By Josh Smiley, CFO, Eli Lilly
It’s no secret the growing prevalence of high-deductible health plans falls hardest on those with chronic diseases.
A survey by the Los Angeles Times and the Kaiser Family Foundation found that people covered by an employer high-deductible health plan, who have at least one family member with a chronic disease, are twice as likely to struggle to pay bills, delay care or ration medicine.
But it doesn’t have to be this way—at least when it comes to the prescription medicines needed to manage chronic diseases. New rules from the Internal Revenue Service confirm that high-deductible health plans can cover certain preventive medicines before patients meet their deductible.
It’s time for employers—who cover half of all Californians, more than any other segment—to drive the insurance marketplace to do a better job caring for people with chronic diseases.
The need for action is urgent. Enrollment in high-deductible health plans has been growing rapidly, and they now cover 37 percent of private workers here.
When out-of-pocket costs rise too high for people with a chronic disease, they end up in the hospital more, with more serious conditions. The California Department of Public Health estimates that 80 percent of all health care expenditures in California stem from chronic diseases and injuries, both of which are preventable.
Two out of every five adults in California have at least one chronic disease and more than half have diabetes or pre-diabetes. So it makes sense for all employers with high-deductible plans to ensure people can afford preventive medicines. One way to do this is through pre-deductible coverage for preventive medicines.
The cost of this pre-deductible coverage is minimal—about 2%, according to a recent analysis. For insulin, it’s even less. Yet few employers are doing it. Even among the largest employers, only one-third offer reduced or no cost-sharing for chronic medicines.
My company, Eli Lilly, has a financial interest in seeing employers reduce costs for the medicines we sell. And we’ve had to answer criticism about the affordability of insulin—responding with solutions that now make 19 out of 20 prescriptions for our most common insulin cost less than $95.
But Lilly is also an employer. And like many companies, we’re trying innovative health benefit designs to reduce out-of-pocket costs for people with chronic diseases—while also slowing spending growth in the company health plan.
Lilly offers our 650 employees in California a high-deductible health plan. But the plan also covers preventive medicines on a pre-deductible basis. That helps employees like Angela McDaniel, a mom of three with Type 1 diabetes. She has paid no more than $50 a month for insulin—versus the $500 it would cost without the pre-deductible coverage Lilly provides. And this year, Lilly’s health plan made insulin cost nothing for employees like Angela.
For all medicines, Lilly’s health plan has lowered costs by passing through rebates to patients at the point of sale. In just one year, sharing these rebates helped more than 11,000 of our members, who saved $265 on average—or nearly $3 million collectively. Also, Lilly’s health plan funds our employees’ health savings accounts all at once in January. So people with chronic diseases have money right away to help them meet their deductibles.
Premiums for our plan have grown an average of just 3 percent annually—half as fast as the trend among all employers.
Employers can reduce cost-sharing for employees without increasing premiums. Here’s how:
- Reducing Low-Value Care: Employers can stop paying for care that has been proven to be of little to no value—and wastes as much as $100 billion a year. The top 5 low-value items to cut are widespread vitamin D screening, PSA screening for prostate cancer in men over 75, diagnostic testing for low-risk patients before low-risk surgeries, imaging for acute low-back pain without other warning signs, and using brand-name drugs when identical generics are available.
- Better Adherence: Selectively lowering cost-sharing for high-value chronic disease management medications has been shown to meaningfully improve adherence, reduce the risk of adverse health outcomes, and, in some cases, reduce expenditures.
I urge my fellow executives at California’s companies to take a hands-on approach with their health plans. If more California employers—especially large employers—reduce cost-sharing for people with chronic diseases, I’m confident California’s workers will be healthier, and California’s companies will be more productive. That’s what we all want.
Josh Smiley is chief financial officer of Eli Lilly and Company, a pharmaceutical company based in Indianapolis, Indiana.
This article was originally published in RealClearMarkets.com.
