Premium Impact of Expanding Pre-Deductible Coverage to Chronic Disease Management Medications in HSA-Eligible Health Plans

IRS Notice 2019-45 allows health savings account (HSA)-eligible health plans the flexibility to cover 14 medications and other health services used to prevent the exacerbation of chronic conditions prior to meeting the plan deductible. There is limited evidence on the impact of expanding pre-deductible coverage on insurance premiums. In this Issue Brief, we use claims data to quantify the effect of expanding pre-deductible coverage to 116 drug classes used to manage chronic conditions.

Key Findings:

The impact on premiums of expanding pre-deductible coverage to 116 drug classes related to chronic disease management medications in HSA-eligible health plans is relatively small (range 1.3-4.7 percent).
The premium impact was driven by: 1) the amount of increased uptake of drugs as a result of enhanced coverage, 2) elimination of all consumer cost sharing or inclusion of coinsurance in lieu of the deductible, and 3) whether or not increased drug use led to offsets in spending on non-drug medical expenditures (e.g., preventable hospitalitzations).
Premiums increased the least — 1.3 percent — when employers imposed coinsurance instead of a deductible and when increased use of prescription drugs led to reduced use of other medical services.
The most expensive scenario, an increase of 4.7 percent, occurred when increased prescription drug utilization led to no decrease in use of other medical services and employers did not impose any coinsurance (i.e., zero cost sharing).

Overall, health spending averaged $4,947 per person in 2018. Prescription drugs accounted for $983 or 20 percent of total spending. The 116 drug classes examined in this study accounted for $798, which was 81 percent of the drug spend and 16 percent of the total spend per person. Only $108 of the $798 in drug spending on the 116 drug classes, or 2 percent of total spending, was attributable to the deductible. The remainder was covered by insurance and/or some other form of cost sharing.

In the absence of utilization increases as a result of covering these 116 drug classes in full, premiums would increase 2 percent. However, medical cost offsets as well as other forms of cost sharing will reduce the impact of expanding pre-deductible coverage on premiums. This is evidenced by the 1.3 percent increase in premiums that we found when average coinsurance is imposed instead of a deductible, and medical cost offsets apply.

Our finding that premiums increased little due to the expansion of pre-deductible coverage is also related to the relatively high percentage of users of the 116 drug classes meeting their deductible. Users of these services are generally high users of health care more generally because of their health conditions. As a result, even when coverage for services is provided pre-deductible, these users are likely to continue to meet their deductible. Services that would otherwise be subject to copayments or coinsurance once deductibles are met will be subject to the deductible when other services are no longer subject to the deductible.

Even before there was evidence that expanding pre-deductible coverage had a negligible impact on premiums, there was an appetite among employers for adding more services if allowed by the IRS. There is also support for expanding pre-deductible coverage among policymakers as evidenced by the Chronic Disease Management Act, which was reintroduced in the U.S. Congress as recently as May 2021. This bipartisan, bicameral legislation would provide HSA-eligible health plans additional flexibility to provide pre-deductible coverage for services that manage chronic conditions.

This study was conducted through the EBRI Center for Research on Health Benefits Innovation (EBRI CRHBI), with the funding support of the following organizations: Aon, Blue Cross Blue Shield Association, ICUBA, JP Morgan Chase, National Pharmaceutical Council, Pfizer, and PhRMA.

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Management and Policy in the School of Public Health at the University of Michigan. This Issue Brief was written with We classified all prescription drug claims into therapeutic classes using the AHFS® Pharmacologic-Therapeutic preventive care for purposes of Health Sa Ap vp ings Ac endicx ount Fig s.u ” re Acc e 1 ssed September 15, 2021. 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Any views expressed in this report are those of the authors, C Pa lass ul Fro ifi Acn aht gtiion ( o ns ttp es:/ ntsin, P A i/ww n H -c FS on w h.D., )v.e .ir rt s.go inOf th g E ev nmplo /pub ze y m 57 e/i 2 unique (ye r AsC -d E er) Ben op inh /n ib the - ite 13 of rrsit a -57 pRes e.p utd icf. e c a larch I sses in t nst he itut AH eFS, w ; M.e C sele hris ctteop d the he r mRo oste cbuck, ommon Ph.D., and mos t $5,000 20% Brot-Goldberg, Zarek C., Amitabh Chandra, Benjamin R. Handel, and Jonathan T. Kolstad. 2017. “What Does a disease Statutory HSA Limits, 2004–2022 p A mr ce e cd -or d ice d ad ing l o ucff ttible set a o N ot css ov icum e e r20 apgt19 e ion. a -45 m o Fi , ng t ghe ur p e olic lis 4 show t y of mp ak re e s t v rs a e he nt s e iv sensit ev ser ideiv v nc ic ite y e d s t of bha y our tthe c fin a n b Cd hr ings w e onic cov D e he ris en th e da p se rose eMa -d e a na d ss uc g um e tm ible pe tnt ions w A ill c a b t, re ew rv hic ea vrie h w iew de .a d s I n on a 20% 0% 5% 10% 15% No 20% Services 25%Rheum 30% atic Dr35% ugs Cover40% ed 7 level among users of the 116 drug classes. We assumed the maximum potential deductible recoupment would equal and should not be ascribed to the officers, trustees, or other sponsors of EBRI, EBRI-ERF, or their staffs. Neither EBRI c ost See ly Inte 116rna , wl hi Rc eh vetnu ogee tShe erv r ic ce a p(t2004) ured .9 4 percent of all prescription drug claims and 81 percent of all pharmacy spending Rx Economics LLC; and A. Mark Fendrick, M.D., University of Michigan Deductible Do? The Impac t of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics.” The Antiresorptive therapy Osteoporosis and/or osteopenia Internal Revenue Service. 2004. “Part III - Administrative, Proc Ce ov dur era el, d a Pnd re- Misc Drug ella s ne Cov ous er, ed Notice 20 W04 ith -23.” Accessed g p r The e e eint ne riod only rrod aic l, uc b w ka e now e si d fin s. in t n w dI n fa he tha or U. tk c t a S. , ts ut ha t he Cton ili eg za xa g uida rtm e ion inc ss ine nc ad e s r spe how re ec ae c ses, nt ifi exp c ly a p lly a arnding s Ma e s m ta ium ty e p s t 20 s inc reh 21 -a dte . r e d t he Thi a uc se tp s b ible a es ripa iod w cov e ric tll. is e rr a ea W n, vgie e eb w a ic to ls a iso m m efin e e xp d ra d ic e l le c a tt ha te ions gd is t t a la o s m t tion w o ocm e cur d aic Pe na ould a ap g l c r-Pe p e ost rp c oxim r hr rs ov off o onic ide nasets te H lySA - 12 Maximum Out-of- Premium I the mean of this ovemp rspending ac t m of easu rEx e — not pa to ned xcin eedg the Pr mee an lost -De dd edu ucc tible tibl amount e Cov . 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Inhaled corticosteroids Asthma Individual Family InC dioi vins duura al nce Family I10% ndividual Fa 10% mily Lim 10% it Health Plans 8% 2.3% 2.0% 1.7% 1.4% 1.2% 0.9% 0.6% 0.3% 0.0% Wood Johnson Foundation). http://www.rwjf.org/content/dam/farm/reports/reports/2012/rwjf402405. c ser of om cvop ic bina e as t ytm ion ha ent ts of m s a ay nd ut m ilice za oins ettion in the ura c nc crrite ee ar w ses ia ould foarnd p inc re m r-ee dad ese d icuc ap l c trible eost mium c offs ovs b e erta y s. g 1.7 p eSim thae ila t rw c re ly ent r , ehighe . omitrt ecd oins frou m ra N nc ot eic re e su 20lt 19 s in low -45. For er p erxa em m ium ple , Impact of Adding Pre-Deductible Coverage on Cost Sharing for Patients Using Goldberg, Chandra, Handel, & Kolstad (2017); Chandra, Gruber, & McKnight (2010); Chernew et al. (2008); Collins, Washington, DC: Kaiser Family Foundation. Accessed September 15, 2021. https://www.kff.org/health- Pre-Deductible Coverage to Chronic Disease Management Medications in HSA-Eligible Health Plans,” EBRI Issue Brief, The We dMe id,d how icare e v Perre, sc ov ripti erla on y tD he rug, Re d Im Bp ook rov’e s® me m nta , int and ena Mod ncee indic rnizaa tion Ac tor field t of ont 200 o t3 (MM he datA a) fior nc lude the 11 d a 6 c prla ov ss is eion th s and at created Insulin and other glucose-lowering agents Diabetes $3,000 t inc her e Naot ses icea ide t all c ntifi om es a bina ngio tions ten si of n- ut conv ilizae tion in rting e cr nzy eases me a (A nd CEm ) e inh dic ibit al c or ost s t o off psets reve.nt exacerbations for individuals diagnosed Disease-M 12% odifying 3.1% Anti- 2R .6he % um 2at .2%ic Dr 1ugs .7% 1.3% 0.8% 0.4% -0.1% -0.5% Rasmusse 2004 re n,for Be m ute /fal, c$ t& 1 -sh ,Do 00 ety 0 et /pr (2015) eve$ nt ;2 Fron ,iv 0e 0- 0ser stin vic &e R s $ o -2 c e,ov b 6uc 0e0r ke (d201 -by9) -p $;r 5 iv Fron ,1 a5 t0 es-tin hea < h R$ - op 5 ela ,b 0uc ns 00 k /. ( 2013) $; 1 0 Fron ,000 stin & Roe$500 buck (2020); Paul Fronstin, Ph.D., Employee Benefit Research Institute; M. Christopher Roebuck, Ph.D., no. 563 (July 14, 2022). C wha handr t ara e, c Aom mitm ab only h, Jona know tha n a n s high Grube-rd , e ad nd uc t Rob iblein McK health p night lan.s (H 2010 DH . P “P s) a. tie Ant t tC he ost ti-m Sha e, rting hese a nd plaH ns ospit hada liz to aha tion O ve aff d set eds in t uctible he determ Rine etind o p tha athty 8 s7 c rp ee en ric ne gnt of pharmacy spending and 72 pe D ric ae bnt ete of s prescription drug claims were for drugs that were This stu To dy ta w l Sa pe s co ndin ng ducted through the EBRI Center for Res $5ea 2,0r 0c 0h on Hea $5 lt 2h ,0 0 Ben 0 efits In $5 n 2o ,0v 0a 0tion In this Issue Brief, we use claims data to estimate the effect of expanding pre-deductible coverage beyond IRS Notice with congestive heart failure (CHF), diabetes, and/or coronary artery disease. Patients who either do not respond to or Results Fronstin & Roebuck (2014); Fronstin & Roebuck (2016); Fronstin, Sepúlveda, & Roebuck (2013); Fronstin, Sepúlveda, & RxEconomics LLC; and A. Mark Fendrick, M.D., University of Michigan Elderly.” 16% American Ec 3.onomi 8% c Re 3.2v % iew 102 0 (1 .6%): 192 2-.21 0%3. doi:10.1 1.4% 257/a 0.e 8r% .100.1.19 0.2% 3. -0.4% -1.0% la of ba etle le d Pa e a st as b k $1 fle o,000 ing w mfor e tfor er “ cin hr donic ividua ” or l c “ ov bot erh ag ce hr a onic nd $2 and ,000 ac ut for e ”fa cm ond A ily st it h cions m ov aer ( ai.e ge., (se just e A 1p 4p p ee nd rcix Figur ent of spe e 1) nding . As w and ill b28 e dpis ec rus cent sed 2005 Pre-de 1,0 du 00 ctible cov2 e,r 0 a0 ge 0 2,600 5,150 5 $0 ,000 $3 14 0,,00 00 00 $3 600 4,000 10% (EBRI CRHBI), with the funding support of the following organizations: Aon, Blue Cross Blue Shield L 2019 Our ee, eJoy L -st 45 im to a ., t11 e Ma s a 6t ss tche la um ss w e e Ls of . tha Ma tm ce ie elim d jeic w ina ask tions ti, ing Shv . d Our e ed ta uc S. w tible or Ra ks jim u, (w p W he rov illtihe e as on m r or H. p not Shr ast a crnk oins ese , a a ur nd rc ah nc N in a e it eis e num sh im p Kose . be Crhoud d of ) for whr a y m ys. . e20 dFi ic 13 r ast t. ions , “we Va for lue -cBhr ased onic Disease-modifying antirheumatic drugs that are used to treat rheumatoid arthristis and who have an adverse reaction to ACE inhibitors are usually switched to angiotensin receptor blockers (ARBs) to prevent C Ro oe p by uc rig k h (2013) t Inform ; Fron asti tin, onR : o Tehis buc rk e,p Buxb ort is a um, cop y& right Fend ed ric bky (t2020) he Em ; p Go loy lde ma e n, Be J ne oyfit ce Re , &sea Zhe rc nh I g (ns 2007) titut;e Triv (EB eRI di, ). 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A. inc dise or ap se orm ata ena mg ee dm ica el c nt ost will offs induc ets, w e enr hic olle h o ec s t cur o inc whe ren inc ase trhe eaised r us e ut of iliza pr tion o escripti f on pred sc rugs ripti. on Thi drs ugs inc rre ea su se lts in d in use ecm re aa ysed inc ur us e in Cherot nehe w, r Mic co ha ndit el, Te ions resa is a B. G c ibson, ase in p Kristina oint Y. u- T Isenb hise o rgne , Mic dha rug el C cla . Sok ssol, acco Allison B unts. fo Rose r 1 n, 9a p nd ercen A. Matr o k Fe f tndr ota icl k. 2006 1,050 2,100 2,700 5,450 5,250 10,500 700 the same exacerbations. However, ARBs are not included in the list of 14 services in Notice 2019-45; thus, they cannot p (2010) rint, or ; W dha ow ra nloa m ed t a this l. ( 2017) repor;t asolely for nd Whara p m er esona t al. l (2018) and non . commercial use, provided that all hard copies retain any and management medications in HSA-eligible health plans is summarized in Figure 3. In general, the effects vary in several Hemoglobin A1c testing Diabetes plan deductibleC . oi Ens nrura ollenc es in p e lans that meet these and other requirem $3 e,nt 65s a 0 re allowe $d 1 ,t 5o 00 open and c$ ont 3,6r 5ibut 0 e to a doi:10.1377/hlthaff.2012.0902. of two mw ed aic ys. al se Enr rvolle icese.s w Seho cond we , rw e e not us e us aing ctua m l infor edicam tions ation o for n d chre onic duc td ible isea s, c se op ma ay na mg ee nt ms, a entnd ma cy oins staur rta tnc o us e ins e tthose ead of ser us viing ces pha20 rma 08. cy spe “Eff 24% ects of nding Inc 5r.a e 2a % mong sed Pa 4 t t.ie 3he % nt 11 Cos6 t3 . d Sha 4% rug ring cla on 2.6s % Soc seioe s e c 1x onomi .7a % mine c Dd. 0is .8 p % aOn ritie av s in He -0.1 e % raage, lth C -1t .a 0his % re. o ” Jou ne -1r . d 9 na %rug l of be covered pre-deductible in HSA-eligible healt A h p Tlans .A Si mG ilarly L, ser A ot Nonin C -E nor epinephrine reuptake inhibitors (SNRIs) all copyright and other applicable notices contained therein, and you may cite or quote small portions of the report ways but are relatively small, regardless. The estimated premium increases range from 1.3 percent to 4.7 percent. 10 Inte 2007 rnational no1 rm ,1a 0 li0 zed ratio (I2 N,R 20 ) 0 testing 2,850 5L ,6 iv5 er0 disease a5 n,d 5 /0 or0 bleeding 1 d1 is,o 0r0 d0 ers 800 he Im apac lth sa t v Ana ings a lys To cc is ta oun lof ou t tP ( -of H re S -po - ADed )c on ketuct a (O tO aix b P-)le pr e C fe ov rre ed ra bg ae si s. Thus, these pla $6 ns ,6 5a 0re also com $4 m ,5onl 00y known a$s H 6,6SA 50 -eligible See Lee, Maciejewski, Raju, Shrank, & Choudhry (2013). General Internal Medicine 23 (8): 1131-1136. doi:10.1007/s11606-008-0614-0. 5% ( the this sa is k me now baseline n as t he HSA ext -ee ligib nsivle e he ma arlt gh p in). la n And desi a $983 g m nong for ta hose ll enrus olle ing es. me Thi dic ra dt,ions by us for ing chr monic ore rd eis ce ent ase da m ta a, na ou ge r m est ent im, atthe es y class is about $34,000 per year. Additional pharmacy spending averages about $5,000 may be an effective treatment for patients with depression who do not respond to selective serotonin reuptake p Nreov whous ided e tha , J. t y aou nd d the o so ve Insur ra bnc atim e E a xpe nd rw im ite h p nt rG op roup er c. it19 ation. 93. Fr Any ee us Foe r b Ae ll? y ond Less tons fr he scop om e tof het he RA N for De H ge oing alth I rens quir ura enc s E eB RI’s $1L ,00 ow 0-density lipoprotein (LDL) testing Heart disease $798 health plans. In 2022, these plans must have a deductible of at least $1,400 for individual coverage and $2,800 for IRS Notice 2019-45 allows health savings account (HSA)-eligible health plans the flexibility to cover 14 medications and 2008 1,100 2,200 2,900 5,800 5,600 11,200 900 11 To estim ®ate the impact of pre-deductible covera© ge for the 116 drug classes, we first summed the following fields from m rea fle y cinc t m re or ae se re the cent am us ount e and th e cy ost ar of e us bring and (ta his nd is g ekne now ricn a drug s ts in e he inta ecns h o ivf th e me a rdgrin) ug . c la As a ssen e s. xa Thi m s r ple esea , enr rcolle h is im es w pit or h tant per year, and total spending on medical and pharmacy averages about $52,000 per year. AHFS Pharmacologic/Therapeutic Classification used with permission. © 2022, the American Socie 2% ty of Health-System P remiumE s inc xper re im ase entt.he Ca le mabst ridg (1e .3 ( p MA er) c: ent Ha )r v in t ard he Univ follow e Nro siing t Cyo P ic nrir s eu css um ra.n s ct eance: inhibitors (SSRIs). p rior express permission. For permissions, please contact EBRI at permissions@ebri.org. Collins, Sa Selec ra tiv R., e seP ro ett orn ain W re. uRa ptasm ke us inhsen, ibitors Sop (SS hie RIs B )eutel, and Mic Dhe eplle res M. sionDoty. 2015. The Problem of Underinsurance and Change in OOP -$2,150 $0 family coverage. Enrollment in HSA-eligible health plans may account for over one-half of those with private health other health services used to prevent the exacerbation of chronic conditions prior to meeting the plan deductible. all relevant claims: deductible, coinsurance, copayment, plan paid amount ® , and total allowed amount. These aggregate d bia ecb ae us tee s m the a yE ha BRI ve su filrle ve dy som not eonly pre sc found riptions for a strong ins ruli espons n bute not to Ie RS N noug ot h to b ice 20 e19 ad -45 he, rebnt ut ta o lsto hefound ir medtic ha att ion r most e g (8 im 1 en Pharma To cis un ts,ders Inc. (tAS and HP)how . The c Dat oa s tis sha a paring rt of the might AHFS cDru hag ng Inf eo fo rma r tion the us ; ASe Hrs P is o no f t t his resp d onrug sible cla for s the s an accd ura the cy o ir f Medical Cost Offset 2009 1,150 2,300 3,000 5,950 5,800 11,600 1,000 $108 StaH tiow ns Rising 1 Deductibles Will Make It Worse: Findings fr Heao rtm d is the eas C e om andm /oonw r diae be atlt eh Fund s Biennial Health Insurance coverage (Figure 1). Ther Roebeuc isk , lim M. ite Cd hr e isvtide ophe nce r. on 2012 the . Thr impeaec tE of ssaeyxpa s on nding the E pcro enom -dedic uc s of tible P rceov sce ripti ragon e on Dr ins ugs. ur a Dnc isser e ptraetm ion, ium Bs. altim In th oreis , MD Issue : figur • e s wUti ere liz d aiv tion o ided f he by tahe lth ca tota re l sa ser mvpic le e s inc size rte o ad sed eriv 12 e a p ve errc aegnt e .v alues. The average annual deductible amount (per Ther w pe he rcn insu e ent is) a ellin m rep aw loy da y s su e arn a s w bp jould e pcett it t o a ed a for d d p ea rd e duc -dding te ible d uc m . tor ible W ehe se cn insu ov rve icre as, a g lin e fo s e wa r v s c aide dov dnc ite iona e re dd b l he p yr e The a -d lte h ca d Cuc hrronic te ible ser , D v eis inr ce eolle a s if a se eMa s m llow na aey gd e ha m by v e e nt la b w A e. c c t om , wehic h R tra ep nse o pr mplo ot siti av ons aye il a fro rs bil m , itthe co y: ns Thi orig ider t s r ina el pcor o he nte t is t xt. a hre v aila e ex ble on amples the int in F erneti gure at www 6.e . F bri.or or al g l the examples we assume $0 0% 5% 10% 15% 20% 25% 30% 35% 40% 0% Survey, 2014. New York, NY: The Commonwealth Fund. Accessed September 15, 2021. % of Sample With Condition 0.43% 0.43% 2010 1,200 2,400 3,050 6,150 5,950 11,900 1,000 SoUniv urce:. hof ttps Ma ://v rb yila dcnd entB era .o ltrim g/in or ite ia tC ivount es/hsy a.- high-deductible-health-plans-2/ Brief, we use claim Tota s d l S at pa en t do ingquantify the Pre s e cff rip e tic ot n Drug of e S xpa pennd dining g pS rp ee-nd de ind guc ont 1ible 16 Dru cov g Cl earsa sg es e to De11 duc6 d tibler S ug penc dla ing ss W eith s in us 11 e6d to covered life) for the 116 drug classes represents the expected cost that will be shifted from the member to the plan • Employers impose average coinsurance instead of a deductible. a w Infor d ahe s rm re eint a nt tion o rtod o tuc he n th e d re e in t c om im he p m a e Unit ctnde on ed dp m rSt ee m ad tium e ics C ats w ion r ong ould reegss im a a e lss r n. o e he W ce lp e nt F rie igure ly nfor w ae s Ma m t1 o pa olic yss 20 um ym 21e a. kt e ha Thi rs w t s b the ho ipa re a rrw te is a a d s no n, elibe bic inc ra am tring ee arse ap l olic le in use gie isla s t tof ion w o eser xte ou vnd icld es that there is a $3,000 deductible and 10 percent coinsurance above the deductible until https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_issue_brief_20 12 Drug Classes 0% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% Medications adjudicated via the medical insurance benefit are outside the scope of this analysis. manage chronic conditions. Percentage of Persons Enrolled in a High-Deductible Health Plan (HDHP), by sponsor • b Inc ecraeus ased e of us the e of for pg ro ene scr ipti meon mbd errug cost s r esd ha ucre e us in t ehe of for othe m rof md ed ed icuc al se tible rv ic cont es. ributions. In this case, we assume a ps rov a ide resu H 2011 lt SA of - So ee uligib xpa rce: Em le nding 1 p ,he l2 oy0 ea 0 e lp Be th p rne e- fid la t Res ens deuc 2 aa , rc 4 d thible 0 d In 0 it stiiona tuc te ov el fle se tim ra a3 te g xibilit ,se 0 b, 5 ap s 0 ery de otm no aiu dp m m riov ns w is6 tra ide ,1 tiould 5 ve 0 p en rro e inc - llm de er nd e t auc a n5 se dt , c9 ible la5 0.9 p im 0 s c daov tae .e rcre ant g 1e 1 if c ,for 90oin 0 sesu rvic raenc s t e 1ha ,w 00 ta 0 p s su revb est ntit ut the ed pre-d the educ otut ible - of cov -po eracke ge tto m a b arx oa imum is der list of rce lin ach ical se ed.r vic We es. also assume that the enrollee has employee- Roebuck, 15 M. _m CC os a hr y t is _ S18 tha op 17 rhe e_ S rc, hi ollin J. ft Sa as_ s m a p r aob ntha lem D _of_ ougunde hertyr, ins Rob ura enc rt e K_ib.p aestne df. r , and Laura M. Miller. 2015. “Increased Use Of Table of Contents 4% 3.0% 2.9% 2.7% 2.6% 2.4% 2.3% 2.2% 2.0% 1.9% 13 Employer Contribution to HSA or HRA,* Among Those With Private-Sector Health tha http t the s:/ e /a m hip ploy org e-rp ro allow ducs tion. first s3. -daolla mar z ocna ovw es ra .cgoe m/ for do tche ume 11 nt 6 s/d2r02109 ug cla-ss AH eIP s t_H hrDH oug Phout -Surve the y.p y de f.a r. We make this assumption Percentage of Total Spend for exa t che erb d ae tion o ductible f chr aonic nd 2.2 p cond eit rc ions ent. if no cost sharing was imposed (results not shown in 0f .2 igur % e). 0% only co Prescve ripti ra on ge t Drugs o simplify Reduces Me the d ex ical C ampl osts I en M . edicaid Populations.” Health Affairs 34 (9): 1586-1593. 2012 1,200 2,400 3,100 6,250 6,050 12,100 1,000 I Ant 20 rod 21 EB uction RI ................................ survey found that 76 ................................ percent of employers ................................ with 200 or more emp................................ loyees increased the num .......................... ber of drugs 5 Coverage and Employee-Only Coverage, 2016–2020 Key Findings: Congressional Budget Office. 2012. Offsetting Effects of Prescription Drug Use on Medicare’s Spending for Medical Premiums increase the most (4.7 percent) in the following circumstance: 8% 3.9% 3.6% 3.3% 3.0% 2.7% 2.4% 2.1% 1.8% 1.5% because it is unlikely that an employer will provide pre-deductible coverage with no costsharing and then impose cost doi:0.1377/hlthaff.2015.0335. Source: Employee Benefit Research Institute estimates based on administrative and services covered pre-deductible in HSA-eligible health plans as a result of IRS Notice 2019-45 (Fronstin and Services. Congressional Budget Office. http://www.cbo.gov/sites/default/files/cbofiles/attachments/43741- Background 2013 ................................ 1,250 2,................................ 500 3,250 ................................ 6,450 6,250 ................................ 12,500 ........................... 1,000 7 BacWhe kgro n t und here is no pre-deductible coverage, an enrollee using $52,000 in health care Financial Impact of Expanded Drug Coverage sh aring oncee n arn e ollm nern olle t an ed m cle ae im ts his s dat aor . her deductible. 12% 4.7% 4.2% 3.8% 3.4% 2.9% 2.5% 2.0% 1.6% 1.1% Overall, 8 percent of enrollees with individual coverage met their deductible, and 7 percent with family coverage did so. • The impact on premiums of expanding pre-deductible coverage to 116 drug classes related to chronic disease Fendr • ick Uti 20liz 21a)t. ion o Pref he -dedauc lth ca tibler e c ov ser ev ra icgees inc was rem ased ost oft 12e p ne a rc dednt ed . for health care services related to heart disease and MedicalOffsets-11-29-12.pdf. Trivedi, Amal N., Husein Moloo, and Vincent Mor. 2010. “Increased Ambulatory Care Copayments and Hospitalizations Discussion servi 80% ces reaches his or her $3,000 deductible and incurs 10 percent coinsurance on the Until IRS Notice 2019-45 was released on July 17, 2019, when it came to providing pre-deductible coverage of health Data and 2014 Study Sam 1,p 2le 50 ................................ 2,500 ................................ 3,300 6,550 ................................ 6,350 12,7 ................................ 00 1,000 .......... 8 The percentage of users of the 116 drug classes meeting their deductible is much higher — 17 percent. Our finding managem 16% ent medica 5t .5 ions % in H 4SA .9% -eligible 4. 3he %alth p 3la .7ns % is rela 3.t 2iv %ely sm 2a .6 ll% (range 2 .1.3 0%–4.7 p 1.e 4r% cent). 0 .8% diabe • tes c E am m arong p eloy . Tw e the rs d o -E tid hir lde not d rly s .a im ”d N d pe e ose d w p E rcngla e o-ins dend ur duc aJour nc tible e.n a cl o ovf M erae gd eic for ine b 36 lood 2 (4 pr )e : ss 32 ur 0e -32 m8. d onitoi:10.1 ors and 05 ins 6/uli NE n/ JMsa gluc09 ose 04 -low 533. e ring Implementation of pre-deductible drug coverage can change plan-paid expenditures in three respects: Volume Effects $49,000 in health care services used above the deductible. However, because the c Our Fr aonst re fin ser in, P dv ings ice as in HSA ul, a thatnd cov A-. e er Ma ligib agrek le of Fe he c ndr hr altonic ic h p k. la 20 dns is21 e , a e . se m “E pm m loy e pd loy eic rs w a etrions Up eret a on gkuide ea of pdrP eb r-e y d- e tD he deuc d Iuc tnt ible te ible r nba al Re C si ov s le e ve ra a nue d gs t e fo o Se rm rP vod ric ee e v e st (nt I RS) (iv 1.3 e sa – Se 4.7 fe rv ic ha pe ers in rb cor ent ) that premiums increased little due to the expansion of pre-deductible coverage is related to the relatively high • The premium impact was driven by: 1) the amount of increased uptake of drugs as a result of enhanced a Me getnt hod • s, 61 p s I................................ ncre er acsed ent us aded e of d p croevsc er................................ ra ipti geon ford g rugs lucom did e tnot ers, a r................................ end duc 54 e us pe er c of ent ot he adrd e m de ................................ d cov icael se ragre v ic for es. b eta bloc ............................... kers. Health care 9 2015 1,300 2,600 3,350 6,650 6,450 12,900 1,000 20% 6.3% HDHP O5 nl.y 6% 4 HDH .9% P With E 4 mp .1% loyer Contri 3.b 4uti %on to HS 2A .6 or HRA % 1.9% 1.2% 0.4% WheC n o enr ngr ollee es s s faional ce reduc Etff ions or in c ts os to t sh Fur aring the for r he Ex alt pand h care , P the re y- a Deduc re likely t to ib inc ler eC ase ov ut eili rza age tion. Nonusers may 70% statutory maximum out-of-pocket limit was $6,650 in 2018, coinsurance does not apply p sect VB reIm D ion 22 ium Hea H inc lt SA 3( h. c r-e )E n.d (a ligib 2ses ). (C “le Fi ) a rna of H e enc c ta he onsi lt ia h P l I Int st m la e ep ns nt rna a .cw ”tl Re it E of h r BRI v He eSA nue la Iss t-e H ue d D C rod H e BP se re ie Re a (f, no. I rc RC for h in ) m . 54 t tE o his m 2I p ( m a E loy p rm e ra ov p e. r loy s c e A e A H ould e cI cP B e e ss c only ne ond tfit o uc C p Re hr rtov ese onic dide a ar c su D c h I ov is rve e ns ear ytse a itof g ut e Ma he eof )na .a tlt he g h p e m follow la ens nt in 2 ing 021 percentage of users of the 116 drug classes meeting their deductible. Users of these services are generally high users coverage, 2) elimination of all consumer cost sharing or inclusion of coinsurance in lieu of the deductible, and (a) Volume: Lower patient out-of-pocket costs tends to increase utilization. services least likely to have pre-deductible coverage include peak flow meters and INR testing (25 percent each). Most decide to initiate use of health care (i.e., the extensive margin), and existing users may increase their level of utilization 24% 7.2% 6.3% 5.4% 4.5% 3.6% 2.7% 1.8% 1.0% 0.1% Mteasur o t2016 he em entire ent o1 f $ ,3 10 49 10 6 D ,00 ru0. g T 2 hT ,erap 6he 00 enrolle eutic Classes 3,e 35 r 0e a ................................ ches6 ,his 750 or her 6ma ................................ ,550 ximum o 13,ut 10- 0of- ................................ pocke 1,0 t limit 00 . ....9 Medications.” Accessed April 7, 2022. https://vbidhealth.com/docs/HSA-HDHP-Reform-Brief.pdf. t ser o a vss ice es p ss trhe ior im to pta he ct sa oft is expa factnde ion o d f th pree -d p ela duc n d tible educ ctov ible er:a ge in HSA-eligible health plans on premiums related to IRS of health care more generally because of their health conditions. As a result, even when coverage for services is 3) whether or not increased drug use led to offsets in spending on non-drug medical expenditures (e.g., e Fr m onst pB loy uil in, P ed ring s d aul, a id on not tnd he e M. lim mom C ina hr etis nt et um op cost he o s rf Ex ha Roe re ing c but uc for iv ke . 20 tOr he 20 d p e. r re “13 - Ma d87 ena d7 a ug cing tible nd Use I RS N ser v of ic ot e Hic s t ee aha lt20 h C t 19 wae -r45 ree Se , aSe drd vna ic ed et. s A or The s John fterp P ee rThu c op ent lene a Sa g e (tR is e-fy lim SD Their ina ) and ting Figure 3 57.7% (i.e., the 60 int % ensive margin). To model this scenario, we repeated the analysis described above but included a 12 13 N otice 2019-45. The survey found that about one-half of health plans (56 percent among fully insured products and (b) Shift: Independent of volume effects, lower consumer cost sharing shifts t 55.3% he cost burden from the patient to p rovided pre-deductible, these users are likely to continue to meet their deductible. Services that would otherwise be Impact 2017 Analysis 1 o ,3 f 0 P0 re-Dedu2 ctibl ,600 e Coverag 3,e 4 0 ................................ 0 6,750 ................................ 6,550 13,100 ................................ 1,000 .........9 D preed vuc ent tible able : W hospit hat D ao litza Cop tions aym ).e nts and Coinsurance Do?” EBRI Issue Brief (Employee Benefit Research WhaTom ram, C J. arFr pe ar nk (D , Fa -DImp ng E) int Zh act raod ng, uc on E em dPr m the emium a M. ChrEonic gg s le of Expandin D stis on, ease Chr Ma istn ine a 53.6% g g e Ym . Pr L eu, nt e- St A Ded c etp of he uc 2 n B 01 tib . 9 in le Soum Co the ev rS erage ae i, na and te (D to S. e nni 1948 s Ross ), follow -Deg ena d n. cost-sharing ranged from 25 percent to 40 percent, depending on the service. The 2021 EBRI survey also found that 53.0% Now let’s assume that disease-modifying antirheumatic drugs was covered on a pre- perc • e nt ut Prili eza vetnt ion iv- einc ser reva ic se es r ass ecum ompm tion ende , bd a sed by ton he e U. stS. imP arte ev s of entiv the e Se ela rv st icic eit s Ta y of sk d e For ma cn ed ( USP for p STF resc ), ripti theon Add vris ugs ory (Roebuck 46 percent among self-insured products) experie1 nc 4 e Pd e ra c e pn re t m Co ium insu inc ranrc ee ase of less than 1 percent, and 8 percent of self- the plan. subject to copayments or coinsurance once deductibles are met will be subject to the deductible when other services • P I 20 ns re 18 tm it. u ium “ te E) ff s inc . ect rof eaH sed igh t-he De d leuc asttib — le 1.3 Ins ur pe arnc ceent on — H w igh he-n e Acuit mp yloy Out ercs im ome ps in D osed ia coins bete ur s: A anc N e ains tur ta el Ex ad of pea rim de ed nt uc for tible Chronic Disease Management Medications in HSA*-Eligible Health mostb y e m the ploy int errod s w uc ould tion o adf dt he pre c-o dm ed puc anion b tible cill ov in era the ge H fo ouse r addof itiona Repl he resent alth ca ative re s (H ser.R. vice 37 s if a 09)llow by Re ed pbry e sent law.a tA ive 20 s E 21 a rA l HIP deduct 50 2018 % ible b1a 47.1% ,3 s5 is 0. The av 2,70 e0 rage allow 3,45e 0d amou 6,nt 900for this6 d ,6rug 50 class 1 is 3,3 abo 00 ut $3 14 ,0,00 00 0. 2012) (Gatwood et al. 2014). Volu Com me m Eff ittect ee on s ................................ Immunization Pract................................ ices (ACIP), the Healt ................................ h Resources and Ser................................ vices Administration’s (H .................... RSA’s) 9 insured products and 19 percent of fully insured products e Mxpe edir cie alnc Ce od st no Offs p ertemium change. are no longer subject to the deductible. Translation in Diabetes (NEXT-D) Study.” Diabetes Care 41 (5): 940-948. doi:10.2337/dc17-1183. and when increased use of prescription drugs led Plans to reduced use of other medical services. Blumenauer (D-OR) and Tom Reed (R-NY). This bipartisan, bicameral legislation would provide HSA-eligible survey of health plans also found that three-quarters of health plans expanded pre-deductible coverage as a result of 5% 25.7% Assuming that this drug class is not subject to any copayments or coinsurance, the Bright Future Project, and HRSA and the Institute of Medicine (IOM) committee on women’s clinical preventive Fr onstin, Paul, and M. Christopher Roebuck. 2019. “Do Accumulating HSA Balances Affect Use of Health Care Services (c) Offsets: In some clin 0% ical scena 5% rios, gre10% ater utiliza 15% tion of hig 20% h-value t 25% herapies c 30% an decre35% ase spending 40% on other 24.4% 2019 1,350 2,700 3,500 7,000 6,750 13,500 1,000 4.7% Shift Effects .........................................................................................................................................................9 4 24.8% • The most expensive scenario, an increase of 4.7 percent, occurred when increased prescription drug utilization t Shi he ft Eff Ihe RS noti alt 40 eh p c % tscla e.ns additional flexibility to provide Av ec ra ov gee Coi rans ge uranc fore serv No ice Cos s tt S ha ha t rm inganage chronic conditions prior to meeting 25.8% enrollee would be covered for $34,000 in insulin. They would still meet their $3,000 Mor Whaer a rm ec, a ser end J. ntv ly Fr ic Sp , a eFr nk s (r ending onst , e Fa qin, Roe uir ng ?”e Zh E dB b a R b y ng, I uc Se Iss kE c , ue m ta ion m nd Ba r27 ie Fe M. f, no. 13 ndr E g of ic g48 k le t he ( st 220 on, (PE 22 am tC ie )p hr u nt loy si st e P ed ine re ot cB la e e Y c im n . tie on L s d fit u, a a Re St nd tae sea p tA o he ff rec or n So st h I d im a ns b a um ltte e it e ut C trhe aa eri, )e .e a A ff nd cetc of tD of e20 nni e10 xpa s Ross (nde ACA -d ) D p a er nd gena - In. RS services (e.g., hospitalizations). 0% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 22.4% 2020 led to no d1 e,c4r0 e0 ase in use 2 ,8 of 00 other me3 d,ic 5a 5l se 0 rvices 7 a,nd 10 0employer6 s d ,90 id 0 not imp 1ose 3,8 0a0 ny coinsur 1a ,0 nc 00 e (i.e., zero We a the lso p ala ssn d umeedduc tha tible t e. m The ployb er ill s im wap s r ose eint d rsom oduc e efor d in t m of hec Se ost na sh tea rin Ja ing on nua the ry 20 1120 6 d (rS. ug 32 cla 00 ss )e a snd . Thi Aps ril 202 cost sh 1 (S. 1424 aring is ) 5 deduct Offset Effec ible. ts Aft ................................ er the deductible ................................ is met, $15,0................................ 00 in health care................................ spending is subject ...................... to 9 deductible N 20 ot c 17 ov ic. ee “r 20 D aia g 13 e b e -of 57 tese s Out ).r vicp ea s a tiend nt m Ca erd eic aand tions Ac ut spe e c Cifi om ed p lic in I atRS N ions ot Be icfor e 20 e a 19 nd -45 Aft on er H prigh em-ium Deds. uc They fo tible Ins und uranc tha e t Fr Ther onst e in, P are seve aul, a ra nd l wM. ays in w Christhic ophe h e rxpa Roe nding buck . p20 re13 -de . d“uc Heta ibl lte h C cov are er a Sp ge e nding may im aft pe arc tA p drop em ting iuma s. Fu Ellxpa -Rending place m the ent g, eH ne igh ro-sity cost sharing). 30% 4% 1.5% 1.3% 1.2% 1.0% 0.9% 0.8% 0.6% 0.5% 0.3% impose and d in t reghe ard H leouse ss of of whe Retp he rerse ant n e anr tivolle es in Ma e mee yt s his 2021 (H or h R. er35 de 63 duc ), tb ible uild . ing We on ad the de dI RS g this uid assa um ncp et ion b and p erceavus ious e in p verrsi ior ons coins Enr ura ollm nce ent, : A re Nsaulting tural Exip n $ erim 1e ,50 nt for 0 p Tr aa id nst la ow tion in ards D c iab oins etes (NEXT urance -D , )a St nd udy. $4 ” ,5 JA0 M0 A p Int aeid rna out l Me -d of ic- ine po 177 cket 2021 1,400 2,800 3,600 7,200 7,000 14,000 1,000 prem •ium 4% P inc eriod reaic ses her aa ltng h e ev da flua rom tions virt ua sully ch a ze s a ro nnu to 1.5 p al phy ersi cc ea nt ls. and select preventive screenings not listed above Results ............................................................................................................................................................... 10 Deductible Health Plan With a Health Savings Account: A Five-Year Study.” EBRI Issue Brief, no. 388 of coverage shifts spending from enrollees to the plan. Enrollees may increase services utilization when their cost share relatteo d fur wor the k, r w inc e rfound ease p tha re-td tehe duc m tible ajor it cy ov of era eg m ep fo loy r ecrhr s im onic pose disd e a som se m e afor nam ge of mecnt ost . sharing in lieu of a deductible, (3): 358-368. doi:10.1001/jamainte6rnmed.2016.8411. 8% 2.2% 1.9% 1.6% 1.3% 1.0% 0.7% 0.4% 0.1% -0.2% in total. Cost sharing falls by $2,150 or 0.2 percent. In other words, employer costs (optional, per IRS Notice 2004-23). Da ta and Study Sample Ov erall, health spending averaged $4,947 per person in 2018. Prescription drugs accounted for $983 or 20 percent of 2022 (Employee 1B ,4 e0 ne 0fit Resea 2r,c 8h I 00nstitute)3 . ,650 7,300 7,050 14,100 1,000 declines, le 20%ading to higher health care costs and, as a result, higher premiums. However, there might be cost offsets Discussion ........................................................................................................................................................... 12 r VB anging ID He fa rlt om h a 60 pp e pa errs t ceo ntb te o t75 he p only erce st ntudy to ha , depending ve eon xam the ine ser d tvhe ice im (Fr pa onst ct of in a expa nd nding Fendr ic pr ke 20 -de 21 duc ). tible For tchis ove ar 7ss agum e tp o tion, increase by 0.2 percent. Employers could easily recoup the cost sharing by imposing a ® ® • Obesity weight-loss programs and tobacco-cessation programs (option, per IRS Notice 2004-23). 12% 2.8% 2.4% 1.9% 1.5% 1.1% 0.6% 0.2% -0.3% -0.7% For the present study, we utilized the IBM Marketscan Commercial Claims and Encounters (CCAE) Database and total spending. The 116 drug classes examined in this study accounted for $798, which was 81 perc32.0% ent of the drug 30.9% from increased used of other services. 3.1% 28.9% w e calculated the average cost share by summing the copay and coinsurance fields from the 116 drug classes’ claims services in addition to those specified in 27.1% IRS Notice 2019-45 on premiums (VBID Health n.d.). It quantified the Fr onstin, Paul, M. Christopher Roebuck, and A. Mark Fendrick. 2022. “The Impact of Expanding Pre-Deductible Conc ® pr lusi eon -deduct ................................ ®ible copayme ................................ nt or coinsurance ................................ . To recoup the entire ................................ $2,150, emplo .......................... yers could 15 • Drugs taken b 24.8% y asymptomatic indiv 2.9% iduals to prevent the manifestation of disease (optional, per IRS Notice IBM Ma 3%rketscan Benefit Plan Design (BPD) Database. Data from 2018 were used — the last full year preceding IRS spend and 16 percent of the total spend per person. Only $108 of the $798 in drug spending on the 116 drug classes, 16% 3.5% 2.9% 2.3% 1.7% 1.1% 0.5% -0.1% -0.7% -1.2% 10% Conclusion t pha ott e nt we iarl fina e C ov ade jnc udic raia ge l im a 8tin HSA ed p aacft t e -on E r ligib the enr le d olle e H de uc ea out lt tible h P -of la w -ns p as sa oc on ketP tis rspe fied emndi ium and ng s.t”he a E nd B n d RI em iv Iide ss ploy ue d e b B ry rspe ie the f, no. nding sum 55 of of 8 t e (he E xpa m a pnding llow loyee ed p B a re e m ne -d ount fit ed uc Re s fr tsea ible om r c h require 10 percent coinsurance. Just like the case where the drug class is subject to the 2004-50). Notice 2019-45. Member health insurance eligibility information, as well as medical (inpatient and outpatient) and Ther Refer ee is nc lim es ................................ ited empirical evidenc................................ e on the impact of expa ................................ nding pre-deducitble................................ coverage on insuranc.......................... e premiums as a 16 or 2 percent of total spending, was attributable to the deductible. The remainder was covered by insurance and/or 20% 4.2% 3.4% 2.7% 1.9% 1.2% 0.5% -0.3% -1.0% -1.8% those claIim nss. tit ute). c In r ove ersponse age to 57 to Id RS N rug c ot la ic ss e e20 s us 19e -d 45 t, o tthr reeaet- q 11 ua crhr teonic rs of cla on rg deit ions emp. loy Ite found rs and the haa t lt ch p ovela rin ns g offe all trhe ing se Hd SA rug -eligib class le e s p hea re lt-h deductible, imposing 10 percent coinsurance results in the enrollee reaching his or her r pe ha surlt m of acy IRS N claim ot sic , c eo 20 mp 19 ris -e 45 d .t he The CC2021 AE fil A es. HIPThe surv Be Py D of dains tab ur ae se rsp not rove ide d a db p ov lae n -rsp epe or cifi tecd indiv that idua mosl a t rnd espond family ent ds r ede uc por tible ted 0% some other form of cost sharing. E Endno ndno test ................................ es ............................................................................................................................ 18 I p dnc la ed ns ruc ea e tses ible xpa in c nd witeonsu h a d p rce m om -e dr e b d ina out uct- tion o ible of-p oc cf c ov kop e etr a acy g os m e te for s for nt s a m e he nd dic alt c aoins h ca tions ur r ea a nd ha ncv eser e w bould veic ee n s t a inc ss ha roc e t ap ia se rte e v p der nt w em it th d ium he e e s b le xa ty e c r e1.7 p ious rbat ion o c eonseq rcent f c .ue hr Ther onic ncees. a rThese e 24% 4.8% 3.9% 3.1% 2.2% 1.3% 0.4% -0.5% -1.4% -2.3% maximum out 20 -16 of-pocket cost 20 sha 17 ring limit of 20 $6 18,650. 2019 2020 Fr lev onst els. in, P Althoug aul, M h th . Ce hr 20 ist1 op 8 C heC rA Roe E cont bucakins , Ja oson B ver 27 uxba mill um ion cov , and eA re . dMa livre ks, w Fendr e ric est k. ric 20 te 20 d . our “D o ana Pely op sile s t C o hoose those W cont isely inu Ao ftus erly either no premium increase or premium increases of less than 1 percent. Although estimates are reported, a great deal Offset Effe 2% cts inc seve cond lude ritaion l fin fas. catnc or The s t ial st ha imr tp eca ss acn e , t w on xpla orp se re in t d mis ium he ea se sm s of c aont ll inc expa rol, rnding ea inc se re in p p arses er-e dm ie n hosp d ium ucts. ible ita liz cov ateions rage , a for nd 14 exa serv cerb icaets in HS ion of he A-a elt ligib h dle is phe ara itlt ieh p s, lans Figur es In the absence of utilization increases as a result of covering these 116 drug classes in full, premiums would increase 2 Satisfying Health Plan Deductibles? Evidence From the Use of Low-Value Health Care Services.” EBRI Issue e of nrunc olleedr t(ai.e int .,y 36 re5 d gara dy ing s) in a the n e effe m cp t loy of m Not ent ic-eb 20 ase 1d 9, -45 HSA on -ep ligib rem leium hes r alte h p ma lains n. . W In th e als eo ArH eIqPuir su erdv e tha y, t15 the p eprolic cent y hold of ful erly s Fi nally, we also considered potential medical cost offsets from increased use of prescription drugs. The Congressional 1 9 * HSA = health savings account, HRA = health reimbursement arrangement. a s a In 2020, llowed 57. in I 7 RS N perce ot nt ico ef 20 ind 19 ivid -45 ua ls is w sm ith all he (Fr alth ons co tin, Roe verage b thr ucokug ah nd a Fe priv ndr ate ic-k s e20 cto 22 r ) e.s ta Fu blirs the hme r e nt xpa wending re in ap p re la-n de w dith uc ta ible particularly for those with chronic medical conditions and lower household income. In fact, there is a body of peer- Brief, no. 516 (Employee Benefit Research Institute). https://www.ebri.org/docs/default-source/ebri-issue- percent. HSo ow urce ev : M ee rd , icm al Ex ed pic ena dil c tureost Pan e offs l Surv eetys a - Ins w surane ce ll a Com s ot ponhe ent r (M f EPS orm -IC). s of cost sharing will reduce the impact of expanding pre- ins weur ree ful d p l-la 4 tim % ns e o fa e M nd m op re 29 loy P rp e ee e mrs, a ic ue m nt 1.3% nd In of cw reself e as inc e-ins lude urd ed t he pla irns spouse noteds a tha nd t it d eis p e too ndeent ars. ly tThese o know e xc wlha ustions imp raecsu t tlt he ed N in a oticn init e had ia l on Figure 1, Percentage of Persons Enrolled in a High-Deductible Health Plan (HDHP), by Employer Contribution to HSA or Ov Budg era ell, he t Offiaclt eh sp (CBe O) a nding ck now aver le ad gg ee dd $4 tha ,947 t the pe re r p wears a son in 2 link b 01 et8 w e (Fi en p gurre e sc 5)r. ipti Pron escdrripti ug on utili dza rugs tion a accnd ount its im ed for pa c$9 t on 83 us ore 20 of deductible that met the deductible requirements to be an HSA-eligible. However, we do not know how many of these r ce ov vie erw ae gd e lit to e11 rat6 d urer ug de m cla onst ssers t atha ing t a tha ret us sele edc m tiv ost elyly low fore c ring hronic cost d is sh ea ar se ing mfor edic high ation ma -value na cg hr eonic ment d is als ea o se ham s a ana sm ge am ll im enp t act brief/ebri_ib_516_lowvalhealth-22oct20.pdf?sfvrsn=56693a2f_6. deductible coverage on premiums. This is evidenced by the 1.3 percent increase in premiums that we found when p sa re m m pium le of s. 2.1 m Anotill he ion r 7 p me em rcb ee nrts. of N ful ext ly, ins we ur m ed er p gla ed ns indiv and id1ua 7 p l a end rcent fam of ilyself de-dins ucur tible ed le plv ae ns ls rfr eom por tte he d “Bot PD he d r” a tw ahe base. n a s k Thi eds HRA, Among Those With Private-Sector Health Coverage and Employee-Only Coverage, 2016–2020 ............. 5 other medical services as far back as 2012 (Congressional Budget Office 2012). More specifically, when it came to percent of 3-t 4ot %a P l sp rem einding um Inc. re A as nd e the 116 drug classes examined in this study accounted for $798 or 16 percent per enrollee1% s were in an HSA-eligible health plan. Some were enrolled in a health plan with a health reimbursement arrangement on premiums. Employers can recoup the costs associated with expanding pre-deductible coverage by imposing m edications can meaningfully improve adherence, reduce the risk of adverse health outcomes, and, in some cases, ® Und avere arg t ehe coins initia urla 2004 nce isI RS g impose uida d nc ins et e for ad H of SA a- e dligib educ let ible hea , ltah p nd la mns ed , ic unt al c il t ost he offs ded euc ts a tible pp ly is. met, coverage does not include a inf bout orm t ahe tion w impa as g ct of ene the ra tN ed ot b icye . Ma Nro kectont scae nxt d weavs g elop ive en for rs via t he a p la “ot nhe -spe r” crifi esponse c statiss, b ticaut l a na wely c si as of n conc clalude ims d ta ha tat a 22 nd pnot erce nt Fr p sc eonst or rson. ing in, P the Only a fin ul, $1 aMa nc 08 ia rt l im ín of -J. tp he a Se c $7 tp of úlv 98p e in d rd op a, ose ra ug nd dspe M. polic nding Chr ies t ist ha op onthe tm he ra R y 11 oe a6 d ff be uc c rug tk . us 20 cela 13 of ss. e m “ s, or Me edic d ic a 2 p ta ion te ion U rs a cent m tili ong of zatt ot ion a Me al sp dic nd a ernding e A d bhe ene , rew fic nc aia s e rin a ies, the 10 (HRA). Others were in health plans that met the deductible requirement but may have not met other requirements, such as 2-3% Premium Increase r ce op duc aye m e exp nts or endit cur oins es.ur ance. Figure 2, Chronic Disease Management Services in the Expanded Safe Harbor ........................................................... 6 2 “ any service or benefit intended to treat an existing illness, injury, or condition, including drugs or medications.” This gleaned from plan documents. As a result, deductible levels were not available for all members in the initial sample. of fully insured plans and 46 percent of self-insured plans still do not know what impact the Notice had on premiums. Health Savings Account-Eligible Plan.” American Journal of Managed Care 19 (12): e400-e407. CBO started assuming that a 1 percent increase in the number of prescription drug fills was associated with a 0.20 attributable to the deductible. The remainder was covered by insurance and/or some other form of cost sharing. In the restriction on preventive services. Our finding that premiums increased little due to the expansion of pre-deductible coverage is also related to the 1-2% Premium Increase narrow definition of the “safe harbor” has likely caused some plan members to go without needed care, as it is well A Fift ge ur r er e3, quir Im ing pacindiv t on idua Prem l/fa ium mis of ly de Ed xpa uctnding ibles of Pra et- D leeadst uc $1 tible ,350/$2 Cove,r700 age — to t Che hr onic 2018 D fe ise da ese ral mi Mana nim ge um me s for nt Me HSA dic a etligib ionsil in ity EBRI Issue Brief is registered in the U.S. Patent and Trademark Office. ISSN: 0887 –137X/90 0887 –137X/90 $ .50+.50 W E p the e vit e r c h I n in a eb nt RS N senc tdhe ec e ot ra e of ic basenc e se ut 20 ili in spe e 1 za 9of t-ion inc 45 e ndin vin p ideg rnc la eon a c eses e t, ot ha H he a SA ts a e r -xpa m e rligib e ed nding su iclt le a l se of he pc a rrov v e ltic -h p e d er e s. ing d laun A cs tt he ible si am rse e ila c no 11 ov r w e e 6 d ff ra a eb g rcug le te ha w tc o ill la s b a ss inc de o ee p rs in full n fo e t aase m und p or , re e p in t m rflexib eium m he ium sMe le , e s w b d m e ic ne p ould aloy id fite p d rinc op s w esi ul rg e e a a n rtse e ,ion 2 2 relative0% ly high percentage of users of the 116 drug classes meeting their deductible. Users of these services are Gatwood, Justin, Teresa B. Gibson, Michael E.F Chernew, Amanda M. Farr, Emily Vogtmann, and A. Mark Fendrick. E B SRI ee r Inte eserna arcl h Rus eving enue cla Sim erv s d icea (t2004) a and . assumptions about behavioral responses confirmed the findings from the AHIP established that increases in cost sharing for health care have been associated with deleterious consequences. Thus, — the fina 0l a -1% na Ply retm ica iul sa m In m crp ele as e included 1.6 million members. HSA-Eligible Health Plans ....................................................................................................................... 10 (Roebuck et al. 2015). We W thin ith Me k di itc is al Co resa t sona Offsetsble to assume the same effect willNo ap Me pldy ic al to Cos the t O p ffsop etsulation with p a offe lr er eca re ing dnt y . rm e H p or ow or et ing e pv rot erte ,ha c m ttion for e td he icy a l c w cost ould ert aoffs in m ade dt es a addic d s w a itl se iona ell a rv l se ic s ot er s t vhe ic hr eroug s on form h a as of p vra ec lue -ost de-d b s uc aha sed tible ring ins b w ur aill si a s if a nc red euc d llow e esi tg e he n (V d b im y- p B ta he Ic D t ) Iof RS. pla en st xpa Lending g ruc isla tur tiv e pe . r e - generally20 high 14. us “Pe ric rs of e Ela he sta iclt ith y caand re Me mor de ic a gte ion U nerally se: b C eost caus Sha e of ring theA irc rhe oss alt Mul h condit tiple ions Clini. ca A l C s ond a reit su ions lt, e .”v e Jour n wna hel o n cov f erage © 2022, Employee Benefit Research Institute –Education and Research Fund. All rights reserved survey (Fronstin, Roebuck, and Fendrick 2022). In general, the impact on premiums of expanding pre-deductible the U.S. Department of Treasury issued guidance 15 years later in 2019 via IRS Notice 2019-45 to further increase the 3 See https P:r/ e/m wiw um w .D irs ec .g re oa vs/e pub/irs-drop/n-19-45.pdf. e A d pm r e s t op dpuc he loy osa t ible m m lsa e rt nt k c ha ov e -b tt e a for pr sra e ov g d H e ide SA he on a -a e lt p d ligib h b rd eit m e ile ona ium ne he fit l fle s. a s lt — h p xibilit Thi in p s is lans ya te ro g tvic ride e ow ula xtn e s, it rc nd , etd hose p is br y e im -td e he pe nr or d 1.3 p olle uc tant tible d te in HSA ha r c ct e ov nt the e rinc -a se eg ligib re e p a la to se le ns se he in us rv a p e ic lt r h p e e this s t mium la ha flexib ns ts t .m ha a ili na tty g w te o e ca found hr llow onic for w he n * HSA = health savings account. Figure 4, Ma Mult naiv ge ad ria Cta er e Se & ns Sp itiv eit cia y lt Ay na Ply ha sirs of macI ym 20 pa ( c11 t on ). Premiums of Expanding Pre-Deductible Coverage to Chronic for services is provided pre-deductible, these users are likely to continue to meet their deductible. Services that would We also captured age, gender, geographic region (Northeast, Midwest, South, West), relationship to policyholder (self, coverage as allowed in IRS Notice 2019-45 is small. Estimated premium increases range from virtually zero to 1.5 flexibility of H SoS uA rce-: e Em ligib ployle ee Be he na efilt tRes h p ela arcns h In sttio tute cov estie mra te spe s bac se ifi d c on low admi- nc isost trativ ep erne rov lle mnt ent iv ane d cser laimv s ic dae tas t . o prevent the exacerbation of Source: Employee Benefit Research Institute estimates based on administrative enrollment and claims data. e c aond ff ve erca it tg iv ion e e cs he oins m aa ltur y h ma b ae nc nna e e fit is g e e im m mp e pose nt loy for d er ins s a all tnd e ba ed p ne olic of fica y ia m d rie e ad k s. e uc rs A tible w ta ho r, ga e and tre ed m c st ont erd aic inu te ag l c aylly ost e xplor c ha offs lle ing enge ts a cov dp p b ely y ra .he g ea for lth ca cer rtea in hig spending h-va ’slue ser , ious Disease Management Medications in HSA-Eligible Health Plans ................................................................. 11 3 spouse, dependent), and household size (number of enrollees on the policy) for descriptive analysis. percent. There was no premium inc rease in the conservative scenario where deductibles were replaced by coinsurance, chronic conditions on a pre-deductible basis (Figure 2). c fis lin ca icl c allha y indic llenge ats. ed health services prior to meeting the deductible will produce more effective, clinically nuanced e e e e e e e e e e e e e e e e e eb b b b b b b b b b b b b b b b b br r r r r r r r r r r r r r r r r ri. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i.o o o o o o o o o o o o o o o o o or r r r r r r r r r r r r r r r r rg g g g g g g g g g g g g g g g g g IIIIIIIIIIIIIIIIIIs s s s s s s s s s s s s s s s s ss s s s s s s s s s s s s s s s s su u u u u u u u u u u u u u u u u ue e e e e e e e e e e e e e e e e e B B B B B B B B B B B B B B B B B Br r r r r r r r r r r r r r r r r rief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief A re • • • • • • • • • • • • • • • • • • s e J J J J J J J J J J J J J J J J J Ju u u u u u u u u u u u u u u u u u aly ly ly ly ly ly ly ly ly ly ly ly ly ly ly ly ly ly rc h 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 re ,,,,,,,,,,,,,,,,,, p 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0r2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 t 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 fr o• • • • • • • • • • • • • • • • • •m N N N N N N N N N N N N N N N N N N o o o o o o o o o o o o o o o o o o th .................. e 563 563 563 563 563 563 563 563 563 563 563 563 563 563 563 563 563 563 EB RI Education and R esearch Fund © 2022 Employee Benefit Research Institute 16 10 17 11 13 12 15 18 19 14 3 5 9 8 2 4 7 6