With the rise of consumer-directed health plans, today’s patients are playing a more active role in their medical decisions. At the same time, the cost of health care continues to rise, and payers are increasingly shifting the cost-sharing burden onto patients.
As a result, patients are taking a more critical approach to their care. They are more informed about their choices and more aware of their increasing financial responsibility when they seek treatment. For the pharmaceutical industry, it will be critical to better understand how consumer behavior relates to market access for their products.
This trend is expected to grow in coming years. Future health care reform could further encourage a consumer-driven approach to care, so industry stakeholders will need to understand why patients are more involved in their treatments decisions, as well as how this involvement intersects with a rising cost-share burden for treatments.
Patients are Becoming More Involved in Health Care Decisions
Consumer-Directed Health Plan growing in popularity
Consumer-directed health plans, or CDHPs, are changing the way patients approach their health care.
A CDHP is a high deductible health plan that is often paired with a tax-advantaged account, such as a Health Savings Account (HSA). Patients have reduced monthly premiums, yet they must meet a high deductible if they ever seek care. The savings account is used to subsidize the patient’s medical expenses. This setup is designed to encourage patients to more actively manage their healthcare expenses.
CDHPs are an attractive model for both employers and their workers. Enrollment in CDHPs has grown significantly in the last decade. In 2016, 29 percent of workers covered by an employer-sponsored health insurance were enrolled in a CDHP. That’s up from 4 percent in 2006.
In the Health Insurance Marketplace, 90 percent of enrollees had a high deductible health plan in 2016.
Patients using fewer services yet spending more
Despite the growing popularity of CDHP plans, there are some drawbacks to the model.
CDHPs are designed to help reduce health care spending by motivating patients to minimize their medical treatments and eliminate wasteful services. Yet research has shown that individuals could be scaling back their care too much by eliminating both necessary and unnecessary care.
Additionally, a recent study has shown that while individuals are indeed seeking less medical care and decreasing their prescription drug use, they are actually spending more on out-of-pocket costs than individuals in non-CDHP plans.
While the results have been somewhat mixed with the growth of CDHPs, the popularity of these types of plans are expected to continue in the coming years as more employers offer CDHPs.
Health Care Costs Are Continuing to Rise
US Health Care Spending
As consumers become increasingly involved in their medical decisions, they are navigating a health care landscape where costs are continuing to escalate.
US health care spending more than doubled between 2000 and 2011, from $1.37 trillion to more than $2.7 trillion. Spending grew to $3.2 trillion in 2015, which is an average of $9,990 per person. Out of pocket responsibility, such as deductibles and co-payments, made up 11 percent of these costs.
The nation’s health spending is expected to accelerate over the next decade, growing at an average rate of 5.4 percent per year.
US Prescription Drug Spending
The use of prescription drugs has been a significant driver of health care costs. In 2015, prescription drugs accounted for 10 percent of the total health care expenditure, or $323 when adjusted for discounts and rebates. By 2021, drug expenditures are expected to be between $580 billion and $610 billion.
The primary driver behind increased spending on prescription drugs is the rising cost of brand-name drugs. Brand-name drug prices have risen over 100 percent from 2008 to 2015.
New specialty products on the market have astronomical price tags. In 2012, spending on specialty drugs was about $87 million. It’s estimated that this figure could quadruple to $400 billion by 2020. Treatments for hepatitis, autoimmune diseases, and oncology are primarily driving the increased specialty drug spending.
Even generic medications are playing a role in increasing drug spend. Hundreds of generics had price increases of more than 1,000 percent between 2008 and 2015.
Payers Are Shifting Cost-Sharing Burden to Patients
As costs for medical services and prescription drugs continue to increase, payers are increasingly shifting the cost-sharing burden onto patients.
This cost-sharing burden has come in the form of rising deductibles and coinsurance payments for individuals with employer-sponsored coverage. Between 2004 and 2014, patients’ average payments towards deductibles more than tripled and average payments towards coinsurance more than doubled.
Additionally, the percentage of individuals who are required to pay coinsurance, rather than copays, for preferred brand medications has risen significantly: from 8 percent in 2007 to 24 percent in 2015. Since coinsurance requires patients to pay a percentage of the cost of their treatment, rather than a flat rate, this setup makes it hard for patients to budget for or predict their out-of-pocket costs.
These rising out-of-pocket costs, particularly high pharmacy deductibles, can make it challenging for patients to adhere to their treatments. This can be a particularly taxing situation for individuals with CHDPs, as they’re often responsible for the full cost of prescriptions. As employers continue to encourage enrollment into CDHPs, these high deductibles will increasingly expose patients to the price of pharmaceuticals.