Health insurance coverage may not adequately protect individuals from the high costs associated with cancer treatment. Some policies have high deductibles (e.g., catastrophic policies typically contain a deductible of $15,000 or more), and copayments or coinsurance over the course of cancer treatment can be substantial (HIAA, 1998). Furthermore, many insurers, including Medicare, do not cover all of the drugs and treatments used by cancer patients (see discussion of prescription drug coverage below).
Relatively few studies specific to cancer exist regarding the magnitude of the financial burden associated with out-of-pocket costs, but available evidence suggests that it is substantial. In a study conducted in 1986, Medicare was found to cover an estimated 83 percent of typical total charges for lung cancer and 65 percent of typical charges for breast cancer (Sofaer et al., 1990). For these two cancers, investigators assessed the extent to which supplemental Medigap plans reduced out-of-pocket costs and found that plans varied widely in the financial protection offered. Out-of-pocket expenses ranged from less than $100 under some health maintenance organization (HMO) plans to nearly $4,000 under some private Medigap plans (1986 dollars) (Sofaer et al., 1990). Unlike the great majority of employer-provided insurance plans, Medicare does not cap beneficiaries' total payments for cost sharing (AARP, 1997). Medicare HMOs typically have lower cost sharing than the traditional Medicare program and may offer additional benefits, such as outpatient prescription drug coverage (AARP, 1997).
Prescription Drug Coverage. Insurance policies often lack comprehensive coverage for prescription drugs, a benefit needed by most individuals with cancer. Medicare, for example, does not cover the costs of most outpatient prescription drugs, which can include pain medications and other drugs to treat the effects of cancer and its treatment. Many Medicare beneficiaries are subject to these costs because only one-third of them have insurance policies that cover prescription drugs (e.g., Medicaid, employer-provided, or privately purchased policies) (Gluck, 1999). Most chemotherapy is administered in outpatient settings and is covered by Medicare. Even when insurance does offer prescription drug coverage, out-of-pocket expenses can be high because of limits to coverage.2 An estimated 7 percent of the elderly with chronic illnesses spend at least 10 percent of their household income on prescription drugs (Rogowski et al., 1997).
Early detection tests for breast, cervical, and colorectal cancers are effective in reducing mortality. For women age 50 to 69, for example, mammography screening reduces the death rate from breast cancer by about one-third (USDHHS, 1991). Although effective, these tests are underutilized, for example,