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.