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Impact of First Dollar Coverage for Insulin

By Xcenda

Over the past ten years, high deductible health plans (HDHPs) have become commonplace in the employer-sponsored insurance market. These plans can require patients to pay thousands of dollars out of pocket (OOP) before plan benefits cover most services and medicines. Before the deductible is met, patients are commonly required to pay the full list price of many medicines. In 2019, the Internal Revenue Service (IRS) issued guidance that clarified that certain preventative services and medicines, including insulin and other glucose lowering agents for diabetes can be considered preventive and therefore excluded from the deductible, at the plan’s discretion.

Xcenda conducted an analysis to understand the impact of expanding ‘first dollar coverage’ for patients with diabetes taking insulin in HDHPs. We found that, on average, patients with diabetes in HDHPs pay approximately 3.5 times more OOP per insulin prescription compared to non-insulin prescriptions. While less than one-third of patients with diabetes in HDHPs are required to meet their deductible before their insulin is covered, OOP costs would be 2.4 to 3.7 times lower if they had first dollar coverage for insulin. Exempting insulin from the deductible could save certain patients with diabetes in HDHPs more than $1,500 annually in OOP costs and allow them to spread their OOP costs more evenly throughout the year.

With growing acknowledgement that coverage is not the same as access, rethinking benefit design is important. Patients need to be able to afford the OOP costs of medicines in order to be able to access them; allowing first dollar coverage is one step forward for diabetes patients.

This work was funded by the Pharmaceutical Research and Manufacturers of America; editorial control was maintained by Xcenda.
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Out of Pocket Spending for HDHP Patients Taking Insulin & Impact of Shifting to First Dollar Coverage