$19,616 — that’s the average cost nationwide of an employer-provided family health plan in 2018 according to recent employer study conducted by the nonprofit Kaiser Family Foundation and reported in today’s Wall Street Journal. It’s pretty staggering to think about the fact that $19,616 is only the average and that there are more than a few folks across the country paying a lot more than the average.
The dirty little secret that’s fast becoming less of a secret is that hospitals charge health plans anywhere from 2 to 5 times more for hospital services than they charge Medicare.
Per the WSJ article, a “major driver of employer premium growth over the years has been the prices that insurers and employers pay for health care”.
For several years now, and possibly even more so today, the increasing prices for hospital-related services and hospital stays have been the major cost driver of insurance premiums for private insurance coverage. The prime drivers for the hospital price hikes include hospital pricing for emergency-room visits, surgical hospital admissions and administered drugs.
Hospital pricing is especially crazy. This is particularly true as it relates to the health plans that employers provide to the approximately 150+ million Americans that rely on employer-sponsored health plan coverage. The dirty little secret that’s fast becoming less of a secret is that hospitals charge health plans anywhere from 2 to 5 times more for hospital services than they charge Medicare.
We’ll be reporting more about this conundrum that is hospital pricing and what’s being done to combat or rein in the crazy pricing in upcoming posts.
Drug Coupons Explained
We encourage and help anyone we can to obtain a coupon for their prescriptions.. We know, however, that there are emerging issues with them.
Drug manufacturers have some amazing but expensive medications. They have created coupon programs that help the consumer pay for the prescriptions up until that consumer reaches their insurance company deductible (most coupon programs require the consumer has insurance).
For the consumer, that appears to be fine. That is the good.
Once the member meets their deductible (even though they may not have actually paid that full amount, due to the coupon), the insurance company is hit with the cost. For the remainder of the year the carrier is paying the full cost on refills for that prescription. That is the bad (at least for the insurance company).
The battle between the manufacturer and insurance company is now heating up. The manufacturer wants to let the consumer off the hook for the cost (so they will use their product) but wants to get to the carrier reimbursement portion. Some insurance carriers have concluded that since the consumer did not actually pay for the prescription, deductible credit should only be given for what the consumer actually paid. We assume more carriers will follow suit.
We are beginning to see the consumer caught in the middle. The manufacturers do not want to keep filling the prescriptions for free. If they see that the member was not given deductible credit from the insurance carrier, the member is then billed for the full cost. The consumer assumes the coupon will work and does not find out it was rejected until after the prescription has been filled. The consumer then gets billed. And, that is the ugly.
We at BBG still see the coupon option to be worth researching and using. However, we are urging our clients’ employees and dependents to research this and reach out to us for help. We know a lot about these options and are learning how get ahead of being blindsided.
On June 19th the Department of Labor released final regs that offer new options for associations to sponsor health plans for their members. There’s no clear picture yet of what will emerge out of the new “Association Health Plan” (AHP) regs and how the new regs will impact health coverage options for small businesses. Here are a few of the highlights from what we know so far about the status and the market implications of the new AHP regs:
We’ll continue to monitor and report back with any significant developments. For those interested in peeling back the onion on the new regs, healthcare attorney Larry Grudzien has an informative webinar posted on his website that does a good job of diving into the details.