How to Finally Say “NO” to Group Benefits Cost Shifting

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During a time of political polarization, it’s hard to say anything that’ll garner instant agreement from everyone. That healthcare is expensive, though? That’s a no brainer. According to Investopedia contributor Lisa Epstein, the cost of healthcare in the US is twice that of any other developed country. If it were a nation, this sector would be the world’s fifth largest economy.

Now, if costs correlated to quality, we might feel differently – but they don’t. Among the top 11 industrialized countries, the US ranks last for quality of care. We’re looking at a very steep price tag on a relatively unimpressive product. But it gets worse when you think about who pays for it. “The cost of this huge financial burden to every household because of lost wages, higher premiums and taxes plus additional out-of-pocket expenses is more than $8,000,” Epstein said.

So what about efforts to cut healthcare insurance costs?

For example, the manufacturer Mylan reduced the price of EpiPens by 50 percent last month. And, the ACA has brought premiums down since its rollout. Efforts like these look good on the surface. But underneath, invisible costs remain unchanged or continue rising. Meanwhile, the savings they represent are only accessible to some, while many others go on bearing a heavy cost burden. Let’s look at each example more closely.

EpiPen discount: shifting (not cutting) costs, for some (not all)

A two-pack of EpiPens costs around $600 before insurance, said Brenda Goodman at WebMD; the lifesaving drugs they administer, about a dollar a dose. To make the devices more affordable, Mylan is offering a copay discount of $300 through the end of the year.

But the number is misleading. While copay discounts do ease pain at the point of sale, they don’t change the cost of the device for insurers, which continue to front most of the bill and pass it back to policyholders through higher deductibles and copays. The burden isn’t lifted. It’s just better-hidden.

Then, discounts like these aren’t available to everyone. They benefit only those who know about them and who qualify. For example, Medicare patients aren’t allowed to use copay coupons. And copay discounts apply only to individuals; schools and hospitals are still forced to pay full price. All told, the cost isn’t cut. It’s just pushed onto a different portion of the population.

Remember that EpiPens cost what they do only because they’re proprietary. In 1997, before Mylan acquired the rights, an EpiPen cost only $100. Since then, the price has inflated steadily. According to Vivian Stock-Hendel, whose teenage son relies on EpiPens to administer lifesaving medicine for severe food allergies, Mylan’s pricing is “unethical and legal robbery.”

ACA premium hike: rising by double digits in 2017

Some of the provisions originally included in the ACA to keep renewal increases down are expiring this year. Translation: next year’s rates are rising fast. Blue Cross Blue Shield of Texas “is asking for rate hikes of up to 60 percent for next year,” CNBC reported. “In New York, insurers are asking for average rate hikes of 16.6 percent.” In California, the projected average rate increase is 13.2 percent statewide, skyrocketing over the 4 percent average increase logged in each of the last two years, according to the Ventura County Star. The national average increase is likely to land around 10 percent.

Thanks to ACA subsidies, many Americans will be insulated from the impact of these increases. Eleven million people purchase health insurance through the Marketplace; most will be able to do so for $75 or less per month, said CNBC.

But what about those who aren’t eligible for subsidies? People whose incomes are too high, or who buy a plan outside Healthcare.gov, will “feel the brunt of those rate increases,” said CNBC. Some may end up paying 50 percent more or higher for the same coverage.

The moral of these stories?

Many efforts that appear to be cost-cutting on the service are actually cost-shifting when you take a closer look. It’s not enough to cut costs for some, while leaving many others to struggle on under a burden they can’t sustain. It’s not enough simply to obscure rapidly-inflating healthcare costs via superficial solutions. These efforts are not bringing down the cost of healthcare.

If you’re an employer who is tired of shifting costs, and particularly shifting costs to your own employees, take a moment to discover a better way. Use our real-time calculator to instantly determine if you could be saving money with BeaconPath’s cost-saving methodologies.

Plug the two numbers from your Summary (Billed Charges and Paid Claims) into our proprietary calculator and press enter. You will instantly be able to see if the BeaconPath program would result in savings for your company, and it will also tell you the projected savings. Click through to see your results now. After all, isn’t it time to just say “NO” to cost-shifting!

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