A few years ago, an attendee at a seminar I lead told the group that one company, Stanley Tools, had eliminated co-pays for prescription drugs. This was 180 degrees from the common practice at the time of raising co-pays to “control health care costs”. Well, the good news is that the practice is spreading, as reported in Tuesday’s Wall Street Journal (subscription required). Evidence has been mounting that prescription drugs improve outcomes in the long term and cut costs in the long term. Some of the quality measurement initiatives look at patient compliance. Raising co-pays decreases compliance, as patients either forgo the drug or cut the dosage to save money. Put together, real savings with better outcomes are a lost opportunity, and no one comes out ahead.
As reported in the article, some examples include:
· Marriott cut copayments for drugs related to heart disease, diabetes and asthma.
· University of Michigan cut copays for diabetes patients.
· Pitney Bowes gives away diabetes and asthma drugs and has cut copays for osteoporosis treatments, anti-seizure drugs and others.
· UnitedHealth cut copays for a chlorofluorocarbon-free asthma inhaler.
Employers are focusing on chronic conditions that carry the most risk of higher costs when treatment does not happen. Over the next several years, we will be able to see changes in outcomes and cost as the financial barriers are removed.
Way back when, the idea was that spending on preventive care upfront saved money by avoiding or minimizing health problems later on. The original HMOs – the real HMOs (as opposed to the investment scheme behind so many HMOs today) put their money into preventive care, and forced patients to a medical home – a primary care physician. As the Reagan administration led the move to make healthcare nothing more than a commodity to go to the lowest bidder, long term relationships, and long term returns on investing in health went away, replaced by companies hopping from insurance plan to plan trying to save some money, but spending more in the end. The insurers have a disincentive to invest in prevention, as the people they cover may be another company’s customer next year.
There remains in some circles the bizarre – and false – notion that individuals have no personal financial responsibility for paying for health care. I don’t know what kind of health plan the gang at the Heritage Foundation has, but in the US, patients pay about 20 percent of costs out of pocket. On prescription drugs, it can be a higher percentage (and yes, or lower). This doesn’t include the personal share of insurance premiums.
Individuals have personal responsibility. The insurance system was treated as a commodity, forcing short term decisions for the financial benefit of the company (or, in their defense, the survival of the company) rather than making long term investments for the benefit of their customers AND the company. It can happen. Maybe long term contracts would make sense, with premium increases capped, and certain obligations on the companies. Think of it the way one signs a lease for office space.
The pain is such that we are seeing rationale solutions coming online for our healthcare needs. I’m optimistic for our future – we’ve solve tougher problems before.