By Pauly Suba
In today’s turbulent landscape of health and business, we turn to insurance industry experts operating in the region to shed light on pressing issues. With premiums reportedly on the rise to at least 20% increases, concerns loom large among potential clients over affordability and access to essential healthcare and insurance services.
As we delve deeper, we explore drug cost comparisons across various regions. From common medications for diabetes to those from heart conditions, with experts discussing the disparities in drug prices and coverage by insurance.
What factors contribute to the increasing insurance premiums in Guam?
Campillo
Frank J. Campillo, health plan administrator, Calvo’s SelectCare:
Guam is not immune to premium increases, which mainly reflect medical inflation and the added utilization legacy due to long COVID-19. Premium increases for Guam may be higher than the national averages due to a number of factors
Recent increases in hospital fees at Guam Memorial Hospital: These exceeded 65% in highly utilized services.
The effects of long COVID-19 symptoms and the related costs of treatment: The most common symptom is fatigue; however, there are wide ranges of cases that involve damage to a variety of organ systems, along with an increase in conditions requiring mental health services. One of the biggest uncertainties about long COVID-19 is its impact on ongoing medical costs and future premiums. There is little known about how many people are affected by long COVID-19, how long it will last for those affected, and how it will impact their personal health.
Another factor affecting 2024 premiums is the shift in payment responsibilities for COVID-19 vaccines and tests from the federal government to insurance carriers. Prescription drug increases, which Reuters reported in late December will see major drug manufacturers raising prices on at least 500 drugs. Manufacturers increasing prices include Sanofi, Takeda, and Pfizer. Pfizer stood out with increases on more than a quarter of all affected medicines.
Besagar
Marilou L. Besagar, general manager, Great National Insurance Underwriters Inc.:
Some of the factors which drive the cost/premiums up are the changes in market dynamics and the availability of reinsurance coverages is now limited. There are even countries which would have a hard time to secure insurance, especially for catastrophic perils because insurers prefer not to take any risks in that area. Extreme weather events occur not only on Guam. Earthquakes and even man-made catastrophic events contribute to the increased insurance premiums, since we on Guam do not operate in a vacuum. An increase in loss ratio, regulatory changes and the economic slowdown contribute to premium increases. (Note: CAT is a high-yield debt instrument designed to raise money for companies in the insurance industry in the event of a natural disaster.)
Butler
Brent Butler, president, Nanbo Insurance Underwriters Inc.:
The increasing costs of reinsurance for natural catastrophe risks such as typhoons and earthquakes has dramatically increased the costs of insuring homes and commercial buildings for insurance companies on Guam. As a result, many insurers have tightened their underwriting guidelines or have declined to cover certain large commercial properties.
Crisostomo
Jerry Crisostomo, plan administrator & head of health plans, NetCare Life and Health Insurance Co.:
There are many factors that contribute to the increase in health insurance premiums on Guam such as utilization, provider costs, drugs expenses, technological advancements etc. However, the underlying single factor is that our population is SICKLY. We are beyond an “intensive care” stage. Instead, our population is on “life support” or even “hospice care” stage, unfortunately. The average Guam consumer spends a considerable amount of money on healthcare each year. However, premium increases, higher deductibles and co-insurance, and soaring prescription drug prices have all contributed to spikes in
total healthcare costs. The cost of treating patients has been on the rise, post-pandemic.
Guamanians are dying from hypertension and strokes, heart disease, and from diabetes at a rate significantly higher than the U.S. mainland per capita. However, heart disease, cancer stroke, and diabetes are all preventable diseases. We have patients who are non-compliant or non-adherence to their drug regimen. All health insurance plans offer a myriad of wellness, fitness, disease management and preventative benefit programs with poor penetration or participation from members.
Lojo
Arvin C. Lojo, health plan administrator, TakeCare Insurance Co. Inc.
The increase in insurance premiums in Guam is driven by varying factors such as but not limited to higher pharmaceutical costs due to supply and distribution challenges; limited specialty services where for the majority of the services people need to go off island; the higher cost of living which affects the cost of health care services and supplies, population risk factors due to high prevalences of diabetes, hypertension and other chronic conditions.
Typhoon Mawar hit Guam on May 24, 2023 with maximum sustained winds of up to 140 miles per hour and gusts up to 165 miles per hour. Household and other waste was held at Tiyan in Guam.
Journal file photo
What recent developments are occurring in the insurance industry in Guam, particularly concerning updates or enhancements in your insurance package offerings?
Frank J. Campillo:
We have implemented various wellness initiatives in the different markets that we operate in, including wellness rewards programs to promote staying healthy and achieving wellness goals. Our key objectives are to mitigate the gaps in medical care that exist in our island and provide our members access to quality medical networks in Guam, Hawaii, the Continental U.S., the Philippines and other nearby Asian countries.
Marilou L. Besagar:
The Insurance Association of Guam recently secured the approval of the Insurance Commissioner for a new tariff on Auto and Homeowners insurance.
Insurance companies are to comply immediately with these changes. An increase in auto losses is driven by the high cost in materials/parts, shipping costs and the new AI technology found in new vehicles. When you add competition into this mix, it equates to an immediate solution to control the auto insurance rates.
The same is also true with Homeowners Insurance – an increase in material and labor costs, especially after Typhoon Mawar highlighted the need to revise the rates. GNIU will continue to offer Non- Life and Life products and intends to remain one of Guam’s strong insurance players this year and for the years to come.
Brent Butler:
After writing insurance policies on Guam and the CNMI for the past 50 years, Tokio Marine Pacific Insurance Ltd. discontinued issuing property and casualty insurance policies in September 2023.
Nanbo Insurance Underwriters had been the general agent for Tokio Marine since 1969. Basically, Guam was too small for Tokio Marine to operate, as Tokio Marine is one of the largest insurance companies in Japan. Due to its decision to discontinue underwriting property and casualty insurance, Nanbo Insurance was forced to find another insurance carrier to represent. On July 19, 2023, Island Home Insurance Co. appointed Nanbo Insurance Underwriters to be its General Agent.
Jerry Crisostomo:
The health insurance industry market will continue to see more enhancements and advancements in technological and digital tools for members, expanded coverage for telemedicine healthm more attention to mental health benefits, and improved offerings on consumer driven high deductible plans and mail order prescriptions. Additionally, since the Government of Guam has successfully transitioned to a self-funded health plan for its employees and retirees, we have seen an increase in interest from commercial groups wanting to learn more about how the self- funded plan would work for them. In the U.S. market, over 62% of employers with 100 or more employees are self-funded. Although, Guam is somewhat behind in this transition, the self-funded concept has indeed garnered serious interest from Guam employers, since the fully insured program has become financially unsustainable and unaffordable with premium increases escalating each year at double digit rates.
NetCare made a corporate decision several years ago to implement and adopt a ‘three legged’ market consisting of a fully insured market, a self-insured market and a Network Access Market. Today, our fully insured market makes up 33.7%, our self –insured market is 37.8% and our Network Access market at 28.4%. This allows us to diversify our market offerings and give employers options to better control their healthcare dollars.
Arvin C. Lojo:
TakeCare continues to review how its benefit plan offerings can incorporate technological advances in medicine which drives costs higher, while providing better means in managing and minimizing long term recoveries or treatment. Likewise, we continue to focus on overall population health management by improving outcomes through preventative and screening efforts, wellness and fitness programs and disease management using data analytics and collaborative partnerships.
Is there any ongoing effort aimed at mitigating the expenses associated with medication in Guam?
Frank J. Campillo:
Controlling prescription drug costs has always been a challenge for our industry and our island, especially since we have the challenges of added expenses such shipping cost, a relatively small market, and few distribution channels. As mentioned prior, drug manufacturers are poised to increase prescription drugs in 2024, affecting a significant number of drugs widely used to treat today’s prevailing illnesses such as diabetes, high blood pressure, cardiovascular diseases, and cancer. The increases have also affected widely used preventive vaccines.
Jerry Crisostomo:
NetCare has implemented a mandatory use of generic drugs as well as implementation of closed premium drug formulary across all benefit plans. This has resulted in an overall plan-wide generic drug utilization of 90% ,which is way above the national average for generic drug usage of 78%.
Arvin C. Lojo:
TakeCare continues to develop and implement programs to minimize drug costs. These strategies include promoting the utilization of generic medication, establishment of cost-effective drug distribution channels, clinical programs to increase medication adherence and ensure appropriate and timely usage of preferred brand and specialty medication through collaborative partnership with other health care stakeholders.
Typhoon Bolaven passed just North of Guam the night of Oct. 6, 2023 with its center kicking the island of Rota in the Northern Mariana Islands. The coming onset of the storm generated long lines at gas stations in Guam.
Glimpses Media file photo
Could you provide insights into the pharmaceutical coverage included in your insurance packages, particularly for conditions like diabetes and heart conditions?
Frank J. Campillo:
Our health plans include coverage for a wide range of prescription drugs through a formulary that is designed by the Pharmacy and Therapeutic Committee of our Prescription Drug Manager. The formulary includes coverage for preventive drugs in accordance with “USPSTF” without co-pay and coverage for drugs to treat just about every disease affecting our island such as diabetes and cardiovascular diseases. Coverage and co-payments differ based on the type of health plan offered.
Jerry Crisostomo:
NetCare provides prescription drug coverage across all benefit plan designs in all markets that we currently serve. Prescription drug coverage includes coverage for most medical conditions including diabetes and heart or cardiac conditions. NetCare has implemented a mandatory generic prescription drug coverage at a low co-payment plan. Drug coverage for brand and/or specialty drugs are only covered if a generic drug is not available. Brand and specialty drugs are offered at a much higher co-payment plan.
Arvin C. Lojo:
TakeCare prides itself in offering disease management and wellness programs and incentives as part of its benefit plan offering that promotes medication adherence, lower out of pocket for the members at preferred pharmacies and focus on health outcome improvements.
In comparison to the continental U.S., are medication prices notably higher in Guam and Micronesia, and why is that so?
Frank J. Campillo:
Prescription drugs are normally higher in Guam and Micronesia for various reasons to include transportation cost, market scale, and limited distribution channels.
Jerry Crisostomo:
The cost of drugs is more expensive in Guam as compared to the U.S. mainland due to limited choices of pharmaceutical wholesalers and distributors that ship drugs and medical devices to Guam as compared to many options of companies available to the U.S. mainland market. This may open an opportunity for pharmaceutical vendors to impose a higher purchasing price on medications due to the lack of competition. Other factors contributing to the high cost of pharmaceuticals is the shipping cost and the stocking of drugs with a limited shelf life. Therefore, it is conceivable that pharmaceutical services rank as the second highest healthcare expenditure in Guam.
Arvin C. Lojo:
Drug prices in Guam are primarily higher due to supply and distribution challenges relating to the costs of shipping and sourcing these medications to Guam. Prices are also impacted by the lack of deeper discounts and rebates that drug manufacturers extend to U.S. mainland and/or Hawaii pharmacies.
How do pharmaceutical costs in Guam and Micronesia compare to those in the UK, other European countries, and Japan, known for lower healthcare expenses?
Frank J. Campillo:
The cost of pharmaceuticals is generally highest in the U.S. when compared to other countries, and Guam may be even higher due to the added transportation fees and the reasons stated previously. Attempts to bring drug prices down have been made by both the Trump and Biden administrations, including a new rule allowing Medicare to directly negotiate prices with drug manufacturers. Most countries have a central body or committee that negotiates or sets drug prices for the populations — which the U.S. does not have. According to a 2022 RAND report, drug prices in the U.S. were in general 2.78 times higher combined for brand and generic medications when compared to other OECD countries.
Jerry Crisostomo:
Prescription costs are higher in Guam due to FDA regulations and bureaucracy etc. In the U.S. market, the pharmaceutical companies determine their drug pricing unlike foreign countries such as Europe, and Asia where the government determines a strict pricing control for prescription drugs. For example, Stelara which is a medication to treat psoriasis would cost $14,519 per vial, yet in the Philippines, the cost for this same medication is $2,070 per vial from the same pharmaceutical company. Another example is Harvoni, a drug that treats the Hepatitis C disease would cost $96,390 for 90 tabs in Guam, yet this same medication would cost $1,260 for 90 tabs in the Philippines.
Arvin C. Lojo:
Unlike other countries, pharmaceutical prices in the United States are not as highly regulated compared to Europe and Japan. There is also the limited competition amongst pharmaceutical companies, which affects drug pricing.
