Newswise — Prescription drug spending per member covered—both before and after manufacturer rebates—grew much faster for those enrolled in individual health insurance plans compared to those enrolled in large group plans from 2015 to 2109, according to a new study in the JAMA Health Forum by researchers at Johns Hopkins University and Texas Christian University. It’s the first study to examine prescription drug spending at the commercial insurance plan level.
For the study, the researchers examined pre-rebate and post-rebate annual drug spending per covered member (inflation-adjusted) over the five-year period, separately by plan type. For large group plans, post-rebate drug spending per covered life grew annually by only 2 percent on average despite many new therapies being marketed. In contrast, post-rebate drug spending per covered life grew annually by 11 percent on average for individual plans. The result is the bifurcation of spending between the two types of plans.
“Our study identified an overlooked health equity issue in health insurance for those with individual coverage plans. Unsubsidized Americans enrolled in individual plans do not have the same access to more affordable prescription drug plans as enrollees in large group plans,” said Professor Ge Bai, professor of practice at Johns Hopkins Carey Business School. “Since the implementation of the Affordable Care Act in 2014, prescription drug plans for the individual insurance market have become increasingly unaffordable for Americans not eligible for federal subsidies. This widening gap in affordability between individual plans and large group plans is attributable to regulatory constraints on the individual market and deteriorating risk pools.” Bai’s research focuses on pricing, policy, and management within the health care industry.
In 2015, the post-rebate drug spending per covered life on prescription drugs was 6 percent lower in individual plans ($644) than in large group plans ($686), but in 2019, it was 35 percent higher in individual plans ($995) than in large group plans ($738). Pre-rebate spending shows a similar trend. Higher pre-rebate spending indicates higher patient out-of-pocket costs, and higher post-rebate spending means higher insurance premiums. In the meantime, enrollment in individual prescription drug plans dropped by 24 percent from 16.1 million to 12.3 million.
The data in the study were from the health insurers’ mandatory medical loss ratio (MLR) filings for 2015 through 2019, for each state separately and for the individual, small group, and large group markets in each state. The sample includes approximately 2,200 unique health plans (70 million covered lives per year) with reported positive prescription drug prices.
The research was supported by Arnold Ventures, a private investment fund that specializes in health care, education, criminal justice, and public finance. Ge Bai is a visiting scholar at the Congressional Budget Office. No content in this study represents the opinion of the Congressional Budget Office.
RSS