Present at the Destruction: Further Evidence From the Marketplace

A few days back I wrote about the collapse of the insurance business model in the US. I pointed out that the traditional business model is breaking down under the strain of newly developed forces.

Today’s New York Times had a front page article on the multifold increase in the co-payment for expensive prescription drugs. I am quoting selected passages from it as bullet points. The meaning and context is not altered.
Heath insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases...

Insurers say the new system keep everyone’ premiums down... But the result is that patient may have to spend more for a drug than they pay for their mortgages, more, in some cases, than their monthly income…

The system, often caller Tier 4 … is the fastest growing segment in private insurance ... Five years ago it was virtually nonexistent … Now 10 percent of them have Tier 4 drug categories…When people who need Tier 4 drugs pay more for them, other subscribers in the plan pay less for their coverage…

[Says] a health economist: “It is very unfortunate social policy. The more the sick person pays, the less the healthy person pays.” Traditionally, the idea of insurance was to spread the costs of paying for the sick. “This is an erosion of the traditional concept of insurance,” [a policy analyst] said. “Those beneficiaries who bear the burden of illness are also bearing the burden of cost.”

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