The Wall Street Journal, October 12, 2010 contains an interesting article on the growing number of people who leave their prescriptions at the pharmacy when they hear the cost of the drug to them, the cost being the co-pay or the coinsurance.
According to the article, the abandonment rate, that is leaving the prescription at the pharmacy, was up 55% in the second quarter of this year. The average co-pay for a brand name drug rose to $28.00 since 2000 according to the report. That is $28.00 mind you, not $2800 dollars.
Patients are notorious for not taking their prescriptions as ordered, skipping dosages, not completing the prescription or simply not taking the drug at all. Abandonment is a new twist that goes along with the psyche that says parents cannot afford flu shots for the kids because they are not covered by the health plan, but have plenty of money to spend on a cell phone. Of course, that worry is going away as PPACA requires somebody else to pay 100% of the cost of a flu shot.
Clearly in some cases health care is unaffordable, but in far more situations, it is a matter of priorities in spending ones money, especially for more routine expenses. That is the essence of the health care problem; we see no value in spending our own money on health care.
The relatively new form of health insurance, the high deductible health plan (HDHP) is a good example of our priorities. In return for a high deductible, starting at about $2,400 for a family, there are much lower premiums. Plan participants assume part of the risk, betting that healthcare spending up to the deductible amount will not offset the savings in premiums. However, when the risk is realized people scream, “You expect me to pay $325 for that prescription?” Well, yes, just as the insurance company pays a claim in return for your premium payment. In the case of prescription drugs, the HDHP can be a real shock because the co-payment approach is not permitted and the patient pays the full cost up to the deductible, which cannot be applied on an individual basis, but collectively as a family unlike traditional insurance coverage where there are individual and family deductibles.
Patients Take More Power over Prescriptions
There is a clear trend among employers to raise co-payments for prescription drugs and to place strong financial incentives on the most efficient use of drugs. These incentives include higher cost sharing for brand (as opposed to generic), for non-formulary brand drugs and lower costs for using a mail order pharmacy. In other words, employers are steering patients to be efficient consumers of health care, at least when it comes to prescriptions. The problem we face is the critical point where cost sharing inhibits health care and there are diminishing returns as a result.
How much cost sharing is too much?
The problem in answering that question is that it is not a dollar and cents issue, it is emotional and perceptual. What the average person can afford and what they think they should pay are two different things. Employers who hike cost sharing would do well to spend time and money on education and communication (for employees and their families) so that their efforts do not prove counterproductive.
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