July 15, 2022
By Bob Herman and Tara Bannow
Next year, UnitedHealthcare will offer employer health plans that have no copays or out-of-pocket costs for five vital drugs — insulin, epinephrine, glucagon, naloxone, and albuterol — but those discounts will only be a guaranteed for less than a quarter of UnitedHealthcare’s membership for now.
The news of the plans comes right as UnitedHealthcare’s parent company, UnitedHealth Group, reported revenue and profits in the second quarter that blew away Wall Street’s expectations. UnitedHealth’s $5 billion net profit was its second-largest quarterly profit ever, only beat by the second quarter of 2020, when the pandemic led to widespread delayed care.
Starting in 2023, fully insured employers — companies that offload all of the risk of covering workers’ medical and drug expenses to insurers — can choose UnitedHealthcare’s new plans that make those five drugs free for patients. UnitedHealthcare covers 8 million people in fully insured plans, about 20% of its total U.S. membership. Medicare Advantage and Medicaid plans are not included in the new free drug offering.
It’s a consumer-friendly move that experts say also has a good shot at giving back to UnitedHealthcare’s bottom line by preventing patients with diabetes, asthma, or severe allergies from ending up in the hospital.
“This happens to be a case I think where the incentives for United and the benefits for consumers might align a little bit,” said Andrew Mulcahey, a senior policy researcher at the RAND Corporation. “So it’s kind of a win-win in some ways.”
Self-insured employers, which pay their workers’ medical and drug claims but use insurers as a claims processor, are still free to choose their own drug plan design. In fact, some self-insured companies have already made insulin and other medications free for their workers for years, through a movement called “value-based insurance design.”
The idea behind making life-saving drugs like insulin free for patients is they’re not optional for those who need them. Tacking on copays or deductibles could mean people don’t get the medications, potentially leading to catastrophic outcomes. UnitedHealthcare’s move aligns with value-based insurance principles, said Len Nichols, a health economist with the Urban Institute.
“We shouldn’t be charging copays for people to get stuff they really need,” Nichols said. “The conditions these drugs are designed for, there is no question: If you need that stuff, you need it.”
UnitedHealthcare’s move to make insulin and other drugs free for some isn’t a new concept, but “any policy that removes financial barriers for essential services is a very important one,” said Mark Fendrick, one of the original pioneers of value-based insurance design.
The important part is that UnitedHealthcare isn’t just making copays $0 for those five drugs. It would eliminate all cost-sharing, which therefore includes the deductible for those medications.
“Even if you make copays low, deductibles are high,” Fendrick said. “It’s pre-deductible coverage that really matters.”
Making more services and drugs free at the point of care usually means premiums are raised on the back end. However, some research from Fendrick and others suggests premium increases for making these types of drugs free would be marginal. The assumption is, if someone with a chronic condition gets the medication or service they need for free, they will get it quicker and avoid a more costly hospitalization down the road.
“With a lot of these diseases — diabetes, asthma, and opioid overdose — not only do [patients] visit the emergency room, they end up hospitalized and sometimes even in critical care settings,” said Margaret-Mary Wilson, UnitedHealth’s chief medical officer. “This really has the potential to decrease hospitalizations and ER visits.”
UnitedHealthcare could certainly see cost savings from a move like this, said Jack Hoadley, research professor emeritus at Georgetown University’s Center on Health Insurance Reforms.
“If someone’s diabetes or asthma gets out of control, the cost of that one hospital visit will exceed whatever the copays would have been,” he said.
UnitedHealth’s Wilson said roughly 700,000 people within the 8 million people in a fully insured UnitedHealthcare plan, or about 9%, could benefit from this new drug plan design. UnitedHealth is also adopting it, as a self-insured employer, for its own workers. She said it’s unknown right now whether the company will expand the design to Medicare and Medicaid in 2024.
“We’re simply viewing this as a first step, one step in the right direction, and continue to evaluate other options,” she said.
Nichols said the move could push other insurers to make similar changes.
“It may start a chain reaction,” he said. “If United’s doing this, then why isn’t Humana? Why isn’t Anthem?”
UnitedHealthcare may soon field higher drug costs under a bill in Congress that would cap out-of-pocket costs for uninsured people. The measure is considered friendly to drugmakers because it would spread costs to all Medicare patients, insurers, and the federal government, and it would still allow insulin makers to raise prices. Its fate in Congress is uncertain.
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