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The Risks of Cost-Sharing

A study in the December 4 issue of The New England Journal of Medicine notes that when firms change to a three-tier prescription drug plan that charges considerably more for brand-name medications, a disturbing number of employees quit taking their blood pressure and cholesterol-lowering medications, instead of changing to less expensive prescription drugs.

Several corporations have been adopting three-level pricing plans (some firms are contemplating a move to four-tier plans), which are designed to encourage workers and dependents to use generic medications or other less-costly medications. Employees who are willing to use high-cost medications, will be required to pay higher out-of-pocket costs.

The study, conducted by researchers at the Harvard Medical School and Medco, found that in two such three-tier arrangements, 50 percent of the workers switched from a high-cost medication to lower-cost drug when their coverage changed to three-tiers. However, a considerable percentage of workers stopped filling their medications for chronic health conditions. Specifically, the study showed that nearly 33 percent of employees in one firm stopped filling their prescriptions for proton-pump inhibitors for acid reflux.

The findings have potential implications for people with severe mental illness who are receiving costly medications through public and private insurance. State Medicaid programs are instituting higher co-pays for prescription medications that that could hurt the ability of lower-income Medicaid beneficiaries to pay for needed psychotropic drugs.

A report by the Center on Budget and Policy Priorities in Washington, DC points up that higher cost sharing in Medicaid programs contain significant risks for beneficiaries. The meta-analysis by the center highlights that based on several studies, that cost-sharing efforts will worsen the health of beneficiaries and lead to increases in medical costs.

The potential risks are most acute for older adults and beneficiaries with disabilities. Since these enrollees more medical services and prescription drugs, their out-of-pocket expenses for co-payments would be the highest. Moreover, these beneficiaries would be most likely to avoid or delay needed medical care because of cost issues.

States should consider capping co-payment requirements and avoid increasing cost-sharing for beneficiaries with incomes below the poverty line and near poverty.

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