Friday, July 27, 2007

Higher drug co-pays no panacea

Passing along higher co-pays on prescription drugs doesn't save money according to a recent study at Carnegie Mellon University.

From the Pittsburgh Post-Gazette:
"What most employers don't consider is that increased co-pays on drugs may lead to an increase in other types of health care," said William B. Vogt, associate professor of economics and public policy at Carnegie Mellon. "Not all savings are really savings. They are offset by other types of spending." [...]

When co-pays rise, employees react by buying fewer drugs, the study confirms. That saves money for the employer.

But it also prompts employees to rely on health care "substitutions" to counter the effects of less medication. The study found that higher co-pays lead to more outpatient care, such as doctor or emergency room visits.

The findings suggest that increasing co-pays "may not be as effective a mechanism for controlling spending as previously thought."
The study used information from nine national corporations and a half-million people and concluded that "35 percent of corporate savings on prescription drugs "are substantially offset" by increases in other medical spending, including outpatient care." Other trade-offs could include losing good employees, a less healthy work force and increased absenteeism.

So, what's the bottom line?
"It confirms what we all expected but could not demonstrate -- that encouraging people to take their medicine prevents long-term complications and ultimately can save a substantial amount of money."
This is just one more reason corporations should be aligning behind the push for universal health care with prescription coverage.


abi said...

Let's face it, there are both practical reasons and reasons of basic human decency for providing universal health care. The only thing stopping us from implementing it is money - from corporations who are protecting their own very narrow interests.

Seems fair...

Larry said...

Corporations never consider how raising co-pay will not only hurt the employee, but the business as well.

All corporations look for is the penny they save today.

American healthcare is in a very sad position.

Kathy said...

Abi, the human decency reason should be sufficient by my way of thinking. And we call ourselves a "Christian" nation?

Larry, I realize corporations look for pennies to save, but the health of their workforce should be important too (if they're not heartless).