The cost of prescription drugs in the U.S. are high and getting higher. What do high prescription costs mean exactly and how is it impacting the group healthcare insurance market? Here are some statistics that show just how out of control prescription drug prices are:
- Spending on prescription medicine per capita in the U.S. is higher than any other country.
- U. S. prices for top-selling medicines are 3 times higher than in Britain, and despite using similar amounts of prescription drugs, the U.S. pays more for them than any other high-income country.
- Prescription costs are up 7% in 2018.
- Overall U.S. prescription expenditure is up to $360 billion, 6% higher than last year.
While rising Rx costs is an enormous issue in itself, this issue becomes even more detrimental when you look at it within other limitations and restrictions of today’s healthcare landscape.
Shrinking Coverage and Rising Deductibles
Just as prescription costs are rising, so are primary health plan costs. To keep these health benefit costs in check, many companies are being forced to downgrade coverage and raise deductibles, thus shifting some of that cost burden onto employees.
That means that on top of rising prescription costs, employees are facing higher overall out-of-pocket costs for all types of health expenses.
(Side note: Because wage increases aren’t keeping up with healthcare cost increases, employees are also spending more of their after-tax income on healthcare costs than ever before.)
Rx Coverage Inside the Deductible
In the past, prescription expenses typically weren’t included in the deductible. That means, prescription coverage was available without having to meet the deductible first. But now many primary plans are including Rx inside of the deductible, which requires that the deductible be met before any Rx coverage kicks in. And you guessed it, most deductibles are higher today than ever before.
Layering on supplemental insurance has always been a great way to add additional coverage, but what many don’t realize is that there are two types of supplemental health insurance. One in particular can really aid in providing additional coverage for prescription expenses, but the other lacks that capability. It’s important to know the difference.
Supplemental voluntary insurance is the type that many immediately think of when they hear ‘supplemental.’ This category includes hospital indemnity, cancer and critical illness insurance. While these plans do offer additional coverage, they are subject to disease- and event-driven conditions. That means that if the specified disease or event doesn’t occur, there is no coverage. These required events can be hospitalization, cancer, a heart attack, or other diseases. The downside is that this type of supplemental plan likely won’t provide any coverage for any prescription expenses not associated with that particular event. So, if you have cancer insurance and are diagnosed with MS, then you’re stuck with paying for those expensive medications out of your own pocket. And, you also need to pay for any routine Rx, which make up a huge chunk of employees’ out-of-pocket expenses.
Supplemental expense reimbursed insurance, on the other hand, is a type of supplemental health insurance that can provide coverage for a wide range of expenses without disease- or event-driven conditions to trigger coverage. That means that this insurance can provide reimbursement for everyday prescription expenses, doctor co-pays, and other deductible expenses, as well as reimburse for more unexpected expenses like IVF treatment, MS or a hospital stay.
While U.S. prescription expenses will likely continue to rise, increasing employee out-of-pocket costs even more, supplemental expense reimbursed insurance is a solution that can counter this issue and provide employees with the financial protection they need.