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High-Deductible Plans Saddling Workers with Bigger Drug Outlays

February 5, 2020 at 6:37 pm

drug cost

A new study has found that high-deductible plans and increased use of coinsurance are exposing health plan enrollees to higher and higher pharmaceutical costs.

One of the big problems for many enrollees in high-deductible plans is that their outlays for drugs may not count towards their health plan deductibles and, if they are enrolled in separate pharmaceutical plans, they may have to pay the full list price until they meet their drug deductible, according to the “2019 Kaiser Family Foundation Employer Health Benefits Survey.”

The report warns of a growing crisis for American workers, more and more of whom are struggling with their health expenditures, be they premiums, deductibles, copays and/or coinsurance.

Workers in small firms face relatively high deductibles for single coverage and many also are saddled with significant premiums if they choose family coverage, according to the study.

The cost of group health insurance is growing at about 4% to 5% a year, reaching $7,188 for single coverage in 2019 and $20,576 for family coverage.

Workers in small firms on average contribute 16% of the premium for single coverage, compared with workers at large firms (19%), according to the report. But small-firm employees contribute 40% on average for family coverage, compared to 26% for staff at larger firms.

That said, 35% of covered workers in small firms are in a plan where they must contribute more than one-half of the premium for family coverage, compared to 6% of covered workers in large firms.

But premium contributions are only part of the story. Eighty-two percent of covered workers have a general annual deductible for single coverage that must be met before most services are paid for by the plan, and that average deductible amount is $1,655. But, the average annual deductible among covered workers with a deductible has increased 36% over the last five years, and by 100% over the
last 10 years.

The hidden cost-driver

With all this as a backdrop, the cost of prescription drugs is one of the largest challenges facing group health plan enrollees, especially those who are enrolled in high-deductible health plans, whose out-of-pocket expenses for pharmaceuticals can be especially burdensome. It is the hidden cost-driver in the system.

The Kaiser survey found that about 90% of covered workers are enrolled in plans where the health plan deductible must be met before prescription drugs are covered. But, this number has been shrinking as group coverage pricing increases and employers shift more of the cost burden to employees.

There are a few ways that employees are taking on a significant load with their drug expenditures:

  • First, more workers are enrolled in plans that carve out prescription drugs, meaning that their expenditures on medication do not count towards satisfying their health plan deductibles. About 13% of employees are enrolled in a plan with a separate annual deductible that applies only to prescription drugs.
  • Many people with workers face out-of-pocket costs linked to prescription list prices regardless of the actual net, post-rebate costs. That’s because coinsurance percentages are computed based on the price negotiated between the pharmacy and the plan or pharmacy benefit manager. These negotiated prices are typically close to list prices.

    Even worse, patients pay the entire negotiated price when they are within a deductible and do not enjoy the benefits of rebates that the PBM may have negotiated with drug makers. Patients with these benefit designs do not benefit from rebates, though major brand-name drug makers sell their products at half of the list prices.

  • In the past, health plans had two- or three-tier benefit designs for drugs, mostly for generics and brand-name drugs, with lower copays and coinsurance for the lowest-tier medicines. But as prices have started increasing, many plans have four tiers and sometimes five (the specialty tier).

    The disappearance of two- and three-tier benefit designs have made out-of-pocket expenses especially high for specialty drugs. Plans place therapies for such chronic, complex illnesses as cancer, rheumatoid arthritis, multiple sclerosis and HIV on the fourth and specialty tiers of benefit plan, for which the enrollee has to pay a larger share.

Categories: Uncategorized.

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Average Family Plan Cost Hits $20,000 for First Time; What Can You Do to Cut Costs?

January 28, 2020 at 2:15 pm

healthcare costA new study has found that the average annual premium for a group family health plan has exceeded $20,000 for the first time in 2019, up 5% from 2018.

The average premium for single coverage plans in 2019 is $7,188, up 4% from the year prior, according to the Kaiser Family Foundation’s annual report on employer coverage.

The costs of high-deductible health plans are only slightly less than the average. The average premiums for covered workers in HDHPs with an attached health savings account are $6,412 for single coverage and $18,980 for family coverage.

Increasingly, workers are picking up a larger portion of the health care and insurance tab. In 2019, they are paying $6,015 on average in premiums for family coverage, or about 29% of the total tab. Workers with individual coverage contribute 17.3% toward the total premium.

Additionally, the average deductible for single coverage is $1,655 in 2019, which is unchanged from the year prior, however, the deductible is often higher for workers in small firms ($2,271) compared to large businesses ($1,412).

The average annual deductible among covered workers with a deductible has increased 36% over the last five years and 100% over the last 10 years, according to the report.

Also, 66% of workers have coinsurance and 14% have a copayment for hospital admissions. The average coinsurance rate for a hospital admission is 20%, and the average copayment is $326 per hospital admission.

Another survey by the Kaiser Family Foundation and the Los Angeles Times found that 40% of group health plan enrollees had difficulty affording health insurance or health care, or had problems paying medical bills.

And close to 50% said that they or a family member had skipped or postponed getting health care or prescriptions in the past year due to costs.

Easing the burden

There are steps you can take to ease the burden on both your company and your employees.

Consider plans with telemedicine – More and more employers (69% of firms with 50 or more workers) are offering health plans that cover the provision of health care services through telemedicine. Telemedicine can greatly reduce the cost of care in terms of price for medical visits, as well as the time involved for the employee to travel to the doctor.

Telemedicine can include video chat and remote monitoring.

Utilizing retail health clinics – More health plans will pay for services rendered by retail clinics, like those located in pharmacies, supermarkets and retail stores. These clinics are often staffed by nurse practitioners or physician assistants and treat minor illnesses and provide preventative services. They can greatly reduce the cost of care for these kinds of visits outside normal hospital systems.

Plans with narrow networks – If a health plan can contract with fewer doctors and specialists, there is often less outlay for care. At this point, the jury is still out on exactly how much can be saved, but there are also drawbacks such as:

  • Disruption of provider relationships
  • Employee backlash
  • Reduced access or convenience for employees
  • Lack of specialists.

Tiered or high-performance networks – These networks typically group providers in the network based on the cost, quality and/or efficiency of the care they deliver and use financial incentives to encourage enrollees to use providers on the preferred tier.

Categories: Strovis Insurance.

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