According to an issue brief from VBID Health, providing pre-deductible coverage for medicines used to treat common chronic conditions could lower out-of-pocket costs and increase medication adherence for patients. With more than 40 percent of Americans enrolled in a high-deductible health plan with an individual deductible of at least $1,300 or $2,600 for a family, pre-deductible coverage could have a beneficial financial impact.
Under the Internal Revenue Service’s current Safe Harbor section of the Internal Revenue Code, only certain types of preventive services may be covered by a health care plan prior to meeting the plan deductible. Until the deductible is met, “coverage does not include ‘any service or benefit intended to treat an existing illness, injury or condition, including drugs or medications.’” While preventive care is important, chronic conditions cannot be overlooked: Spending on chronic disease comprises a substantial majority of total U.S. health care expenditures. Thus, for many Americans, managing a chronic condition means paying higher out-of-pocket costs.
The VBID Health paper considers the financial impact of pre-deductible coverage of medications for chronic conditions should the current law be changed.
Using a baseline hypothetical HDHP with a $2,000 deductible and 10 percent coinsurance until reaching the $6,500 out-of-pocket maximum, this study examined how providing pre-deductible coverage for 57 drug classes covering 11 chronic conditions would impact out-of-pocket costs, plan expenditures and premiums. Although it would increase utilization and shift some costs to health care plans, the study found that the overall impact would be modest, requiring a premium increase of less than 2 percent.