Closing the EHB Loophole: Louisiana Leads, But National Action is Needed
"Jason," a Utah AIDS Foundation client, confronted a brutal truth in the wake of his HIV diagnosis: a healthcare system more interested in profits than patients. Faced with a staggering $3,200 co-pay for his HIV medication—well beyond his financial reach—Jason's plight was exacerbated by his insurance company's implementation of a co-pay accumulator policy. This policy effectively nullified the assistance he once relied on, leaving him stranded without his medication for months. "I felt scared and discouraged when I was told I have a $3,200 co-pay to pick up my HIV meds. I don’t even make that much money each month," Jason shared, his voice a stark indictment of a system failing its most vulnerable. His story, spotlighted by The Utah All Copays Count Coalition, underscores a pervasive issue: patients across the nation are cornered into impossible choices between health and financial ruin, casualties of an insurance industry's practices that blatantly prioritize margins over meaningful care.
Understanding the Problem
Jason's heartbreaking story sheds light on interconnected issues fueling the healthcare affordability crisis: co-pay accumulators and the Essential Health Benefits (EHB) loophole. These tactics have a devastating effect on patient well-being, so let's break them down:
Co-pay Accumulators: A Profit-Driven Scheme at the Expense of Patients
These programs allow insurers to take the value of manufacturer-provided coupons or patient assistance and apply it towards an annual deductible, but not towards a patient's out-of-pocket maximum. This means even with generous assistance, patients can face thousands of dollars in additional costs, forcing them to ration medication or abandon treatment altogether. The numbers reveal the widespread impact:
The AIDS Institute reports that co-pay accumulator adjustment programs (CAAPs) are present in a shocking 66% of individual Affordable Care Act (ACA) marketplace plans nationwide, with some states showing 75-100% of available plans utilizing these tactics.
Co-pay Maximizers: A Further Threat to Affordability
Insurers are increasingly employing an even more severe tactic known as 'co-pay maximizers'. These programs set a patient's co-pay to the full amount of available assistance, even if it's intended to cover an entire year's medication cost. Unlike accumulators, which prevent assistance from counting towards the out-of-pocket maximum, maximizers essentially 'use up' all available assistance in a single payment. This leaves patients facing the full, often unaffordable, cost of medication for the rest of the year. The combined use of maximizers and accumulators is becoming increasingly common, leaving patients with limited options and magnifying the financial burden of life-saving treatments. A staggering 72% of commercially insured beneficiaries in the United States were enrolled in plans with co-pay maximizers as of 2023, according to a Drug Channels analysis.
This highlights the alarming prevalence of these practices and the immense pressure they place on patients struggling to manage chronic conditions.
The Essential Health Benefits (EHB) Loophole: Insurers Exploit Gaps in Coverage
Under the ACA, states have flexibility in selecting the 'essential' healthcare services that insurers must cover. Some insurers manipulate this system by classifying necessary medications (especially for chronic conditions) as 'non-essential'. This lets them continue using co-pay accumulators and maximizers on these medications, further undermining patient affordability.
Centers for Medicate & Medicaid Services’ (CMS) data reveals that in many states, critical treatments for chronic disease management are not guaranteed coverage under 'essential' benefits. This means patients could be subject to accumulators and maximizers indefinitely, locked in a cycle of escalating costs even when reaching their out-of-pocket maximums.
The takeaway is clear: these practices prioritize the shareholder profits of insurance companies over the health and well-being of patients, especially those battling chronic and complex conditions.
Federal Action – Progress and Pitfalls
The CMS Notice of Benefit and Payment Parameters for 2025 signals a notable yet incomplete step towards remedying the healthcare affordability crisis. It attempts to close the Essential Health Benefits loophole starting in 2027 by mandating routine, non-pediatric dental coverage as an essential benefit. While seemingly tangential, this amendment serves as a precursor to addressing broader coverage issues, demonstrating the potential to mitigate part of the financial burdens that patients like Jason face. However, it underscores a significant gap in the rule's scope—its silence on co-pay accumulators and maximizers.
Limitations of the CMS Rule Change
The rule change’s failure to directly address co-pay accumulators and maximizers leaves a significant gap in patient protection. These payor-driven barriers systematically undermine patient affordability and access, especially for those managing chronic conditions. The absence of direct action against these schemes allows insurers to deploy cost-containment strategies that, while ostensibly designed to control expenditures, place the financial burden squarely on patients.
This oversight perpetuates financial hardship and deepens healthcare disparities. Accumulator and maximizer practices disproportionately affect marginalized populations, highlighting the limitations of regulatory changes that fail to comprehensively address the complex dynamics of healthcare affordability and access.
Without targeted measures to dismantle these financial mechanisms, efforts to expand coverage and close loopholes may achieve only superficial improvements. A significant portion of the population, particularly those managing chronic diseases, will continue to face insurmountable financial barriers to accessing essential treatments. This situation underscores the need for a more holistic approach to healthcare reform—one that confronts the financial mechanisms impairing patient care and seeks to eliminate systemic practices that prioritize profit over patient well-being.
Court Challenges: A Victory Shadowed by Continued Uncertainty
The battle against co-pay accumulators achieved a notable legal milestone when a federal court ruled these practices violated the Affordable Care Act's mandates. Despite this victory, the landscape remains fraught with ambiguity, largely due to the federal government's tepid response. The government’s retraction of its appeal in 2022, while upholding the court's decision, did not establish a nationwide prohibition on co-pay accumulators, leaving insurers in a legal gray area.
The HIV+Hepatitis Policy Institute has spotlighted the risk posed by the federal government's refusal to enforce the court's ruling against co-pay accumulators, shifting focus instead to addressing insurers' classification of certain drugs as “non-essential health benefits.” While the final 2025 Notice of Benefits and Payment Parameters rule curbs the classification of covered drugs beyond state benchmarks as non-essential, the government's inaction on co-pay accumulators marks a troubling disconnect between legal victories and their practical implementation.
This gap between legal wins and real-world application emphasizes the need for interventions at the state level. Louisiana's SB 210 emerges as a key measure, proposing tangible solutions to bridge the gap left by federal inaction and protect patients from the financial burdens imposed by insurers' exploitative tactics.
State Solutions: Louisiana as a Model
Louisiana's Legislative Response with SB 210
In an assertive move to safeguard healthcare affordability and accessibility, Senator Bob Owen's SB 210 targets the mechanisms of co-pay accumulators and the Essential Health Benefits (EHB) loophole. The legislation mandates comprehensive coverage under EHBs and holistic accumulator protections, ensuring all cost-sharing payments contribute towards the ACA's out-of-pocket maximums.
This legislative approach not only challenges the status quo but also highlights Louisiana's proactive stance in addressing healthcare disparities. By mandating that insurers recognize all federally designated EHB services and medications as essential, SB 210 directly confronts insurers' manipulative practices, ensuring patients receive the comprehensive coverage promised under the ACA.
Addressing the ‘Endless Deductible’
In a letter to the Louisiana State Senate Insurance Committee, CANN President and CEO Jen Laws warns that without robust protections like SB 210, insurers can impose what patients call "the endless deductible." This term illustrates the loophole that allows insurers to employ exploitative accounting practices, negating the ACA's intent to cap patient spending on healthcare. SB 210's provisions aim to close this loophole, ensuring patients are not burdened with exorbitant costs for essential treatments, thus preserving the ACA's core promise of affordable care.
In his letter, Laws reveals that Louisiana's health plan benchmarks do not guarantee coverage for essential cancer treatments such as radiation or chemotherapy, underlining the significance of SB 210. By ensuring that expenditures for such critical treatments are counted towards patients' out-of-pocket maximums, the bill offers a lifeline to those facing the daunting financial implications of treating life-threatening conditions. This measure is pivotal in bridging the gap left by the current healthcare system's shortcomings, providing patients with much-needed financial relief and access to life-saving treatments.
A Blueprint for National Reform
Louisiana's initiative serves as a compelling model for tackling the challenges posed by ambiguous EHB classifications, federal inaction, and exploitative co-pay practices. SB 210's success could inspire a wave of legislative efforts across the United States, advocating for a healthcare system that prioritizes patient well-being over payor profits. This approach highlights the potential for state-level innovations to influence national healthcare policy, paving the way for reforms that ensure healthcare accessibility and affordability for all, especially those living with chronic and life-threatening conditions.
Call to Action
The legislative changes proposed in Louisiana represent a critical juncture in the fight for healthcare affordability and access. To realize the full potential of these reforms, a concerted effort is needed from key stakeholders across the healthcare ecosystem:
For U.S. Policymakers:
Legislators at both state and federal levels must embrace proactive strategies to close the EHB loophole and regulate co-pay accumulator and maximizer use. Crafting and enacting policies that guarantee comprehensive coverage of essential health benefits and ensure all forms of patient assistance contribute towards out-of-pocket maximums are essential steps toward protecting patients from undue financial strain. Supporting state-level initiatives like Louisiana's SB 210 can serve as a foundation for broader national reforms, underscoring the importance of legislative action in safeguarding patient interests.
Healthcare Providers:
Medical professionals and healthcare institutions play a crucial role in advocating for their patients' rights and navigating the evolving insurance landscape. By staying informed about the implications of insurance policies on treatment access and affordability, healthcare providers can better support their patients in accessing the care they need. Engaging in policy discussions and supporting legislative efforts to address the EHB loophole and co-pay accumulator issue are necessary contributions to the broader push for healthcare reform.
Community Advocates and Patients:
The voices of patient advocacy groups and people affected by the healthcare system's complexities are instrumental in driving change. By raising awareness about the challenges posed by the EHB loophole and co-pay accumulators, mobilizing communities to demand reform, and sharing personal stories, advocates can influence policy decisions and encourage insurers to prioritize patient needs. Engaging in public discussions and advocating for policies that protect patients from harmful insurance practices are critical steps in building a more equitable healthcare system.
Actionable Next Steps:
Reach out to state and federal representatives to express support for policies that ensure comprehensive coverage of essential health benefits and address the challenges posed by co-pay accumulators.
Educate oneself and others about the impact of the EHB loophole and co-pay accumulators on healthcare affordability and access, leveraging resources and information provided by reputable patient advocacy organizations.
By uniting in the pursuit of meaningful healthcare reform, stakeholders across the spectrum can contribute to a future where healthcare accessibility and affordability are realities for all, especially for those facing chronic and life-threatening conditions. The journey toward closing the EHB loophole and eliminating unfair insurance practices demands collective action and unwavering commitment to patient well-being. Let's join forces to advocate for a healthcare system that truly serves the needs of its patients, ensuring equitable access to essential treatments and protections against financial hardship.
States Push PDABs Despite Warning Signs, Patient Concerns
The debate over how the U.S. tackles rising healthcare costs is as constant as the sun setting in east. Most Americans feel the financial pressures from the high cost of their healthcare, evidenced by individual households holding 27% of the nation’s $4.3 trillion health-related expenditure burden. Healthcare spending is fragmented and multifaceted, being comprised of expenses such as hospitals, residential and personal care facilities, medical providers, technology, and retail prescription drugs. Despite the complexities of the healthcare market, pharmaceutical expenditures are often the most simple target to attack, often accompanied by solutions that seem way too good to be true. The fact is, access to prescription drugs is a significant part of modern medicine but there is nothing simple about how prescription drugs are brought to market and sold to consumers. In 2022, $633.5 billion was spent in the U.S. on prescription drugs, yet overall prescription drug expenditures by the government, private insurers, and patients were less than $1 out of every $7 spent on healthcare.
In recent history, in an attempt to create a “simple” solution to the costs John and Jane Q. Public pay for prescription drugs, through legislation, several states have created PDABs. PDABs are Prescription Drug Affordability Boards, also called Prescription Drug Advisory Boards. In theory, a board created to lower the cost of drugs for patients sounds like a good thing. However, the manner in which PDABs are currently set to operate is more harmful than good. Patients are not included in the development of the PDABs' decisions when those decisions directly affect their lives.
That is why the Community Access National Network (CANN) entered this policy and advocacy space. The boards have the wrong focus and don’t have patients’ interests as the priority. There is a difference between access and affordability. Jen Laws, C.E.O. of CANN, states, “Ultimately, CANN's focus is 'access' - it's in our name. Cheap gimmicks often pose serious potential to disrupt access for patients because we're the interest group here with the least in the way of resources (time, money, manpower). It's why we do what we do, and it's why we're going to keep doing what we do."
The prevalent tool PDABs utilize to lower costs is Upper Price Limits, or UPLs. The myopic focus is the allowable maximum a plan might reimburse a pharmacy or provider for any particular medication. However, this focus is not on lowering the price of what patients pay. A UPL does not determine what drug manufacturers charge for their drugs. It only sets the maximum that insurance plans will reimburse for drugs. That does not directly benefit patients because there is no mandate to pass any “savings” back to patients, for plans to retain medications with lower reimbursements, or for patients to have lower cost-sharing related to these medications. In general, patients pay for medications through co-pays and patient assistance programs. Although UPLs lower drug prices for payors, they increase the price patients potentially pay in terms of access by threatening the financial stability of providers and pharmacies, incentivizing utilization management that prioritize certain medications over others (regardless of an individual patient’s needs), and disrupt the provider-patient relationship by inserting the interests of payors over that of patients.
CANN has created multifaceted resources to educate the public about PDABs, their challenges, and possible solutions. People engage and comprehend in different ways. As such, CANN created varied communications. Long-form blog posts were written to be detailed sources of education and advocacy. A white paper was created as a downloadable handout to empower patients and enable them to engage with local PDABs or legislatures that are considering them in states that do not have them yet. For visual learners, CANN created an animated video that gives an overview of PDABs and their challenges, which is digestible and easily shareable.
With UPLs, the price patients potentially pay by losing access is more damaging than the monetary price tag of a drug a payor considers. UPLs that are set too low can cause drug manufacturers to reduce the production of drugs or place drug purchasing groups in the position of discounting distribution to a particular state altogether if low reimbursement makes them too costly to sell in that state. No purchaser or re-seller can sell to a state at a cost. No pharmacy can distribute a medication that costs them more to provide than they get paid in return. This creates shortages or removal of life-saving medications from the market, resulting in delays in care or patients being forced to utilize medicines that aren’t as efficacious as they and their physicians’ desired prescriptions.
UPLs also damage patient access by adversely affecting the 340B Drug Pricing Program entities that use the revenues from discounts to provide medications and other healthcare services to vulnerable populations without recourse for care. Lower revenues mean fewer services and possibly closures of facilities or program restrictions. AIDS Drugs Assistance Programs are largely dependent on using their 340B savings to extend access to care to poorest people living with HIV. We’re already seeing providers discuss this concern relative to insulin price caps. In a recent 340B Report article, the issue is summed up as follows: “Before 2024, most insulins had list prices of $300-$500 or more and were 340B penny-priced, so 340B providers earned savings of $300-$500 per prescription, Meiman said. However, now that many insulin list prices are $35, the 340B savings could drop to around $8 per prescription, she said. Historically, 340B savings on insulin have accounted for around 10% of community health system 340B revenue, she said.” Colle Meiman, a national policy advisor for the State & Regional Associations of Community Health Centers, also acknowledged this problem is a bit “counterintuitive” to how most policymakers think about drug pricing and reimbursements.
Moreover, lowering the price insurers are allowed to pay for medications is a double-edged sword. While on the surface, it seems like it would save payors money, it potentially only benefits PBMs in the short term and is an additional barrier to patient access. PBMs make their money from the profits they get via drug rebate revenues. Low UPLs will result in drug manufacturers lowering rebate levels and therefore lowering how much PBM’s might make on a particular medication. This means that PBMs could potentially increase the occurrence of benefit designs that restrict drug formularies to steer towards medications that result in more profit, not what is best for patients’ health. This already happens and is a concern many providers are beginning to voice. Additionally, they could enforce more utilization management, which again is a barrier to access but a way to increase their profitability.
CANN is energized to shine the light on PDABs and offer better solutions. Jen Laws explains, "Instead of nonsensical quick fixes, which aren't fixes to anything other than next quarter profits for payors, legislators should be focused on addressing the self-dealing nature of 'vertical integration', shoring up incentives for innovation, and meaningfully fixing benefit design that currently disadvantages patient access." Instead of a PDAB, states should consider a board focused on the patient perspective to evaluate benefit plan designs and offer recommendations to each state legislature about policy actions that will benefit patients as the priority stakeholder group.
In partnership with HealthHIV and The AIDS Institute, CANN will continue this work. It's crucial to stay abreast of the inner workings of policy and to advocate for the public proactively. Digging into the weeds with a patient focus enables advocacy groups to sound the alarm to the public as well as take the patient's perspective to those in power. Those in power are detached from the humanity behind the dollars and cents on their financial ledgers.