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Call For Employers And Government To Reduce Economic Impact And Improve Health Outcomes

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This post was contributed by Russell Libby, MD, Board member of the Physicians Foundation.

As a practicing physician, I’m no stranger to the hardships and roadblocks that many patients in the U.S. face when attempting to receive adequate care. A recent survey by the Physicians Foundation underscored concerns about the impact of medical costs on patients, highlighting the overall economic fragility of many households in our country. This realization begs for solutions, and there are ways employers and the government can reduce that impact and improve health outcomes. The survey also reveals perspectives on patient needs and expectations that should help guide physicians as to how they can evolve their practices to best serve patients.

One striking issue from the survey is that a significant portion of our population (48 percent) fears they could not afford the cost of a medical emergency. They worry it could put their family in a financial bind, even bankruptcy. In the age of significant co-pays and high deductibles, the costs associated with routine care is also a strain, forcing tough choices about spending on necessary care and medicines. This reinforces Federal Reserve reports from earlier this year, stating 47 percent of all Americans cannot afford a $400 medical emergency. Additionally, the Pew Charitable Trust found that 55 percent of Americans don’t have enough liquid savings to cover a month’s income if they had an illness or injury to treat. It is amazing that, with so many people living on the edge of financial disaster, we can’t come up with solutions to help them in a time of need. Some may advocate for a solution that takes us into the idealistic and risk fraught dead-end of a single payer, government run health care system. It is not within the scope of this blog to address that proposal other than to say it is a simplistic fantasy. Yet there is merit to this concept relative to specific elements that control the way the marketplace for health insurance is regulated.

There may be a role for the government in fixing one of the most egregious distortions of cost – one which impacts most patients and forces them to make choices that can undermine their health and, as pointed out in the patient survey, contribute to their economic fragility. And this is prescription drug costs. Costs to consumers for prescription drugs have outpaced all other areas of health care, in ways that raise my eyebrows.

This challenge does not just concern ground breaking new drugs that are effective at treating a fatal disease (and can sometimes cost two or three times as much as the average annual family income for a course of treatment). Cost challenges also impact any one of the dozens of generic drugs that are being manufactured or acquired by pharmaceutical or other types of companies and re-priced at hundreds of times their original cost. This practice generates unfathomable profits, financially strapping our patients and depleting funds from our public programs like Medicare and Medicaid.

Even worse, drug costs are forcing many patients to question whether they can afford to buy the medicine in the first place, or to take it as prescribed. An example is doxycycline, an antibiotic used to treat Lyme disease and a number of other common infections. It went from six cents a pill to $3.36 over a short period of time, without being questioned by the market or Federal authorities. Regardless of the reasons the pharmaceutical industry puts forth, these price increases create a huge health liability for our country.

Most of this appears to have evolved through creative business plans that have virtually eliminated marketplace competition for specific drugs, leaving us with a single source that can name a price. We need better scrutiny of key acquisitions and potentially anti-competitive business practices. We need our government agencies like the SEC and the DOJ to be more vigilant. We also have thousands of drugs, many of which are generics, pending approval by the FDA, but in what seems to be an endless backlog. Get that system to work for us. The more competition, the better the prices will be.

Additionally, although I am wary of the potential for abuse, we need to find a way to inspect and authorize foreign manufacturing of drugs that are incredibly expensive domestically, yet are available at a fraction of the cost in international markets.

Finally, direct consumer advertising creates demand for brand name drugs, and is undermining physicians’ effort to prescribe responsibly. Stop the ads and there is significant money to be saved.

So, what can employers do to protect their employees from an acute episode of expense that is not covered by their health insurance, or is a result of the plan benefit design and out of pocket expenses?

First they can make sure that they take advantage of the federally acceptable options such as a Health Reimbursement Plan or Health Savings Account, where the employer can help with a defined contribution. They can also offer a Flexible Spending Account, where the employee can set aside pre-tax dollars to cover expenses. These are good options to consider, but do come with strict rules and often don’t cover what might be needed in an emergency.

It would be nice for an employer to consider creating an employee emergency fund as well. It could be defined however they like, but would provide access to money to cover an unaffordable emergency related to a health care expense. The rules would dictate how much, under what conditions, qualifying specifics for each employee and whether it would be considered a gift, income or loan. Consider what that could do for your employees, giving them confidence and comfort in a time of need, and building a sense of community and loyalty to the business. I can only believe it is a worthwhile investment and the return would far outperform the costs.