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Irish eyes are smiling: Mom and me in County Cork, in happier days of 1995.
The unfinished health care battle really came home for the holidays in my family.

My mom is 71 and a retired public school teacher. In Sept. 2001, she awoke and found herself unable to walk. Eventually, she was diagnosed with multiple sclerosis. Yes, she is unusual to have recieved the diagnosis so late in life. Most people are diagnosed in their 20 or 30s. A doctor later determined she may have experienced earlier episodes that went undiagnosed.

Multiple sclerosis (MS) is a progressive neurological disease. It is debilitating and can be fatal. Its progression and symptoms can vary greatly. There is no cure; the best one can hope for is arresting its progression, and with therapy, perhaps regaining functionality lost from attacks. Its progress can be tracked by its symptoms as well as scanning to detect the growth of lesions on the brain. The placement of these brain lesions can determine what functions are affected by the disease. They have yet to definitively determine the cause of MS.

I admire my mom. She has always cared well for her health. She was among the first wave of people to give up smoking when the health risks were made clear. She watched her own, and our family's, diet carefully (no pre-prepared foods, home cooking, lots of veggies, no dessert, no fried food). She embraced the aerobic exercise fad of the 1980s and has always kept herself physically fit and active.

Once diagnosed with MS, she dedicated herself fully to her rehab, and with physical therapy, has nearly completely regained her lost mobility. She now walks with a cane, which is mostly unneeded. I encourage her to use it though, both for the added safety and as a way to telegraph her not-always-apparent challenges to people. (Please, don't knock my mom over, give her a seat on public transport.) Her balance is not great, nor is she able to do all she could as before. She does present much younger than her 71 years however, both in appearance and the way she carries herself. She continues to lead an active social life, as well as working occasionally and volunteering with her church and community.

My mother, I am happy to report, has had no serious progression of her disease since her initial diagnosis 10 years ago. This is evident by both an absence of recurring attacks or symptoms, and subsequent brain scans that show existing brain lesions to be unchanged.

We can probably thank the drug Glatiramer, sold under the brand name Copaxone, for her continued good health. Every night she injects herself with this drug. I'm sure it isn't fun for her, but she does as her doctors tell her, and she never complains. Copaxone has probably saved countless lives, and more importantly, as with my mother, helped people with MS maintain a good quality of life. (MS progression varies greatly; however, many people with MS are not as fortunate as my mother.)

The drug is also very is expensive, about $4,000 a month, if one were to pay cash for it. Which is why we're so glad to have insurance! Should we need life-saving drugs, they will be there for us and we will not be financially devastated by our need for them. Isn't that right?

Thus far, it worked out pretty well, as her prescription insurance covered it at a $35 co-pay, which made her annual costs about $420 year. Quite manageable.

I'm the pudgy one on the right. Double-breasted houndstooth was all the rage in 1970.
In addition to watching her health, my mother was always thoughtful about her life choices as well. My parents opted to have only two children, as having more seemed fiscally irresponsible. My mom did wish for a daughter, but resigned herself that was not to be. They scrimped to buy their first house because real estate was a good investment.

My brother and I were raised in a relatively affluent part of Michigan, which they choose for the good schools. My parents both had master's degrees and taught public school. Many of my friends' parents were doctors, lawyers, engineers or executives at Oldsmobile, and as such, were rather better off than us. Though my brother and I lamented we were the last in our neighborhood to get a color TV, otherwise I can't recall wanting for much as a child. My mom was good with money and I was, frankly, not a difficult child to please. If I had a bike and a box of LEGOs, that was enough. I was happy. In 1977, my parents built a new home. It was spacious, nice and comfortable. We were a nice, solidly middle-class union home.

One deciding factor that influenced my parents' decision to enter the teaching profession way back in the 1960s was public union employees got good benefits. It was the promise of union wages, benefits and job security they found attractive. They wanted the ability to make plans secure in their future. The good health insurance was a big factor.

Since retirement, mom's health insurance has been provided by Blue Cross/Blue Shield via the Michigan Public Schools Employees Retirement Systems. Her prescription insurance is subcontracted by BC/BS and provided by Catalyst RX.

Mom received a letter Dec. 19 from Catalyst RX saying her co-pays and deductibles will change in 2012. They have a very complicated new formula. The most glaring new policy initiative was that starting in January, just days away, she will be required to pay, up front, a $1,600 co-pay for Copaxone! On two weeks' notice! Co-pays will step down until she meets deductibles, and by year's end, she will have been made to pay $6,600 for her prescription.

This is up from her $35-a-month co-pay last year. Arbitrarily and unilaterally—and completely without warning—her insurers have increased her annual health care costs by $6,180—and just on one prescription alone! Do I need to make explicit that $6,180 a year is no small bill for a retired school teacher to be abruptly hit with out of nowhere?

And this is far from her only increased costs. She has been sharing with me how many of her bills, medical and otherwise, just keep going up. Additionally, if she's able to manage to pay for the increased prescription costs, it will be from dipping into the principle of her 401K. This not only damages her long-term retirement nest egg, but will add to her year-end tax bill. This isn't a cost she can absorb on fixed-income retirement. And it's not like she can just return to the workforce full-time (did I mention she has MS?).

She has managed her money well, juggling pensions, Social Security and a 401K. But still, it's being sucked out of her much faster than she planned, and she planned well.

So, who is Catalyst, anyway?

Catalyst logo
So, who is Catalyst RX? These folks that suddenly in 2012 can't get by without squeezing another six grand out of my mother? Who are these people who can abruptly unload $6,000 of what was once their costs onto my retired school teacher mom?

Catalyst RX is a subsidiary of ironically named Catalyst Health Solutions. They are apparently in the business of creating more problems than solutions for my mom and people like her. The company's materials describe Catalyst RX as "a full-service pharmacy benefit manager (PBM) serving more than 18 million lives in the United States and Puerto Rico." Eighteen million people? I wonder how many others got a letter just like my mom's?

This would be the Board of Directors of Catalyst Health Solutions.

David T. Blair, Director, Chief Executive Officer, Catalyst Health Solutions, Inc.

Michael R. McDonnell, Director, Executive Vice President & Chief Financial Officer, Intelsat Ltd.   
Edward S. Civera, Chairman of the Board, Catalyst Health Solutions, Inc.

Steven B. Epstein, Director, Founding Member & Senior Partner, Epstein Becker & Green, P.C

Daniel J. Houston, Director, Executive Vice President, Retirement & Investor Services, Principal Financial Group, Inc.

William E. Brock, Director, Founder and Senior Partner, The Brock Offices

Kenneth A. Samet, Director, President & Chief Executive Officer, MedStar Health, Inc.

Dale B. Wolf, Director, Former Director & Chief Executive Officer, Coventry Health Care, Inc.

CNN named Catalyst to their list of the fastest growing companies in 2011. Three-year average: revenue growth—23 percent; profit Growth—26 percent; total return—23 percent.

And on Nov. 1, the company reported this of its earnings:

Catalyst Health Solutions, Inc. (NASDAQ: CHSI), today announced its financial results for the third quarter ended September 30, 2011. Revenue for the quarter grew by $504.3 million, or 55%, to $1.43 billion from $925.1 million in the prior year.

The company's own 2011 six-month report certainly doesn't suggest any belt-tightening measures are needed:

Gross profit for the first six months of 2011 increased by $24.8 million to $131.2 million compared to $106.4 million in the first six months of the prior year.

The company addressed investors in its third quarter earnings call on Nov. 2, 2011 (transcript). CEO David T. Blair sounded very gung-ho and optimistic saying he anticipated "meaningful growth" and "significant opportunity," which he attributed to "the continued consolidation in our industry." He didn't mention any concern about the threat of the "free market" getting out of hand and threatening their monopoly marketshare, oddly.

Chief Financial Officer Tim Pearson delivered even more good news to investors:

"In the third quarter we continued deliver strong earnings growth with significant year-over-year revenue and adjusted EPS gains. For the quarter revenue grew by $504 million or 55%, to $1.43 billion, up from $925.1 million in the prior year. The increase in revenue is primarily due to the addition of WHI prescription volume for the quarter. Total unadjusted managed claims processed in the quarter increased to $24 million from $17 million in the same period in 2010."

So, life is good at Catalyst. Really good.

So, why the big rate hikes on life-saving medicine?

There's this from the investor call:

This range incorporates the roughly $26 million managed claims from WHI, assumes client attrition, new business wins and a modest claim growth.

Hey, here's an idea to keep "claims" growth "modest!" Maybe they could just make a new policy that the 18 million existing policy holders will now pay a greater share of the cost of their own prescriptions in 2012 than they did in 2011! Then the company's liability to claims will stay "modest!" Genius!

David T. Blair
David T. Blair, you oughta know
It turns out CHS's Director and CEO David T. Blair has made quite a name for himself among his fellow One Percenters in the business community. He is only 41 and has served as CEO since 1999. It's been announced Blair will become the next chairman of the board in 2012. He was also recently named number 7 on Forbes magazine's list of "America's 20 Most Powerful CEOs 40 And Under." How exciting for Mr. Blair. I guess that's how you make a name for yourself in corporate America. You soak the little people until they are dry. You get a bonus, a promotion, and the little people get a letter telling them they've been shafted.

You apparently make a great deal of money doing this as well. Forbes magazine lists Mr. Blair's total compensation for 2009 at a modest $2,243,572. But Bloomberg Businessweek places his 2010 compensation at a more One Percenter-worthy $4,354,194. Mr. Blair also has, of course, many extravagant stock options. In fact, he just cashed in on those to the tune $2.26 million.

Blair exercised options on shares he had purchased for $6.62, or $347,550, selling the lot for $ 42.53 to $ 43.30 a share. He realized a net gain of $1.91 million. Blair retains 289,488 shares.
Nice gig, buying shares for just under seven dollars and selling them for six times that in a short turn. I guess we can see why Mr. Blair thinks two weeks is reasonable notice for someone to be asked to cough up an extra $1,600.

Maybe Mr. Blair can be persuaded to break off a few clams to help my mom? He likely could find it in his couch cushions. Perhaps Mom and I should consider going Roger & Me on him?

Or maybe the problem is really Medicare?

It appears Medicare Part D introduced tier pricing schedules for prescription drugs and they have since spread to private insurers. Medicare classifies tiers of drugs based on price. Copaxone has been classified as a tier 4 drug, that requires higher co-pays. It's unclear why my mom's coverage situation changed in 2012 from 2011, however. It's possible it represents a discretionary new application of tier pricing policy, or perhaps an underlying financial relationship between Medicare and Catalyst. The New York Times reported in 2008 on a similar situation with an MS patient suddenly discovering her co-pay out of reach. A spokesman for Kaiser Permanente said at the time they would "suspend the change for the program... while it reviewed the new policy."

James Robinson, a health economist at the University of California, Berkeley, quoted in the Times says of tier pricing:

“It is very unfortunate social policy. The more the sick person pays, the less the healthy person pays. This is an erosion of the traditional concept of insurance. Those beneficiaries who bear the burden of illness are also bearing the burden of cost.”

Rep. Henry Johnson (D-GA) has introduced the Part D Beneficiary Appeals Fairness Act H.R.3613 to address precisely this situation. The bill has 33 House sponsors.

Private and employer health insurance plans classify prescriptions using tiers to differentiate among generic, brand name and "non-preferred" brand name drugs. Any medication costing more than $600 is automatically placed on a specialty tier that requires patients to pay from 25 to 33 percent or more - rather than a flat rate.

For many seniors on a fixed income, these life-saving drugs for everything from cancer to rheumatoid arthritis, lupus and multiple sclerosis can cost upwards of $1,700 per month. Seniors who can't afford the medication often go without treatment.

"How can we look our seniors in the eye - people suffering from leukemia, Crohn's disease or multiple sclerosis - who are required to pay more in prescriptions than they bring home each month - and say 'sorry, you're out of luck. It's either food on the table and roof over your head or the life-saving drugs - you can't have both,' " said Rep. Johnson.

Regardless, where the impetus for this rate hike is coming, the end result is my mom is being stuck with a six thousand dollar bill.

Options: What Mom's explored

  • She's spoken to Blue Cross/Blue Shield who tell her it's out of their hands and she should talk to Catalyst.
  • Catalyst's customer service rep was sympathetic, but, of course, told mom there's nothing that can be done, the policy is the policy. She did ask my mom if she had military service background (she does not). Apparently the military's Tricare coverage is able to negotiate for lower bulk drug prices (pdf), which would have passed a savings on to my mother. Bulk negotiating of drug costs, gee, what a great idea! How free markety! Someone should look into implementing that widely. Oh, wait ...
  • Copaxone does have a drug-assistance program that mom may or may not qualify for, depending on income requirements. Regardless, if she does qualify she will likely have to stop substitute teaching, something she's done a few days a week to make ends meet. (Yes, she has been one of the many working "retired.") Substituting to supplement her income may put her over the income threshold. So, she may incur savings on the prescription, while having to sacrifice income opportunities. This meager supplemental income has gone to extravagant "luxuries" like traveling to New York City to see her son as she did this week. How she'd manage it without supplemental income is anyone's guess.

    Frankly, this has been my mother's experience with retirement these last years. I can't stress enough that I have watched her save and plan carefully for these days for decades. But how can you plan for what drugs you'll eventually need? No one plans to get MS. And who can plan that one's perscriptions costs will skyrocket from $420 to $6,600 in a single year? That isn't a reasonable cost-of-living increase. That's a stick-up.

    Like many Americans, her 401K went into the tank in 2008 and really hasn't come back out.

    Mom, Dec. 24, 2011, at the 9/11 Memorial in Manhattan.
    Retirement was supposed to be fun and relaxing after a lifetime of non-stop working.

    Instead, after being widowed, she sold her house a year ago to downsize into a smaller, more affordable one. By the way, she sold the house for the same price she paid for it 13 years before, and it was in a "nice" area. But with that move, she did manage to save herself $500 a month, which was a welcome relief. Looks like the Catalyst insurance is poised to vacuum that up to "increase revenues."

    And frankly, I don't much care for the idea that my mom's continued financial security may depend on her qualifying and being approved for a "charitable" drug-assistance program. My mother, like so many working Americans, is not a charity case. And she shouldn't have to be dependent on the good will of big Pharma to survive and make ends meet in her retirement. She did everything "right." She made "safe" investments in real estate and saved in a 401K. She worked hard her whole life educating Michigan's children, and giving back to the society that promised in return, they would care for her in this time, her retirement years. That was the social contract she signed all those decades ago. And now, the robber barons sacked her 401K, tanked the value of her real estate, and have moved on to rewriting her retirement benefits, after she retired, in pursuit of ever more profit.

    I'm frightened for her financial security and also for her mental health. Not that she's infirm, but I just want her to enjoy her retirement years and not be constantly worried about her skyrocketing cost of living, and her ever-shrinking savings.

    I worry for her health, of course, as well as for the health of all the people who depend on life-saving drugs like Copaxone. For some inexplicable reason, nearly all MS drugs are soaring in cost. Copaxone has risen in just recent years from $10,000 a year to $45,000. Again, not a reasonable cost-of-living increase. Why huge price increases so late after the development cycle? This places them out of reach of many people with MS who desperately need these drugs to stay healthy and mobile. My mother's friend's insurer stopped paying for Copaxone when physical therapy enabled her to walk again. This is akin to cutting off a diabetic's insulin because they came out of ketoacidosis.

    Mom and I will get past this. But this isn't really about her. It's about a broken and corrupt health care system that can still write its own rules as it goes along and devastate people's finances and threaten their health without remorse or oversight.

    At least 17,999,999 other people's financial and health futures are held hostage by Catalyst RX's capricious rule changing. And this just shouldn't be something that insurers can just do to people. But apparently, they can. As the cliche goes: "There oughta be a law."

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