What LMICs Can Learn about Health Insurance from the ACA

These days, it’s rare to point to the U.S. health sector as a model for anything other than chaos and complexity, but there are both lessons learned from mistakes and occasional beacons of hope like the Ryan White HIV/AIDS Program that can be instructive for countries—especially low- and middle-income countries—seeking to stretch limited health funding to achieve universal health coverage (UHC).

UHC is a guiding principle in countries around the world, a principle reinforced in Sustainable Development Goal #3.8. Once limited to highly developed countries, health policy makers in many low- and middle-income countries (LMICs) are experimenting with various combinations of national, community, and private insurance schemes as a primary means for achieving UHC. But designing these schemes to achieve affordable and equitable access to health services while containing costs is a constant struggle in both the developing and developed country contexts. One of the challenges in cost containment is the increasing costs of innovative and effective pharmaceutical products and technologies. Balancing this tension between cost containment and improved health outcomes requires many strategies, not least of which are coordination and collaboration between therapeutics committees and the insurers.

In the U.S., we have learned much about drug formularies and pricing within a complex insurance market through our work helping states and federal programs implement the Affordable Care Act (ACA). The ACA expanded access to healthcare for millions of Americans, often low-income and underserved populations. However, access to medications for patients with chronic illness (HIV, diabetes, etc.) or those with expensive pre-existing conditions (e.g. cancer) has remained a real concern under the ACA.

Every insurance plan has a drug formulary—essentially a list of medications that the insurance plan will cover and any restrictions or prior authorization that a patient may need to acquire before being able to fill the prescription. Formularies are tiered, often one through four, and each tier has a general pricing scheme associated with it. Prescription drugs on tiers one and two are often covered at no or low-cost to the patient while tiers three and four are more expensive. There is significant variation among insurance companies and how they choose to structure their formularies. Some have consistently placed high-cost medications, or medications used to treat high-cost illness, on the most expensive tier and set quantity limits and/or require prior authorization.

They can also make less effective but “common” regimens as the low-cost first-prescribe option, holding back state-of-the art treatment as a second-line option to be used if the first line fails, even if the evidence shows that the second line is a better treatment option. A good example of this in the LMIC context would be if UHC schemes required ART patients to use relatively low-cost single dose Stavudine (d4T), Lamivudine (3TC), and Nevirapine (NVP) as the first-line treatment even though more efficacious, easier to use, and more costly single tablet therapies (e.g. TDF / 3TC (or FTC) / EFV fixed dose combination) are the prefered first-line treatment and result in improved health outcomes.

When insurance companies are able to decide their own drug pricing policies with little regulatory oversight, it can send the signal that certain patients, such as those who are living with HIV, are not welcome and raises concerns as to whether such actions may be considered discriminatory under the ACA. Further, for patients with a complex condition like HIV, plans with cheap monthly premiums may seem like the best option, but may actually have high deductibles and out-of-pocket costs hidden in the details. It may make more sense for patients with higher anticipated costs to enroll into a silver or gold plan that has a higher monthly premium but lower deductibles and copays, thus reducing the overall out-of-pocket expense. Providers and patient advocates must understand these issues as they may find themselves in the position to help guide their clients in making the best, most cost-effective choices on insurance plans.

The Ryan White HIV/AIDS Program (RWHAP)—the U.S.’s program that provides a comprehensive system of treatment and supportive services for low-income individuals living with HIV—has a unique approach that helps address this problem. Jurisdictions funded by RWHAP are permitted to pay insurance premiums and other out-of-pocket expenses on behalf of their enrolled clients if deemed more cost-effective than purchasing HIV medications directly. This approach allows eligible individuals living with HIV to access private health insurance, thus improving efficiency of RWHAP funds and enabling program clients to access all other ACA-covered healthcare and pharmaceutical needs as well.

Finding the right balance in drug formularies, which represent one of the greatest financial risks and health benefit opportunities, is essential. The U.S. system provides both a cautionary example and an instructive path towards finding that balance.

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