Leaders at all levels of government and civil society are alarmed at the continued rise, year after year, in the death rate from opioid overdose. The latest numbers for 2015 report a record 33,000 deaths, the majority of which are now from heroin. Health insurers are not a disinterested party in this matter.

Cigna, America’s fifth largest insurer, recently announced it has made good progress towards its goal of reducing opioid use by its patients by 25% by mid-2019. To that end, Cigna is limiting the quantities of opioids dispensed to patients and requiring authorizations for most long acting opioid prescriptions. Cigna is encouraging its participating providers to curtail their use of opioid prescriptions for pain patients and is providing them with data from monitoring the opioid use patterns of their patients with an aim towards reducing abuse.

In a Washington Post report on this announcement Cigna CEO David Cordani said, “We determined that despite no profit rationale—in fact it’s contrary to that—that societally we needed to step into the void and we stepped in pretty aggressively.”

No profit rationale?

Paying for fewer opioids saves the insurer money in the short run. And opioids have become costlier as “tamper-resistant” reformulations, encouraged by the FDA, have led to new patents allowing manufacturers to demand higher prices.

There is growing evidence that, as doctors curtail their opioid prescriptions for genuine pain patients, many in desperation seek relief in the illegal market, exposing them to adulterated opioids as well as heroin. For the same reason, recent studies on the effect of state-based Prescription Drug Monitoring Programs (PDMPs) suggest they have not led to reductions in opioid overdose rates and may actually be contributing to the increase. It is reasonable to be skeptical that Cigna’s internal prescription drug monitoring program will work any differently.

Further research suggests the community rating regulations of the Affordable Care Act may be contributing to the problem. The ACA requires insurance companies to sell their policies to people who have very expensive health conditions for the same premiums they charge healthy people. At the same time, the ACA’s “risk-adjustment” programs systematically underpay insurers for many of their sickest enrollees. The overall effect is that the ACA penalizes insurers whose networks and drug formularies are desirable to those who are sick. Insurers respond to this disincentive by designing their health plans to have with provider networks, drug formularies, and prescription co-payment schedules that are unattractive to such patients, hoping they will seek their coverage elsewhere. This “race to the bottom” between the health plans results in decreased access and suboptimal health care for many of the sickest patients.

Researchers at the University of Texas and Harvard University, in a National Bureau of Economic Research working paper, show “some consumers are unprofitable in a way that is predictable by their prescription drug demand,” and “…Exchange insurers design formularies as screening devices that are differentially unattractive to unprofitable consumer types,” resulting in lower levels of coverage for patients in those categories.

The researchers rank drug classes by net-loss to the insurer (per capita enrollee spending minus per capital enrollee revenue). Opioid antagonists, used to treat opioid addiction, exact the third highest penalty on insurers, about $6,000 for every opioid antagonist user. (See Table 2.)

This suggests that patients suffering from opioid dependency and/​or addiction (there is a difference) are victims of the race to the bottom spawned by the ACA’s community rating price controls.

Thus, the opioid overdose crisis and the ACA mandates—especially community rating—combine to make the “perfect storm.” Insurers team up with state and federal regulators to curtail the prescription of opioids for chronic pain patients, leading many to suffer needlessly and driving some, in desperation, to the illegal drug market and the risk of death from overdose. Meanwhile, the ACA penalizes insurers who help patients seeking rescue from the torment of dependency and addiction.