of paying for 20 years of this drug ($6 million), the insurance company could give the patient $2 million to drop his or her policy. With that $2 million, the patient could buy health care as needed and get the $307,000/year drug for free.

What stops an insurance company from offering this incentive?

8 Comments

  1. Maik

    December 2, 2013 @ 4:55 pm

    1

    In the specific case, there is an income cap in addition to the requirement of no coverage. The patient couldn’t take that deal and be eligible for the free drug in the same year.

    More generally, it’s a valid point that leads back to the fact that it’s always bad policy to legally require someone to buy something while letting the seller set any price.

  2. philg

    December 2, 2013 @ 4:58 pm

    2

    Mark: There is an income cap? All that I saw was “The company also pledged to provide it free to any patient in the United States who is uninsured or whose insurance won’t cover it.” But the last part of the sentence raises another question… why wouldn’t all insurance companies simply remove this drug from their list of stuff that they will pay for? The patients won’t suffer (or even complain?) because Vertex will then provide the drug for free.

  3. philg

    December 2, 2013 @ 5:01 pm

    3

    And now with Obamacare preventing insurers from denying applicants with health problems (or even charging them higher rates?)… if an insurance company has a patient who is costing $500k/year, is it illegal for them to give the patient $1 million to not renew and go to healthcare.gov (once it is fixed!) to sign up with some other insurer?

  4. Maik

    December 2, 2013 @ 5:02 pm

    4

    Wikipedia says “Vertex said it would make the drug available free to patients in the United States with no insurance and a household income of under $150,000.”, giving the company’s own press release as the source: http://investors.vrtx.com/releasedetail.cfm?ReleaseID=644257

    It’s not clear to me how a $150,000 income means you can obviously afford a $307,000 treatment.

    Regarding dropping it from coverage, presumably the company relies on regulation that won’t let insurers drop effective, approved treatments.

  5. davep

    December 2, 2013 @ 6:25 pm

    5

    Malik: “It’s not clear to me how a $150,000 income means you can obviously afford a $307,000 treatment.”
    It doesn’t mean that because that is silly.

    A $150,000 income means you can afford insurance (obviously).

  6. Tort Boi

    December 2, 2013 @ 8:45 pm

    6

    “And now with Obamacare preventing insurers from denying applicants with health problems (or even charging them higher rates?)… if an insurance company has a patient who is costing $500k/year, is it illegal for them to give the patient $1 million to not renew and go to healthcare.gov (once it is fixed!) to sign up with some other insurer?”

    But what would keep that insured from coming back at a later date? A contract? But a contract that contradicts law is generally void, so it probably wouldn’t be enforceable. It’s a very expensive gamble by the insurance company on what may be nothing more than an unenforceable gentleman’s agreement.

  7. philg

    December 3, 2013 @ 12:11 pm

    7

    Folks: If there is concern about making a long-term contract, the insurer could instead give the $500k/year patient a free apartment to use, a leased car, annual cruises with the family, catered food delivered every day, etc.

  8. Holly Mathis

    December 6, 2013 @ 11:28 am

    8

    My 2 year old grandson has CF. This is killing disease & tx should be given regardless of status be it income or insurance.

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