You’re breathing a sigh of relief that open enrollment is over and you won’t have to think about healthcare benefits for the next several months. But you shouldn’t put your medical and prescription drug plans on the shelf so quickly. You need to understand what impact your new offerings may have on employees and the impact to your short- and long-term costs.
HDHPs and Rx Price Hikes Are a Double Whammy for Your Members
Your offering probably includes a high deductible health plan (HDHP), which you think is helping to reduce your costs. But what you may not know is that members with HDHPs through private insurance delay treatment and preventive care, which could increase your costs in the long-run (Health Affairs). Coupled with rising prescription costs, members are forced to make difficult decisions that impact their health, quality of life, and job performance. A Consumer Reports survey of nearly 1,200 US adults shows that many are forced to “cut back on groceries, delay retirement, or ration their own healthcare in potentially dangerous ways” due to high Rx costs.
Impact of Rx Increases on Member Health
When faced with Rx price hikes, members made difficult decisions. They:
|Decision||Percentage of Members who Made This Decision|
|Didn’t fill prescriptions at all||30%|
|Took medication less often than prescribed||16%|
|Cut pills in half without talking to their doctors||15%|
|Took expired medications.||18%|
They also took other steps, like postponing medical tests and skipping office visits. Those who didn’t experience Rx price hikes for their medications took similar cost-saving measures (see survey).
Financial Impact of Rx Increases
People hit with Rx price hikes also had to make some tough lifestyle changes. They:
|Decision||Percentage of Members who Made This Decision|
|Spent less on groceries||32%|
|Charged more on their credit cards||31%|
|Postponed paying other bills||21%|
|Delayed retirement to keep insurance coverage.||12%|
They also took other cost-saving steps, as did those who were not impacted by Rx price hikes (see survey).
Decline in Quality of Life Could Impact Employers
You may think that how your employees spend their money is none of your business, but you couldn’t be more wrong. It could be very bad for business—yours.
The Cost of Poor Nutrition
If your members are spending less on groceries, they’re probably eating less healthily. A meta-analysis by the Harvard School of Public Health found that it costs $550 more per person per year to eat healthy in the US. Unhealthy eating accounts for approximately 71 billion dollars in yearly medical costs, according to the US Department of Agriculture. It’s a major cause of obesity and nutritional deficiencies, and according to US Department of Health & Human Services, has been linked to:
- Heart disease
- High blood pressure
- Type 2 diabetes
- Certain types of cancer.
The Cost of Stress and Anxiety
Financial pressures can cause people to become distracted at work, leading to decreased productivity, absenteeism, or presenteeism issues for you. Such distractions could also result in safety issues, including putting other employees at risk. Financial worries can also lead to mental health issues such as anxiety, which according to an article in the Journal of Clinical Psychiatry, costs the US more than $42 billion a year, or almost 33% of the country’s total $148 billion mental health expenditure.
Paying Cash for Prescriptions
To lower their prescription drug costs, people have begun paying cash instead of using their insurance because it’s cheaper. Sites like GoodRx or Blink Health offer coupons or negotiate better rates than some insurers for some medications. In an article, reporters from the both New York Times and ProPublica found lower prices through GoodRx than through their insurers/PBMs. “Many were drugs that can be purchased for $4 at Walmart without any coupon.” Covered individuals paying cash for medications may be getting lower prices, but they aren’t able to apply the amount toward their deductibles, which could hurt them in the long run if they end up reaching their deductible.
What Can You Do?
You can take steps to help employees and their dependents mitigate the high costs of prescriptions.
- The Consumer Report survey article provides some tips to help make drugs more affordable for its readers. Use these and other tips from your insurer to educate your members. This includes encouraging members to ask the insurer during open enrollment if the medications they’re taking are covered.
- Allow members to apply the amount they pay in cash for prescriptions toward their deductibles and out-of-pocket spending maximums.
- You may not know this, but in some cases, if your members must pay a set copayment for prescriptions no matter what the actual cost, your insurer may ask the pharmacy to collect the full amount anyway and send it to the insurer. This practice, called clawback, caught the attention of attorneys across the country who have brought suits against some big insurers for overcharging consumers. Make sure your insurer doesn’t engage in clawback.
- PBMs often negotiate better deals on brand name drugs, but generics often are batched by group of drugs, so you aren’t always getting the best price on individual generics. Negotiate a better deal with your PBM to get individual pricing on generics and demand transparency into how “batched” drugs are priced.
It’s your fiduciary duty under ERISA to ensure you’re paying only reasonable plan expenses. While health benefits programs have not been put under the same legal scrutiny as 401(k) plans have, overpaying for generics could present a valid challenge. And the clawback lawsuits will certainly bring calls for better oversight of insurer practices. You need to demonstrate that you’re not diligent in your efforts to prudently carry out your fiduciary duties. How can you do that with the limited reporting you are receiving from insurers, PBMs, and other vendors?
It’s time you took greater control over your benefit offerings to ensure you are delivering the best value for both you and your members. For that, you need to take ownership of your data, collecting and storing it with a third-party vendor who can drill deep into the data to give you the answers you need to fulfill your duties and to better manage your costs.