Are you or your clients running a health plan or a sick plan?

Employers recognize that health care costs are a major expense with substantial impact on their bottom lines. A recent article on BenefitsPRO finds that thanks to inflation, the cost for health care benefits in 2023 will reach $13,800 per employee.

CFOs and human resource executives tasked with controlling health plan costs typically focus on two areas:

• The first is lowering the cost of the care itself through stronger hospital networks or drug formularies
• The second is cost shifting of health care expenses to plan participants through higher premiums, deductibles and copays.

This approach is understandable given the math, but often leads to unintended pennywise and pound-foolish scenarios that raise overall costs especially for employees dealing with chronic conditions like diabetes.

The missing cost control ingredient is a review of the plan design itself with respect to outcomes that will make a difference in plan risk and cost and the health of employees. Some questions that should be asked, include:

• Is the plan covering the right things?
• Are the right behaviors encouraged?
• Are you or your clients running a health plan or a sick plan?

Better ways to address chronic diseases to control costs

It is well established that chronic diseases like diabetes cost significantly more if not well managed. People living with diabetes need consistent, affordable access to medicines, devices and supplies to successfully manage their blood sugars. That investment should be treated as preventive care as it prevents the much more costly complications of diabetes – heart attack, stroke, even avoidable emergency room visits and hospitalizations.

A patient on insulin (roughly a third of adults with diabetes) needs not only the insulin but the pen or pump to deliver it, a continuous glucose monitor (CGM) to see their blood sugars in real time and access to certified diabetes educators to give them the training they need to live with this life-threatening 24/7/365 disease.

These are not luxuries earned after appropriate “skin is put into the game.” They are absolute necessities.

How many of your or your clients’ plans make employees pay possibly thousands of dollars out of pocket before covering these supplies? When you analyze the plan spend for diabetes care, how much are you or your clients spending on the complications of poorly controlled diabetes – heart attack, stroke, ER visits, etc. – versus for the proactive management of diabetes – insulin, CGMs, doctor visits, and education?

We know that 1 in 4 people report rationing of insulin due to cost. And these are insured people. The uninsured ration even more. More than 60% abandon their prescriptions at the cash register when they cost more than $250.

Controlling diabetes costs helps employees and employers

Express Scripts published a report in June 2022 indicating that placing a $25/month cap on all diabetes medications would result in a net savings of more than 16% of total plan spending on diabetes care. Wouldn’t you or your clients like to lower your total diabetes costs by 16 percent? The simple answer is to move diabetes management care to a pre-deductible status in your health plan. Treat it as preventive care the same way a wellness visit is treated.

In July 2019, the IRS clarified that chronic disease management could be treated pre-deductible even for high-deductible health plans (HDHPs). They did this at the request of employers who were wanting to lower their employees’ cost burden and, at the same time, lower their plan costs. Those employers understood that managing a disease is far less costly than dealing with the ramifications for not doing so.

Today, 37 million Americans live with diabetes. That’s 1 out of every 10 employees. They alone generate more than 16 million annual ER visits. We need to invest in diabetes management to prevent avoidable emergencies. Consider exempting these services from your plan’s deductible. Visit www.diabetesleadership.org to learn about other plan design options that reduce plan risk and cost and improve care.

To learn more about the Diabetes Leadership Council, check out additional resources from this series including Drug Rebates.