For people with chronic conditions, consistent medication use and access to routine health services to manage their condition is essential for maintaining a high quality of life. However, financial barriers created by outdated health insurance benefit designs can interrupt needed care for some patients.
High-deductible health plans (HDHPs), for instance, feature lower-than-usual monthly premiums and higher deductibles, and are often combined with health savings accounts (HSAs), which allow beneficiaries to set aside tax-exempt money for medical expenses. These plans require consumers to pay more upfront for their health care before insurance coverage kicks in.
Patients with chronic diseases who require regular care or medications can end up paying thousands of dollars in health costs at the beginning of the year to meet their deductible, leading some to avoid needed care. Delaying preventive or needed care generates larger health system costs over the long term as patients wait to get care until they experience acute, costlier-to-treat conditions.
As health care spending has risen, HDHPs have grown increasingly common so addressing this problem could have a large impact on overall health care spending and the heath of millions of patients. In July 2019, the Internal Revenue Service (IRS) issued a new rule allowing HSA-HDHPs the flexibility to cover 14 medications and services used to prevent the exacerbation of chronic conditions prior to meeting the plan deductible.
A new study funded by the National Pharmaceutical Council and conducted by Paul Fronstin, PhD, of the Employee Benefit Research Institute and A. Mark Fendrick, MD, of the University of Michigan examined whether large employers had changed their health plan coverage in response to the new IRS rule. The researchers surveyed benefits decision-makers at 354 large employers and found that 3 in 4 large employers have adopted some level of pre-deductible coverage.
Medications and services for heart disease and diabetes were the most likely to be included for pre-deductible coverage, with 66% adding pre-deductible coverage for blood pressure monitors and insulin/glucose lowering agents, 61% adding coverage for glucometers, and 54% adding coverage for beta-blockers. About 64% of employers covered six or fewer of the 14 medications and health services allowed by the IRS rule, while only 8% added covered all 14 services.
Almost all employers (96%) adopted pre-deductible coverage for telehealth services, as allowed by a temporary provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. This provision will end on Dec. 31, but three-quarters (76%) of employers said they would prefer to make the provision permanent.
Employers offered several reasons for adding pre-deductible coverage, but the primary one for 74% of respondents was “to do right by our employees.” Many also had business considerations such as employee retention (64%) and employee attraction (52%).
When employers offer pre-deductible coverage, patients may still have cost sharing requirements such as copayments or coinsurance for these medications and health care services. The survey showed, however, that some employers are voluntarily waiving patient cost sharing. Depending on the medication or service, 25% to 40% of employers eliminated patient cost sharing altogether.
Significantly, the survey revealed there is an appetite among employers for further expansion of pre-deductible coverage, with most employers (81%) indicating they would include pre-deductible coverage for additional drugs and health care services if allowed by law.
Some members of Congress are attempting to do just that. Sens. John Thune (R-SD) and Tom Carper (D-DE) and Reps. Earl Blumenauer (D-OR) and Tom Reed (R-NY) are championing the Chronic Disease Management Act to give HDHPs the flexibility to further increase pre-deductible coverage for chronic disease management.
Prior NPC-funded research conducted by VBID Health found that providing pre-deductible coverage for 57 drug classes covering 11 chronic conditions, which could increase medication adherence for patients and lower their out-of-pocket costs, would require only a modest premium increase of less than 2%.
A recent survey by America's Health Insurance Plans and the Smarter Health Care Coalition found that most health insurance providers also adjusted their HSA-eligible plans to cover more chronic disease prevention services on a pre-deductible basis. The survey also found that reducing or eliminating cost sharing for these services was indeed modest, with most respondents reporting that premiums did not change at all or increased by less than 1%.
While there has been substantial uptake in offering pre-deductible coverage, the EBRI survey shows that employers would embrace the opportunity to add more preventive medications and health services for pre-deductible coverage. However, the IRS rule states the list of preventive services will only be reviewed every five to 10 years. Given the speed of medical innovation and the benefits for patient health when they can access the latest, most effective therapies, this is too long to wait. Already some services that may meet the criteria for pre-deductible coverage are not included in the list.
For example, angiotensin converting enzyme (ACE) inhibitors are included to prevent exacerbations for those with congestive heart failure, diabetes, and/or coronary artery disease. But ACE inhibitors may not work effectively for some patients, who are usually switched to angiotensin receptor blockers (ARBs) to prevent the same exacerbations. ARBs meet the criteria of the IRS notice, but are not included in the list of 14 services allowed to pre-deductible coverage.
Expanding pre-deductible coverage further could benefit the health of millions of Americans suffering from chronic conditions as well as lower health care costs by reducing barriers to appropriate, high-value care.